Principles of Marketing
Quarter 4 – Module 5 :
Product, Services, and
Experiences
Product Defined
- is anything offered for sale by a firm to buyers to satisfy their wants and
needs. Products may be take any of the following forms:
1.
2.
3.
4.
A physical object like a toy or a kilo of pork;
A service like a ferris wheel ride or a dental check-up;
A place like London or Boracay;
An organization like the Supreme Student Government (SSG) or the
Philippine Marketing Association;
5. A personality like Manny Pacquiao and Kathryn Bernardo.
To maintain the interest of buyers, the physical products are most often
provided with benefits like: (1) quality; (2) reputation of the
manufacturer; (3) packaging; (4) credit; (5) information about the
product; (6) warranty; (7) after sales service; and (8) delivery.
With the foregoing statements, a product may now be defined more
specifically, as follows:
“A product is anything offered for sale by a firm to buyers to satisfy their
physical, social, symbolic, and psychological wants and needs.”
Classification of Products
Products may be classified into two categories: (1) consumer goods; and
(2) industrial goods.
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Consumer goods- are those intended for final consumption by
consumers. They may be classified according to: (1) the rate of
consumption and tangibility; and (2) the consumer’s shopping habits.
Rate of Consumption and Tangibility
Based on the rate of consumption and tangibility, consumer goods are
further classified as: (1) durable; (2) nondurables; and (3) services.
Durable goods- are tangible goods which normally survive many uses.
Examples are motorbikes, refrigerators and filing cabinets.
Nondurable goods- are tangible products which are consumed in one
or a few uses. Examples are ice cream, toothpicks, and petrol.
Services- are intangible goods like activities, benefits, or satisfaction
which are offered for sale. Examples are entertainment in movie houses
and concerts, transport services, tailoring services, and haircuts.
Consumer’s Shopping Habits
Based on consumer’s shopping habits, consumer goods may be further
as: (1) convenience goods; (2) shopping goods; (3) specialty goods; and (4)
unsought goods.
Convenience goods- are those which are purchased with a minimum of
effort. Many of them are readily available in many retail outlets.
Examples are soap, bread, soft drinks and milk.
Shopping goods- are those that are bought only after an effort to
compare with other goods is made. Examples are radio sets, readytowear suits, cellphones, and shoes.
Specialty goods- are those that the consumers seek to buy and they
are not willing or they are not able to accept substitutes. Examples are
special medicines, jewelry, and exotic foods like (adobong kamaru) and
(isaw).
Unsought goods- are those that are not yet wanted by or are still
unknown to the consumer. Because of the said reasons, consumers use
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no effort to seek them. There are two types of unsought goods: (1) the
new unsought goods, and (2) the regularly unsought goods.
New unsought goods- are really new ideas or products that the
consumer still have to know to be motivated to buy. An example is the
papaya soap when it was first introduced. Consumers did not know
much about it, so it was not sought.
Regular unsought goods- are those that stay unsought but not
unbought forever. Examples are encyclopedias, educational plans,
memorial plans, and life insurance plans.
Industrial Goods- are those used in the production of other goods. They
are categorized as follows:
1.
2.
3.
4.
5.
Installations
Accessory equipment
Raw materials
Component parts and materials
Supplies
Installations- This term refers to industrial products with long life, are
generally expensive, and they form part of the major capital equipment of an
industrial firm. Examples are buildings, generators, computers, elevators, and
others.
Accessory Equipment- These are industrial goods that are used as aids in
the production process. They have a shorter usable life than installations.
Examples are hand tools and lift trucks in factories, fax machines, and desks
in offices.
Raw Materials- These are unprocessed goods that will become part of
another product. Raw materials are of two types: (1) farm products; and (2)
natural products. Farm products are those grown by farmers, while natural
products are those which occur by nature. Examples of farm products are
palay, tomatoes, eggplant, coconut and milk. Examples of natural products
are fish, lumber, gold, diamond, coal and oil.
Component Part and Materials- These are processed industrial goods that
will still be used and become an actual part of the finished product.
Component materials are exemplified by paper for further processing into
printed magazine, textiles into dresses, and flour into bread. Component parts
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are exemplified by tires mounted in motor cars, strings in a violin, and knobs
on television.
Supplies- These are items that are used as aids in the operating process but
do not become part of the finished product. Among the examples are pencils,
ink, paper clips, fasteners, and others.
Levels of Products
1. Core or generic product- it represent what the buyer is really buying.
2. Actual or formal product- it represents the design, brand name, and
packaging that delivers the core benefits to the customer.
3. Augmented product- it represents additional services or benefits of the
actual product.
Branding
-Is that marketing action which identifies and helps differentiate the
goods or services of one seller from those of another. A consumer who uses a
product and begins to like it, it will find less difficulty in purchasing the
product again if he is provided with a brand to remember.
Brand- is a name, term, sign, symbol, or design, or a combination of these
elements, that is intended to identify the goods or services of one seller or a
group of sellers.
Brand may either be: (1) legally registered; or (2) not legally registered. Legally
registered brands are provided with legal protection called trademark.
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Brands, whether legally registered or not, consists of two distinct parts: (1)
brand name; and (2) brand mark.
Brand Name- This term refers to that part of a brand consisting of words,
letters, and/or numbers that can be vocalized. Examples are Suzuki, UST,
Tide, Close-Up, and Hundred Islands.
Brand Mark- This refers to that part of a brand that appears in the form of a
symbol, design, or distinctive coloring or lettering, and which cannot be
vocalized. Examples are the popular companies like Nike, Starbucks and
McDonalds.
Packaging
- refers to all activities involved in designing and producing the
container or wrapper for a product. The container or wrapper is the package.
The package may include up to three levels of material briefly described as
follows:
1. The primary package which the product’s immediate container. The
370ml. can containing Alaska milk is its primary package.
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2. The secondary package which protects the primary package. The carton
box containing two dozens of Alaska milk cans is its secondary package.
3. The shipping package which contains the secondary package or
packages. It provides ease of storage, identification, and shipping.
Reasons for Packaging
There are several reasons for packaging products. Among them are:
1. It provides protection to product before and after they are in the
possession of the intended users. Products need to be protected from the
harmful effects of outside elements. Packaging serves to eliminate this
problem.
2. It provides convenience to the user. Many products are now neatly
packaged which provide convenience for use just anywhere. The effort
exerted from date of purchase to actual use of the product is greatly
diminished.
3. It provides safety. Products like insecticides may cause considerable
harm useless they are contained in suitable packages.
4. It provides economy to both the seller and the user. Buyers have a
different quantity requirements for products. Some will need more in a
single purchase, while some will need less. In any case, purchasing in
various quantities is made possible by packaging.
5. It allows sellers to effectively promote the product. The package can be
made to attract the attention of the prospective buyer and further
provide vital information about the product.
Labeling
- it is the part of the products which provides information about the
product and the manufacturer is called the label. It may be a part of the
package, or a tag attached to the product.
Types of Labels
There are four types of labels
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1. The brand label- this label identifies the product of brand. Example is
the word “Goodyear” indicated in some tires sold by dealers.
2. The descriptive label- This label provides information about the
product; who made it, where and when it was made, its contents, how it
is used, and how to use it safely.
3. The grade label- This label identifies the product’s judged quality with a
letter, number, or word like “grade A” or premium grade.”
4. The promotional label- This label provides attractive graphics to help
promote the product.
Product Life Cycles
Products, like humans beings, have a life cycle which is referred to as
the Product Life Cycle or PLC. The PLC refers to a product’s sales growth from
the beginning to its peak, followed by a decline and its eventual withdrawal
from the market. In more simple term, PLC is the period between the birth
and death of a product.
The PLC consists of four distinct stages: (1) introduction; (2) growth; (3)
maturity; (4) decline. These stages are actually the manifestations of the effects
of various forces affecting the life cycle, namely: (1) consumer demand; (2)
competition; (3) government rulings. These forces are beyond the control of the
firm and the influence of its marketing efforts.
The Introduction Stage
In this stage, the product is introduced to the public. It is generally
characterized by the following:
1.
2.
3.
4.
Slow growth of sales;
Heavy promotional expenditures in relation to sales;
Relatively high prices for the products; and
Limited product offerings, like limited variations in sizes, color, and the
like.
The Growth Stage
The growth stage in the PLC follows a successful introduction stage. The
growth stage is characterized by the following:
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1. Sales start climbing rapidly as distribution increases and the consumers
are persuaded to try the product.
2. The ratio of promotional expenditures to sales decreases. This is due to
the rapid increase in sales but without a corresponding increase in
promotional expenses.
3. Prices tend to remain high except when demand stimulation is required
and entry of competitors is discouraged.
4. New forms of the product appear, like new colors, new models, and new
sizes.
The Maturity Stage
When the growth in sales down, the maturity stage begins to take over. This
stage is characterized further by the following:
1. Sales settle down as the product becomes well-known.
2. Price reductions are used as a tool of competition.
3. Competition is intensified; and 4. The market becomes saturated.
The Decline Stage
The decline stage begins with a permanent drop in sales. The stage is further
characterized by:
1. A pruning of product models and variations to eliminate
those not producing profits.
2. Promotional expenses are reduced; and 3. Plans for
phasing out the product is made.
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Service Defined
- is a form of product that consists of activities, benefits, or satisfactions
offered for sale that are essentially intangible and do not result in ownership.
Four major attributes of Service
1. Intangibility- Physical products are tangible. As such, they can be
inspected by consumers prior to purchase. On the other hand, service
are intangible. It would, therefore not be possible to “sample” a lawyer’s
legal skills, or a doctor’s ability to handle a surgical operation before one
decides to retain a lawyer or a doctor.
2. Variability- Because services are performed by human beings, no service
provider can render the same service in exactly the same way every
single time. A college professor, when giving the same lecture in two
separate sessions, cannot use the exact words and gestures for both
sessions.
3. Inseparability- Because services are rendered by people, the service
provider must be present each and every time the service is provided.
Services are rendered and consumed simultaneously. As a lawyer gives
legal advice to a client, legal services are being “produced”, and
simultaneously “consumed” by the client.
4. Perishability- Unconsumed services cannot be stored or warehoused.
When a 40-room boutique hotel with a restaurant on its ground floor
operates on a particular day, unconsumed or unused ingredients for food
production, unsold bottles for soda, or unused coffee beans can be
stored, available for use of sale the following day.
Experiences Defined
-
A product which involves experiential aspects of consumption rather
than utilitarian ones. This type of product allows consumers to
engage in fantasies, feelings and fun and often carries subjective
meanings and characteristics. It also represent what buying the
product or services will do for the customer.
-
Examples are: students’ field trip in Baguio City, group of friends
watched Showtime at ABS-CBN.
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Activity No. 1 Fill in the blanks by choosing the appropriate word or group of
words in the box. Writer the correct answer on the space provided before the
number.
Shopping goods
Industrial goods
Brand Name
Unsought goods
Specialty goods
Brand Mark
Labeling
Product
Packaging
Service
Brand
Durable goods
___________________1. They are tangible goods which normally survive many
uses.
___________________2. Are those that are bought only after an effort to compare
with other goods is made.
___________________3. Goods that the consumers seek to buy and they are not
willing or they are not able to accept
substitutes.
___________________4. Are those that are not yet wanted or are still unknown
to the consumer.
___________________5. Are goods used in the production of other goods.
___________________6. Is a name, term, sign, symbol, or design or a
combination of these elements, that is intended to
identify the goods or
services of one seller or a group
of sellers.
___________________7. This refers to the part of a brand that appears in the
form of a symbol, design, or distinctive coloring or
lettering, and which
cannot be vocalized.
___________________8. This term refers to the part of a brand consisting of
words, letters, and/or numbers that can be vocalized.
___________________9. It refers to all activities involved in designing and
producing the container or wrapper for a product.
___________________10. It may be a part of the package, or a tag attached to
the product.
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Module 6
Lesson 1: Price, New Product
Pricing and Approaches
Lesson 2: Place and the
Distribution Channels, Its
Functions and Nature of Supply
Chain Management
The second variable in the marketing mix is the price. If it is set correctly,
there is a chance that the firm’s sales and profit goals will be achieved. Making
the price variable work, however, requires the marketer to acquire sufficient
knowledge about the various aspects of pricing.
The Meaning of Price
Price is the money, good, or service exchanged for the ownership or use of a
good or service. When one hundred pesos in paid for a sack of corn, that
amount is the price of the corn. When a boy is asked to carry a sack of corn
from the parking area to the store and is paid a kilo of corn, the price of the
service is one kilo of corn.
When a bundle of sweet potato tops is exchanged for a bundle of string beans,
each is the price of the other.
Pricing Defined
Pricing may be defined as those activities involved in the determination of the
price at which products that will be offered for sale considering the various
objectives of the firm.
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Pricing Objectives
Before setting prices, the firm’s pricing objectives must first be
determined. Pricing objectives may consist of any of the following:
1. Profit-oriented objectives
2. Sales-oriented objectives
3. Status quo-oriented objectives
Profit-Oriented Objectives
Profit-oriented objectives call for profit generation. This may either be:
1. To achieve the target return on investment or on net sales; or
2. To maximize profit
The Target Return Objective. This refers to the pricing objective
requiring a certain level of profit. Most often, it is stated in terms of
percentage of sales or on capital investment. An example is the 21
percent return on investment required by a company’s, or the 2 percent
return on sales required by another firm.
The Profit Maximization Objective. This refers to the pricing objective
of seeking as much profit is possible. This may be achieved by
increasing the quantity sold or increasing the profit margin. However,
even if the firm succeeds in the attempt, it will not be for long because
the situation will invite competition and will ultimately result to a
decrease in profits in the long run.
Sales-Oriented Objectives
Sales-oriented pricing objectives refers to those that will provide higher
sales volume. This may be achieved through any of the following:
1. Increasing sales volume
2. Maintaining or increasing market share
Increasing Sales Volume. This objective requires an increase in sales
volume for a given period. For example, the company may seek to
increase its sales by 20% annually. This may be adapted to achieve
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long-term profitability even if losses are sustained in the first few
years.
Maintaining or Increasing Market Share. This objective requires
maintaining or increasing the company’s market share. If, for
instance, the company’s market grew from 30% last year to 40% this
year, this surely indicates that the company is growing.
Status Quo-Oriented Objectives
Status quo pricing requires maintaining the same price for the
company’s products. This happens when the firm is satisfied with its
current market share and profits. Status quo pricing may be due to
any of the following:
1. To stabilize prices
2. To meet competition
3. To avoid competition
The Pricing Strategies
The firm’s products, even if their quality and price cater to the requirements of
the target market, must be made available at the place and time they are
needed. Until this is so, it will be very difficult for the marketer to achieve his
marketing objectives. The place and time requirement, however, is possible if
the appropriate marketing channels are used.
This lesson presents the marketing channel as a means to help the marketer
realize his marketing goals.
The Nature and Functions of Marketing Channels
Products are really meant to be sold to buyers. This is possible if the products
are able to reach the customers. The firm must devise some means to bring
the product to the customers. The gap between the firm and its customers
must be closed by a facilitating tool called marketing channels.
Marketing channels are human creations and they may be designed and
structured to serve the needs of the user.
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Marketing Channel Defined
- May be defined as a set of interdependent organizations and
individuals that facilitate the movement and transfer of ownership of
commodities from the producers to the ultimate users.
Functions of the Marketing Channels
Marketing channels play an important role in the marketing of goods and
services. Specifically, they perform the following functions:
1. They routinize decisions and work;
2. They finance the process for moving goods from the producers to the
consumers;
3. They are active participants in the pricing process’
4. They serve as a channel of communication between the
producers and the consumers’
5. They assist in the promotional aspects of marketing; and 6.
They minimize the number of transactions in the system.
Routinization of Decisions- The marketing channel provides the
manufacturers with a much reduced number of people to contact when
transactions are made.
Financing- When manufacturers sell directly to consumers, they may have to
reckon with the financing of the following:
1. Sales calls to prospective customers;
2. Purchase of selling equipment;
3. Construction of display stores;
4. Extension of credit to customers; and
5. Training of retail salespersons
The manufacturer may not be in a financial position to handle these activities,
especially if it is undertaken on a nationwide scale. The distributor performs
these functions which, in effect, relieves the manufacturer from financing such
activities.
Pricing- the difficulty of pricing one’s products is aggravated by lack of direct
contact with consumers, especially if they are scattered throughout a wide
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area of concern. The distributor directly deals with the consumers and can
provide important information regarding the setting of a realistic factory price.
Channels of Communication- The changing requirements of users are
oftentimes relayed to the distributor, Individual buyers, for instance, may
inform the retailer that they will be buying next season only items with new
designs. This information will be relayed by the distributor to the
manufacturer. The distributor, in effect, is acting as a channel of distribution.
Assistance in Promotional Activities- When the distributor attempts to
increase his sales by promoting his products, he is actually complementing
the promotional activities of the manufacturer. For example, a certain retailer
gives free items to buyers every time a particular brand of soap is purchased
from his store.
Minimization of Number of Transactions- The distributor plays an
important role in minimizing the number of transactions within the system.
Types of Marketing Channels
Marketing channels consist of two basic types:
1. Consumer channels
2. Industrial channels
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Source: https://courses.lumenlearning.com
Consumer Channels- are those that are used in the distribution of consumer
goods. As shown in the figure above, Direct channel is a direct distribution
channel. This is an arrangement where the producer sells his goods or
services directly to the consumers. Examples of these are the “bibingka”
vendor (who is also the producer), the TV company (which directly sells its
services to televiewers), and the chicken farmer (who sells his products directly
to the consumers).
Retail channel- is that type where one middleman interposes between the
producer and the consumer. Recording companies market their CDs and
VCDs using this type of channel. These companies deal with music shops
which directly sell their products to consumers.
Wholesale channel- is that type of channel where the wholesaler and the
retailer provide linkage between the producer and the consumer. Groceries,
cement, and noodles are examples of products that pass through this type of
channel.
Agent channel is that type of channel where an agent apart from the
wholesaler and the retailer provides linkage between the producer and the
consumer. Examples of products which pass through this type of channel are
candies and canned goods.
Industrial Channels- are those which are used in the distribution of
industrial goods. As shown in figure below, they consist of three types:
Source: Consumer-and-business-marketing-channels.html
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1. The manufacturer selling directly to the industrial users- An example is
the manufacturer of trucks and buses in Japan directly selling to bus
companies like Victory Liner.
2. The manufacturer assigning industrial distributors which sells directly
to industrial buyers. An example is the spare parts manufacturers who
sells to industrial distributors in Metro Manila who, in turn, sell to
jeepney operator.
3. The manufacturer dealing with agents who call on industrial users.
Universities are oftentimes called on by agents who sell books published
by well-known firms.
Evaluating the Prospective Channel Member
The list of channel alternatives is really an enumeration of distributors
with possibilities of serving the company as middlemen. The list must be
trimmed down to the exact number of middlemen required. This can be
achieved through careful and objective evaluation of the prospects.
A set of criteria that may be useful in evaluating a channel is as follows:
1. Credit and financial condition of the distributor
- A review of the credit performance and the financial statements will
provide a clue as to the desirability of selecting the prospective
distributor.
2. Sales strength
- This refers to the sales capacity of the prospective distributor and is
indicated by the quality, the actual number and the technical
competence of the salespeople.
3. Product lines
- Determining the types of products carried by the prospective
distributor will reveal whether the sales objectives of the firm can be
expected.
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4. Reputation
- This is a very important requirement in determining the possibility of
profitable relationship.
5. Market coverage
- The market covered by the prospective distributor must be the market
coverage desired by the manufacturer.
6. Sales performance
- The prospective distributor must be able to show satisfactory sales
performance. This is indicated by sales volume.
7. Management succession
- A prospective distributor who has a qualified person to succeed him in
case of a need for replacement is a plus factor in evaluation.
8. Management ability
- When the quality of management of a distributorship is poor, it is not
worth considering the prospect.
9. Attitude
- If the prospective distributor has the right attitude, the possibility of
longterm success in handling by the manufacturer’s product is
possible. This is indicated by the distributor’s aggressiveness,
enthusiasm, and initiative.
10. Size
- When the prospective distributor is into large-scale operations, larger sales
volume for the manufacturer’s products is possible. Large firms usually
employ more salesperson, have better equipment offices, personnel, and
facilities.
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Factors that Influence Channel Selection
There are several factors that influence the selection of a channel.
They are the following:
1. The nature of the product
- It will determine which channel of distribution is best suited.
Highly expensive products like ships and airplanes, for instance,
require more direct dealing with users.
2. The nature of the market
- It is also an important consideration. Buyers of detergent soaps,
for instance, are scattered throughout the country, so the
manufacturer will have to choose a channel that will serve this
particular market.
3. The nature of the company
- The size of the company and its organizational set-up will also be a
factor in selecting a channel. Large companies can afford to
adapt even a multichannel approach in its distribution activities.
Supply Chain
- Is the network of all the individuals, organizations, resources,
activities, and technology involved in the creation and sale of a
product. The chain starts from the delivery of materials from the
supplier to the manufacturer, to the eventual delivery of the finished
product to its user.
The supply chain segment involved in the delivery of the product from the
manufacturer to the consumer is known as the distribution channel.
Wholesaling and Retailing
1. Wholesaling- is the sale of goods for resale. Wholesaling is an important
product
distribution
function.
Without
wholesalers,
product
manufacturers would have to deliver goods directly to retailers.
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2. Retailing- Is defined as the sale of goods/services to the final customer
for his personal consumption. Typical examples of retailing
establishments are drug stores, sari-sari stores, restaurants, movie
houses, convenience stores and supermarkets.
Types of Distributorships
1. Online resellers- Companies like Shopee exist to serve as Internetbased distribution points for a number of manufacturers and dealers
especially as online buying is steadily growing in the local market. In theory, it
should be easy for any business to set up its own online store. In actual
practice, it may make better sense to avail the service of online resellers
because these can take care of the marketing, are already well entrenched,
have a large base of users, and would likely have well-tested online payment
options that would be difficult for smaller enterprises to set up on their own.
The downside? Online resellers may demand for quite a bit of margin from the
suppliers.
2. Wholesalers- these buy your products in bulk, typically taking
ownership and therefore transferring the risks involved with ownership into
their hands. In exchange, wholesalers ask for territorial exclusivity and long
credit terms, allowing them to practically make money without having to have
an initial outlay.
3. Company sales force- in-house sales teams may be manageable
when lean, such as when a firm is just starting up. But complexity can
escalate quickly as the team grows in number. A sales force works best when
there is order and discipline among the ranks. There should be clear roles and
mission orders for everyone along with its corresponding incentives and
penalties that is stated clearly. Otherwise, it is easy for the teams to devolve
into idle individuals with no motivation to pursue their targets.
4. Value-added Resellers (VARs)- these are firms that put together
products from different suppliers in order to come up with systems or solutions
that appeal to markets with specific needs. A VAR serves as a sort of one-stop
shop and firms that supply to VARs hope to become exclusive suppliers for
particular systems components. VARs are very common in the technology
industries where solutions to complex problems often require mix-and-match
methodologies.
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5. Professional sales agencies- if you cannot set up your own sales
team, then perhaps you can get a sales team that is for hire. Professional sales
organizations take on the selling of products in exchange for commission
schemes. These organizations ask for, at the least, 20% of SRP as their
revenue share. The advantage of these agencies is that their sales
organizations are already in place so it is just nearly a matter of plug-and-play
for the firm.
6. Specialty dealers- these are distributors that specialize in either
particular products categories or in the specialized needs of very distinct target
markets. The more specialized the store, the higher the margins that it can
charge. But it is also expected to have highly trained and highly educated staff
who can easily answer customer queries.
Distribution Strategies
Decisions must be made by the firm on how broadly or narrowly its
products will be distributed. This will determine the number of
intermediaries that will be tapped.
Distribution strategies consist of three types:
1. Intensive distribution
- Is a strategy that requires the firm to sell its product through every
available outlet in a market where a consumer might reasonably try
to find them. Intensive distribution is applicable to convenience
goods like groceries, and softdrinks. When the consumer feels a need
for a convenience good, it must be satisfied immediately and the
product that is readily available has the advantage of getting sold.
2. Selective distribution
- Is selling through only those outlets which will give the product special
attention. This strategy decreases the number of outlets who will
carry the product. Selective distribution is used for purposes like
avoiding making sales to middlemen with any of the characteristics
as follows:
1. Poor credit rating;
2. A reputation for making too many returns or requesting too much
services;
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3. 3. Place orders that are too small to justify making calls or service;
and
4. Are not in a position to perform satisfactorily.
3. Exclusive distribution
- Agreement is one where the producer grants exclusive selling right to a
middlemen in a certain area. In return, the middleman is required to
carry all the producer’s products. Exclusive distribution is applicable
to specialty products or services like automobiles and expensive
watches. The agreement is designed to help control prices and the
service offered in a channel.
Supply Chain- Is the network of all the individuals, organizations, resources,
activities, and technology involved in the creation and sale of a product. The
chain starts from the delivery of materials from the supplier to the
manufacturer, to the eventual delivery of the finished product to its user.
The supply chain segment involved in the delivery of the product from
the manufacturer to the consumer is known as the distribution channel.
Activity 2.
Directions: Read the following questions carefully. Your answers will be
evaluated using the rubrics shown below.
Many products are now being sold online because of the global pandemic
(COVID-19). Name three products that you believe should never be bought
online but in a real store. Explain why?
a.
b.
c.
Explain why fine dining establishments must have very high markups over the
cost of their foods. Is it possible to be a low-priced fine dining establishment?
_____________________________________________________________________________
_________________________________________________.
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Grading Rubric (25 points)
Criteria
10 points
8 points
5 points
Explanation
A complete
response with
a detailed
explanation
Demonstrated
Knowledge
Response
Response
Shows
Shows
shows some
shows a
complete
substantial
understanding understanding understanding complete lack
of the problem
of
of the
of the
questions,
problem,
understanding
ideas and
processes
Requirements
Good solid
Explanation is
response with
unclear
clear
explanation
2 points
ideas, and
processes
Misses key
points
for the
problem
Meets the
Goes beyond
Hardly meets Does not meet
requirements
the
the
the
of
the
problem
requirements
requirements requirements
of the problem
of the problem of the problem
TOTAL
23
POINTS
Module 7
Promotion and Different Promotional Tools
Marketing is often equated with advertising. But as you hopefully know by
now, advertising and promotions in general are just part of the marketing mix
In fact, promotions is the fourth P’s of marketing mix, and covers matters
such as advertising, sales promotions, personal selling, public relations
strategies. In short, these are the most direct communication elements
available to a marketer.
Advertising and promotions constitute the overt forms of communication for a
product that involve the use of various media to deliver messages to the
market in order to achieve business objectives. Because different kinds of
media may be employed in order to push a message to consumers, the
portfolio of media is referred to as the promotions mix.
Traditionally, the promotions mix was composed of advertising, sales
promotions, public relations, and personal selling. Today, however, the
promotions mix, has been updated in order to reflect new realities in the
communications environment.
Today’s promotions mix consists of above-the-line communications, which
refer to the traditional mass media vehicles of print, radio and television, and
belowthe-line communications, which refer to more targeted, smaller scale
executions including the use of social media. Increasingly, many campaigns
now combine the two in what is called through-the-line communications,
often involving the use of mass media to encourage consumers to visit belowthe-line channels.
The purpose of promotions is to elicit a change in behavior. Of course, getting
people to buy your product, when previously they did not, constitutes a
change in behavior. But he behavioral objective need not be this abrupt.
Often, consumers first need to be primed in order to allow them to collect
positive feelings toward the product, before finally getting them to actually
purchase it.
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Promotion- it is an activities or a series of activities that are intended to boost
the sales of a product or service, usually short-term.
Two types of Promotions
1. Trade promotions- are intended for marketing intermediaries such as
retailers. The purpose of trade promotions is to encourage the
intermediaries to increase purchases, to stock a particular product, to
accelerate purchases
or payments for purchases, or to extend preference towards a particular
brand.
Examples of trade promotions are 10+1 ( if a retailer orders ten cases of
a product, the manufacturer delivers 11 case but does not charge for
the extra case), giving retailers free store signages to carry a specific
product brand, and contests among participating retailers. Trade
promotions “push” products to the retailers or trade outlet.
2. Consumer promotions- are intended for consumers. The purpose of
consumer promotions is to induce product trial, encourage brand
switching, or reward consumer patronage.
Advertising- may be defined as any paid form of non-personal presentation
and promotion of ideas, goods, or services, by an identified sponsor.
Brand awareness- is the extent to which consumers are familiar with the
distinctive qualities or image of a particular brand of goods or services.
Types of Media and Techniques Used in Advertising
1. Radio- a viable advertising vehicle in the Philippines since 1922, radio
is the most accessible media. Philippines radio stations broadcast in
either the AM or FM brands, with AM stations broadcasting mostly talk,
news, or opinion programs On the other hand, FM stations primarily
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broadcast music, with each radio station specializing on a particular
type, such as classical, hip-hop, rock, or pop.
2. Newspapers- newspapers circulating in the Philippines constitute one of
the most viable media for advertising, if the advertiser would like to
reach a great number of urban dwellers and a wide variety of audience.
Unlike the other types of media, a lot of advertising information can be
accommodated in a small newspaper advertising space.
3. Consumer Magazines- are purchased by certain types of buyers
depending on the nature of the magazine. Metro magazine, for instance,
are read by young professionals and those with sufficient income to be
able to afford its high-end price.
Among the advantages of magazines are:
a. It can be passed on to other readers
b. Its low cost of advertising per thousand of prospects reached
c. It reaches a specialized audience.
4. Television- provides a powerful combination of visual and audio effects
to the audience. Just imagine the difference between a live radio
broadcast and a live telecast of a boxing spectacle like that of Manny
Pacquiao.
Television’s main disadvantages, however, are the high costs involved,
and the limited information format (a TV ad, like the radio ad must not
be longer than 60 seconds).
5. Outdoor Advertising- consists of posters, painted bulletins, and
spectaculars. Posters are the least costly, while spectaculars are the
most expensive. A very important aspect of outdoor advertising is the
choice of location where visibility is a must.
6. Direct Mail- is the most selective of all media forms. It reaches only the
individuals and organizations the advertiser wishes to contact. Direct
mail contains information which may be in the form of postcards,
letters, leaflets, folders, booklets or catalogs. The disadvantage of direct
mail is that costs are high per prospect reached.
7. Cable TV- are those which are attached to subscribers homes to the
exclusion of all others. As subscribers belong to a specialized group,
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cable TV can be useful in advertising special products. The main
drawback of Cable TV, however, is its limited coverage.
8. Yellow Pages- The yellow pages of directories (like the telephone
directory) are widely used by national and local advertisers. This
medium is especially useful to buyers who have already made a decision
to buy products or services but do not know where to buy them.
The cost per advertisement page is low compared to other media Its
main disadvantage, however, is that it is a passive form of advertising
and the message is dormant until the prospect lifts the pages of the
directory.
9. Transit advertising- consists of those that appear inside and outside of
buses. It is less costly but it is also less discriminating. It can be read by
just any other person, prospects and non-prospects.
10. Point-of-Purchase- refers to those appearing in outlets where goods are
sold. They are most often used by national advertisers for the purpose
of selling their goods through retail outlet. Point-of-purchase advertising
is varied in terms of material, size, construction, and design.
11. Internet- is a global network of networks linking millions of users and
as such, offers many possibilities for the advertiser. Many companies
have already put up their own home pages which serve as a form of
advertising that the audience seeks.
12. Cellphones- are tools of electronic communication using two forms: the
spoken word and the text (or Short Messaging Service). The SMS is
currently used by some firms to advertise their products such as movies
and entertainment. The cellphone is an inexpensive medium for
advertising, but it cannot select its audience.
Public Relations
- Is a form of promotion designed to favorably influence attitudes toward
an organization, its products, and its policies. The purpose of public
relations is to build or maintain a favorable image for an organization
with its customers, prospects, stockholders, employees, labor
unions, the local community, and the government.
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Public relations consist of two components: publicity and public affairs.
Publicity- is the generation of news about a person, product, or organization
that appears in broadcast or electronic media. It is usually achieved by
planting commercially significant news about the product or service in a
published medium or obtaining favorable presentation of the product or
service upon radio, television, or stage. Publicity is most often used in
promoting a film and its star, or a new record release and its singer.
Forms of Publicity
1. News release- is a brief memo or report containing news information,
such as the announcement of a new product, or change in management.
The purpose of news release is to inform a newspaper, radio station, or
other medium, of an idea for a story.
2. Press agentry- is the planning and staging of an event in order to
generate publicity The tools of press agentry are:
a. Press kits- which contains information about the event and key
information for publication in news stories. These may include product
samples, background information and product brochures, and other
information that will help the newswriter in writing an article about the
event or the organization.
b. Speaker’s bureaus- which are actually listing of company officials who
will speak at civic and industry events.
Public Affairs- is that part of public relations that deals with community
groups.
Two types of Public Affairs
a. Lobbying- is the attempt to persuade a government official or
governing body to adopt policies, procedures, or legislation in favor of
the lobbying group or organization.
b. Community involvement- is that type of public affairs which
undertakes company participation in community activities like
sponsoring a sports event, a musical show, or scholarship programs.
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Sales Promotion- is a short-term inducement of value offered to arouse
interest in buying a good or service. It is offered to the middleman or to the
final consumer.
Sales Promotion Methods
1. Consumer
sales promotion- techniques encourage or stimulate
consumers to patronize a specific retailer or to try a new product.
Trade sales promotion- stimulates wholesalers and retailers to carry a firm’s
product and to sell it aggressively
Activity No. 3:
Write PROMOTION if the statement is TRUE, and write ADVERTISING if it is
FALSE. Write the correct answer on the blank provided at the left side of the
paper.
_____________1. Advertising is one of the means used to motivate people to
patronize
a certain product.
_____________2. Direct-mail consists of those that appears inside and outside
the
buses.
_____________3. Public relations consist of two components; publicity and
public
affairs.
_____________4. Public affairs is most often used in promoting a film and its
star, or
a new record release and its singer.
_____________5. Posters are the least costly, while spectaculars are the most
expensive.
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Module 8:
Managing the Marketing Effort
The Marketing Process
The MARKETING PROCESS is the process of discovering unfilled
customers needs. It involves identifying opportunities, target market, designing
and planning market strategies and programs and organizing, implementing,
monitoring and controlling the result.
THE MARKETING PROCESS:
1.
2.
3.
4.
5.
Analyzing marketing opportunity
Selecting target analysis
Designing Marketing Strategies
Planning Marketing Programs
Organizing, Implementing and Controlling the Marketing Effort
To be successful in any business, the company must look closely to the
environment and market. On the other hand, constraint are those factors
that will reduce profit or limit the expansion of the business. In order to
evaluate the opportunities and constraint SWOT Analysis (strength,
weaknesses, opportunities and threats) is to be conducted. SWOT analysis
is a managerial tool to assess the environment. Strength and weaknesses
are internal in an organization. While opportunities and threats exest in
the external environment. Designing Marketing Strategies
After selecting the target market, Metro Corporation must select the
marketing strategies to employ. These are selected with the objective of
increasing awareness, revenue and profits. The selected strategies can be
applied during the product’s introduction into the market.
Marketing strategies can be defined as comprehensive programs of action
involving the use of organizational resources to achieve marketing objectives.
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Planning of Marketing Programs
The planning of marketing programs involve developing and implementing
action plans or tactics under each strategy. Action plans or tactics
conventionally use the marketing mix as the foundation of implementation.
Place variables may also be involved. The company may decide to utilize its
existing distribution network (coverage), but include the use of independently
owned local dealers (channels) who shall be responsible for stocking the
product inventory to service various product retailers and eliminate stock outs.
The fourth P (promotion) assumes a major role in the implementation of the
company’s market penetration strategy. Product advertising (advertising) may
be released and broadcast in advance to create and sustain new product
awareness. There will be product sampling (consumer promotion) during the
first three weeks of the product launch. A social media account will be created
(social networking) to harness the influence of the internet on the new
products target market.
Separate budgets would be allocated to these marketing mix variables.
These are limitless possible combinations and budgetary allocations for each
marketing mix variables. To a large extent the success of the company’s
marketing program would depend on the proper selection of the variables to be
used and the financial support extended to each of the variable.
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Activity No. 4
Fill in the blanks by choosing the appropriate word or group of words in the
box. Writer the correct answer on the space provided before the number.
Competition
Publics
Marketing Efforts
Suppliers
Action Plan
Marketing Plan
Brand
Customer
Opportunities
Durable goods
Target Market
Marketing Process
__________1. A person or organization that buys goods or services.
__________2. This are important in order to anticipate societal expectations.
__________3. A perceptual map can be used to determine the specific segement
it should target, in somparison to existing competitors.
__________4. A new product’s competitive position in the market can be
determines through the use of marketing tools.
__________5. A document describing the current market position of a business
and strategies designed to accomplish its objectives.
__________6. A series of steps that allow organizations to identify customer
problems.
__________7. Conventionally use the marketing mix as the foundation of
implementation.
__________8. The resources a company dedicates to promoting its products and
services.
__________9. To provide necessary raw materials at the required quantity, price
and time should also be considered.
__________10. It may emerge from the increasing consumer disposable income.
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Module 9:
Marketing Planning and Control
The Importance of Marketing Planning
Planning is useful in the performance of the various activities of the
manager especially marketing managers. As the manager must plan, direct
and control, he must do them in succession and not simultaneously.
Managers make decision to solve problems which consist of two types: (1)
those that can be anticipated and (2) those that come out nowhere. The
problem solving approach is the concern of planning and a number of this
type of difficulties is partly solved by the marketing plan.
What is Planning?
Planning in general, refers to the selection and sequential ordering of tasks
that are required to achieve an organizational goal.
It is the process of determining department (or unit) objectives and selecting a
future courses of action to accomplish them
The Planning Process
The typical planning cycle has five phases. They are the following:
1. Establishment of objectives or goals
2. Development of premises
3. Decision making 4. Implementation of the chosen course of action; and
5. Evaluation of result
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The Flow Model of the Marketing Planning Procedure
Marketing Planning
Marketing planning as distinguished from the overall company planning
as well as planning in the other functional areas, deals with the development
of alternative’s program within the scope of the firms product/ market mix. It
seeks to provide the following types of information.
1. A product portfolio; and
2. The perspectives of different products/ markets included in the portfolio.
One of the goals of marketing planning is “the production of the marketing
plan.
The Marketing Plan
The marketing plan is a written statement identifying the target market,
specific marketing goals of the firm, the budget and timing for the marketing
program.
The Contents of the Marketing Plan
In general marketing plans must, at least, contain the following
1. Market review ( or situational analysis);
2. Problems and opportunities;
3. Marketing objectives; and
34
4. Marketing strategy
Market Review
The market review section presents development In the market
especially those related to the past year.
Depending on the nature of the company and its product the following
will have to be included in the market review section:
1. A detailed description of the market including forecast of the market
growth;
2. The competitive position of the company;
3. A detailed description of the consumers including buying habits and
preferences.
4. A description of dealers, distributors and brokers;
5. Advertising, history of the company’s brand and the competition; and
6. Sales promotion activities of the company and the competition Problems
and Opportunities
The market review section once finished will provide clues to the
marketing problems and opportunities.
This section is subdivided into the following parts:
1.
Marketing problems that need to be corrected
2. Marketing opportunities that can be exploited; and
3. Conclusions.
Marketing Objectives
This section indicates what the firm hopes to achieve in the light of
problems and opportunities presented in the preceding section.
Marketing Strategy
The marketing strategy is a statement that indicates where the majors
resources of the company should be directed in order to achieve the objectives.
What is Marketing Control
A marketing plan is expected to be implemented and there is a need to
monitor progress from time to time. Effective monitoring , which is part of the
control system can identify deficiencies and deviations and this will pave the
way for corrective action.
35
The Marketing Control Process
The marketing control process consists of the following steps
1. Setting standard;
2. Measuring performance and reporting deviations;
3. Doing causal analysis to determine why deviations have occurred;
and
4. Taking corrective action.
Setting Standards
Standards are those by which marketing performance will be measured.
The standard refers to the value used as a point of references for comparing
other values such as those that have been achieved by the marketing
department.
Causal Analysis
These are times when deviations from the planned result occur.
Corrective action
Deviations from standard have the potential of causing increasing
damage to the firm as long as they are not corrected.
Approaches to Marketing Control
There are several approaches to marketing control. These are as follows.
1. Sales analysis
2. Market share analysis
3. Sales to expense ratios
4. Attitude tracking
5. Profitability analysis by product, territory, market segment, trade channel,
and order size; and
6. Marketing audit
Sales Analysis
Sales analysis refers to a detailed breakdown of the company’s sales
record. The actual sales performance is compared with the target sales.
Market Share Analysis
A useful analytical tool to measure competitive performance in
marketing is market share analysis. A company’s share of the market
indicates how strong the company is when compared with competitors.
36
Sales to Expense Analysis
A certain percentage of expense over sales is usually maintained by the
firm. If this ration goes up compared with the previous years, it could be an
indication of a need for corrective action.
Attitude Tracking
The attitude of customer comprises a very important concern for the
company. If there is an unfavourable change, or even a tendency, it may
seriously affect the marketing performance of the firm.
Marketing Audit
The marketing audit must include an investigation of six separate
components which are follows:
1. Marketing environment
2. Marketing Strategy
3. Marketing Organization
4. Marketing Systems
5. Marketing Productivity
6. Marketing Function
Activity 5.
Direction: Choose the letter of the correct answer. Write the letter that
correspond to your answer on a separate sheet of paper.
1. This is a total evaluation program for marketing effort.
a. Marketing Audit
b. Marketing Function
c. Marketing Organization
d. Marketing Strategy
2. The “advance work” in the strategic management process is comprised of
a. Strategic analysis
b. Strategy formulation
c. Strategy implementation
d. Strategic posturing
37
3. Which of these requires a firm to establish annual objectives, devise,
policies and allocate resources?
a. Strategy evaluation
b. Strategy formulation
c. Strategy implementation
d. Strategy manipulation
4. The term _____ is used to refer to strategy formulation, implementation and
evaluation with _____ reffering only to strategy formulation.
a. Assessment, Planning
b. Management Cycle; brainstorming
c. Strategic management ; strategic planning
d. Strategic planning ; strategic management
5. It refers to the selection and sequential ordering of task that are required to
achieve an organizational goal.
a. Market review
b. Marketing Strategy
c. Planning
d. Sales Analysis
6._____ are the individuals who are most responsible for the success or failure
of an organization.
a. Consultants
b. Ethics officers
c. Operatives
d. strategies
38
7. A marketing department that promises delivery quicker than the production
department ability to produce is an example of a lack of understanding of the
a. interrelationship among functional areas and firm strategies
b. need to maintain the reputation of the company
c. organizational culture and leadership
d. synergy of the business units
8.
All of these are pitfalls an organization should avoid in strategic
planning except.
a. Failing to involve key employees in all phases of planning
b. Hastily moving from mission development to strategy formulation
c. Using plans as a standard for measuring performance
d. Using strategic planning to gain control over decisions and resources.
9.
The two most critical questions that strategy must address are how a
company will achieve its objectives today, when other firms may be computing
to satisfy the same customers needs and how the firm plans to compete in the
future
a. Business
b. Corporate
c. Functional
d. operational
10. Which of the following statements regarding strategy formulation and
strategy implementation is the most accurate?
a. Neither strategy formulation, non strategy implementation can
success without the other.
b. Neither strategy formulation, nor strategy implantation can have a
significant impact on firm performance.
c. Strategy formulation is more important that strategy implementation
d.Strategy implementation is more important than strategy formulation
39