Chapter 1: Marketing Principles and Strategies

'Marketing is so basic that it cannot be considered as separate function. It is the whole

business seen from the point of view of its final result, that is, from the customer's point of view'.
- Peter Ducker

Marketing is indeed an ancient art; it has been practiced in one form or the other, since the
days of Adam and Eve. Today, it has become the most vital function in the world of business.
Marketing is the business function that identifies unfulfilled needs and wants, define and measures
their magnitude, determines which target market the organization can best serve, decides on
appropriate products, services and programmers to serve these markets, and calls upon everyone
in the organization to think and serve the customer. Marketing is the force that harnesses a nation's
industrial capacity to meet the society's material wants. It uplifts the standard of living of people in
society.

Definitions and terminology

There are as many definitions of marketing as many scholars or writers in this field. It has
been defined in various ways by different writers. There are varying perceptions and viewpoints on
the meaning and content of marketing. Some important definitions are:
 Marketing is a social and managerial process by which individuals and groups obtain what
they need and want through creating, offering and exchanging products of value with
others.
 Marketing is the process by which an organization relates creatively, productively and
profitably to the market place.
 Marketing is the art of creating and satisfying customers at profit.
 Marketing is getting the right goods and services to the right people at the right places at
the right time at the right price with the right communication and promotion.
 Much of marketing is concerned with the problem of profitably disposing what is produced.
 Marketing is the phenomenon brought about by the pressures of mass production and
increased spending power.
 Marketing is the performance of business activities that direct the flow of goods and
services from the producer to the customer.
 Marketing is the economic process by which goods and services are exchanged between the
maker and the user and their values determined in terms of money prices.
 Marketing is designed to bring about desired exchanges with target audiences for the
purpose of mutual gain.
 Marketing activities are concerned with the demand stimulating and demand fulfilling
efforts of the enterprise.
 Marketing is the function that adjusts an organization’s offering tithe changing needs of the
market place.
 Marketing is a total system of interacting business activities designed to plan, promote, and
distribute need satisfying products and services to existing and potential customers.
 Marketing origination with the recognition of a need on the part of consumer and
termination with the satisfaction of that need byte delivery of a usable product at the right
time, at the right place, and at an acceptable price. The consumer is found both at the
beginning and at the end of the marketing process.
 Marketing is a view point, which looks at the entire business process as a highly integrated
effort to discovery, arouse and satisfy consumer needs. It is obvious from the above
definitions of marketing that marketing has-been viewed from different perspective. Now it
is imperative to discuss the important terms on which definition of marketing rests: needs,
wants, and demands; products; value, cost, and satisfaction; exchange, transactions and
relationships; markets; and marketers. These terms are also known as the core concepts in
marketing.

Needs, wants and demands

Marketing starts with the human needs and wants. People need food, air, water, clothing
and shelter to survive. They also have a strong desire for recreation, health, education, and other
services. They have strong performances for particular versions and brands of basic goods and
services.

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  A human need is a state of felt deprivation of some basic satisfaction. People require
food, clothing, shelter, safety, belonging, teem and a few other things for survival.
These needs are not created by their society or by marketers; they exist in the very
texture of human biology and the human condition.
 Wants are desires for specific satisfiers of these deeper needs. For example, one
needs food and wants a pizza, needs clothing and wants a Raymond shirt. These
needs are satisfied in different manners indifferent societies. While people needs
are few, their wants are unlimited.
o Human wants are continually shaped and reshaped by social forces and
institutions.
 Demands are wants for specific products that are backed up by an ability and
willingness to buy them. For example, many people want to buy luxury car but they
lack in purchasing power. Companies must therefore measure not only how many
people want their products, but, how many would actually be willing to buy and
finally able to buy it.

Products
People satisfy their needs and wants with products. Product can be defined as anything that
can be offered to someone to satisfy a need or want.

Markets
A market consists of all the potential customers sharing a particular need or want who
might be willing and able to engage in exchange to satisfy that need or want. The size of market
depends upon the number of persons who exhibit the need, have resources that interest others, and
are willing to offer these resources in exchange for what they want.

Marketing concepts

Firms vary in their perceptions about business, and their orientations in the market place.
This has led to the emergence of many different concepts of marketing. Marketing activities should
be carried out under some well-thought out philosophy of efficient, effective, and responsible
marketing

Traditional Approaches:

1. Production Concept:
It is one of the oldest concepts guiding sellers. The production concept holds that customers
will favor those products that are widely available and low in cost. Managers of production-
oriented organizations concentrate on achieving high production efficiency and wide distribution
coverage.

2. Product Concept:
The product concept holds that consumers will favor those products that offer quality or
performance. Managers in these product-oriented organizations focus their energy on making good
products and improving them over time. These managers assume that buyers admire well-made
product and can appraise product quality and performance. These managers are caught up in a love
affair with their product and fail to appreciate that the market may be less “turned on” and may
even be moving in different direction.

3. Selling Concept:
The selling concept holds that consumers, if left alone, will ordinarily not buy enough of the
organization’s products. The organization must therefore an aggressive selling and promotion
effort. The concept assumes that consumers typically show buying inertia or resistance and have to
be coaxed into buying more, and that the company has available a whole battery of effective selling
and promotion tools to stimulate more buying.

4. Marketing Concept:
The marketing concept holds that the key to achieving organizational goals consists in
determining the needs and wants of target markets and delivering the desired satisfactions more
effectively and efficiently than competitors.

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 Sales Orientation

Contemporary Approaches:
Kotler et al (Marketing Management, 13th Edition, and Pearson) has put contemporary
approaches in one term called 'Holistic Marketing', which includes relationship marketing,
integrated marketing, internal marketing, and performance marketing.

1. Relationship Marketing/Customer Relationship Marketing:

An integrated effort to identify, maintain, and buildup a network with individual consumers
and to continuously strengthen the network for the mutual benefit of both sides, through
interactive, individualized and value-added contacts over a long period of time. It aims to bring
profit through best possible customer service and building customer loyalty.

2. Business Marketing/Industrial Marketing:

Focuses on industrial goods or capital goods rather than consumer products or end
products.

3. Social Marketing:
The societal marketing concept holds that the organization’s task is to determine the needs,
wants, and interests of target markets and to deliver the desired satisfactions more effectively and
efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s
well-being. The societal marketing concept calls upon marketers to balance three considerations in
setting their marketing policies, namely, company profits, and consumer want satisfaction, and
public interest. Originally, companies based their marketing decisions largely on immediate
company profit calculations. Then they began to recognize the long-run importance of satisfying
consumer wants, and this introduced the marketing concept. Now they are beginning to factor in
society’s interests in their decision-making. The societal marketing concept calls for balancing all
three considerations. A number of companies have achieved notable sales and profit gains through
adopting and practicing the societal marketing concept.

Marketing Mix

The marketers deliver value to the customer basically through his market offer. He takes
care to see that the offer fulfils the needs of the customer. He also ensures that the customer
perceives the terms and conditions of the offer as more attractive vis-à-vis other competing offers.

Marketing Mix is the set of marketing tools that the firm uses to pursuits marketing
objectives in the target market. It is the sole vehicle for creating and delivering customer value. It
was James Colleton, a noted marketing expert, who coined the expression marketing mix and
described the marketing manager as mixer of ingredients. To quote him, “The marketing man is a
decider and an artist – a mixer of ingredients, who sometimes follow a recipe developed by others
and sometimes prepares his own recipe. And, sometimes he adapts his recipe to the ingredients
that are readily available and sometimes invents some new ingredients, or, experiments with
ingredients as no one else has tried before’. The dynamics of the marketing process and the
versatility of the marketing process and the versatility of the marketing mix tool cannot be
described any better.

1. Product
2. Price
3. Place (referring to distribution)
4. Promotion

• Product: The most basic marketing mix tool is product, which stands for the firm’s tangible offer
to the market including the product quality, design, variety features, branding, packaging, services,
warranties etc.

• Price: A critical marketing mix tool is price, namely, the amount of money that customers have to
pay for the product. It includes deciding on wholesale and retail prices, discounts, allowances, and

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credit terms. Price should be commensurate with the perceived value of the offer, or else buyer will
turn to competitors in choosing their products.

• Place: This marketing mix tool refers to distribution. It stands for various activities the company
undertakes to make the product easily available and accessible to target customers. It includes
deciding on identify, recruit, and link various middlemen and marketing facilitators so that
products are efficiently supplied tithe target market.

• Promotion: The fourth marketing mix tool, stands for the various activities the company
undertakes to communicate its products ‘merits and to persuade target customers to buy them. It
includes deciding on hire, train, and motivates salespeople to promote its products to middlemen
and other buyers. It also includes setting up communication and promotion programs consisting of
advertising, personal selling, sales promotion, and public relations.

Marketing mix or 4 Ps of marketing is the combination of a product, its price, distribution

and promotion. It must be designed by marketers in such a manner that these four elements
together must satisfy the needs of the organization’s target market, and at the same time, achieve
its marketing objectives.

Additional 3Ps

People: These are the employees, customers or those who are directly or indirectly involved in
consuming or producing the goods or services. For instance, the company may recruit or train staff
in delivering the goods or services it offers.

Physical evidence: This can be the facility design, equipment or signage. For example, when
walking in a hotel, a customer expects to find the premises clean, the place cozy and the staff
friendly.

Process: This is the flow of activities or steps and level of customers’ involvement. For example, a
customer can walk in fast food shop and order a hamburger and get it served within two minutes.

Chapter 2: Customer Relationship: Customer Service

Relationship marketing definition

 Integrated effort to identify, maintain, and buildup a network with individual consumers
and to continuously strengthen the network for the mutual benefit of both sides, through
interactive, individualized and value-added contacts over a long period of time".
 Marketing oriented toward strong, lasting relationships with individual accounts".
 The understanding, explanation and management of the ongoing collaborative business
relationship between suppliers and customers.
 A customer centered approach whereby a firm seeks long-term business relations with
prospective and existing customers.

What is Customer Relationship Management?

Customer Relationship Management (or CRM) is a phrase that describes how your business
interacts with your customers. Most people think of CRM as a system to capture information about
your customers. However, that is only part of the picture. CRM involves using technology to gather
the intelligence you need to provide improved support and services to your customers. In other
words, CRM is also about what you do with that information to better meet the needs of your
existing customers and identify new customers, resulting in higher profits for you.

THE CRM BUILDING BLOCKS:

 A database that collects information about your customers.
 A way to analyze the information in the database.
 A strategy for applying the analysis to better meet your clients’ needs and identify potential
customers.

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  Collecting data to ensure your strategy is effective

THE CHARACTERISTICS OF RELATIONSHIP MARKETING

RM is about healthy relationships which are characterized by concern, trust, commitment

and service.

Concern: Relationship marketers are concerned for the welfare of their customers. They want to
meet or, preferably exceed customer expectations, producing satisfaction or delight. Marketers can
to some degree mould expectations through mediated and interpersonal communications with
customers, but only in very rare circumstances is it likely that they will be able to determine
expectations.

Trust and commitment: Commitment and trust are 'key' because they encourage marketers to (i)
work at preserving relationship investments by cooperating with exchange partners, (ii) resist
attractive short-term alternatives in favour of the expected long-term benefits of staying with
existing partners, and (iii) view potentially high risk actions as being prudent because of the belief
that their partners will not act opportunistically. When commitment and trust – not just one or the
other - are present they produce outcomes that promote efficiency, productivity and effectiveness.
The challenge for RM managers is to demonstrate their commitment to the relationship and to
inculcate trust in their partner. In a service marketing context this can be particularly challenging
because of the relative absence of tangible clues, and because services cannot be examined before
they are produced or consumed.

Service: The outcome of this concern for customers, in an environment of relationship commitment
and trust, is a desire to provide excellent service. RM requires an organization-wide commitment to
providing high-quality service which is reliable, empathic and responsive. Since RM is a means to a
profitable end, relationship marketers must believe that excellent service produces improved
profitability. Further, the basic sequence: 'service quality leads to customer satisfaction which leads
to relationship strength, which leads to relationship longevity, which leads to customer relationship
profitability.'

Benefits of CRM

CRM is about making each and every customer feel like they have a one-to-one relationship
with you. Effective CRM gives you the opportunity to show your customers that:
 You know and recognize them.
 You understand them.
 You care about their needs, questions and concerns.
 You want to deliver services and products they need the most.
 You appreciate their business.

CRM will also benefit your company by allowing you to:

 Develop superior services and products that meet your customers’ identified needs.
 Enhance marketing towards the most profitable customers to improve your bottom line.
 Improve efficiency by providing support and services to customers online (through
frequently asked questions, for example).
 Anticipate future business needs based on data on historic sale and service trends.
 Increase your customer base as you develop new ways to engage in business online.

THE BOTTOM LINE:

CRM seeks to answer two questions:
1. Who are my customers?
2. How can I serve them better?

Type of Information Questions

• Who are they?
Customer profil • Are they a business or a person?
• Where are they located?
• If they are a business, how big are they?

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 • If they are a business, what do they do?
• Why do they need your product?
• How do they communicate with you?
• Do they have an account?
• How long have they been a customer?
• How often do they buy?
Customer buying profile • When do they buy?
• Is there a pattern to their buying habits (e.g.,
seasonal)?
• How much do they buy at one time? Over time
• What do they buy?
Customer buying preference • Do they always buy the same thing?
• Why do they buy it
• What kinds of problems/issues do they
Customer service profile encounter?
• What is the current status of their issues?
• How many open tickets are there?
• How many cases have been resolved

Building Value for You

By compiling this information and analyzing it, you can then build a strategy with this
information to:
 Maximize repeat business opportunities by anticipating your existing customers’ needs.
 Identify your best customers.
 Identify potential customers.
 Identify complementary products you can sell to your customers.
 Target marketing campaigns/materials and promotions

Building Value for the Customer

Other ideas on how you can use this information to increase your company’s perceived
value to the customer include:
 Make ordering or buying easier through pre-filled order forms and e-mail reminders.
 Tailor the shopping experience for your customers and allow self-service to reduce
customer wait times.
 Develop an e-newsletter or blog with topics that would be of interest to customers to earn
their loyalty.
 Quickly share updates and respond to comments/feedback from customers through social
media channels such as Twitter.
 Offer an online forum where customers can provide reviews and feedback; this also allows
you to hear about problems as they emerge and to respond quickly.
 Offer free products to your best customers.
 Offer incentives for additional or future purchases

IMPORTANT TIPS FOR SUCCESSFUL RELATIONSHIPMARKETING

For successful relationship marketing following steps may be considered.

1. Listen to customers. They'll tell you what they need from you if you'll just take the time to
listen and make them feel comfortable. If they don't volunteer information, ask questions to
uncover their problems and needs. Then, focus on solving problems or meeting needs
rather than selling them another product. They'll appreciate your interest and you will,
most likely, make a sale in the long run. And, even if you don't make an additional sale,
customers may refer you to someone else based on the excellent service you've provided
them.
2. Be honest. Don't try to sell something that's not needed. Likewise, if you can't fulfill
particular customer needs, tell them, and try to help them find someone who will. Your
helpfulness will be long remembered and those customers are more likely to come back to
you when they need your type of product or service again.
3. One relationship-building tactic is to "get in front of your customers" through the mail.

CUSTOMER LOYALTY

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 By creating value for your customers, you will earn their loyalty. An often-quoted statistic
states that it takes ten times the money and effort to attract a new customer than it does to retain
an existing one.

Chapter 3: Market Opportunity Analysis and Consumer Analysis

Strategic Marketing versus Tactical Marketing

Quite often, people confuse strategy and tactics and think the two terms are
interchangeable in strategic planning, but they’re not.

Strategy is the “what” part of the equation and helps you answer the question, “What are we
trying to accomplish?” Yet your business design may not be sustainable; you may have trade-offs
for how you position your business with customers and competitors.

Every business has limited resources and deals with a competitive landscape. The more it
does of one thing, the less it can do of another. This concept leads to tactics, or the “how” part of the
equation. Your tactics help you answer the question, “How are we going to accomplish our goal?”

Ultimately, a good way to think about the difference between the two is that strategy acts as
a guide to a set of actions that various departments or teams will undertake. The following figure
further illustrates the difference between strategy and tactics.

Example:

Goal:
Increase sales revenue by 25% by the End of the Year

Objectives
1. Increase Awareness of our website to Target Audience (TA) by 100% by the end of the year
2. Increase Repeat Purchases by 10% compared with last year

Example Strategy:
1. Engage Target Audience at key touch points in their day when receptive to brand messaging
2. Encourage Repeat Purchases from Existing Customers

Example Tactics:
1. Run TV ads targeted at TA in the middle of the day
Run Facebook Advertising at lunchtimes based around similar interests
Acquire Coverage in National Magazines targeted at TA using PR
Run Online Banner Advertising on XYZ sites targeted at TA in the evenings
Sponsor Local Sporting Events
Create content around the shopping & lifestyle needs of your customers

2. Email existing customers with referral % deal for new customers

Print vouchers added to all orders sent out this month
Competition: invite friends to enter mechanism (opt-in email data capture)

The Marketing Environment

There are two environment factors involved in marketing: microenvironment and

macroenvironment factors. Microenvironment refers to the internal factors that affect or
influence the company with regard to decision-making, strategies etc.

Macroenvironment refers to the external and uncontrollable factors that affect or

influence the decision of the company in similar aspects that affect the microenvironment.

The Microenvironment Explained

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 The microenvironment is a environment of internal factors or elements that have a direct
impact on an organization. These factors include:

1. The Company. Composed of the management itself, its departments and personnel that can
affect its organizational objectives and goals.

2. Suppliers. Refer to the people responsible to provide the goods and services necessary for
the company to carry out its business activities. They refer to the overall value delivery
system of materials needed in their operation.

3. Marketing Intermediaries. Act as “in between Channel” to the company and its consumers
by promoting, selling and distributing their products.

4. Customers. Refer to the different types of consumer group with whom the company can sell
its products.

5. Competitors. Individuals or group that affect the company’s sales or ability to sell its
products by providing greater customer value and satisfaction in the market place.

6. Public. Groups that have an actual interest in the company’s achievement of its goals.

The Macroenvironment Explained

Marcoenvironment is an environment of outside factors that affect a company’s decision-

making and strategies. This environment is composed of the following:

1. Demographic environment. Pertains to population characteristics, size, density and

location.

2. Economic environment. Pertains to customer expenditures affecting their income and

purchasing power.

3. Technological environment. Refers to inventions and innovations from applied science

and engineering research.

4. Natural environment. Pertains to any fortuitous event that is uncontrollable such as

natural calamities that may affect the market.

5. Political environment. Pertains to restriction and policies implemented by the government

affecting the business operations.
Marketing Research Defined

Marketing research is a process of defining a marketing problem and opportunity,

systematically collecting and analyzing information and recommending action to improve an
organization’s marketing activities (Berkowitz, Kerin, Hrley and Rudelius, 1999). It is the
company’s way of determining which product or services will be patronized by the different types
of consumers or demographics. For example, a market research can be used to determine which
kind of fruit drink will be accepted by a certain target market. Perhaps, powdered juice drinks may
be acceptable to people of the lower income group compared to fresh fruit juice drinks because of
the price difference. Fresh fruit juice sells at a higher price compared to powdered fruit juice drinks.
Or perhaps, determine why a company’s product is not saleable in an area, but saleable in another.
It can also tell how often does a consumer buys the product or avails of the services. It is also the
market research that can be the basis for a company to decide whether to continue producing all
selling the product or services, or to pull it out from the market. With market research, there is less
probability for the business to incur loss from the product or services it has invested in.

Stages of Marketing Research:

Identification of Identifying and

Information Solving Marketing
Needed Problems

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29 of Data
 Marketing research specifies the information that is necessary to address the issues,
managers and implements the data collection process and analyses the results, then finally
disseminates the results and findings.

Types of Research

1. Problem Identification Research. A research study that specialize on identifying

problems which are not necessary apparent on the surface and yet exist or are likely to
arise in the future.

Examples:
Market potential, market share, image, market characteristics, sales analysis,
forecasting, and trends research.

2. Problem Solving Research. A research study that solves specific marketing problems.
Examples:
Segmentation, product, pricing, promotion, and distribution research

Marketing research Process

1. Defining the Problem. A well-defined problem allows the researcher to have direction
and focus on the solution based on the information gathered. This first step is for the
marketing research team to identify what the problem is. This can be done thru
customer feedback, data from sales and previous reports, ect.

2. Developing the Approach of the Problem. A process where the researcher identifies
what kind of approach he would like to adopt. Exploratory research can be useful in this
step. Exploratory research is used by the marketers if the topic is not well understood
by them. This type of research intends to formulate the problem precisely, clarifies
ideas, finds explanations, gains insight, eliminates ideas or insight not useful, and forms
the hypothesis. The main purpose of this type of research is to gather whatever
information or insight so that an approach may be developed.

3. Formulating the Research Design. This is the master plan of the research a process
where the researcher confirms the study he wants to measure and intends to measure.
The creation of surveys and identification of the people who will participate in the
survey should be part of the design.

4. Collection of Data. The research gathers two types of data. The primary data is a
statistical data which is collected through surveys on demographics, opinions of
consumer, motives for buying the product, lifestyle characteristics, etc. this approach is
applicable for first time research study. Secondary data is a type of research where
data is gathered from complied sources like sales invoices, warranty cards and from
publications or published data.

5. Preparing and Analyzing Data. The process where the researcher interprets the
findings based on the published data.

6. Preparing and Presenting the Report. This is the final process of the marketing
research. The report should have been done and prepared in a comprehensible format,
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 so that the management of the company will be able to understand it. At the same time,
it will be easier for the company to use it for decision making process, especially if it is
aware that all the information contained in the report are based on facts.

To strengthen the data gathering, sustain the company’s relationship with the consumer.
Marketers consider the Customer Relationship Management (CRM) which is a widely used strategy
for managing company and customer relations and clientele interactions. The goal of this strategy is
to win prospective clients and maintain existing ones. CRM meets the changing expectations of
customers on social and demographic factors, economic situations, educational standards,
competitor’s products, and experiences and manages the unsatisfied customers.

With the aid of CRM, the management maintains a deeper understanding of the customers,
thereby providing a higher level of customer relationship.

Consumer and Business Markets

“Know thy consumer” is a philosophy in marketing. Every company that intends to make
good in business should focus on knowing who is customers are and who are to be considered its
customers. Ben Chan, the man behind Bench Company shared his thoughts on his company’s
success. He said, “Our customer spend more time in outdoor activities than resting and staying at
home. So you don’t expect me to sell my products on home media.” Based on this statement given
by a successful businessman, it is important for a company to have a “feel” or “pulse” about its
customers with regard to the way they behave on daily basis. Hence, it is justifiable to know the
segments of your market so you can identify who among these segments will be your target market.

The target market are the customer who buy or patronize a product or service. The term
customer or consumer is defined as a person who consumers, especially one that acquires goods
or services for direct use or ownership rather than for resale or use in production and
manufacturing (American Heritage Dictionary). Consumer are also called user segments,
segments, market and target market. More often, a company develops a group of segments aside
from its existing market and even encourages non-user segments to try and use its product.

The scenario given in the introduction proves that the company owner knows who his
customer are. The company was right to focus on outdoor advertising of its products through
billboards and other out of home advertising media. This is one way of really knowing very well the
target market in terms of customer behaviour.

Knowing your target market is one of the key factors for a company’s attainment of success.
A company that understand what a consumer prefers, especially in terms of price, type of product,
product features, ect., has a greater advantage in the market.

A target market cab be known thru the customers buying behaviour

1. Consumer behave in terms of buying situations. For example, the way a customer
behaves in a fast food restaurant is different from the way he or she will behave when in a
place for fine dining.

2. Changes may influence the behaviour of a customer. For example, if a customer is used to
shop in a particular boutique, and gets to being assisted by a sale person from the moment
he or she steps in the boutique, he or she will feel the change if it is not the same service he
or she is given when shopping in a different store.

3. Preference can also show a customer’s behaviour. For example, customer prefer to buy
baked products or goodies during the day, when the product have just come out of the oven
or really fresh. Others would prefer to buy between 6 to 8 pm, when the baked goods are
ready discounted.

Consumer behaviour refers to any action that a person takes in purchasing a product. By
studying the consumer behaviour, a company learns the different information it needs to know
about its target customer. This would include information why a certain customer buys a particular
product, or not. It will also help in determining the preferences of the customer, his reason for
buying the product, what product he buys, the place where he usually buy a product, etc.

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 Marketing is all about satisfying the needs and wants of a customer. But before it is able to
do so, it must be familiar with these concepts.

1. Needs. A state of felt deprivation; the basic human requirements.

2. Want. The form taken by human needs as shaped by culture and individual personality.
Wants are described of objects that will satisfy needs.
3. Demands. Human wants that are backed by buying power.

Consumer Behavior Influence

The buying behaviour of customers are influenced by the following:
1. Cultural Influences. These influences are composed of values, beliefs, or preference of one
person which can be handed over from generation to generation. It may be an influence said
to be so, but marketers need to understand and study the trend in terms of cultural values
because culture changes over time. For example, years back, the Filipino wife used to cook
and eat breakfast at home, not only to save but to spend time with the family. But time has
changed this practice. Due to economic reasons, a lot of wives are working nowadays, due to
time scarcity, Filipinos have adopted the US way of eating fast foods. Another example of
cultural influence is the Japanese people’s preference for products that can minimize space
use.

2. Social Influences. Every consumer belongs to a certain group. The group is able to establish
norms, status and role. Norms are the universal values, attitudes and beliefs that are
appropriately acceptable to a certain group. Status is the position of an individual member in
a certain group with defined position. For example, a person is thinking of buying a more
expensive car to fit his group’s preference.

3. Family Influences. This is the most important determinant in terms of consumer buying
behaviour because of the close interaction of the family members. For example, either of the
spouse may need to ask the other of his/her opinion regarding a product or good the other
decides to buy, even if the wife wants to buy a flat screen TV for their house, for instance, but
the husband might just buy an ordinary TV set. Or when passing by a food court, a teenager
may want to eat a coffee outlet famous for its waffles and cold coffee drinks, but because his
younger brother prefers to eat a fast food known for its crispy fried chicken and French fries,
his parents decide to eat there instead.

4. Psychological Influences.Products are bought according to the customer’s needs and

wants.

Psychological Influences Discussed

The buying behaviors of consumers may be influenced by psychological factors. A buyer
may decide to buy a product or avail of a service based on his perceptions of what his needs and
wants are. A person may choose to buy a shirt because he needs something to wear on an occasion
he is to attend, but his decision may be influenced by the color that he prefers, the price and the
quality of the product and not just need to buy a new one. The price of two shirts that he finds may
be both reasonable and that the quality of the cloth excellent, but he may have second thought
about the color of the shirt. He may choose the color that will suit the required motif for the
occasion, or a color that complements his skin. Or he may simply decide to buy the shirt of his
favourite color. These examples given are all considered psychological factors that affect a
consumer’s buying behaviour. This factors are further categorized into the following:
1. Motivation is an internal urge that drives a person to respond to a certain stimulus such as a
sales promotion activity in a store.
For example, the word “sale” is a motivating term for any shopper to grab the offer
outright.
2. Personality is a pattern of traits that an individual has that could affect her buying
behaviour.

For example, the color of a dress may affect the buying behaviour of a consumer,
defending on what she prefers. A dress may fit a customer well, but she may not but it if her
preferred color is not available.

3. Perception is what the consumer pictures and interprets in what is seen in a product. Every
product possesses a brand personality and image that are commonly perceived by
consumers every time they encounter the brand.
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 For example, a consumer may not even consider checking the products in a boutique
despite the goods being on sale, because the customer thinks that the sold in the boutique
are cheap in quality.

4. Learning individual changes in behaviour brought about by a personal experience.

For example, a lot of Filipinos go to Hong Kong with a personal knowledge that it is
the best place in the world to shop based on a past experience they hold. On the other hand,
others choose to shop in places such as Divisoria and Tutuban because of the low prices of
products, despite the unsafe environment and the traffic congestion in the area.

5. Brand loyalty can be achieved from repeated purchase or adoption of the product resulting
from positive trials.

For example, Michael Hill, a jeweller is known all around the world for producing
quality jewelry and watches.

6. Attitude and beliefs are any descriptive thought that a person has about a product. Attitude
is the particular feeling or evaluation of a person towards a product; beliefs is what a
consumer thinks about it.

For example, China is one of the largest producers of products in the world. But a lot
of people have this negate beliefs on the quality and durability of China products.
Nevertheless, majority prefer to believe that China prices are always affordable. Another
example is the belief in the quality of shoes made in Marikina.

7. Lifestyle refers to the way a person lives in a society and is expressed on how a particular
product fits his standard of living.

For example, Manila Polo Club and Lions Club are high society groups of social
organizations of people belonging to the upscale class. Since a person who belongs to this
environment is exposed to expensive things, his choice of products will also be affected, or
based on what he is accustomed to.

Role of the Spouse in Buying

According to Kurt and Boone (2007), the role of a spouse can be categorized into four types:
1. Automatic Role. Seen when the partners independently make equal numbers of decisions.
For example, buying a shampoo for both of the partners may not give them the
result they want, because a man needs to have a different kind of formula for his oily scalp,
and the wife for her dry frizzy hair
2. Husband-dominant Role.Occurs when the husband usually makes certain purchase
decisions
For example, the husband may decide for the brand and the color of the car he
wants to buy for his family.

3. Wife-dominant Role. Has the wife making most certain buying decisions
For example, in buying the groceries, small appliances in the house especially
kitchen appliances and tools, curtains, ect., it is the wife that decides most of the time.

4. Syntactic Role. Refers to joint decisions

For example, the purchase of a house follow the syncretism pattern which is the
combination or union of ideas or thought; in the case of buying, it is the decision regarding
which product to buy.

Stages of Consumer Purchase Decision Process

Buying a product is not always simple. Sometimes, the consumer may not be able to decide
what product to buy. Because of more than a handful of quality products available, coupled with
good promotion and discount offers, consumers are faced with complex decisions to make. Most of
the time, the process of buying has to be well thought –off so as to commit the error of buying a

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product that does not suit a customer’s need or want, taste, or other preferences. It is important to
note that not all decision process mean sales for the company or purchase for the buyer.

There are five stages to the consumer buying decision process that may be considered:

Consumer Purchase Decision Process Explained

Before a consumer is able to decide on what to buy, he goes thru the five (5) stages of the
decision process (Brown, 2008).

Stages Consumer Behavior

Problem Recognition Recognizing the need for the product due to
some psychological influences, or perceiving
whether the product is needed based on the
actual predicament
Information Search Scanning the environment and recalling an
experience the consumers had in using or
buying the product
Alternative decision Confirming as to when and where to buy the
product
Post Purchase Decision The feedback after purchasing the product

Four Types of Buying Behavior

1. Routine Response. This is a kind of buying behaviour that does not depend on a
thorough research because it is usually about buying products that are bought
frequently and are low priced. Examples include soft drinks, snack foods, milk, etc.

2. Limited Decision. A kind of behaviour that entails more research because the
consumer in this type may know what product he or she wants, but has no idea what
brand of product to consider. Examples of this are clothes, shoes, etc.

3. Extensive Decision. A type of behaviour in buying that needs more research or

information before deciding whether to purchase or not. The products involved here are
for more expensive than the first two behaviours and may involve psychological risks.
Examples are cars, computers, insurance, education, etc.

4. Impulse Buying. Unplanned buying behaviour involving a powerful urge to buying

something immediately. A lot of impulse decision are made at the checkout area and can
be on items such as candy, sodas, batteries, firm, etc.

Marketing Segmentation, Market Targeting and Market Positioning (STP)

The marketing arena is a broad playground; therefore, a marketing specialist must know
how to target its markets. As discussed in the previous chapter, a target market is the buyer or
consumer who is expected to buy a product or avail of a service offered by a company. The target
market is the specific group that has heterogeneous needs and wants. Every product is tailor-made
based on the profile of the customers. This is so because a company studies and identifies the needs
and wants of its target market, design the goods or strategy, then produces the goods and services
according to those needs. By targeting a market, the company saves money because it doesn’t have
to spend much on its marketing and promotion. Selecting the market based on its willingness,
desire and ability to acquire the product is a must.

For example, a company produces a bath soap that whitens the complexion say one that
contains papaya extract. This product, though available in the market for anyone to buy, will surely
catch the attention of women who would like to whiten their complexion. The type and size of
market will depend on the product’s price. If the product is expensive, the target market will be that
of A and B segments. If it is priced lower, then it will be able to capture the C and D market
segments or group.

Some companies develop a group of segments of the B, C, D, and E market by offering low
priced products. Taking the papaya soap for example, a company may produce a product that

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would cater to the male customers who would want their complexion lightened, too. Or produce a
papaya soap that would cater to children’s sensitive skin, or a germicidal soap for the whole family.

Segmentation

It is the process of defining and subdividing a large homogenous market into clearly
identifiable segments having similar needs, wants, or demand characteristics (business.com). by
dividing the market into segments, the company will be able to identify their actual and potential
target market that could give them the most profit.
How does one go about dividing a market into smaller groups? Are these strategies to use in
doing so?

To be effective, marketers must identify the needs and wants of the target market. It should
also be able to assure that the needs and wants of consumers in each market will be served. Kotler
(2010) stated that the target market can be divided in terms of:

1. Geographic Segmentation. Dividing the market into different geographical units, such
as nations, states, regions, countries, cities, or even neighbourhoods.

Example:

Offering products like sweaters or milk coats for nation situated in the tropical
regions would be a waste of time and money because it is very obvious that people who
live in those regions will not be availing of the product due to the climate they have.

2. Demographic Segmentation. Dividing the market into segments, based on variables

such as age, gender, family size, family life cycle, income, occupation, education, region,
race, generation, and nationality.

Example:

A company that sells floor polisher or vacuum cleaners would not be offering their
products to low-income groups. Though it does not follow that people from low-income
groups could not afford to buy the products, it will be a waste of time and money for the
company to invest much, yet get a low share in the market sales.

Another example are companies that manufacture baby diapers. If it focuses on an

area that has a small percentage of families with babies, the company can be expected to
be successful in its business.

3. Psychographic Segmentation. This is dividing the buyers based on social class,

lifestyle and personality characteristics.

Example:

A car manufacturer much know what type of car will bought by a particular
segments. High end cars and luxury ones will be for the upper income group. SUV’s and
other type which are not as high-end as the luxury cars will be offered to the other
income groups that can afford to buy such cars.
4. Behavioral Segmentation. This divides the market by consumer knowledge, attitude,
use or response to a product.

Example:

Christmas Season is a time when consumers respond heavily in terms of shopping. It

is expected that the sales of commodities like ham, clothing, fireworks, furniture,
gadgets, etc. will increase at this time of a year.

Kotler (2010) has identified the current trend in identifying the target Market Profile.
Target Market Profile

Gen X 18 to 35 years old

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Gen Y 17 below/high school teens
Skippies 12 below/kids
Beauty Seekers Young and adults in 40’s to 50’s who are into
active use of cosmetic products and beauty
enhancement, still vain and conscious of
being glamorous
Male Metrosexuals Straight guys who are conscious of their
looks, glamorous, and wear more cosmetics
than women
Dual Earners Family wherein both parents are working
Single Parent Independent provider for the family
Baby Boomers Born in early 60’s which are considered now
as a group of segments who are stable, who
have generated a lot of properties, with
successful careers, and having a high
purchasing power

Target Marketing

After knowing the market target segment, the next of the marketer is market targeting.
Market targeting is a broad term that is used to describe the process of identifying groups of
consumers who are highly expected to purchase a specific good or service. After the target market
has been divided into segments, marketers can now concentrate on which segment to focus on. This
does not mean that there would only be one segment; a few segments can be potential target
market.

Positioning

In marketing, positioning is the company’s move to create an image of its products in the
minds of the consumers. The product is well positioned if the consumer can remember what it is,
what its benefits are, etc. being well positioned it tantamount to sure sales. For example, if a
detergent powder has a good product positioning, just the mention of its brand or name will
already remind the public what it is popular for, say for bleaching or making clothes whiter and
stain-free. A particular shampoo that is remembered to control or reduce dandruff, a bath soap
known in just a few brushing are a few examples of products or brands that have attained a good
market position.

Exhibit 1: Positioning Examples

Below are examples of products that are classified according to their current positioning in
the market.
Brands Current Positioning
Anlene Milk supplement for women with osteoporosis
Anmum Milk supplement for pregnant women
Baygon For extermination of household pests
Off Lotion For protection from mosquitos and other insects
Safeguard For superior skin germ protection

Market positioning is not an easy process. It is actually considered by many as tricky. A

company must think of ways on how it can make the consumers perceive its product. If a product
was saleable for quite a period of time, and was threatened or affected by a new product entrant the
company may change the package, improve its product, lower its price, etc. to gain back or maintain
its position in the market.

Chapter 4: Developing the Marketing Mix

Marketing Mix: PRODUCT

In simple words, the term, “Product” means an article which satisfies our wants. It is defined
as a set of attributes, tangible, intangible & physical assembled in an identified manner. Philip
Kotler, defines the term product as “anything that can be offered to the market for consumption
that might satisfy a need”.
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Features of a Product:

1. It has many utilities

2. It can either be tangible. Ex: soap, or intangible Ex: Insurance policy.
3. It is a combination, package, brand, etc
4. It is purchased because of its satisfying power.

New Product Development:

Introducing a new product is a difficult task, there is no guarantee that the new product
developed is accepted in the market; hence, the risk if high. It is better to adopt a scientific
approach for the development of new products. The following are the different stages of a new
product development:

1. Idea Generation: New product development starts with an idea. The idea may come from any
source. Ex: Competitors, Newspapers, Government, Research & Development, Department, etc.

2. Screening Analysis: Here the company evaluates all ideas. The intention here is to avoid
unnecessary expenses by stopping further processing of unwanted ideas, which do not suit the
company’s requirements. An idea is evaluated with reference to various factors such as
consumer needs, investments, profitability, technology, etc.

3. Concept Testing: In this stage, the concept is tested. The co. evaluates whether the concepts
would suit the co., requirements.

4. Business Analysis: Here a detail financial analysis is done. It is carried out to find out the
financial marketing competitive & manufacturing viability usually, they analysis is done by the
experts. The task of the management is this step is to identify the product features, estimate the
market demand & the products profitability. Those ideas, which promise more profits with
minimum payback are selected.

5. Product Development: In this stage, product on paper is converted into a physical product.
This is done by the engineering department or by the research & development department.
Proper care must be taken while developing the product, so that the new product does not
become a waste. For this purpose, research reports, company’s budget, product features, etc
have to be studied carefully. Undue haste in developing a new product results in the premature
death. On the other hand, if the time taken is to long, the company may lose the opportunity to
the competitors.

6. Test Marketing: After developing the product, the next stage is to test its commercial viability.
This process is known as test making. Test marketing is defined as “developing a temporary
Marketing Mix & introducing the new product to a market called, the sample market to verify &
analyze the market reaction for the new product”. This is one of the most important steps
because for the first time, the information on the new product acceptance by the market is
collected.
While, test marketing, the company changes the Marketing Mix namely, Product, Price,
Promotion & Physical Distribution depending upon the test marketing results. If it is accepted, it
chooses the best marketing mix for the product, otherwise the project is rejected.

Advantages of Test Marketing:

a) It helps to understand the market reaction to the new product.

b) Customers perception on the marketing mix is understood.
c) It avoids costly error of manufacturing, unwanted products. It reduces, the uncertainties
relating to the new product.
d) It helps in developing suitable marketing mix
e) It helps in developing proper marketing strategies.
f) Test marketing also highlights the weakness of the new product, which can be rectified
before launching on a large scale.
g) Test marketing gives better coordination between the company, intermediaries & the
customers.
h) It also helps to understand the intermediaries view on the new product.
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 i) It brings down the overall cost of new product development by eliminating wastages.
It should be remembered that the market chosen for test marketing must be proper in the
sense that is should represent the entire country so that biased results are not considered.

7. Commercialization: When once is successful in test marketing, i.e., when the market accepts
the new product, it is launched in other markets on a large scale in a wider market is known as
commercialization. It is from this stage that a new product is really born from the customer’s
point of view.

PRODUCT LIFE CYCLE

Product also has various stages of life as human beings. From the time a product is introduced,
till it is withdrawn from the market, it goes through 4 stages. Analysis of these stages for the
purpose of repositioning the product in the market is called Product Life Cycle management. The
following are the stages in a product life cycle.
I. Introduction Stage
II. The Growth Stage
III. The Maturity Stage
IV. The Decline Stage

1. Introduction Stages: In this stage, a new product is introduced on a large scale for the first
time. Market reacts slowly to the introduction. In other words, consumers take time to accept
the new product. Initially, the company may suffer losses, sales improves gradually. Most of the
products fail in this stage itself.
Following are the characteristics of this stage:

a. Consumers do not have the knowledge of the product

b. Consumers may or may not be strongly in need of the new product.
c. If there is a need for the product, the company gets readymade demand. Otherwise, it
increases slowly.
d. Sales are minimum
e. The competition is less, in fact the company, which introduces new product is called as a
Market Pioneer.
f. The cost of it is very high because the company spends money heavily on Research &
Development, Sales, Promotion, etc.

2. Growth Stage: It is called the market acceptance stage. Following are its features:
a. Consumers & traders accept the product
b. Sales & profit increase
c. More competitions enter the market
d. The focus of competition is on the brand rather than the product
e. Competitors may introduce new features to the product
f. Distribution network increase
g. The price will be reduced marginally.

3. Maturity Stage: This stage indicates the capacity to face the competition, sales increases at a
decreasing rate. Competition becomes severe. It is reflected in various ways such as offering
discounts, modifying products etc.

4. Decline Stage: For all products, sales invariably declines as new products enter the market. In
this stage, there is a sharp decline in the profits, cost increases & market share comes down.
Most of the manufactures withdraw from the market. Some may reduce production &
concentrate only on a limited market

Reasons for the Failure of New Product:

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 1. Poor marketing research
2. Not using the up-to-date technology
3. High price or to costly products
4. Poor design
5. Inefficient marketing
6. Non-cooperation from the middlemen
7. Improper promotional techniques
8. Improper timing of introduction of the new product.

Marketing Mix: PRICING

Price of a product is “its” value expressed in terms of money which the consumers are
expected to pay. Form the seller’s point of view, it is return on the exchange & in economic terms, it
is the value of satisfaction.

Importance of Price:
Price is a key factor, which affects a company’s operation. It plays an important role at all
levels of activities of a company. It influences the wages to be paid, the rent, interest & profits. It
helps in proper allocation of resources by controlling the price, the demand & supply factor may
easily be adjusted.

Objectives of Pricing:
1. To increase the profit: this is the most common objective. A company may fix the price
with the aim of earning certain percentage of profits
2. Market Share Objective: some companies fix the price with a view to capture new market
or to, increase or maintain the existing market share. The objective here is to either avoid
competition or to meet it.
3. To Stabilize the Price: This is usually followed in the oligopoly market by the market
leaders. The objective here is to avoid the price war & fluctuations in price.
4. To Recover Cost: To get back the cost incurred as early as possible, is another objective of
pricing. It is for this reason that different prices are set for cash & credit sales for the same
product.
5. Penetration Objective: The objective of penetration pricing is to fix a low-price so as to
enter the new market.
6. To Maintain the Product Image: In this case, the objective is to fix a higher price to create
a perception that the product is of superior quality. This is called market skimming strategy.

Pricing Policies & Pricing Methods or Determination or the Price:

I. Cost Plus Pricing: In this method, the cost of manufacturing a product serves as the basis to
fix the price, the desired profit is added to the cost & the final price is fixed. Most of the
companies follow this method. Following are various methods of cost + pricing.
Advantages of Cost + Pricing:
1. This method is simple & hence price can be easily determined.
2. Companies, which cannot estimate the demand may follow this method.
3. It is suitable for long-term pricing policies

Disadvantages of Cost + Pricing:

1. It neglects the demand factor of the product
2. It is difficult to determine the exact cost.

II. Pricing Based Upon Competition: Competition based pricing is defined as a method
where a company tries to maintain its price on par with its competitors. It is suitable when
the competition is serve & the product in the market is homogenous. This price is also called
the going rate price. The company cannot take risk of either increasing the price or
decreasing it. Following are some of the methods based upon competition:
a. Pricing Above the Competition: It is usually followed by well-recognized
manufacturers to take advantage of their goodwill. The margin of profits is too high.
This method is useful to attract upper class & upper middle class consumers.
b. Pricing Below Competition Level: This type of pricing is followed by the
wholesalers & the retailers. They offer various kinds of discounts to attract

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 consumers. Even established companies follow this method to maintain or to
increase their sales during the off season.

III. Pricing Based on Markets: Depending upon the market of product, the manufacturers may
fix the price for their products. In a perfect market, he has to go for the expected price in the
market. It is also called the market price or going rate price. In case of monopoly, he is free
to fix the price & can effectively practice the price discrimination policy.

Marketing Mix: PROMOTION

Promotion is the process of marketing communication involving information, persuasion

and influence. Promotion has three specific purposes.
1. It communicates marketing information to consumers, users, and prospects.
2. Besides just communication, promotion persuades and convinces the buyers.
3. Promotional efforts act as powerful tools of communication.

Every company can choose from the following tools of promotion, popularly known as the
promotion-mix variables:
1. Advertising,
2. Sales Promotion,
3. Personal Selling,
4. Public Relations

Advertising
It is universally defined as any paid from of non-personal communication about a product,
service or idea coming from an identified sponsor designed to influence purchasing decision from
customers. The term “any paid form” refers to the airtime rates on TV and radio and space for print
materials. Non-personal communication advertising uses media deliver the ads and distinguish
advertising from personal selling. The product, service or idea is what the sponsors advertise to the
audience. The identified sponsor is the advertiser or the company that owns the brand.

Objectives of Advertising

Advertising is done:
1. To inform about the new product, features, added benefits, etc.
2. To persuade consumers, encouraging repeat purchase from trials.
3. To remind and to maintain the brand in the minds of consumers.

Types of advertising
1. Bound advertising. Designed to influence customers to buy, inform the target audience
about the features of the product and remind the target audience to retain the product.

2. Institutional advertising. Designed to import values, promote goodwill and enhance the
image of the product to the public.

It can be executed in a number of ways such as:

a. Slice of life. Showing typical people using the product in the ad

b. Lifestyle. showing how product fits to a particular lifestyle
c. Fantasy. The use of graphics, and computer generated graphics and animations built
around the product in the ad.
d. Image. Creates an image of a product associated to a type of target market/profile
e. Musical. Uses sounds and musical jingles/MTV’s to achieve recall with the brand
f. Personality symbol. The brand showing symbols or counterpart in the user of the
product like Marlboro cigar for cowboy personality
g. Technical expertise. Shows the expertise of the company in making the product like
that of one sardines advertisement showing the process from catching the fish to
canning.
h. Scientific evidence. Shows laboratory and medically tested evidence about the product
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 i. Testimonial evidence. The use of credible celebrity or personality testifying their
satisfaction in using the brand

Sales Promotion

Sales Promotion is a direct and immediate inducement that adds an extra value to the
product so that it prompts the dealers, distributors or the ultimate consumers to buy the
product.”According to the American Marketing Association, “Sales promotion means to give short
term incentives to encourage purchase or sale of a product or service. Sales promotion helps in
solving the short-term problems of the marketing manager, the impact of these methods is not very
lasting or durable and the results of these efforts are not as lasting as those of advertising and
personal selling. Sales promotion is more of a catalyst and a supporting communication effort to
advertising and personal selling.

Objectives of sales promotion

Sales promotions, as a tool of communication and promotion, fulfils the following

objectives:
a. Sales promotion helps in introducing new products.
b. It also helps in overcoming any unique competitive situation.
c. It is useful for unloading the accumulated inventory or stock of the goods in the
market.
d. It can be used for overcoming the seasonal slumps in sales.
e. Sales promotion helps in getting new accounts i.e. clients or customers.
f. It helps in retrieving the lost accounts.
g. It acts as a support and supplement to the advertising effort.
h. It also acts as a support and supplement to the salesmen’s efforts.
i. It aims at persuading salesmen to sell the full line of the products and not just
concentrate on a few products.
j. It helps in persuading the dealer to buy more stock from the company i.e. to increase
the size of the order.
k. Its objective is to create a stronger and quicker response from the consumers.
l. It also helps to boost dropping sales of any product of the company.

Sales promotion techniques

1. Sales promotional letters: Several companies utilize the medium of letters for sales promotion.
These letters serve different purposes. Sometimes they are used to give information about the
company's products, at other times; they are used as reminders for the customers to continue to
buy a particular brand. Some letters seek information from the customers regarding various
aspects of their purchases.

2. Point of purchase (POP) displays: The stocks are artistically arranged to gain maximum
attention. Displays of various types such as window displays, wall display, counter displays or floor
displays are also used. The retailer's role is very important from the point of view of displays.

3. Customer service programmes: At times, the company organizes and conducts customer
service programmes or camps with the aim of providing service to the customers at different points
of purchase.

4. Demonstrations: Companies do product demonstrations for sales promotion, especially when

they are introducing a new product in the market. Demonstrations are usually used for low unit
price products like washing powder or high unit price products like washing machines and vacuum
cleaners. Demonstrations may be organized at the retail stores by the company salesmen for the
benefit of retailers as well as consumers. Door to door demonstrations and institutional
demonstrations are also considered to be highly specialized form of sales promotion.

5. Free samples: Free samples of the product are offered to persuade the consumers to try them
out. By offering free samples to a large section of the new market, a company seeks to gain an entry
into that market. For using this tool, the product should be of low cost and subject to frequent
purchases. e.g., soaps, detergents, toothpastes, tea, etc.

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6. Contests: Contests of various kinds are also commonly used as sales promotion tool. There are
dealer contests which are exclusively for the dealers of the company and consumer contests for the
general public. Companies spend a large amount of money on these contests because they have to
be publicized widely and the expenditure on the attractive prizes is also to be covered. Consumer
contests may be in the form of quiz contests, beauty contests, scooter and car rallies, lucky draws,
suggesting a brand name, writing a slogan, suggesting a logo, etc. The consumer has to be induced
to get interested in the contest and purchase the product associated with it.

7. Premiums and free offers, price-off schemes and installment offers: A premium offer is
given for a particular product and along with it is a free offer of another product to be given free to
anybody buying the product.

8. Coupons: These are certificates which promise price reduction to consumer on specified items.
Coupons generally perform specific functions for the company. Firstly, they encourage the
consumers to make use of the bargain offered and secondly they also serve as an inducement to the
channel members for stocking the items of that company. Coupons may be distributed through
newspaper and magazine advertisements or by direct mail or along with the package consisting the
product. Coupons are generally used while introducing a new product or for strengthening the
image of the product.

9. Catalogues: Catalogues carry essential information on the products offered by the company. A
well-designed catalogue carries complete information relating to the products, their pictures, size
specifications, colours, packing, uses and prices. The products are listed and indexed properly in
order to facilitate order booking and processing.

10. Trade fairs and exhibitions: These tools are based on the premise that 'seeing is believing’
and are extensively used. These fairs and exhibitions provide the companies with the opportunity
of introducing and displaying their products. This brings the company's products and consumers in
direct contact with each other. Trade fairs and exhibitions are very effective in international
marketing and a lot of trade orders and enquiries are generated at the international level also.

11. Gifts: Companies also distribute gifts to people like customers, dealers and other influential
people. These gifts may include pens, pencils, calendars, diaries, decoration pieces, etc. The gifts
generally carry the company's name and logo. These gifts are intended to create goodwill amongst
the various people towards the company and indirectly help in furthering the sales of the company.

12. Sponsoring major national and international events: Companies associate themselves with
the major national and international events such as sports like cricket, hockey, tennis, golf, etc. The
business houses generally sponsor the event as a whole or may associate themselves with specific
aspects of the events. e.g., companies of soft drinks, cigarette manufacturers, etc. The purpose
behind sponsoring is to remain a part of the news and got the best of sales promotional efforts in
the form of benefits.

Personal selling

According to the American Marketing Association, “Personal selling can be defined as an

oral presentation, in conversation with one or more prospective purchasers, for the purpose of
making sales”.

According to F.E. Webster, Jr. "Personal selling is a highly distinctive form of promotion.
Like other forms of promotion, personal selling is basically a method of communication, but unlike
others it is a two-way, rather than unidirectional communication. It involves not only the individual
but social behaviour. Each of the persons in face-to-face contact, salesman and prospect influences
the other. The outcome of each sales situation depends heavily upon the success that both the
parties experience in communicating with each other and reaching a common understanding of
needs and goals. The main task involved in personal selling is to match specific products with
specific consumers so as to secure transfer of ownership".

Objectives of personal selling

Personal selling helps in the following major areas:

1. To improve the sales volume of the company's different products.
2. To ensure the proper mix of products in the total sales volume.
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 3. To increase the market share of the company.
4. To increase the profits of the company.
5. To reduce the overall selling expenses.
6. To gain new accounts and improve business growth.
7. It helps in the appointment of dealers and expansion of the distribution channel.
8. To secure channel members co-operation in stocking as well as selling the products of the
company.
9. To achieve the desired proportion of cash and credit sales.
10. To provide pre-sale and after-sale services.
11. To train the dealers and customers.
12. To assist and support other promotional measures.
13. To help in collecting the amounts due from the market.
14. To help in gathering and reporting marketing intelligence.

Public relations

Public relations is a very important and resourceful tool of the promotion mix.
According to Kotler, “Public relations induces a variety of programmers designed to improve,
maintain or protect a company of product image. e.g., through press conferences, seminars,
speeches, annual reports, charitable donations, etc.”

The major tools in public relations are

1. publications: annual reports, brochures, articles, company magazines and news
letters.
2. events: special events like news conference, anniversary celebration of the
company, sponsoring sports and cultural events.
3. News: the companies find and create favorable news
4. speeches: by company executives at trade associations, sales meetings, etc.
5. identity media: companies also use such devices as company logos, stationery,
business cards, uniforms, etc., which help in identifying the company.

Objectives of public relations

1. Social awareness can be created through the PR promotion plan, regarding a product,
service, person, organizer, etc.
2. It helps to build credibility by communicating the message for example, in editorials of
newspapers, etc.
3. It assists in the launch of new products.
4. It assists in repositioning of a product.
5. It helps in building up consumer interest in a particular product category.
6. It also helps in influencing the specific target groups.
7. Public relations help to define products that have faced problems or complaints from the
public.
8. It helps to build the corporate image in such a way that it projects favorably on its products.

Marketing Mix: PLACE (Distribution)

One of the important problems of marketing is the distribution of goods & services to the
right place, person & the right time. Manufacturers often find it difficult to decide about the
effective distribution system. The channel of distributions refers to the group of intermediaries,
which perform the distribution functions.

According to Philip Kotler, “The distribution is the set of all firms & individuals that assist in
the transferring the little of goods & services as they move from producers to customers.” It is also
defined as “The root through which goods move from the place of production of the place of
consumption.”

Functions of the Channels:

1. Channels of distribution helps, the goods & services to move from the place of production to the
place of consumption, hence they create place utility.
2. Goods are brought by the channels when they are needed. Hence they create time utility.
3. A channel reduces complexity in the distribution system
4. Inclusion of channel reduces the financial burden of the producers
5. They provide various services such as standardization, grading, etc.
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6. They supply the market information to the producers
7. They help producers in promoting their sales.

Types of Channels

1. Zero-level channel (producer to consumer): It is also called as direct marketing or direct

selling. This channel consists of the producer who directly sells his products to the ultimate
consumers. This is the shortest, simplest, & cheapest form of distribution. Producers are
benefited by increased profit, whereas consumers are benefited by reduced price. This is
possible because it eliminates the middleman completely. With the development of
sophisticated & efficient retailing like supermarkets, chain-stores, automatic selling machine
are financially sound follow this channel of distribution. For products like jewelry & industrial
goods like machinery, this is the best channel.
2. One-Level Channel (Producers Retailers Consumers or producers Wholesalers
Consumers): This is a short channel where the manufacturer may himself perform
some of the wholesaler. This is considered to be the best channel as it eliminates some of the
marketing intermediaries & at the same time gets advantages of inclusion of retailers. In case of
perishable goods, this is the best channel. When there is large scale promotion, inelastic
demand & when manufactures are financially sound this channel is preferred.
3. Two-Level Channel (Manufactures Wholesalers Retailers Consumers):
This is the traditional channel. It is more useful in the case of buyers, sellers, & manufactures
who operate in small scale. The manufacturer sells his products in large quantities to a
wholesaler who in turn sells in small quantities to retailers & finally retailers sell to ultimate
consumers. Products which have low unit value & which are purchased frequently may be
distributed through this channel.

Methods of Distribution:
1. Intensive Distribution: It is a method of selling whereby a manufacturer distributes his
products through a large number of retailers & in, as many places as possible. In this case,
retailers control the distribution system. Usually, consumer’s necessities are sold through this
system.
2. Selective Distribution: In this case, manufacturer sells their products through few retailers.
Even though this method is suitable to sell all products, it is usually followed in case of
industrial goods & consumer shopping & luxury goods. Ex: Motor vehicle.
3. Exclusive Method of Distribution: In this case, the manufacturer sells his products only
through a particular wholesaler or retailer. In other words, the manufacturer gives him the
exclusive rights to distribute the products such a distributor is usually prohibited in dealing to
the competitor’s product.

Retailing
Retailing refers to the set of business activities that adds value to the product and services
sold to consumers. Retail means to “break bulk” and to sell the products by piece to individual
customers. It is the final activity in the marketing channel which brings the product to the end user.
Retailing is important to customers because it is thru retailing that consumers are able to avail of
different products according to the number of goods or the quantity that they need.

Function of Retailing
1. Providing product assortment. Due to retailing, consumers are able to buy a variety of
products at the same time.

2. Breaking bulk process. If not for retailing, products will come in bulk and everyone will be
forced to purchase more than he or she needs.

3. Holding inventory. The advantage of this function is that the customers will buy at a
convenient place and not be stocked up with products that do not satisfy them.

4. Providing customer services. The fact that the retailers are the ones buying in bulk and
breaking the bulk for the consumers means providing the customers services.

Types of Retailing
The types can vary as to the type of product assortments, locations and target customer.
The following are the types of retail stores:

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 1. Specialty stores sell specific or specialized types of items like cell phone stores, computer
stores, etc.

2. Convenience stores carry a limited selection of basic items. It can be from drinks,
medicines, food, beverages, etc. these are usually open 24 hours a day.

3. Supermalls combine a shopping mall and an entertainment center.

4. Supermarket is simply a grocery store.

5. Hypermarket is a combine of a supermarket and a department store.

6. Drug stores are stores that sell medicines.

7. Cosmetic stores are specialty stores that sell substances used to enhance the face and the
body like lipstick, deodorant, etc.

8. Kiosks are stores with one or more sides open.

9. Fast food chains sell quick foods that are prepared fast.

10. Discount stores are those that sell products with prices lower than what is sold in
department stores.

11. Surplus markets sell things that are used, unused or things bought that are not needed.

12. Flea markets (Tiangge) are stores or bazaar that sell low priced items.

Wholesaling
Wholesaling is a channel level that buys products from the manufacturing channel for the
purpose of reselling to the lower channel members such as retailers and dealers. This involves
selling products in bulk or large quantities.

Chapter 5: Strategic Planning and the Marketing Process

Company strategies are plan to solve and achieve goals and objectives which can be
executed within the time bound or allotment for such objectives. These are plans of action
formulated by marketing managers ahead of time to keep the company prepared for ant=y battle
with competitors, and a backup plan and a safety net in case of unexpected failures. These company
strategies are tools that are essential to break the previous target of the company by “being better
than before in terms of sales, better than others in terms of market share and better than expected
in terms of profit” (Go and Escarial, 2010).

Strategic Planning: Defining the Role of Marketing to a Company

Strategic planning pertains to the process of developing and maintaining a “strategic fit” or
the most appropriate strategy between the organization’s goals and capabilities in the changing
marketing opportunities.

The process of Strategic Planning:

1. Defining the company mission;
2. Setting the company objectives and goals;
3. Designing the business portfolio; and
4. Planning the marketing and other functional strategies.

Defining the Mission

Mission is a statement of the company’s purpose in the industry category or what the
organization wants to accomplish in the large business environment. It can also mean the purpose
of why an organization is existing.

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Setting Company Objectives and Goals
In setting the company objectives and goals, the company should establish a profitable
relationship with consumers. These can be achieved by developing better products and by
delivering these products to the market fast, offering a lower cost possible.

Designing the Business Portfolio

As a defined by Kotler (2010), a business portfolio is the collection of businesses and
products that make up the company represented by specific business unit (SBU) presented in a BCG
Matrix (Boston Consulting Group Matrix). The matrix is based on product life cycle theory that can
be used in determining the business portfolio of a business units. The matrix shows the various
business units of the market growth versus y=the market share.
The BCG Matrix classifies all its SBUs according to the growth share matrix as follows:
1. Stars. Category of product SBUs with high market share and high market growth. The
product placed under this category use more cash but are doing good in the business, and
therefore are expected to generate higher profit in come.
2. Cash Cows. SBUs with high market share but low in market growth. Investments under this
category should be kept low because of the slow growth.
3. Question Marks. SBUs with low market share but high in market growth. This means that
there is a large consumption of cash, but because the share in the market is low, not much
cash is generated.
4. Dogs. SBUs of products with low market share and low market growth. The products under
this category do not generate much cash, and can barely sustain their market share. They
may “break even” but are better sold or disposed off.

This analysis may not look simple, but it is. It discusses about the different possibilities that may
happen in terms of the market share and profit a product may give a business. For example, a
product with a high market share would normally give more income and a product with a low
market share would usually generate low profit. It is not impossible though, that a product with a
high market share may yield no profit, or one with a low share in the market would earn more
profit.
And this is the importance of a business plan. All business, big or small, already made or just
starting, must have a business plan. With it, the company will be able to make sure that it can keep
an eye on how the product are doing in the market. At the same time, it would benefit the company
by using the business plan as a guide to come up with strategies on how it can satisfy the needs and
wants of the costumers, while increasing its profit and making sure that it does not shortage the
costumer’s needs and still satisfy them. An example of a business portfolio and its analysis is shown
below.

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Stars Question Marks
Detergent soaps and toothpaste Cologne for men
Cash Cows Dogs
Shampoo and conditioner All-around cleaning products
Company A’s Current Business Portfolio
Analysis
1. The detergent soaps and toothpastes, being STARS have a high market share and market
growth

2. The company’s cologne for men has a low market share but has the potential to have a high
market growth with the use of an effective marketing strategy.

3. The shampoo and conditioner have a high market share but with a low market growth
which may be due to so many new brands of shampoos and conditioners offered in the
market.

4. The cleaning products have a low market share and low market growth which may be due
to their poor performance in the market, and the introduction of a new bleaching product of
rival companies.

Developing Strategies for Growth and Downsizing

A business portfolio is a collection of business and products that make up the company
(tutor2u.net). It is used to determine the position of the products in a particular market, so that a
firm may be able to come up with decision as to which products needed more investment, what
products will be more profitable for a certain market, which would be retained or sold off, and what
strategies can be company come up with to ensure a high market share and product growth.
A portfolio planning is a tool for identifying company growth opportunities through
market penetration, market development, and diversification.

1. Market Penetration. It is a strategy used to increase the sales of current market segments
without changing the product.

Example:
The case of an ice cream brand that offers three various flavors in one container.

2. Market Development. It is a strategy in identifying and creating new market segments for
the current product.

Example:
A face powder that does not only cater to the adult market but also to the younger
ones.

3. Product Development. It is a strategy for company growth by offering a modified or a new

product to current market segment.

Example:
The case od a company that became successful for its beer product, but decided to
offer a new coffee product carrying the same brand name.

4. Diversification. It is a strategy for a company growth by starting or acquiring business

outside the company’s current products and market.

Example:
A known corporation that owns a chain of development stores and later on ventured
into building condominiums in the metro.

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 Ansoff Opportunity Matrix helps a company to analyse the growth of its products and to
direct the company as to the business strategies to use.

Steps in the Marketing Process

The marketing process consists of analyzing market opportunities, researching and

selecting target markets, designing marketing strategies, planning marketing programs, and
organizing, implementing, and controlling the marketing effort. The four steps in the marketing
process are:
1. Analyzing market opportunities. The marketer’s initial task is to identify potential long
run opportunities given the company’s market experience and core competencies. To
evaluate its various opportunities, assess buyer wants and needs, and gauge market size,
the firm needs a marketing research and information system. Next, the firm studies
consumer markets or business markets to find out about buying behavior, perceptions,
wants, and needs. Smart firms also pay close attention to competitors and look for major
segments within each market that they can profitably serve.
2. Developing marketing strategies. In this step, the marketer prepares a positioning
strategy for each new and existing product’s progress through the life cycle, makes
decisions about product lines and branding, and designs and markets its services.
3. Planning marketing programs. To transform marketing strategy into marketing
programs, marketing managers must make basic decisions on marketing expenditures,
marketing mix, and marketing allocation. The first decision is about the level of marketing
expenditures needed to achieve the firm’s marketing objectives. Decision is how to divide
the total marketing budget among the various tools in the marketing mix: product, price,
place, and promotion. And the third decision is how to allocate the marketing budget to the
various products, channels, promotion media, and sales areas.
4. Managing the marketing effort. In this step marketers organize the firm’s marketing
resources to implement and control the marketing plan. Because of surprises and
disappointments as marketing plans are implemented, the company also needs feedback
and control.
Managing the marketing effort

Four marketing management functions:

– Marketing analysis
– Marketing planning
– Implementation
– Control

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Marketing Implementation
Organization is one factor contributing to effective marketing implementation, the process
that turns marketing plans into action assignments and ensures that such assignments are executed
in a manner that accomplishes the plan’s stated objectives. This part of the marketing process is
critical, because a brilliant strategic marketing plan counts for little if it is not implemented
properly. Whereas strategy addresses the what and why of marketing activities, implementation
addresses the who, where, when, and how. Strategy and implementation are closely related in that
one layer of strategy implies certain tactical implementation assignments at a lower level. For
example, top management’s strategic decision to “harvest” a product must be translated into
specific actions and assignments.

Evaluating and Controlling the Marketing Process

To deal with the many surprises that occur during the implementation of marketing plans,
the marketing department has to monitor and control marketing activities continuously.
Four types of marketing control needed by companies:
1. annual plan control
2. profitability control
3. efficiency control
4. and strategic control.

Types of Marketing Control

Type of Control Prime Responsibility Purpose of Control Approaches

Annual-plan control Top management, To examine whether  Sales analysis
Middle management the planned results are  Market-share
being achieved analysis
 Marketing
expense-to-
sales analysis
 Financial
analysis
 Market-based
scorecard
analysis
Profitability control Marketing controller To examine where the Profitability by:
company is making  Product
and losing money  Territory
 Customer
 Segment
 Trade channel

Efficiency control Line and staff To evaluate and Efficiency of:

management, improve the spending  Sales force
Marketing controller efficiency and impact  Advertising
of marketing  Sales
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 expenditures promotion
 distribution
Strategic control Top management, To examine whether  Marketing-
Marketing auditor the company is effectiveness
pursuing its best review
opportunities in  Marketing
markets, products and audit
channels  Marketing
excellence
review
 Company
ethical and
social
responsibility
review

Marketing Plan

Format of the Marketing Plan

1. Executive Summary. Overview of the entire plan, its directions, objectives and the key
changes in the strategy to achieve its goals for the company/brand.

2. Environmental Analysis. Includes the study of the industry situation, current market trends
and other factors directly affecting the company/brand.

3. Competitor’s Analysis. Analysis of the factors affecting the company’s current competition
and the competitors’ matrix on the brands available situation in the market situation.

4. SWOT Analysis. Analysing the SWOT affecting your company or brand key success factors.

5. Target Market. The current market served, its segmentation and profile to categorize its
description.

6. Marketing Objectives. General Objectives focused on Key Results Area sales in number of
units/volume, market share in % of the industry and profit in pesos net after tax at the end
of the period.

7. Marketing Strategy. Includes basic strategies based from the marketing tools such as
product strategy, price strategy, placement strategy and promotions strategy.

8. Marketing Specific Action Plans

a. Include the time frame allotted for each strategy as to number of months or specific
period, or amount of time in implementing each action plan.
b. The details of every strategy or the tactics to be done and target output or goals for
each strategy.
c. The expenses or resources needed in materializing each of the plans. Budget should
be effective in accordance to the expected outcome of the plan.

9. Financials. Include cash flows, sales forecasts and other financial figures such as income
statements.

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