PRINCIPLES OF MARKETING

PRINCIPLES OF MARKETING Handout/Activity Sheets

Teachers: Angilette Cenidoza 2nd SEM - 3rd Quarter

WEEK 1 : LESSON 1
MARKETING PRINCIPLES AND GOALS

I. MARKETING PRICIPLES
MARKETING – is a form of communicating or promoting the value of a product, service, or brand to the consumers. Prior to the marketing
of specific products and/or services, a marketing company conducts a thorough analysis of the external environment, the market, its
competitors and customers and an incisive audit of its internal operating characteristics.
The “by word-of-mouth” marketing may be the simplest, oldest, and most natural way of marketing a service or a product for
profit and non-profit purposes. If it aims to increase sales of product or service, it is known as marketing for profit. On the other hand,
marketing for non-profit aims to communicate messages for social purposes.
Example: health and public safety information disseminated by the government
Marketing is defined by the AMERICAN MARKETING INSTITUTION as the activity, set of institutions and process of creating,
communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
Alternately, the PHILIPPINE MARKETING ASSOCIATION defines Marketing as a “science and profession guided principally
by the universal principles of ethics, corporate citizenship, and corporate social responsibility.
Marketing is the key for success in any organization whether it is a profit or non-profit organization. By simply knowing its purpose you
will be able to realize the importance of Marketing.
II. MARKETING GOALS
The goals of Marketing can be summarized as follows:
1. Understand the market and its consumers and satisfy their changing needs and wants.
2. Introduce and innovate products and services that improve human condition and the quality of life.
3. Design and implement effective customer-driven marketing strategies.
“ Customer-driven strategy is concerned with meeting the needs of the organization's actual and potential customers and,
as a result, delivering the objectives of the organization, such as profit or service in a public service organization.”
4. Develop marketing programs that deliver superior value to consumers.
5. Build and maintain mutually beneficial and profitable customer relationships.
6. Capture customer value to create profits.
7. Promote value transactions with full regard to society’s well-being.

WEEK 2 : LESSON 2
MARKETING SERVICES AND APPROACHES

I. CLASSIFICATIONS OF PRODUCTS/GOODS
Products that are marketed can be generally classified according to USE, DIFFERENTIATION, TYPE and DURABILITY.

According to USE:
Consumer goods
Industrial goods
Products / Goods
Classifications of

According to DIFFERENTIATION:
Undifferentiated goods
Differentiated goods

According to DURABILITY:
Consumables
Semi-durables
Durables

According to TYPE:
1 Convenience Goods
Shopping goods
Specialty goods
Unsought goods
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A. According to USE : Consumer and Industrial Goods

When classified according to use, products/ goods can either be consumer goods or industrial goods.
❖ Consumer Goods are goods that are purchased for personal consumption and/or for household use.
Example:
• instant noodles
• biscuits
• milk
• detergent soap
• shampoo, and
• other items

❖ Industrial Goods are purchased in order to make other goods, to serve as a raw material or input in the production of other
goods.
Example:
• Aluminum – used to manufacture kitchen equipment and cans.
• Electronic cables and Wires – serve as electrical conduits for home appliances.
B. According to DIFFERENTIATION : Undifferentiated and Differentiated Goods
❖ Undifferentiated goods are products whose physical characteristics are so identical, that it would be difficult , if not
possible, to distinguished one purchased from one vendor to another. Most undifferentiated goods are products that are
sourced from nature.
• A typical example of undifferentiated good is rock salt.
When a housewife goes to the wet market to purchase rock salt from two different vendors, determining which one came
from one vendor or the other is a challenge. Salt bought from the two different vendors looks, feels, and tastes identical.
❖ On the other hand, differentiated goods are varied in their characteristics and features that makes them distinguishable
from one another.
Example:
• Different kinds of vehicles – if there are white-colored vehicles of each model from all local car manufacturers
parked side-by-side, the Toyota Fortuner would still be readily distinguishable from the Mazda 3, the Nissan
Sentra, the Honda Civic, and from the other vehicles in the parking area.
C. According to DURABILITY : Consumable, Semi-Durable, and Durable Goods
Based on durability, products are either consumables, semi-durables, or durables. Durability refers to the length of time a
consumer can derive benefit from the product or good purchased.
❖ Consumable – is a product whose benefit can only be used by a consumer for a short period of time, sometimes only a
few minutes.
Example:
• Food
• Drinks
• Detergents
• Toiletries, etc.
❖ Semi-durables – provide benefits to the consumer for a longer period of time, usually spanning several months. These are
manufactured for a longer-term use by consumers.
Example:
• Clothes
• Shoes
• Belts
• Jackets, etc.
❖ Durables – are products that are manufactured to last a long time. They are capable of providing consumers with years of
beneficial use and usually expensive.
Example:
• Automobiles
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• Houses
• Home appliances
• Customer electronics
• Furniture
• Sports equipment
• Toys, etc.
D. According to TYPE : Convenience, Shopping Specialty, and Unsought Goods
❖ Convenience goods – are products that are purchased frequently, are usually inexpensive, and do not require much
purchase effort and evaluation.
Example:
• Newspaper
• Gum
• Candy
❖ Shopping goods – are purchased less frequently than convenience goods, are relatively more expensive, and require
some amount of information search and evaluation prior to purchase. Consumers of shopping goods consider features,
evaluate attributes and compare prices.
Example:
• Shoes
• Clothes
• Handbags
❖ Specialty goods – are goods that require an unusually large effort on the part of the consumers to acquire. Consumers are
usually willing to travel great distances to where these goods can be purchased.
Example:
• Branded luxury merchandise
• Work of art
• Automobiles
• Homes
❖ Unsought goods – are goods that consumers seldom actively look for, and are usually purchased for extraordinary
reasons, such as fear or adversity, rather than desire.
Example:
• Investments
• Memorial plans
• Life insurance
II. MARKETING SERVICES
What is more difficult to market, PRODUCTS or SERVICES?
Services are generally considered more difficult to market due to its 4 Major Attributes:
1. Intangibility – physical products are tangible, as such, they can be inspected by consumers prior to purchase. On the other
hand, services are intangible, and this is the first reason that makes the marketing of SERVICES difficult.
Example:
• A lawyer’s legal skills
• A Doctor’s ability to handle a surgical operation.
* How do marketers address the intangible attribute of services?
* ANSWER : Service marketers commonly resort to the practice of making their services tangible. Although Lawyers and Doctors
cannot give their potential clients a preview of their service skills, , they:
✓ retain large luxurious offices manned by smartly dressed staff;
✓ maintain extensive and updated legal and medical libraries that are readily visible to visitors;
✓ they display diplomas, certifications, and other documentary evidence of their training and
expertise, and readily give out professionally prepared business cards.
This gives their potential clients an impression of their competence and capability to render the service required.

2. Variability – because services are performed by human beings, no service provider can render the same service in exactly the
same way every single time.

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Example:
• A college professor, when giving the same lecture in two separate sessions, cannot use the exact words and gestures
for both sessions.
• An obstetrician-gynecologist (OB-Gyne), cannot perform caesarian sections in precisely the same manner twice, even
when the cases involved may be identical.
* Because of variability, customers sometimes exhibit apprehension when purchasing or paying for services.
* How do marketing organizations address the problem of variability?
* ANSWER: The problem can best be addressed by developing and implementing Standard
Operating Procedures (SOP’s) on how the service should be rendered. For example, a fast-food counter clerk follows a
script in greeting customers, asking orders, reading, and confirming the order, receiving payment, etc.
3. Inseparability – because services are rendered by people, the service provider must be present each and every time the service
is provided. Services are rendered and consumed simultaneously.
4. Perishability – unconsumed services cannot be stored or warehoused.
* How can marketers maximize revenues and avoid lost service perishability?
*ANSWER: The key is the implementation of a marketing strategy called capacity management or achieving a proper balance
between service demand (customer needs) and service supply (service availability).

III. APPROACHES TO MARKETING

1. Traditional Approaches to Marketing – evident up to the late 1960’s, traditional approaches in Marketing focused on production
methods, product quality, and effective selling methods as profit drivers in Marketing.
A. The Production Concept – the production concept assumes that customers prefer products that are inexpensive,
affordable, and widely available.
B. The Product Concept – assumes that customers will always prefer and patronize products of high quality.
C. The Selling Concept – emphasizes aggressive selling and promotional efforts.
2. Contemporary Approaches to Marketing – in contrast, Contemporary Marketing Approaches are centered on the customer,
relationships, and well-being of the society.
A. The Marketing Concept – considers the needs of both the customer and the product offered. The objective is to
provide solution to the customer’s actual or perceived problem.
B. The Relationship Marketing Concept – believes that all Marketing activities are for the purpose of establishing ,
maintaining, and strengthening meaningful long-term relationships with customers.
C. The Societal Marketing Concept – the concept is similar to the marketing concept, however, beyond providing
solutions to customers, it also includes considerations that protect the customers’ well-being and interests, as well as
the interests of the environment and the society.

WEEK 3 : LESSON 3
CUSTOMER RELATIONSHIP : CUSTOMER SERVICE

I. CUSTOMER – is a person or organization that transacts with a businessperson or business organization to buy goods or services for
monetary or other valuable considerations.
CUSTOMER SERVICE – is the process of ensuring customer satisfaction with a product or service.
FORMS OF CUSTOMER SERVICE
1. Salesperson Assistance
2. Product Delivery
3. Technical Advice
4. Help Desks
5. Etc./others
- it involves activities designed to enhance customer satisfaction, or the perception that a
product has met or exceeds expectations.
CUSTOMER RELATIONSHIP MANAGEMENT (CRM) - is a process of managing an organization’s
interactions with current and future customers.

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CUSTOMER LIFETIME VALUE (CLV) – is the forecasted sales or profits that a company can derive
from the entire span of its future relationship with a particular customer. A customer lifetime value can be based upon the potential value
and profitability of his/her relationship with the company. CLV can be measured using the formula:
CLV = (PV)(RP)(RT)
where: PV – is the average peso value of a sale to a particular customer or
customer group
RP – is the repeat purchases in a year
RT - is the retention time in months or years
CLV – is the Customer Lifetime Value
For example: An athlete who spends $2,000 for every visit to a spa and goes to the spa twice a month for an expected time
period of five years would have a CLV computed as:
PV = $2,000
RP = 24 (twice a month for 1 year)
RT = 5
CLV = ?
Solution:
CLV = (PV)(RP)(RT)
= (2000)(24)(5)
CLV = $ 240,000.00

SUCCESSFUL CUSTOMER RELATIONSHIP MANAGEMENT STRATEGIES

1. Adopt the right mindset towards customer service.
2. Purchase or develop CRM software.
3. Estimate customer acquisition and retention costs.
4. Develop and implement a customer service training program.
5. Empower salespersons to make decisions.
6. Establish communication lines between your customer and customer contact staff.
7. Shop your competition.
8. Keep innovating customer service.
9. Promote genuine customer service with passion.

THE STRATEGIC AND TACTICAL MARKETING PROCESS

THE STRATEGIC MARKETING PROCESS

The Strategic Marketing Process seeks to establish a clear and concerted direction for all marketing activities for an organization.
It includes plans to reach specific goals/objectives. The Strategic Marketing Process is depicted in the following diagram:

Mission Situation Objective Setting

Identification Analysis

Strategy Evaluation and Marketing Strategy

Control Development
STEP 1 : Mission Identification – the company’s mission statement is articulated.
STEP 2 : Situation Analysis – this step assesses and evaluates the market, customers, competitors,
and the company’s internal and external environment.
STEP 3 : Objective Setting – objectives are marketing targets that are Specific, Measurable, Attainable,
Realistic and Time-bound (SMART).
STEP 4 : Marketing Strategy Development – the development of a marketing strategy involves market

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segmentation, identification of target market, positioning, selection of broad marketing strategies, and the translation
of strategies into action plans.
STEP 5 : Strategy Evaluation and Control – after the strategy is developed, periodic monitoring and
evaluation is needed. This is necessary to identify deviations and make necessary
adjustments and corrections.

THE TACTICAL MARKETING PROCESS

Complementing the strategic marketing process, the tactical marketing process determines the means or tactics to implement
the strategies. It involves the identification of specific activities, timetables, responsibilities, and budgets, and their
implementation. The objective is to ensure that are implemented successfully.

Marketing Action Marketing

Strategies Plan/Tacti Activities
cs

Monitoring and Activity Responsibility/

Control Budgets Accountability

For example, a company determines to increase sales by 10% by the end of the calendar year. After a careful consideration, it
selects market penetration as its strategy. The current task is to identify the tactics, or activities that it should undertake to ensure that the
strategy will be successful. The firm may decide to increase selling prices. It may opt to do intensive promotions, or it may invest in heavy
product advertising.
Once the tactics and activities are identified, they are developed into an action plan. An action plan is a sequential series of
marketing activities. It includes timetable for each activity, pinpointed responsibilities or accountabilities for each, and the corresponding
budgets. Oftentimes, it is necessary to utilize two or more action plan to ensure successful implementation. These are monitored regularly
to ensure effectiveness.

Macro-environmental Analysis

A. Economic
✓ Latest economic data is projected.
✓ Inflation rate and peso-dollar exchange rates are usually critical in determining future costs, price, and consumer
purchasing power.
✓ Economic factors should be concisely stated, and the accompanied figures and projections acquired should also be
indicated.
Example:
Inflation rate as of the end of 2019 is 3.2% and is expected to increase to 3.7% in 2020.
B. Politico-legal
✓ The political macro-environment is assessed.
C. Socio-cultural
✓ Identify relevant socio-cultural factors that may affect the manner of how the selected brand will be marketed.
D. Demographic
✓ Based on the target market, cite current and relevant figures that may affect the marketability of the product. Therefore,
if the target market is “female residents of Metro Manila between the ages of 18 and 25, who are career-oriented,”
determining the population of Metro Manila, the gender mix of the population, and the distribution of population by age
are all relevant to our brand’s marketability.
E. Technological
✓ Depending on the industry, identify relevant technological developments that may favorably or unfavorably affect the
chosen brand. This may include, for example, a new production process which the company can adopt to reduce
manufacturing costs, or an innovative type of packaging, the patent of which may be owned by one of the competitors.

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F. Natural
✓ A thorough analysis of the natural macro-environment is undertaken in this section: pollution, global warming, and “acts
of God”, among others.
Opportunities and Threats
Enumerate identified opportunities and threats from the macro-environmental analysis. Arrange them chronologically. Relate
them directly to a specific macro-environmental factor and justify why they are classified as opportunities or threats.

Micro-environmental Analysis
The six micro-environmental factors are assessed and evaluated.
A. The Company
✓ The company is evaluated in terms of its organizational ability to implement marketing strategies.
✓ The relationship among functional areas must be evaluated to determine if there are bottlenecks in decision-making,
and if other functional departments are supportive of the marketing.
B. Suppliers
✓ In this section, the relationship between the company and its suppliers is assessed. This is especially for suppliers
involved in the supply of raw materials vital to product manufacturing. Any opportunities to improve the company’s
supply chain should also be investigated with the objective of reducing product cost and increasing value to customers.
C. Marketing Intermediaries
✓ The company’s distribution network is illustrated and explained in this section. The choice of distribution type is
reviewed and possible improvements in intermediary relationship is determined.
D. Customers
✓ In this section of the marketing plan, identification of the geographic, demographic, and psychographic profile of the
brand’s typical customer is expected. The buying behavior should be explained and understood, e .g. why they buy,
how frequently they buy, and how they use your product.
E. Competition
✓ This is where the brand competitors and the companies that manufacture them are identified.
F. Publics
✓ Evaluate the company’s relationship with its publics: corporate, stockholders, the community, financial institutions,
media, the government, and society as a whole. This can prevent any future need for the company to engage in public
relations and publicity.
Strengths and Weaknesses
Enumerate the identified strengths and weaknesses from the micro-environmental analysis. Arrange
them chronologically. Relate them directly to a specific micro-environmental factor and justify why they are classified as strengths
and weaknesses.

References:

So, R. C., & Torres, O. G. (2016). Principles of Marketing. Vibal Group, Inc.