Bicol University

College of Business, Economics and Management

Entrepreneurship Department
Daraga, Albay

MARKETING MIX VARIABLE  Convenience Goods are those

purchased with minimum efforts.
A. THE PRODUCT
 Shopping Goods are those that are
WHAT IS A PRODUCT? bought only after an effort to
compare with other goods is made.
Product is anything offered for sale by a firm to buyers to  Specialty Goods are those that the
satisfy their physical, social, symbolic and psychological consumers seek to buy and they are
wants and needs. Products may take any of the following not willing or they are not able to
forms: accept substitutes.
 Unsought Goods are those that are
1. A physical object like a toy or a kilo of pork;
not yet wanted by or are still
2. A service like a dental check-up;
unknown to the consumer. There are
3. A place like Boracay;
two types of unsought goods: The
4. An organization like Bicol University;
new unsought goods are really new
5. An idea like “pro-life”; and
ideas or product that the consumer
6. A personality like Rodrigo Duterte.
still has to know to be motivated to
To maintain the interest of buyers, the physical products buy. The Regular unsought goods are
are most often provided with benefits like: those that stay unsought but not
unbought forever.
1. Quality
2. Reputation of the manufacturer Industrial Goods may be classified to:
3. Packaging
1. Installations. This term refers to industrial
4. Credit
products with long life, are generally expensive,
5. Information about the product
are they form part of the major capital equipment
6. Warranty
of an industrial firm.
7. After sales service
2. Accessory Equipment. These are industrial goods
8. Delivery
that are used as aids in the production process.
3. Raw Materials. These are unprocessed goods that
will become part of another product. Raw
CLASSIFICATIONS OF PRODUCTS materials are of two types: Farm products are
those grown by farmers. Natural products are
Products may be classified into.
those which occur by nature.
1. Consumer Goods are those intended for final 4. Component Parts and Materials. These are
consumption by consumer. processed industrial goods that will still be used
2. Industrial Goods are those used in the production and become an actual part of the finished
of other goods. products.
5. Supplies. These are items that are used as aids in
Consumer Goods may be classified according to: the operating process but do not become part of
1. Rate of Consumption and Tangibility. Base on the finished products.
the rate of consumption and tangibility, 6. Services. These are the expense items that assists
consumer goods and further classified as: in the operations.
 Durable Goods are tangible goods THE PRODUCT AS A MORE USEFUL VARIABLES
which normally survive many uses.
 Nondurable Goods are tangible The product is one of the variables in the marketing mix
products which are consumed in one and it can be unique so it will be more attractive to
or few uses. buyers. When the marketer does it, he is making his
 Services are intangible goods like product different from the other.
activities, benefits or satisfaction
The purpose of product differentiation is not only to
which are offered for sale.
satisfy customers and make more profits but to beat the
2. Consumer’s Shopping Habits. Base on
competition.
consumer’s shopping habits, consumer goods
may be further classified as:

HAND-OUT NUMBER:05 Market Research and Consumer Behavior

GENIVA M. NARIO, MEntrep (Units)
 Bicol University
College of Business, Economics and Management
Entrepreneurship Department
Daraga, Albay

In product differentiation, the following tools are 2. Reseller Branding also referred to as private
considered: labelling or private branding, refers to the
branding strategy of a firm which manufactures
1. Branding products but sell them under the brand name of a
2. Quality reseller.
3. Image 3. Mixed Branding refers to the use of the
4. Product Features manufacturer and reseller brands in a product.
5. Packaging 4. Generic Branding is a branding strategy which lists
6. Location
no product name, only a description of contents.
7. Promotion
8. Innovation PACKAGING
9. Different Service Levels
Packaging refers to all activities involved in designing and
BRANDING producing the container or wrapper of the product. The
container or the wrapper is the package. The package may
Branding is that marketing action which identifies and
include up to three levels of material briefly described as
helps differentiate the goods or services of one seller from follows:
those of another.
1. The primary package which is the product’s
 Brand is a name, term, sign, symbol or design or a immediate container.
combination of these elements, that is intended 2. The secondary package which protects the
to identify the goods or services of one seller or a primary package.
group of sellers. 3. The shipping package which contains the
 Brand may either be: secondary packages.
1. Legally registered. Legally registered
brands are provided with legal protection Reasons for Packaging
called trademark.
1. It provides protection to products before and
2. Not legally registered.
after they are in the possession of the intended
 Brands, whether legally registered or not, consists
user.
of two distinct parts:
2. It provides convenience to the user.
1. Brand Name. This term refers to that part
3. It provides safety.
of a brand consisting of words, letters
4. It provides economy to both the seller and the
and/or numbers that can be vocalized.
user.
2. Brand Mark. This refers to that part of a
5. It allows the sellers to effectively promote the
brand that appears in the form of a
product.
symbol, design or distinctive coloring or
lettering and which cannot be vocalized. LABELING

Criteria for a Good Brand
1. It should suggest something about the product’s
benefit and qualities.
2. It should be easy to pronounce, recognize, spell
and remember.
3. It should be distinctive.
4. It should be adaptable to additional product lines.
5. It must be capable of being legally registered.
Branding Strategies
When branding products or services, firms have several
options. These are:
1. Manufacturer Branding is a branding strategy in
which the brand name for a product is designated
by the manufacturer.
Labeling is that part of the product which provides
information about the product and the manufacturer is
called the label. It may be part of the package, or a tag
attached to the product.
Types of Labels
1. The Brand Label. This label identifies the product
or brand.
2. The Descriptive Label. This label provides
information about the product: who made it,
where and when it was made, its contents, how it
is used, and how to use it safely.
3. The Grade Label. This label identifies the product’s
judged quality with a letter, number or word like
“grade A”, “grade 3”, or “premium grade”.

HAND-OUT NUMBER:05 Market Research and Consumer Behavior

GENIVA M. NARIO, MEntrep (Units)
 Bicol University
College of Business, Economics and Management
Entrepreneurship Department
Daraga, Albay
4. The Promotional Label. This label provides
attractive graphics to help promote the product.
PRODUCT LIFE CYCLES
The Product Life Cycle (PLC) refers to a product’s sales
growth from the beginning to its peak, followed by a
decline and its eventual withdrawal from the market. In
more simple term, PLC is the period between the birth
and death of a product. The PLC consists of four distinct
stages:
1. The Introduction Stage. In this stage, the product
is introduced to the public. It is generally
characterized by the following:
 Slow growth of sales;
 Heavy promotional expenditures in
relation to sales;
 Relatively high prices for the products
 Limited product offerings, like limited
variations in sizes, color, and the like.
2. The Growth Stage. The growth stage in the PLC
follows a successful introduction stage. The
growth stage is characterized by the following:
 Sales start climbing rapidly as distribution
increases and the consumers are
persuaded to try the products.
 The ratio of promotional expenditures to
sales decreases.
 Prices tend to remain high except when
demand stimulation is required, and entry
of competitors are discouraged.
 New form of the product appears, like
new colors, new models and new sizes.
3. The Maturity Stage. When the growth in sales
slows down, the maturity stage begins to take
over. This stage is characterized further by the
following:
 Sales settle down as the product becomes
well-known.
 Prices reductions are used as a tool of
competition;
 Competition is intensified; and
 The market becomes saturated.
4. The Decline Stage. The decline stage begins with a
permanent drop in sales. The stage is further
characterized by:
 A pruning of product models and
variations to eliminate those not
producing profits;
 Promotional expenses are reduced; and
 Plans for phasing out the product is made.
B. THE PRICE
HAND-OUT NUMBER:05
WHAT IS A PRICE?
Price is a money, good or service exchange for the
ownership or use of a good or service.
Pricing may be defined as those activities involved in the
determination of the price at which products that will be
offered for sale considering the various object of the firm.
PRICING OBJECTIVES
Before setting prices, the firm’s pricing objectives may
consist of any of the following:
1. Profit-oriented objectives. Profit-oriented
objectives call for profit generation. This may
either be:
 To achieve the target return on
investment or on net sales; or
 To maximize profit.
2. Sales-oriented objectives. Sale-oriented pricing
objectives refer to those that will provide higher
sales volume.
This may be achieved through any of the
following:
 Increasing sales volume;
 Maintaining or increasing market share.
3. Status qou-oriented objectives. Status qou pricing
requires maintaining the same prices for the
company’s products. This happens when the firm
is satisfied with its current market share and
profits. Status qou pricing may be due to any of
the following:
 To stabilize prices;
 To meet competition; or
 To avoid competition.
THE PRICING PROCEDURE
The pricing procedure refers to the series of steps adapted
in the determination of price. The series of steps are the
following:
1. The determination of the realistic range of choice;
2. The selection of pricing strategy;
3. The evaluation of economic feasibility; and
4. The setting of the price.
SELECTING A PRICING STRATEGY
The next step in the pricing procedure is the selection of
pricing strategy. The decision-maker may adapt any of the
following:
1. Market Skimming Strategy. It requires the setting
of price at the upper limit of the realistic range of
choice.
Market Research and Consumer Behavior
GENIVA M. NARIO, MEntrep (Units)
 Bicol University
College of Business, Economics and Management
Entrepreneurship Department
Daraga, Albay
2. Penetration Strategy. It calls for setting the price
at the bottom of the realistic price range.
PRICING APPROACHES
Prices of products and services may be set based on any of
the various pricing approaches. They are the following:
1. Cost Based Approach. The cost-based approach in
pricing refers to the setting of the prices on the
basis of costs. Under this approach the total costs
are calculated, and a margin of profit is added.
There are two types of pricing under the cost
based approach:
 Cost Plus Pricing. This method calls for
adding a percentage of costs on top of the
total costs.
 Target Rate of Return Pricing. This
approach enables a company to establish
the level of profits that it feels will yield a
satisfactory return.
2. Buyer Based Approach. The buyer based
approach of pricing deals with consumer
perceptions or behavior as bases for determining
the selling price of a product or service. This
approach is composed of the following methods:
 Perceived Value Pricing. This method
establishes the price for a product based
on the buyer’s perceptions of the value of
the product or service.
 Price-Quality Relationship Pricing. This
approach hinges on the observation that
consumer associate high price with quality
and low quality with low price.
 Loss-Leader Pricing. This refers to the
practice of setting low prices on selected
products which will result in the
generation of less profits, but with the
objective of increasing the sales volume of
other products sold by the company.
 Odd-Numbered Pricing. This refers to the
practice of setting price even below peso
amounts. An example is selling at Php
99.50 rather that at flat 100.
 Price Lining Pricing. This method refers to
the practice of selling merchandise at a
limited number of predetermined price
levels.
3. Competition Based Approach. The competition
based pricing approach refers to setting of prices
based on what prices are being charged by the
competitors. There are two kinds of pricing under
this approach. They are the following:
HAND-OUT NUMBER:05
 Going-Rate Pricing. Under this pricing
method, the firm adapts a price based on
the competitor’s prices. The price adapted
maybe a little higher or lower than the
competitor. Less attention is given to the
firm’s own costs and demand.
 Sealed Bid Pricing. In sealed bid pricing,
the firm sets its price which is thought to
be a little lower than the competitors.
PRICE ADAPTATION STRATEGIES
Price adaptation strategies are those that are used to
address the variations in geographical demand, costs,
market segments, purchase timing, and other factors.
These strategies consist of the following:
1. Geographical Pricing. Geographical pricing refers
to pricing decisions related to products intended
for customers in different locations.
2. Price Discounts and Allowances. Discounts and
allowances are price modifications designed to
reward customers for early payment volume
purchase, and off-season buying. Discounts and
allowances are classified as follows:
 Cash Discounts
 Quantity Discounts
 Functional or Trade Discounts
 Seasonal Discounts
 Allowances
o Discounts are reductions from the
list price that are given by sellers
to buyers who either give up
some marketing function or
provide the function themselves.
o Allowances are reductions in price
given to final consumers,
customers or channel member for
doing some tasks or accepting less
service.
3. Promotional Pricing. Promotional pricing refers to
the temporary reduction of prices of a company’s
products. Price reductions take the form of any of
the following:
 Sale
 Special Event Pricing
 Cash Rebates
 Low-Interest Financing
 Warranties and Service Contracts
4. Discriminatory Pricing. Discriminatory pricing
refers to modifications of the basic price to
accommodate differences in customers, products
Market Research and Consumer Behavior
GENIVA M. NARIO, MEntrep (Units)
 Bicol University
College of Business, Economics and Management
Entrepreneurship Department
Daraga, Albay
and locations. The forms of discriminatory pricing
are as follows:
 Customer Segment Pricing. Different
prices for the same product or services
are charged for different customer
groups.
 Product Form Pricing. Different product
versions are priced differently without
considering costs.
 Image Pricing. Identical products but with
different images are priced differently
even if the cost of offering each location is
the same.
 Time Pricing. Prices varied by season, day
or hour; examples are telephone
companies charging different rates on
different days and hours.
C. THE PLACE (MARKETING CHANNELS)
NATURE AND FUNCTIONS OF MARKETING CHANNELS
Products are really meant to be sold to buyers. This is
possible if the products are able to reach the costumers.
The firm must devise some means to bring the products to
the customers.
The gap between the firm and its customers must be
closed by a facilitating tool called Marketing Channels.
Marketing Channel may be defined as a set of
interdependent organizations and individual that facilitate
the movement and transfer of ownership commodities
from the producers to the ultimate users.
FUNCTIONS OF THE MARKETING CHANNELS
Marketing channels play an important role in the
marketing of goods and services. Specifically, they
perform the following functions:
1. They routinize decisions and work;
2. They finance the process for moving goods from
the producers to the consumers;
3. They are active participants in the pricing process;
4. They serve as channel of communications
between the producers and the consumers;
5. They assist in the promotional aspects of
marketing; and
6. They minimize the number of transactions in the
system.
TYPES OF MARKETING CHANNELS
Marketing Channels consists of two basic types:
HAND-OUT NUMBER:05
1. Consumer Channels. Consumer channels are
those that are used in the distribution of
consumer goods.
2. Industrial Channels. Industrial channels are those
which are used in the distribution of industrial
goods.
THE CHANNEL SELECTION PROCESS
Assuming that the manufacturer has the option to choose
from among the various channel options, he may have to
adapt the following steps:
1. Identification of target consumers;
2. Determination of consumer buying habits
regarding the goods under considerations;
3. Determination of the location of the potential
customers;
4. Listing of channel alternatives;
5. Evaluation of channel alternatives; and
6. Selection of channel members.
TYPES OF DISTRIBUTION STRATEGIES
Decisions must be made by the firm on how broadly or
narrowly its products will be distributed. This will
determine the number of intermediaries that will be
tapped. Distribution strategies consists of three types:
1. Intensive Distribution is a strategy that requires
the firm to sell its products through every
available outlet in a market where a consumer
might reasonably try to find them.
2. Selective Distribution is selling thoroughly only
those outlets which will give the product special
attention.
3. Exclusive Distribution. An exclusive distribution
agreement is one where the producers grants
exclusive selling rights to a middleman in a certain
area.
WHAT IS RETAILING?
Retailing refers to the business activity of selling goods or
services to the final consumer.
Retailer is one whose business firm sell mainly to the final
consumer. A retailer in some cases sell on a nonretail
basis, i.e., wholesale.
FUNCTIONS OF RETAILERS
Retailers perform several functions. They are the
following:
1. They provide convenience.
2. They provide guarantee and service.
3. They provide financing of transactions.
Market Research and Consumer Behavior
GENIVA M. NARIO, MEntrep (Units)
 Bicol University
College of Business, Economics and Management
Entrepreneurship Department
Daraga, Albay

4. They perform promotional activities.  Full Service Retailers are stores where
5. They perform storage functions. assistance in a variety of ways is extended
6. They perform intelligence service for the to the customers.
manufacturer.  Supermarkets are large department
7. They serve as buying agent of the consumers. stores which offers variety of goods
including apparel, groceries, bread, dairy
TYPE OF RETAILERS
and candies.
Retailers may be classified according to the following:  Discount Stores are self-service retailers
that sells a wide variety of goods at less
1. By Sales Volume. According to sales volume, retail than traditional retail prices.
stores may be:  Nonstore Retailers refer to those who sell
 Small outside of the store. They may be
 Medium, or classified as:
 Large 1) At-home retailers
2. By Product Mix Offered. Retailers may also be 2) Telephone Retailers
classified based on product lines they carry. They 3) Vending Machine Retailer
may be categorized into: 4) Mail-Order Retailer
 General Merchandise Stores are those 5) Internet Retailer
that carry a large variety of product lines, 6) Cellphone Service retailer
oftentimes with a number of assortments
in each product line. They may be further WHAT IS WHOLESALING?
classified into: Department Stores are Wholesaling refers to all activities involved in selling
those which carry a variety of product line goods and services to those who intend to resell or use
which include furniture, clothing, sporting the same for producing goods or services.
goods and toys. Variety Stores are those
that sell a variety of products but not as Wholesaler is the one who performs wholesaling
extensive as those of department stores. activities. The wholesale may be called as such depending
 Specialty Stores are those which carry on the intention of the buyer.
only a specific line of products. They may
The following transactions are considered wholesale:
be further classified into: Single-Line
Specialty Store offers only one or a very 1. The sale of the computer unit for office use;
few closely related product lines. Limited- 2. The sale of sugar as raw material for candies;
Line Specialty Stores sells items more 3. The sale of an electric guitar to a professional
specialized in nature than those sold by a guitarist;
single line specialty store. 4. The sale of janitorial services to an office;
3. By Form of Ownership. Retail Stores operate 5. The sale of the bus to a transportation company;
under any of the various forms of ownership. They 6. The sale of the books to a university; and
may either be: 7. The sale of the vegetables to a retailer.
 Corporate Chain Store are composed of
two or more outlets that are owned FUNCTIONS OF A WHOLESALER
commonly by a person or a group of
Wholesalers serve as important links between the
persons, selling similar product lines,
manufactures and retailers. They perform all or any of the
maintaining and using a common logo.
following:
 Independent Stores are owned and
operated by independent retailers. 1. Anticipating consumer needs;
 Franchise Stores or franchise dealer is an 2. Selling and promotions;
independent retailer given the right, 3. Financing;
usually exclusive, by the manufacturer to 4. Storage;
sell his products in a definite market area. 5. Breaking bulk;
4. By method of Operation. Retailers also vary 6. Transportation; and
according to their method of operation. They may 7. Risk-taking
either be: D. THE PROMOTION

HAND-OUT NUMBER:05 Market Research and Consumer Behavior

GENIVA M. NARIO, MEntrep (Units)
 Bicol University
College of Business, Economics and Management
Entrepreneurship Department
Daraga, Albay

WHAT IS A PROMOTION? 3. Competitive Advertisement – presents brand-

oriented messages, designed to stimulate
Promotions refers to the series of steps taken by firms to selective demand.
introduce a product to its target consumers. 4. Comparative Advertisement – makes direct
There are different types of promotional that firms can comparisons between advertised and competing
use to market a product to the consumers. brands.
5. Institutional Advertisement – seeks to enhance
PROMOTION STRATEGIES overall image of and build goodwill for n
organization.
There are two types of promotion strategies:
6. Trade Advertisement – seeks to stimulate reseller
1. Push Strategy. This strategy utilizes the demand through messages in trade media.
distribution channels to promote products. 7. Cooperative Advertisement – one where more
2. Pull Strategy. In this strategy, marketers direct all than one party shares in the cost of advertising.
their promotional activities to the final
TYPES OF ADVERTISING MEDIA
consumers.
1. Newspaper
MAJOR TYPES OF PROMOTION
2. Consumer Magazines
1. Advertising. It is defined as any paid form of non- 3. Radio
personal and mediated presentation of a 4. Television
product/service. 5. Outdoor Ad
2. Public Relations. This refer to the attempts of 6. Direct Mail
firms to build a good brand image and establish a 7. Cable TV
smooth and harmonious relationship with 8. Yellow pages
consumers. 9. Transit
3. Personal Selling. This method utilizes the firm’s 10. Point-of-Puchase
large sales force with the intention of making a 11. The internet
direct sale to target consumers. 12. Cellphones
4. Sales Promotion. It involves the use of incentives
ADVETISING EXECUTION
on a short-term basis to boost product sales.
5. Direct Marketing. It involves direct Advertising messages can be expressed in the following
communication with consumers with the aim of forms:
establishing good rapport with them.
1. Lifestyle. It shows how a product fits a certain
WHAT IS ADVERTISING? lifestyle. Sanitary napkins like Modess, Whisper
and Kotex usually execute their ads using the
Advertising may be defined as any paid form of
lifestyle theme or factor.
nonpersonal presentation and promotion of ideas, goods
2. Slice of Life. It shows a scenario wherein the
or services by an identified sponsor.
product is used in a normal day-to-day setting.
ADVERTISING OBJECTIVES Detergent ads like Tide, Surf and Ariel are the best
examples of this message model.
1. To Inform. 3. Fantasy. These are advertisements that utilize
2. To persuade. magical and fantastic elements to promote a
3. To Compare. product. Many shampoo and conditioner brands
4. To Remind. use this type of message model showing users the
instantaneous effect of their products.
TYPES OF ADVERTISEMENTS
4. Mood. There are ads that show a certain mood
1. Product Advertisement – presents information like love and beauty. The Camay commercial is a
and/or persuasive appeals about products and good example of an advertisement that uses the
services. mood message template.
2. Pioneer Advertisement – presents messages 5. Musical. These are the commercials that show
about a product class to stimulate primary people singing and dancing to songs about the
demand, like those directed to cars in general. product.

HAND-OUT NUMBER:05 Market Research and Consumer Behavior

GENIVA M. NARIO, MEntrep (Units)
 Bicol University
College of Business, Economics and Management
Entrepreneurship Department
Daraga, Albay

6. Technical know-how. There are advertisements,

on the other hand, that show consumers the
product’s technical aspects and how it works.
7. Scientific evidence. Many brands provide
scientific basis to show consumers how effective
their products are.
8. Testimonial or endorsement from an expert.
There are advertisements that capitalize on the
endorsement of a professional or practitioner in a
particular field to promote a product.

WHAT IS SALES PROMOTION?

Sales Promotion is a short-term inducement of value

offered to arouse interest in buying a good or service. It is
offered to the middlemen or final consumer.

SALES PROMOTION OBJECTIVES

1. To identify and attract new customers.

2. To introduce new products.
3. To increase the total number of users.
4. To encourage greater usage of products.
5. To educate consumers regarding the product
improvements.
6. To bring more customers into retail stores.
7. To stabilize a fluctuating sales pattern.
8. To increase reseller inventories.
9. To combat or offset competitor’s marketing
efforts.
10. To obtain more and better shelf-space and
displays.

HAND-OUT NUMBER:05 Market Research and Consumer Behavior

GENIVA M. NARIO, MEntrep (Units)