CHAPTER 1

INTRODUCTION

Rationale

This research paper aims to investigate the variables marketing strategies

and business profitability. This targets the relevance of marketing styles towards

achieving higher business performance indicated by profit. The goal of this research

is to identify whether marketing strategies significantly affect the business profit or

not at all. According to Monica (2014) As an absolute term, profit has no relevance in

comparing the efficiency of a business organization.. A very high profit does not

always indicate sound organizational efficiency and low profitability is not always a

sign of organizational sickness.

Marketing strategy has been an important tool to keep the business going.

This helps a business firm to remain stable in a competitive environment.

Owomoyela et. al. (2013) define marketing strategy as providing a quality product

satisfying customer needs in an affordable price backed up with an effective

promotion strategy. It is a vital business factor to sustain a strong market and

minimize the power of competition. A marketing strategy therefore is a method by

which a certain firm tries to reach it target market.

Consumers are the ultimate source of revenue on any business. The pay they

hand, which comprises the value of the product invested and the profit, is technically

the evidence of a successful market. However, every firm has no control over

consumers' mind. The assessment of entrepreneurial success is based on non-

financial and financial performance measures (Gupta & Muita, 2013). Why and how
a consumer decides to acquire, use and dispose the product are the essential

questions for understanding consumer behavior. That is why marketing strategies

take its place.

Research objectives

The main purpose of the study is to determine the significant relationship

between the marketing strategy and business profitability of the selected small fish

stalls in Panabo City public market. Specifically, this aims;

1. To determine the marketing strategy of the selected small fish stalls in Panabo

City public market in terms of:

 promotion,

 product,

 place, and

 price.

2. To determine the business profitability of the selected small fish stalls in Panabo

City public market indicated by the net revenue.

3. To determine the significant relationship between the marketing strategy and

business profitability of the selected small fish stalls in Panabo City public market.

Hypothesis

The hypothesis that there is no significant relationship between the marketing

strategy and business profitability will be tested at 0.05 level of significance.

Review of Related Literature

Marketing Strategy

Marketing strategies aim at increasing the sales of any firm. Having

recognized the different perspectives about marketing strategies, Li et.al (2000)

defined marketing strategy as providing a way for using resources of a firm towards

achieving the set goals and aims. It is the proper allocation of resources to gain a

competitive advantage. Goi (2005) sees marketing strategies as the marketing

apparatuses that firms utilize to realize their marketing objectives in the target

market.

Marketing has been proven as a helpful tool to an effective increase of sales

of a certain product (Jager 2007). For marketing strategies, a firm look onto diverse

factors such as the viewpoints of its consumers, the quality of the goods and

services, the appropriate employment of promotional techniques, and pricing

strategies, to pursue the company’s objectives (Walker, Mullins & Larreche 2008).

Marketing mix, commonly known as the McCarthy’s (1960) 4Ps which consists of

product, price, place and promotion, is the strategic tool-box that every marketer has

been using to achieve positive feedback and results from the customers as their

sales indicators (Solomon, Marshall & Stuart 2008).

According to Owomoyela et. al. (2013), marketing strategies are developed to

establish, build, defend and keep a business at pace in a competitive environment.

Business Profitability

Profitability determines the performance of a business. Hifza Malik (2011)

stressed out that it is one of the most significant objectives of financial management

since one goal of putting up a business is to maximize the owners’ wealth. Practically

speaking, a business that earns no profit at all cannot survive. On the other hand, a

business that is highly profitable is able to give the owners a large return on their

investment. Therefore, every business entity aims to earn profit to keep and sustain

the business under any market conditions.

Nimalathasan (2009) cited that profit as the primary objective of a business,

determines not only the success of a product or service, but also of the progress of

the market for it. Any firm should earn profits to endure and progress over a long

period of time. Profit provides a concrete indication of the potential earnings of a

business and how well it is managed. If a firm fails to gain a profit, the capital

invested is eroded and if the failure still goes on, the business would most probably

vanish. Velnamby and Nimalathasan (2009) noted that profitability is the most

responsible element that could give the owners a more precise view of the firm’s

performance.
Theoretical Framework

A number of studies supported the correlation between the marketing strategy

and financial performance of a business. Weston (1978) the profit is use to evaluate

the efficiency and use to assess the value and worth of the investment to the

owners. Most of these studies have considered the paper about the Profit Impact of

Marketing Strategy and have focused on company performance.

Moreover, larger firms have higher survival rates (Aldrich 1986), and the

benefits of associated economies of scale may be beneficial. While growth in small

businesses was considered the most important measure, it was also argued that

financial performance is multidimensional in nature and that metrics such as financial

performance and growth are different performance factors that should be

considered.

On the other hand, Hoy (1992) established that the pursuit of progression may

be slightly or even insignificantly associated with firm profitability. Keith (1988)

attested that growth as a tool to measure firm performance is generally based on the

thought that growth is a forerunner to the achievement of sustainable competitive

advantages and profitability.

While growth has been believed as the most important measure in firms, it

has also been argued that financial performance is multidimensional in nature, and

such measures are different features of performance that has to be deliberated and

weighed up (Wiklund, 1999).

Conceptual Framework

The figure below shows the variables marketing strategy indicated by

McCarthy’s (1960) 4Ps, and business profitability indicated by the net revenue.

INDEPENDENT VARIABLE DEPENDENT VARIABLE

Marketing Strategy Business Profitability

1. Promotion 1. Net revenue

2. Product (generated income
3. Place minus input cost)
4. Price

Marketing strategy as the independent variable is indicated by four factors:

promotion, product, place and price. Zeithaml et. al. (1995) labeled promotion as the

technique of encouraging customers share the benefit, they got from purchasing a

good or service. According to Duncan (2005), promotion is vital to achieve a

successful market exchange. Previous researches (Amine and Cavusgil, 2001;

Francis and Collins-Dodd, 2004) have proven that there is a significant relationship

between promotion and business performance. A product is anything that can be

offered to a market for purchase, use, or consumption to satisfy a customer’s need.

Past researchers have recommended that product factors have a significant

influence on business performance (KazemandHeijden, 2006; Kemppainen,

Vepsäläinen, and Tinnilä, 2008; Owomoyelaet al, 2013). Jones, (2007) describes

place as any way that the purchaser can acquire a product or obtain a service.

Owomoyela et al, (2013); Amine and Cavusgil, {2001}; and McNaughton, (2002)
agree that place has a significant impact on business performance. Price can be

stated as the actual or rated value of a valuable product which is up for exchange

(Kotleret al, 2005). Zeithaml (1988) viewed that monetary cost factors influence

consumer’s perception in the market exchange process. This was strengthened in

the studies of Colpan (2006); Doole et. al. (2006) and Owomoyela et. al. (2013)

having found that there is a significant correlation between a product value and

business performance.

The dependent variable which is business profitability is defined as the

organizations’ ability to generate income, and its failure to generate revenue is a

loss. The indicator, net revenue, is that if the generated income exceeds the input

cost or simply the capital, that justifies profitability; but if the income is less than the

invested capital, the business reflects a poor performance (Hermanson, 1989).

Significance of the study

The results of the study will be of great advantage for further research. It will

be of great use to increase the awareness about the factors that influence the

profitability of a certain business whether in relation to marketing strategies or not.

This will also help the university by adding up the compilations for academic

researches which could be utilized in the future, for comparison and possible

improvement

Future researchers could also benefit this study since this would serve as an

additional resource for viewing and referencing. This study will surely be beneficial

for the business owners. This would give them a hint or an idea on which factor of

the business would they consider and could be improved. This will help them revise

necessary strategies and upgrade marketing techniques to achieve a higher

business performance.
Definition of terms

The terms used in the study are herein defined to convey the meaning and to

establish a common frame of reference.

Marketing strategy: This is a method by which a firm or business attempts to

reach its target markets wherein, companies influence the consumers to acquire the

goods or services, provide good and services that would satisfy consumer’s needs,

and employ appropriate promotional tools and pricing techniques to achieve the set

objectives.

Business Profitability: This is the ability of a given investment to earn a

return from its use. This determines whether a business is earning more that the

return of the input cost thus proving that it is well-managed, progressing by growth

and time duration.

 CHAPTER 2

METHODOLOGY

This chapter is focused on defining the research methods that will be utilized

by this study. This portion would explain how the essential information and data are

gathered and analyzed. The research design, research locale, population and

sample, research instrument, data collection, and statistical tools, will be defended

and justified.

Research design

This study will employ the quantitative non-experimental correlational design.

This research lacks the manipulation of the independent variable, random

assignment of partcipants to conditions or orders of conditions, or both –

characteristics pertinent to experimental designs (O’Dwyer and Bernauer, 2013).

This is utilized to provide a strong evidence that change in independent variable will

cause a change in the dependent variable. This will focus on a quantitative research,

thus involving numerical analysis such as scaling.

In this paper, the research design is used to identify whether marketing

strategies of the selected small fish stalls affect the business profitability with the

help of adopted questionnaires and suitable statistical tool.

Research Locale

The selected site that this research will cover is Panabo City public market located

along the national highway at Barangay Sto. Niño, Panabo City, Davao del Norte

Province. The figure below points out the public market of the city as this study’s

local which will be the resource of the participants and the necessary data.

Population and sample

The owners or vendors of the small fish stalls in Panabo City public market

selected in a random sampling are the respondents of this research. Considering the

small allocated area of Panabo City public market for fish businesses, 30

respondents are deem necessary to complete this research (Sugiyono, 2012). This

minimum number meets the requirement for marketing strategy and business

profitability.

Respondents Sample
Owners/ Vendors 30
Total 30

Research Instrument
 Likert scale will be used to determine the level of marketing strategy and

business profitability of the selected small fish stalls in Panabo City public market.

Lissitz & Green (1975) and Boote (1981) suggested that a five (5) - point scale is

reliable.

The following scales are used to determine the marketing strategy.

Descriptive
Scale Interpretation
Equivalent

4.21 – 5.00 Very high The marketing strategy is always observed.

3.41 – 4.20 High The marketing strategy is often observed.

The marketing strategy is sometimes

2.61 – 3.40 Average/ Moderate
observed.

1.81 – 2.60 Low The marketing strategy is rarely observed.

1.00 – 1.80 Very low The marketing strategy is never observed.

The following scales are used to determine the business profitability.

Descriptive
Scale Interpretation
equivalent

It measures that business profitability is

4.21 – 5.00 Very high
exceptionally manifested.

It measures that business profitability is highly

3.41 – 4.20 High
manifested.
 It measures that business profitability is
2.61 – 3.40 Average/ Moderate
moderately manifested.

It measures that business profitability is poorly

1.81 – 2.60 Low
manifested.

It measures that business profitability is not

1.00 – 1.80 Very low
manifested.

Data collection

To gather the necessary data, the researcher will formally inform the

respondents through writing a letter of permission. After getting a positive response,

the researcher will ask relevant questions to the respondents, whether by a

questionnaire or by any form of inquiry. Once the necessary information is gathered,

the researcher will analyze and evaluate the data to get the result and prepare for a

discussion.

Statistical tools

Weighted mean - To determine the level of the marketing strategy applied by

the vendor/owner; also, it will be used to determine the level of business profitability

in terms of the net revenue.

Pearson r – This will be used to determine the significant relationship

between marketing strategy and business profitability.

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