CHAPTER 4: LET THE MARKET KNOW YOU BETTER

Marketing is about creating and accumulating customers. Marketing plans are designed to capture
market share and defeat competitors. The marketing function and the marketing mix serve the overall
business strategy. It is summarized in seven (7) Ps by which the enterprise will engage competitors and
gain customers.

7 Ps

Positioning

Product

Packaging

Place

People

Promotion

Price

The 7 Ps are a set of recognised marketing tactics, which you can use in any combination to satisfy
customers in your target market.

POSITIONING

- In the context of a marketing battle plan, it has three overlapping objectives

1. Enterprise Perspective

- Scans the market environment and decides to position itself with products that specifically address the
needs of a chosen target market.

2. Competitive Perspective

- The enterprise has to differentiate and distinguish itself from its competitors.

3. Customers Perspective

- Positioning is the way the customers perceive the enterprise and its products or services in their minds

POSITIONING

- Enterprises can establish their positioning either by starting with their own product creations or with
their customers’ outcome expectations.
Competitive landscape

(graphic organizer)

- The competitive landscape of the enterprise, relative to its market, can be clearly mapped out by laying
out both the latitudinal and longitudinal market dimensions.

Latitude

- Lays out what is important to the different customer segments from their differing points of view.

Longitude

- Represents the product features and attributes of competitors in the marketplace.

The latitudinal and longitudinal dimensions will draw the parameters of the map, locating both the
customers and the competing enterprises in their respective positioning.

PRODUCT

- is the tangible good or intangible service that the enterprise offers to its customers in order to satisfy
their needs and to produce their expected results.

- Products are often identified with their brand names to distinguish them from other products in the
market. Some products have built up so much loyalty to the point that their brand names have become
their best selling proposition.

Four General Types of Products that are marketed by enterprises:

Breakthrough products

- Offer completely new performance benefits. They may double the performance at half the cost. They
may be much more convenient and easy to use. They may cater to a unique set of customer needs that
have not yet been trapped. They may create a new demand. Marketing breakthrough products need a
higher level of customer education and orientation.

Differentiated products

- try to claim a new space in the mind of the customer different from the spaces occupied by existing
products. The performance benefits may be close to existing products but there would be additional
benefits on special aspects of the product.

Copycat products
- will not make much impression on the consumer’s mind. The marketer should make up for this lack of
mental space by offering more physical space in the shelves ,lower prices, easier access, promotional
freebies, and the like aggressive advertising may add to market demand but a greater cost than the
leading brands.

Niche products

- do not intend to compete directly with the giants. They are products with lower reach, lower visibility,
lower prices, and lower top of mind. They are content to play minor rules in specific and smaller
market segments.

PACKAGING

There used to be a time when products came wrapped in ordinary packaging that prominently displayed
the brand name, the main attributes of the product, the company’s logo, and its place of business.
Packaging came in a small, medium, and large sizes without much variation in the material, shape, and
purpose of the packaging. That is a time long gone.

Today, packaging serves several important purposes, which elevate it to one of the seven P’s of
marketing.

First, packaging identifies the product, describes its features and benefits, and complies with
government rules on specifying its contents, weight, chemical composition, and potency. Packaging
provides easy brand identification for the customers.

Second, packaging differentiates the product from its competitors and even from its other brand
offerings. For example, liquor brands differentiate their premium scotch and brandy offerings by
packaging them in ceramic bottles.

Third, packaging lengthens the lifespan, physically protects, and extends the usefulness and the product.
Vacuum-packed or aseptically packaged products prolong the shelf lives of many food and beverage
items. High-tech packaging protects fragile and sensitive products like crystal sculptures, laptops,
precision tools and the like.

Fourth, packaging has become an environment issue by itself. Many packages are discarded after the
contents have been taken out. This generates waste and poses packagers and customers alike.

Fifth, the aforementioned purposes of packaging have increased the cost of packaging and, therefore,
the price of the product. To counteract this, the packaging must possess its own value proposition for
the customers as well as for the enterprise. For the customers, they may put some premium on
environment-friendly packaging. Customers may even be able to convert the packaging were
exchangeable for cash. Some packaging are so beautiful, they can create their own value as collectibles.
PACKAGING

Packaging does not refer only to the wrapper or container of the product. It can mean the bundle of
products or services that are put together to attract and delight customers. It can also mean the terms
and conditions attached to the sale servicing of the product.

PLACE

“ Location. Location. Location.” this is the often-recited mantra of salespeople who want to have the
best access to their customers. Although finding a good location proves to be challenging, even more
challenging the potentials of that location.

Initial Location Screening

In finding a good location, one needs to consider the following:

1. The number of customers residing of working in the areas, and the number of customers who
frequently pass through the area.

2. The density or number of customers per unit area.

3. The access routes to alternative locations and their traffic count in those routes.

4. The buying habits of customers or where they buy, at what time and how frequent.

5. Locational features such as parking spaces, foot access, creature comforts, and the like

In similar way, the entrepreneur must be able to determine the price that comes with the location
because it will spell out the success or failure of the business. The entrepreneur has to consider the
following:

1. The cost of buying or renting, renovating and operating the location.

2. Customer volume, drop in rates ( what percentage of customers, traffic would stop by the store) in
sales conversion ratios ( what percentage of drop ins would actually purchase something from the
store).

3. Revenues based on the volume and mixed of goods and services expected to be sold at certain prices.

4. Profits.

In addition to the above factors, the final choice of location must be based on the following:
1. Image and location conditions. This differs to the physical look of a location, sanitary conditions,
crime and safety levels etc. the reputation of a location is also important.

2. Exact fit to target customers. Is the location traffic generally composed of your target customers?

3. Clustering of competitor establishments. This oftentimes results in drawing a bigger market to the
location.

4. Future area development. A certain location might not have the most customers or the best
economics in the short term, but it might become a central business hub within the next five years.

5. Fiscal and regulatory requirements. An entrepreneur would want to set up shop in a town or city
with low tax rates, good governance, excellent infrastructures, and great public services.

Relevant Location Drivers

It would benefit the entrepreneur to do an in depth location analysis. The entrepreneur can make use of
the following relevant location drivers for location selection. These are the ‘musts’ in choosing the
location for your business.

1. Physical Proximity to Target Market

For most entrepreneurs, locations are chosen based on how close it is to the target market. Ideally, the
best locations should be easily accessible from home or the workplace. However, physical proximity is
not always important.

2. Customer Traffic Flow

- refers to the people that regularly come into contact with your business establishments. Your shop
might not be near to customer’s homes or workplaces, but it might be situated somewhere along their
daily routes. Higher traffic flows mean higher drop-in rates for stores along the traffic route. Important
data to research include daily volume of people and/or vehicles passing through, as well as information
on the “peak hours” and the “ slow hour”.

3. Industry Clustering

A lot of competitors clustered in one location usually draw on a bigger market to the area. Three stores
side-by-side offer more choices to customers than one stand-alone store. The downside is that
clustering also results in fiercer competition. As such, some entrepreneurs prefer to establish a
monopoly far away from competitors.

4. Convergence od multiple Industries

Locations where multiple industries converge, such as central business districts, shopping malls and
public markets are able to attract more customers because of one-stop shopping convenience. But
again, competition is usually strong in such areas.

5. Population Concentrations.

Urbanization creates population concentrations. Where people live, goods and services follow. The
greater number of people, the greater thenumber of needs and wants to be satisfied. Simply put, the
more populous the location is, the greater is the oppurtunity for business and profit.

6. Activity Hubs

Activity hubs such as large schools, high-rise buildings, public parks, transport terminals, and
entertainment centers provide good location potentials for food establishments and client-specific
services.

7. Growth Potential

Business are always looking for new areas to expand and grow. This is especially the when crowded
population centers become saturated with many providers of goods and services. Hence, the new
development site will e natural greener pasture for early locators. The early locators will catch the early
customers.

8. Business Climate

Enterprises prefer locations that are conductive in doing business. This includes areas with:

High economic growth

Stable political situation

Effective social services

Good infrastructures

Cheap utilities

Efficient transportation and logistics

Availability of skilled labor force

Low crime rates

Good fiscal incentives

Trusted public officials

9. Cost of Doing Business and Producing Goods and Services

For industrial establishments, the more relevant criteria are those locations with lower cost of doing
business and lower cost of producing goods and services. Hence, these industrial establishments would
prefer locations outside the main population centers but with government-supplied amenities.

Cooperative Location Analysis

Perhaps the most common way by which an entrepreneur ‘surveys’ a potential locations is
through comparing it with other locations with more or less the same features and tenant mix or
clusters of competitors. These locations must have that ‘extra something’ that makes competitors fight
for a store space within the same area. Keen observation is required for an entrepreneur if he or she
wants to draw several insights from these favored locations.

Geography and Atmospheric Determinants

Another way of looking at a location or place to sell the product or service can be based on two
major place determinants: geography and atmosphere. Within each determinant, there are extreme
opposite qualities that create a dilemma for the entrepreneur. To better understand what these
dilemmas are, let us take a look at each one of these determinants.

For the geography determinant, there are six decision tensions:

1. Concentration versus Destination

2. Access versus Abundance

3. Clustered versus Dispersed

4. Developed versus Underdeveloped

5. Physical versus Virtual

6. Upscale versus Downscale

For the atmosphere determinant, there are five decision tensions:

1. Formal versus Informal

2. Exclusive versus Public

3. Conservative versus Adventurous

4. Aesthetics versus Functionality

5. Minimalist versus Maximalist

Atmosphere refers to the state or condition of the environment, which affects the mind and mood of
customers, either in a positive or negative way.

The geography and atmosphere decision tensions provide alternative choices to the marketing
strategist. The final decision would depend on the positioning of the enterprise and its products in the
marketplace.

PEOPLE

People are the ultimate marketing strategy. People sell and push the product. People search hard to find
the right market. People distribute, promote, price, and sell the products in the most attractive market
places. People aim to please the customers have bought the product. People are the regular contact
points between the enterprise and its market.

The people in a marketing organization paly a crucial role in the success of the enterprise.

The marketing efforts of people are organized at four levels:

1. To create customer awareness;

2. To arouse customer interest;

3. To educate customers as to evaluate their buying choices; and

4. To close the sale and deliver the products.

To arouse the interest of customers, the enterprise can use several people or organizational modalities.

First modality- is to outsource the people from advertising agencies, events management outfits, call
centers, and telemarketers.

Second modality- is to build in-house capabilities by hiring market researchers, brand managers,
salespeople, public relations officers, website writers, orchestrators, etc.

Third modality- is to collaborate or enter into partnership with principals, distributors, dealers, and
industry associations.

Educating customers in their evaluation process requires the enterprise to know the customer’s
decision-making process.

Consumer Evaluation Process

(table)

Finally, the sale must be closed and the products should be delivered to the customer. Closing the sale
demands that the product be available, adequate, acceptable, and affordable.

Availability means that the enterprise has the goods or services on hand.

Accessible means that the customers can easily get the product from their usual buying places or the
products can be conveniently delivered to them.

Adequate means the product meets the quality and delivery specifications of the customer.

Acceptable means that the customer is convinced by the selling points of the product, finds very little or
no objectionable features in the products, and accepts the conditionality, warranties, and amenities
given by the seller.

Affordable means the price and terms are right.

The organizational modality to educate the customers, help them in their decision-making process, and
to close the sale would depend on four variables.

1. Is there a need for high contact (face to face) or will low contact (Internet) be sufficient?

2. Is their a need for high accessibility? If so, the company requires distributors, dealers, branches, and
franchisees to expand their reach. Alternatively, they need a very fast, reliable, and economical delivery
system.

3. How heavy or light is the transaction cost? High transaction cost products need new competent
people to sell them.

4. Does the customer need a lot of sale servicing and after-sales servicing.

PROMOTION

Promotion is the explicit communication strategy adopted by an enterprise to elicit the patronage,
loyalty, and support not only from its customers but also from its other significant stakeholders.

Promotion encompasses all the direct communication efforts of the enterprise, such as advertising,
public relation campaigns, promotional tours, product offerings, point-of-saale displays, website, flyers,
emails, letter, telemarketing, and others.

Effective promotion depends on three critical factor:

The credibility of the communicator;

The message and the medium of the message; and

The receptiveness of the audience to all that is being communicated.

Before crafting promotion and communication strategy, the communicator must profile the target
audience very well.

For business promoter, it is important to get very positive emotional reaction from the target audience.
All messages must make an impact on the target audience-sensory, emotionally, and intellectual impact
at that.

In developing a promotion campaign, the enterprise should start with the target audience in mind.

At the beginning of its operations, the enterprise may have a very limited market to cover. The narrower
the market coverage, the more focused the promotion campaign should be.

As then targeted audience becomes bigger, then marketer can shift to a shotgun approach. Electronic
mails, websites, letter blasts, radio broadcasts, and print ads in certain publications might serve the
purpose.

For mass markets, television commercials, ubiquitous billboards, and high-circulation broadsheets,
magazines or tabloids would already be cost effective and create quite an impact.

PRICE

Pricing depends on the business objectives set by the enterprise. While price is a major factor for the
customer in buying a product, it is not the only factor such as in the case of buying premium products.

Non-price factors outweigh the price factor whenever a customer is buying a premium item because he
or she is more particular about the ‘premium-ness’ in terms of quality, the status or image that the
product brings, shorter waiting time or immediate delivery, and other such decision criteria.

The enterprise should set the prices of its products or services based on its business objectives such as
the following:

1. Profit maximization

2. Revenue maximization

3. Market share maximization

4. Attainment of the desired prestige or quality leadership

5. Penetration, survival, or liquidation

6. Scarcity pricing or market skimming

7. Cost recovery

8. Subsidy pricing

9. Marginal pricing

The first three pricing strategies pertain to the related dynamics of the different price ranges applied
across different product volumes or quantities while considering the product costs incurred as these
products are brought or sold.

PROFIT, REVENUE, AND MARKET SHARE MAXIMIZATION

(table)

*Assumes the following: Fixed Costs equal P 300; Variabl Costs equal P 5 PER UNIT

One market research approach in estimating the demand , given the difference price levels, is to conduct
a price tolerance survey of randomly selected respondents.

As mentioned earlier, prices could be set at a premium to project a quality image and to distance the
product from its inferior customers. The idea is to attract customers who are willing to pay extra for the
quality difference.

At the other end, prices can be set very low to survive in a competitive market or to get rid of mounting
inventories and convert them into cash. The other objective of a low pricing strategy is to penetrate the
market fully and overtake the competition.

Products that are very scarce or rare would appeal to wealthier customers who wish to belong to an
exclusive club of owners.