Unit 6 Marketing Feasibility

Module 8 Marketing Feasibility

PROF. JEFFREY M. AZOR
Writer

Module Introduction

Marketing is the lifeblood of the business. It is the center of revenue generating activities that
fuels growth in any business organization. Thus, it is essential that any student or would-be
entrepreneurs should be able to formulate and develop a sound marketing plan in order to boost
business stability, growth and industry leadership. In this module, you will be able to explore
ways on how to identify, define and describe your target markets, measure and project demand
and supply, develop a practical marketing plan for your chosen product with corresponding
strategies to reach your predetermined organizational objectives and eventually forecast sales
for your business.

Module Objectives
At the end of this module, you should be able to:
1. Describe the target market;
2. Forecast demand and supply;
3. Develop marketing plan and strategies; and
4. Forecast sales

A marketing feasibility or marketing plan should be able to show a well-defined target market,
how much demand for the product can be generated from this market both in volume and in
pesos, describe the supply situation in the industry where the product is competing in, how the
product is positioned to outshine its competitors, the strategies by which the business will
ensure that such product can go against its current competitors and how much sales can be
generated and forecasted given the economic and market elements.

Image from: https://www.google.com/search?

q=basketball+board&rlz=1C1GGGE_enPH435PH444&sxsrf=ALeKk02-
Nag17gW3tnTUcNDbx6lo355QQ:1595231899960&source=lnms&tbm=isch&sa=X&ved=2ahUKEwiizOz1r
dvqAhU6xosBHUalBIIQ_AUoAXoECA4QAw&biw=1366&bih=657#imgrc=HT_xpn3UqTY5eM

Figure 1

An Artistic Representation of Target Market

The outer board represents the whole market regardless of age, background, purchase
behavior and other characteristics. If you are a businessman, you do not just target everyone
but rather those who are in the inner board just above the ring. The inner board represents your
target market. It is only by targeting the inner board that you get to score in a basketball game.
Just like in the business world, it is only by focusing on the right target market that you can
generate revenue for the business and win the game called competition.
Target Market
Your target market is a group of customers that (1) has a similar need for a product or service,
(2) has the money to purchase the product or service, and (3) willingness and ability to buy it.

To identify your target market and best serve your market, you need to:
a) Know your customers
b) Understand what your customers need
c) Why they buy

Because you have limited time, resources and budget, you cannot be everything to everyone.
There is no such thing as “one size fits all” in business more so with marketing. Everything has
to be tailored fit to its target recipients in order to make them satisfied or even delighted. To
effectively reach customers, you need to segment your target market into one primary market
on which you focus most of your energy, and at most, three secondary markets.

You can segment your target market along four key characteristics:

1. Demographic Characteristics
Who are your customers? For you to better know them, you may include information such as:
Age
Gender
Family size
Family life cycle (single, married with or without kids, divorced)
Income
Occupation
Education
Religion
Nationality
Ethnicity

2. Geographic Characteristics
Where do they live? Where do they come from? Where do they stay most of the time? You may
include information such as:
Their country of origin
Region (e.g. CALABARZON, MIMAROPA etc.)
City and density (rural, urban, suburban)
Climate/weather

3. Psychographic Characteristics
Why do they buy? What are their motivations? What drives them to buy? Include information
such as:
Social class (lower, middle, upper)
Lifestyle (leisure activities, exotic vacationer, saver)
Personality (gregarious, authoritarian, ambitious)

4. Behavioral Characteristics
How do they buy? In bulk? In retail? Do they buy with friends? What time do they usually buy?
Include information such as:
The purchase occasion (household staples, special occasion)
Benefits sought (quality, service, economy)
Consumption status (from never having tried your product to frequent purchaser)
Usage frequency (light, medium, heavy)
Loyalty (not, somewhat, devout)
Readiness to buy (unaware, aware, informed, interested, desirous, intending to buy)
Attitude toward product (enthusiastic, positive, indifferent, negative, hostile)
Illustrative Example
Who is the target market of Apple Inc. (creator of iPhones, iPad etc)

Image from: https://www.google.com/search?

q=Apple+products&rlz=1C1GGGE_enPH435PH444&sxsrf=ALeKk03OqDgrNY7AkEr1Cy5J9IQ9MwUHA:159
5233903478&source=lnms&tbm=isch&sa=X&ved=2ahUKEwjh0ZmxtdvqAhWyBKYKHYsyBaYQ_AUoAXoE
CB4QAw&biw=693&bih=616#imgrc=XH4-C1MzjFe8EM

Figure 2

Apple Products

Apple targets teenagers, university students, businesspeople, young children and adults alike
for their tech products. Teenagers use iPods (then now discontinued) for many reasons. Some
of these reasons are to socialize with friends, listen to music and go on Facebook, MSN, Twitter
etc. There are also many gaming apps that appeal to them. iPods have become quite a trend
with teenagers before. College and university students are also targeted by Apple. These
students use Apple products such as iPads, MacBooks, iPhones etc. to quickly research,
process and design contents and even record notes. These notes are kept organized in their
devices. Also these products are light which makes carrying devices to and from school much
easier.

Business people are very intrigued by Apple products. Businessmen and employees use the
MacBook because of high speed, easy interface, slim appearance and large memory
compatibility. The MacBook is also useful in education with its amazing app and internet speed.
All Apple devices (iPhone's, iPads, MacBooks etc.) have a business quality that is very useful.
These devices are used to finish work efficiently and to communicate with clients easily. In
addition, sending documents is easy and organized. Apple products are also useful to young
children and kids. The reason for this is that devices such as iPods and iPads are easy to use
due to their touch screen quality which is good for children.

The iPad belongs to a group, mixed with some iPhone and iPod targets. Apple's main function
for the iPad was basically a larger iPod. It serves to be useful in schools and in many
businesses. The iPad is easy and provide a faster internet and more apps. The iPad typically
attracts older adults, students, seniors and families with older students. This is due to the fact
that a larger iPad allows people to surf the internet easily and and perform more efficiently. This
is the key in ads, where apps are shown and the potential is clear. Parents can download
learning game apps on Apple devices to teach young children and kids. Adults are also one of
Apple's target markets. iPhones are useful to adults for their everyday needs such as phone
calls, map directions, internet connection, documents and cameras. Carrying these small
devices makes adults lives much easier for communicating daily.

Question:
How did Apple define and describe its target market? What market characteristics are given due
importance in identifying its market?

Answer:
Apple focuses on defining its target market using demographic, psychographic and behavioral
characteristics. Aside from tis practical uses, Apple customers take pride in using their products
because of its inherent prestige and high brand equity.
Now that you know who your target market is and how to define and describe them, you may
now proceed in measuring and forecasting demand for your product or service.

Demand

Demand is an economic principle referring to a consumer's desire to purchase goods and

services and willingness to pay a price for a specific good or service. Holding all other factors
constant, an increase in the price of a good or service will decrease the quantity demanded, and
vice versa. Market demand is the total quantity demanded across all consumers in a market for
a given good.

Determinants of Demand for a Product

The demand of a product is influenced by a number of factors. A business should properly

understand the relationship between the demand and its each determinant to analyze and
estimate the individual and market demand of a product. The demand for a product is influenced
by various factors, such as price, consumer’s income, and growth of population.

However, while you are analyzing the effect of one particular determinant on demand, you need
to assume other determinants to be constant. This is due to the fact that if all the determinants
are allowed to differ simultaneously, then it would be difficult to estimate the extent of change in
demand more so in measuring and forecasting product and market demand. So consider one
demand determinant at a time.

1. Price of a Product or Service

Price affects the demand of a product to a large extent. There is an inverse relationship
between the price of a product and quantity demanded. The demand for a product decreases
with increase in its price, while other factors are constant, and vice versa.

2. Income:
Income constitutes one of the important determinants of demand. The income of a consumer
affects his/her purchasing power, which, in turn, influences the demand for a product. Increase
in the income of a consumer would automatically increase the demand for products by him/her,
while other factors are at constant, and vice versa.

3. Tastes and Preferences of Consumers

These factors play a major role in influencing the individual and market demand of a product.
The tastes and preferences of consumers are affected due to various factors, such as life styles,
customs, common habits, and change in fashion, standard of living, religious values, age, and
sex.

A change in any of these factors leads to change in the tastes and preferences of consumers.
Consequently, consumers reduce the consumption of old products and add new products for
their consumption.

4. Price of Related Goods

This refers to the fact that the demand for a specific product is influenced by the price of related
goods to a greater extent. Related goods can be of two types, namely, substitutes and
complementary goods. Substitutes refer to goods that satisfy the same need of consumers but
at a different price. For example, tea and coffee are substitute to each other. The increase in the
price of a good results in increase in the demand of its substitute with low price. Therefore,
consumers usually prefer to purchase a substitute, if the price of a particular good gets
increased.

Complementary Goods refer to goods that are consumed simultaneously or in combination. In

other words, complementary goods are consumed together. For example, pen and ink, car and
petrol, and tea and sugar are used together. Therefore, the demand for complementary goods
changes simultaneously. The complementary goods are inversely related to each other. For
example, increase in the prices of petrol would decrease the demand of cars.

5. Expectations of Consumers
This determinant implies that expectations of consumers about future changes in the price of a
product affect the demand for that product in the short run. For example, if consumers expect
that the prices of petrol would rise in the next week, then the demand of petrol would increase in
the present.
On the other hand, consumers would delay the purchase of products whose prices are expected
to be decreased in future, especially in case of non-essential products. Apart from this, if
consumers anticipate an increase in their income, this would result in increase in demand for
certain products. Moreover, the scarcity of specific products in future would also lead to
increase in their demand in present.

6. Effect of Advertisements
This refers to one of the important factors of determining the demand for a product. Effective
advertisements are helpful in many ways, such as catching the attention of consumers,
informing them about the availability of a product, demonstrating the features of the product to
potential consumers, and persuading them to purchase the product. Consumers are highly
sensitive about advertisements as sometimes they get attached to advertisements endorsed by
their favorite celebrities. This results in the increase demand for a product.

7. Distribution of Income in the Society

This determinant influences the demand for a product in the market to a large extent. If income
is equally distributed among people in the society, the demand for products would be higher
than in case of unequal distribution of income. However, the distribution of income in the society
varies widely.

This leads to the high or low consumption of a product by different segments of the society. For
example, the high income segment of the society would prefer luxury goods, while the low
income segment would prefer necessary goods. In such a scenario, demand for luxury goods
would increase in the high income segment, whereas demand for necessity goods would
increase in the low income segment.

8. Growth of Population
This factor acts as a crucial factor that affect the market demand of a product. If the number of
consumers increases in the market, the consumption capacity of consumers would also
increase. Therefore, high growth of population would result in the increase in the demand for
different products.

9. Government Policy
This refers to one of the major factors that affect the demand for a product. For example, if a
product has high tax rate, this would increase the price of the product. This would result in the
decrease in demand for a product. Similarly, the credit policies of a country also induce the
demand for a product. For example, if sufficient amount of credit is available to consumers, this
would increase the demand for products.

10. Climatic Conditions

These conditions affect the demand of a product to a greater extent. For example, the demand
of ice-creams and cold drinks increases in summer, while tea and coffee are preferred in winter.
Some products have a stronger demand in hilly areas than in plains. Therefore, individuals
demand different products in different climatic conditions.

Given these determinants, you would be able to realistically project a good demand figure for a
specific product. You should be able to scan your environment and see to it that many if not all
of these determinants work favorably for your product and your business as a whole. Otherwise,
your efforts in describing your target market would mean nothing.

Determining Market Demand for a Product

This guide serves as a starting point for understanding and determining your market demand.

1. Define your target market

Defining your target market should always be first step in estimating market size. Your
determined market definition in terms of age, location, income, gender, interests, and other
characteristics which we discussed earlier will guide the rest of the data collection process.
Remember, the more defined your market is, the better your plans will be pertaining to how you
will position, differentiate, price, distribute and promote your product.
To determine possible market segments for your product you’ll want to:

Check out your competitors

Look at your current customer base (if applicable)
Consider what industries, organizations, and individuals may have the greatest potential
need for your product
Think about the key needs and pain points faced by a possible end-user of your product

2. Use a mix of primary & secondary research

Primary research applies specifically to your business venture and could include onsite
visits, in-depth in-person interviews, focus groups, surveys and more. You should be able to
develop your own questionnaire-checklist that gathers demographic and psychographic
data from your target market. You may conduct Focus Group Discussions and In-depth
interviews with observations to determine their psychographic and behavioral
characteristics.

Secondary research is sometimes called “desktop research”. It looks at existing data like
current market reports, studies by government agencies such as the Department of Trade
and Industry (DTI) and Philippine Statistics Authority (PSA), trade associations such as
Philippine Chamber of Commerce and Industry (PCCI) or other businesses in your industry.
If you have an existing company, this may include historical data within your business.

Secondary research is important for learning about the companies and products in your
target market. But you also need to get out there and do primary, or field research, to get a
stronger understanding of the market.

3. Look at the current market

Take a good look at the current marketplace within your target industry. You’ll want to
determine both current numbers (and projected growth of) your potential customer base.
Look at trends within your industry and ask a lot of questions: What areas of the industry
appear to be expanding? What areas are declining? Is the industry adapting to serve to new
types of customers? Review your understanding on determinants of demand so you can
have a clearer picture on this.

Getting a close-up picture of the competition is a key aspect of market analysis. Examine
current and possible future competitors on both a local and (if applicable) national scale.
Your analysis of competition should cover their SWOT (strengths, weaknesses,
opportunities, and threats).

A balanced combination of industry and competitive intelligence should help you gain a
clearer picture of your market potential.

4. Ask your target customers

If you already have a target customer base, these individuals can provide a wealth of
information. Use social media or email surveys to gauge interest in a new product idea.
Review existing customer information such as sales records, customer complaints, receipts
and records. Information about where your customers live and what they buy may show
whether there’s a need in the market for your product.

Equally as important, talk to other company’s employees in the same industry as yours.
They know which items customers request most often, which features drive people nuts,
and they have a good picture of what your ideal customer looks like.

Defining market potential is an essential, yet complex, part of business research. Armed
with data about your potential market demand, you can target a specific group based on
their needs and wants, so you sell directly to people who are looking for your product.
Measuring Market Demand
From the ‘market based’ business perspective, a key question to consider is: “how many
customers are interested in your product.” This is different to the traditional product based
approach which is concerned only with product volume. With the market based approach
you will start with the maximum number of customers.

Illustrative Example
For example, let’s say you are planning to sell milk tea infused with medicinal plant extracts to
consumer market in your barangay and you are trying to work on your market demand for the
next year.

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q=milktea&rlz=1C1GGGE_enPH435PH444&sxsrf=ALeKk01UgasqrU4jcc_Zsi1gmwL-
jQ7ZtQ:1595239098747&source=lnms&tbm=isch&sa=X&ved=2ahUKEwjK4b_eyNvqAhXcw4sBHWiFC8AQ_AUoAXoECA8QAw&b
iw=1366&bih=657#imgrc=XZg1cJvKIF_SfM

Figure 3

Example of a Product for Market Demand Measurement

1. At the highest level (blanket level) your market is defined as all people from 7 years old
to 60 years old in your barangay (say 10,000 people).
2. At the next layer (tertiary layer), you may identify that some people are NOT really into
milk tea and are comfortable with their current beverages of choice, say coffee or iced
tea etc. and have no plan to switch to your product (this may reduce your number of
potential customers to 5,000 people).
3. At the next layer (secondary layer), you may say that the remaining people in your
barangay who drink milk tea are loyal to specific milk tea brands such as Gong Cha, I
Love Milk Tea, Macao Imperial Tea etc. This constitute competitors’ market share when
fully estimated based on survey. (now you are left with 2,000 potential customers).
4. At the next layer (core layer), from the remaining 2,000 potential customers for example,
you may realize that only 1,000 people are really interested with your new product (say a
milk tea infused with medicinal plant extract) thus finally reducing your potential market
to 1,000 customers.
5. The question is, are you going to cover all the 1,000 potential customers as your target
customer? Perhaps it would be wise if you focus to a certain feasible level, say 30% for
a start, i.e. 300 customers, and increase gradually as the market gets to know your
brand and develop market acceptance.
6. The next step would be asking a sample representative (the sample size is determined
through Slovin’s formula) from the total population about the number of times they would
probably buy from you in a week (thus determining the demand by unit volume) and how
much would they want to pay for your product. Let’s say you asked 100 respondents on
these questions, 80 customers replied to buy at least 2 cups of milk tea per week at
P80.00 each while 20 customers replied that they will buy at least 3 cups of milk tea a
week for P100.00 each. This would lay the ground work for your demand in volume and
in pesos per year computed as follows:
 No. of No. of Cups Total Cups In Pesos Total Sales in Pesos
Customers Ordered (per week) (per week)
(per week)
80 2 160 cups P80 P12,800
20 3 60 cups P100 P6,000
TOTAL (Per Week) 220 cups P18,800.00 gross
per week sales per week
TOTAL (Per Month) 880 cups P75,200.00 gross
per month sales per month
TOTAL (Per Year) 10, 560 cups per P902,400,00 gross
year sales per year

While the above steps are illustrative, they are representative of the process you will undertake
to identify your market demand from the TOP DOWN perspective.
Important Note:

There are a lot of ways to measure demand from the basic ones to a more complex approach
using data and high level statistical analysis. However, this Top Down perspective is a simpler
way to measure potential demand for new products. Consult your research instructor or
panelists for more demand measurement options fit to your product or service.

Determining the demand for your product is not the end of the story of whether you would
proceed with your business or not. You should also identify and measure the supply situation in
your chosen sales territory. By knowing who your competitors are and identifying how much
sales in both volume and peso they generate in a a given period of time, you will know whether
the market is already saturated, underserved or unserved.

Supply

Supply is a fundamental economic concept that describes the total amount of a specific good or
service that is available to consumers. Supply can relate to the amount available at a specific
price or the amount available across a range of prices if displayed on a graph. This relates
closely to the demand for a good or service at a specific price; all else being equal, the supply
provided by producers will rise if the price rises because all firms look to maximize profits. While
supply can refer to anything in demand that is sold in a competitive marketplace, supply is most
used to refer to goods, services, or labor. One of the most important factors that affects supply
is the good’s price. Generally, if a good’s price increases so will the supply. The price of related
goods and the price of inputs (energy, raw materials, labor) also affect supply as they contribute
to increasing the overall price of the good sold.

Determinants of Supply

Determinants of supply refer to the factors which influence the quantity of a product or service
supplied. The price of a product is a major factor affecting the willingness and ability to supply.
These are the factors other than price which are assumed to be constant in law of supply.

1. Number of Sellers
The greater the number of sellers, the greater will be the quantity of a product or service
supplied in a market and vice versa. For example, when more firms enter an industry, the
number of sellers increases thus increasing the supply.

2. Prices of Resources
Increase in resource prices increases the production costs thus shrinking profits and vice versa.
Since profit is a major incentive for producers to supply goods and services, increase in profits
increases the supply and decrease in profits reduces the supply. In other words supply is
indirectly proportional to resource prices.

3. Taxes and Subsidies

Taxes reduces profits, therefore increase in taxes reduce supply whereas decrease in taxes
increase supply. Subsidies reduce the burden of production costs on suppliers, thus increasing
the profits. Therefore increase in subsidies increase supply and decrease in subsidies decrease
supply.
4. Technology
Improvement in technology enables more efficient production of goods and services. Thus
reducing the production costs and increasing the profits. As a result supply is increased and
supply curve is shifted rightwards. Since technology in general rarely deteriorates, therefore it is
needless to say that deterioration of technology reduces supply.

5. Suppliers' Expectations
Change in expectations of suppliers about future price of a product or service may affect their
current supply. However, unlike other determinants of supply, the effect of suppliers'
expectations on supply is difficult to generalize. For example when farmers suspect the future
price of a crop to increase, they will withhold their agricultural produce to benefit from higher
price thus reducing the supply. In case of manufacturers, when they expect the future price to
increase, they will employ more resources to increase their output and this may increase current
supply as well.
6. Prices of Related Products
Firms which are able to manufacture related products (such as air conditioners and
refrigerators) will shift their production to a product the price of which increases substantially
related to other related product(s) thus causing a reduction of supply of the products which were
produced before. For example a firm which produces laptops is usually able to manufacture
tablets as well. When the price of tablets increases, the firm will produce more tablets and less
laptops. As a result, the supply of laptops will be reduced.
7. Prices of Joint Products
When two or more goods are produced in a joint process and the price of any of the product
increases, the supply of all the joint products will be increased and vice versa. For example,
increase in price of sugarcane will increase the supply of sugar.

Measuring Supply
Supply in the case of writing feasibility study or business plan connotes the amount of available
products being sold by your competitors both in volume and in peso. You have to know who are
your competitors, how many customers prefer to buy from them and in what quantity and in
what particular price point. You just simply add them all up to arrive at the market supply
situation in your target area.
Illustrative Example
Let us use the milk tea business we presented in the previous discussion on market demand.
1. Identify all shops in your barangay that sells milk tea. Hypothetically, you have listed 5
milk tea shops in your area.
2. Ask for their average weekly sales both in volume of orders and in pesos. Here is what
you have figured out from your interview:

Milk Tea Shops No. of Cups In Pesos (Average) Total Sales in

Ordered (per week) Pesos (per week)
Shop A 150 P100.00 P15,000.00
Shop B 250 P100.00 P25,000.00
Shop C 180 P100.00 P18,000.00
Shop D 100 P100.00 P10,000.00
Shop E 280 P100.00 P28,000.00
TOTAL (per week) 960 P96,000.00
TOTAL (per month) 3,840 P384,000.00
TOTAL (per year) 46,080 P4,608,000.00

3. Remember from the demand example that we have a total of 5,000 milk tea lovers, 960
of them buy from the 5 milk tea shops in your barangay while you projected in the
previous section that you will have an average of 100 customers per week. If you add
this up, the whole milk tea industry in your area that is being served would only be 1,060
customers per week or equivalent to only 21% of the total market for milk tea. This is a
 good indication in the sense that you and your competitors have a huge space for
growth in the coming years.

4. After determining the current supply situation, you should be able to present an
illustrated market share of your milk tea shop versus the other shops. Using the figures
that we have in item # 3, we can present the market share this way:

Figure 4

Milk Tea Shops Market Share

You can see that your shop occupies only 2% of the total market share for milk tea business in
your area. Also it is noteworthy that a huge 79% is still unserved. This means that as you go
along with your business, there is a very huge opportunity for market development in your area
for milk tea products.

Demand and Supply Gap

After determining the demand for your product and the availability of other competitors selling
the same product such as yours in the market, you can see how well they match up by looking
at the gap between them.

Illustrative Example
As already been illustrated in the market share section of supply, you may simply present here
the demand for milk tea and the volume of milk tea available in the market.

Figure 5

Demand-Supply Gap
Forecasting Demand and Supply

There are many determinants of demand and supply of a certain product as previously
discussed. However, it is a common practice in business planning to set an increase in both the
demand and supply in the next 5 years. The rate of increase is dependent on many factors such
as population growth, expected upward trend for the utilization and patronage of the product,
and new technology etc.

Illustrative Example
Given the figures presented in the previous sections, we can present the demand and supply
forecast as follows:

Table 1

Projected Demand for 5 Years

2020 2021 2022 2023 2024

240, 000 264, 000 290, 400 319, 440 351, 384

The base demand is pegged at 5,000 customers per week with the assumption that they will
buy at least 1 cup of milk tea in a week. If this number is multiplied by 4 weeks, the demand
figure will be 20, 000 customers in a month. With this number, it can be gleaned that there will
be a total of 240, 000 market demand for the whole year of 2020. The demand for the
succeeding years will increase by 10% per annum.

Table 2

Projected Supply for 5 Years

2020 2021 2022 2023 2024

50, 880 58, 512 67, 288 77, 382 88, 989

The supply base is pegged at 1, 060 cups of milk tea orders per week multiplied by 4 weeks, the
total supply would be 4,240 cups per month. From this figure, we will multiply it by 12 months
which we would arrive at 50, 880 cups ordered in a year. The succeeding years in this supply
table were computed by increasing supply at 15% per year. We chose a higher increase rate for
supply due to increased competition expected to spur industry growth in the coming years.

Marketing Plan and Strategies

A marketing expert named E. Jerome McCarthy created the Marketing 4Ps in the 1960s. This
classification has been used throughout the world. It is about putting the right product or a
combination thereof in the place, at the right time, and at the right price.

1. A product is an item that is built or produced to satisfy the needs of a certain group of
people. The product can be intangible or tangible as it can be in the form of services or
goods. Company must ensure to have the right type of product that is in demand for your
market. So during the product development phase, the marketer must do an extensive
research on the life cycle of the product that they are creating.
2. The price of the product is basically the amount that a customer pays for to enjoy it.
Price is a very important component of the marketing mix definition. It is also a very
important component of a marketing plan as it determines your firm’s profit and survival.
Adjusting the price of the product has a big impact on the entire marketing strategy as
well as greatly affecting the sales and demand of the product.
3. Placement or distribution is a very important part of the product mix definition. You
have to position and distribute the product in a place that is accessible to potential
buyers.
4. Promotion refers to all activities undertaken to make the product or service known to
the user and trade. This can include advertising, word of mouth, and etc.

Advertising - Social Media Marketing

Social media has benefits. For one, many websites engaged in social media have tools and
analytics that can be used to measure campaigns either for free or inexpensively. Facebook is
the most widely used social platform internationally. Instagram on the other hand provides an
excellent opportunity to regularly engage the audience with organic content and spread
awareness.

Local Partners

Establishing partnerships with other establishments, say banks or retail stores, can provide a
solid channel support in the community.

Content Marketing

Content marketing is creating material that can distribute, either online or physically, to stimulate
interest in a product. These can include writing, images, or even videos. Use digital content to
encourage consumers to act.

Channel Marketing

Word of Mouth Word-of-mouth marketing (WOM marketing) is when a consumer's interest in a

company's product or service is reflected in their daily dialogs. It is free advertising triggered by
customer experiences — and usually, something that goes beyond what they expected. Word-
of-mouth marketing can be encouraged through different publicity activities set up by
companies, or by having opportunities to encourage consumer-to-consumer and consumer-to-
marketer communications.

Illustrative Example
Below is an example of a promotional strategy of a milk tea shop with budget.

Table 3

Promotional Strategy with Budget

Promotional Strategy Budget

Social Media Marketing (Poster or Flyers) P1500
Local Partners (banks or retail stores) P1500
Content Marketing (Vlog or Video) P2000
Word of Mouth Free

Presented in the table is an example of Marketing Strategy Matrix which your business may
adopt in its operations.

Table 4

Proposed Marketing Strategies

Marketing Strategies Competitor A Competitor B Your Milk Tea Shop

Product Too sweet yet use Delicious blend of A delicious milk tea
iconic designs on premium milk tea range with a lot of
their cups flavors flavors to choose
from infused with
medicinal plant
extracts
Price Too cheap Too expensive Average of the two
Placement/Distribution In-store purchase In-store purchase FREE delivery

In-store purchase
Promotion Uses tarpaulin and Uses all social Uses all media
Facebook media plat forms platform

Has video
testimonies of the
cure it provides in
health problems
among customers

You can be creative in answering this marketing strategy matrix. You may include 3 or more
inputs per space to fully maximize its use. You have to be as observant as possible so you can
have a real picture of what others are doing with respect to each of the Ps being answered in
this matrix.

Sales Forecasting

Sales Forecasting is the process of estimating what your business’s sales are going to be in the
future. A sales forecast period can be monthly, quarterly, half-annually, or annually. Sale
forecasting is an integral part of business management. Without a solid idea of what your future
sales are going to be, you can’t manage your inventory or your cash flow or plan for growth. The
purpose of sales forecasting is to provide information that you can use to make intelligent
business decisions.

Illustrative Example

For example, if your forecast indicates a 10% increase in sales of milk tea products, you may
wish to begin searching for larger milk tea space or premises and hire additional staff to meet
the demand.

In your case, you will have an increase in sales volume and peso as illustrated in the table.

Milk Tea Shops No. of Cups Ordered In Pesos Total Sales in

(per week) (Average) Pesos (per week)
Shop A 150 P100.00 P15, 000.00
Shop B 250 P100.00 P25, 000.00
Shop C 180 P100.00 P18, 000.00
Shop D 100 P100.00 P10, 000.00
Shop E 280 P100.00 P28, 000.00
Your tea shop 100 P100.00 P10, 000.00
TOTAL (per week) 1060 P100.00 P106, 000.00
TOTAL (per month) 4240 P100.00 P424, 000.00
TOTAL (per year) 50, 880 P100.00 P5,088,000.00

From this figure, you may simply increase both sales volume and revenue by 10% consistent
with the registered increase in our demand per year. This is illustrated below:

Projection in: 2020 2021 2022 2023 2024

Sales in 50, 880 55, 968 61, 564 67, 721 74,493
Volume
Sales in Peso P5,088,000.00 P5,596,800.00 P6,156,480.00 P6,772,128.00 P7,449,341.00

REFERENCES

Chappelow, J. (2019, June 25) What is demand. www.investopedia.com. Retrieved from

https://www.investopedia.com/terms/d/demand.asp

Glavanic, I. (2015, April 10). How to estimate market demand for a product?
www.parcusgroup.com. Retrieved from https://parcusgroup.com/blog/how-to-estimate-market-
demand-for-a-product/

Irfanullah, J. (2018, June 12). Determinants of supply. www.xplaind.com. Retrieved from

https://xplaind.com/790162/determinants-of-supply

Kenton, W. (2019, June 25). Supply. www.investopedia.com. Retrieved from

https://www.investopedia.com/terms/s/supply.asp

n.a. (2020) Apple; a guide to its target market. https://prezi.com/u_aj_jqmjfvq/apple-target-

market/?fallback=1

n.a. (2020) Apple Inc.’s target market.www.weebly.com. retrieved from

https://appleinccasestudy.weebly.com/apples-target-market.html

n.a. (2020) Quick guide to determining your market demand. www.voccii.com. Retrieved from
https://voccii.com/determining-market-demand
n.a. (2020) How to write a marketing plan. www.smallbusinessabc.com. Retrieved from
https://smallbusinessbc.ca/article/how-write-a-marketing plan/#:~:text=Your%20target
%20market%20is%20a, Know%20your%20customers

Nitisha (xxxx). 10 determinants of demand for a product. www.economicsdiscussion.net.

Retrieved from https://www.economicsdiscussion.net/demand/10-determinants-of-demand-for-a-
product/3402

Self-Assessment Questions # 1
Directions: Kindly provide the information being asked by the following questions.
1. Who is a target market? (5 points)
2. In order to identify your market, cite the three things you have to do to better serve them. (6
points)
3. What are the four major market segmentation strategies that cluster consumer characteristics
in a distinct manner? (4 points)

Self-Assessment Questions # 2
Directions: Kindly provide the information being asked by the following questions.
1. Enumerate 5 determinants of demand (2 points each)
2. Enumerate 5 determinants of supply (2 points each)

Student Activity # 1

Directions: Compute for the demand and supply figure of the worded problem below. (3 points
for each correct computation plus 2 bonus points= 50 points)

You are a coffee shop owner in the process of establishing your next branch in a suburban area
next town. You have conducted a survey among 100 potential customers. You discovered that
75 of them buy at least 2 cups of coffee per week at P60.00 each while 25 of them buy 3 cups
of coffee per week for P85.00 each.

No. of No. of Cups Total Cups In Pesos Total Sales in Pesos

Customers Ordered (per week) (per week)
(per week)

TOTAL (Per Week) _______cups P_______.00 gross

per week sales per week
TOTAL (Per Month) _______cups P_______.00 gross
per month sales per month
TOTAL (Per Year) _______cups P_______.00 gross
per year sales per year

Student Activity # 2

Directions: Compute for the sales forecast of a hypothetical product with an increase rate of
23.58% per year. The figure for sales in both volume and peso was provided on the first year. (3
points each plus 1 bonus point= 25 points)

Projection 2020 2021 2022 2023 2024

in:
Sales in 98, 765
Volume
Sales in P123, 987.00
Peso