Principles of Marketing Tech-Voc

Principles of Marketing
MIDTERM
2nd MODULE
Maui Cano- Teacher
Department of Education Republic of the Philippines
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What I Need To Know
This course deals with the principles and practices in marketing goods and services. It also focuses on
the development of integrated marketing programs that will help grow businesses.
Learning Competency:
 Define and understand marketing Principles , Goals and Approaches ABM_PM11-la-b-1
What I Know
Activity 1: Pre-Test for this Chapter
Directions: From the pool words inside the box, choose the appropriate term for each description
below.
Satisfaction Market share Durable Undifferentiated goods
Consumer goods Branding Current demand Primary demand
Brand equity Marketing Consumable
___________ 1. It is a form of communicating or promoting the value of a product, service,

or brand to the consumers.
___________ 2. These are goods that are purchased for personal consumption and/or for
the household use.
___________ 3. These are products whose physical characteristics are so identical, that
it would be difficult, if not impossible, to distinguish one purchased from one
vendor or another.
___________ 4. This is the availability of manufacturers to successfully distinguish their
products from other competitors.
___________ 5. This is the appreciation in a brand’s value from the point of view of
customers.
___________ 6. It is a product whose benefit can only be used by a consumer for a short
period of time, sometimes only a few minutes.
___________ 7. These are products that are manufactured to last a long time.
___________ 8. It refers to the total demand for all brands of a particular product or
service.
___________ 9. The number of people of a particular market at present that would
actually purchase the product or service offered.
___________10. This refers to measure of how well customer expectations from a
purchased product or service have been met.
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Lesson 1.1
Marketing Defined and understand the goals of marketing and marketing Process
What I Need To Know

Marketing is a form of communicating or promoting the value of a product, service, or brand to the
consumers. Prior to the marketing of specific products and/or services, a marketing company conducts a
through analysis of the external environment, the market, its competitors and customers, and an incisive
audit of its internal characteristics.
General Objectives:
After going through, you are expected to:
 Undertstand the concept goals of marketing;
 Explain the marketing process
 Enumerate the classification of products/share
What’s New
Activity 2: KWL Chart
Direction: using the KWL chart, Write what you know about marketing. Write in the What I Know
column. Write the things that they want to know in the What I Want To know column in the form of
questions. Once done, Please fill the column What I Learned of the things that have added to your
knowledge in marketing using the picture below. Please Answer it shortly.
K-W-L CHART
What I Know What I Want to Know What I Learned
What Is It
Marketing Defined
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Marketing is a form of communicating or promoting the value of a product, service, or brand to the
consumers. The “by word of mouth” marketing may be the simplest, oldest, and most natural way of
marketing a service or a product for profit and non profit purposes. Marketing for profit aims to increase
sales of products or services while marketing for nonprofit purposes. Marketing for profit aims to
communicate messages for social purposes, such a health and public safety information disseminated by
the government.
The American Association (AMA) defines marketing as “the activity, set of instructions, and process
for creating, communicating, delivering, and exchanging offering that have creation, communication, and
the delivery of value to customers.
The key to this definition of marketing is the word “value.” Thus, marketing can be summarized as
the creation, communication, and the delivery of value to customers.
Alternately, the Philippines Marketing Association (PMA) defines marketing as a “science and
profession guided principally by the universal principles of ethics, corporate citizenship, and corporate
social responsibility.
This definition emphasizes an adherence to ethical principles, corporate citizenship, harmful to one’s
health and well-being or promote violence and immortality. Products or services that serve no purpose or
contribute nothing to individual and societal well-being should not be marketed.
GOALS OF MARKETING
The goals of marketing can be summarized as follows:
1. Understand the market and its consumers, ans satisfy their changing needs and wants.
2. Introduce and innovate products and services that improve human condition and the quality of
life.
3. Design and implement effective customer-driven marketing strategies.
4. Develop marketing programs that deliver superior value to consumers.
5. Build and maintain mutually beneficial and profitable customer relationships.
6. Capture customer value to create profits.
7. Promote value transactions with full regard to the well-being of societies.
The Marketing Process

The marketing process can be illustrated in the following diagram: Figure 1: The Marketing Process
The Situation Analysis

 Micro-environmental
 Macro-environment Marketing Strategy Formulation
 The maker  Market Segmentation
 Customers  Target Market Selection
 Competition  Value Proposition
 Strengths, Weaknesses, Opportunities, and  Product Positioning
Threats
Marketing Mix Decisions

Implementation and Control
 Product
 Implementation
 Price
 Monitoring
 Place
 Marketing Mix Adjustment
 Promotion
Before marketing products and/or services, the organization must have a thorough analysis of the
external environment, the market, its competitors and customers and an incisive (perceptive) audit of its
internal operating characteristics. This is followed by the formulation of relevant marketing strategies
coupled with a calibrated response using the elements of marketing (commonly known as the 4P’s). As
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soon as the marketing strategy is implemented, regular monitoring takes place in order to identify
deviation and, if necessary, make adjustments to any or all elements of the marketing mix.
Products, Services, and Experiences

What do organizations market? As consumers, we are most familiar with the marketing of goods and
services. Order than these, however, marketing organizations also market experiences, ideas, advocacies,
and even personalities.
The Three Product Level
Consumers often think that a product is simply the physical item that he or she buys. In order to
actively explore the nature of a product further, let’s consider it as three different products –
the CORE product, the ACTUAL product, and finally the AUGMENTED product. This concept is known as
the Three Levels of a Product. Figure 2: Product Levels
The CORE product is NOT the tangible physical product. You can’t touch it. That’s because the core
product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit
is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit
is speed since you can travel around relatively quickly.
The ACTUAL product is the tangible, physical product. You can get some use out of it. Again with the car,
it is the vehicle that you test drive, buy and then collect. You can touch it. The actual product is what the
average person would think of under the generic banner of product.
The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added
value, for which you may or may not pay a premium. So when you buy a car, part of the augmented
product would be the warranty, the customer service support offered by the car’s manufacturer and any
after-sales service. The augmented product is an important way to tailor the core or actual product to the
needs of an individual customer. The features of augmented products can be converted in to benefits for
individuals.
Features and benefits of products
Features and benefits of a product are also relevant to the three levels of the product. Products tend
to have a whole series of features but only a small number of benefits to the actual consumer.
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Let’s look at this another way, if you buy a Nintendo console it has many features; for example you
can play games alone or you can play against another opponent or two or three opponents. You can also
have access to the Internet. Avatars are adaptable so you can create yourself and your friends. These are
all examples of features to the consumer. However a consumer may buy it because he or she wants to
stay fit and will use software and peripherals to become healthier. Becoming healthier is the benefit to
the consumer.
The consistent marketer will aim to discover the consumer’s preference for benefits and will match
individual features to the preference. That is why professional salespeople for example, often ask many
questions whereas a novice salesperson will just tell you the features of the product
Classifications of Products/Goods
Products that are marked can be generally classified according to use, differentiation, types, and
durability. Figure 3. Classification of Products/Goods
According to Use:
Consumer goods
According to Differentiation:
Undifferentiated goods
Products/Good
s According to Durability:
Consumables
According to Types:
Convenience goods
Shopping goods
According to Use: Consumer and Industrial Goods
When classified according to use, products/goods can either be consumer goods or industrial goods.
Consumer goods are goods that are purchased for personal consumption and/or for household use.
Examples of these are instant noodles, biscuits, milk, detergent soap, shampoo, and other similar items.
On the other hand, industrial goods are purchased in order to make other goods, to serve as a raw
material or input in the production of other goods. Typical examples are aluminum (used to manufacture
kitchen equipment and cans) and electronic cables and wires (serve as electrical conduits for home
appliances) among others.
It would not be possible to say, however, that a product is always a consumer good or an industrial
good. A good that is ordinarily a consumer good can also be used as an industrial good, and vice-versa. For
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example, when a consumer buys sugar from the supermarket and uses this sugar to sweeten his/her
coffee, the sugar in this particular case is a consumer good. However, if the sugar is added to flour,
chocolate syrup, eggs, and walnuts to make brownies and eventually sold, the sugar in this case is an
industrial good.
In other words, physical characteristics alone cannot determine whether a product is a consumer
good or an industrial good. One should also consider how the product is ultimately used.
According to Differentiation: Undifferentiated and Differentiated Goods
Undifferentiated goods are products whose physical characteristics are so identical, that it would be
difficult, it not impossible, to distinguished one purchased from one vendor or another. Most
undifferentiated goods are products that sourced from nature.
A typical example of an undifferentiated good is rock salt. When a housewife goes to the wet market
to purchase rock salt from two different vendors, determining which one came from one vendor or the
other is a challenge. Salt bought from the two different vendors looks, feels, and tastes identical.
On the other hand, differentiated goods are varied in their characteristics and features that make
them distinguishable from one another. If there are white-colored vehicles of each model from all local
car manufacturers parked side by side, the Toyota Fortuner would still be readily distinguishable from the
Mazda 3, the Nissan Sentra, the Honda Civic, and from the other vehicles in the parking area. This is
because each manufacturer and car model has varying appearances and features. The appearance of the
Toyota Fortuner is different from mitsubishi’s Montero Sport. They have different grill designs, headlights,
body heights, hoods, ground clearance etc. The ability of manufacturers to successfully distinguish their
products from other competitors is called branding.
Branding provides a product or service a unique distinguishing name, logo, symbol, or image which is
used to differentiate it from other similar products and services.
Why do some manufacturers brand their products, while others do not? The major reason is cost.
When a company decides to brand its products, it must recognize that there are two responsibilities that
accompany branding:
 All products carrying the brand must have quality consistency
 The brand must be advertised and promoted
The underlying reason why manufacturers decide to engage in branding despite the cost is that they
want the brand to be known and to be preferred by customers, eventually creating and building brand
loyalty. No customer will patronize a brand whose quality is inconsistent. For a brand to be known, it must
be extensively advertised and promoted.
Once a brand acquires customer recognition, a positive market reputation and goodwill, higher
selling prices can be charged, larger sales revenues are generated, and higher profit margins are realized.
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This is because customers begin to attach value to the brand than to the product itself. This appreciation
in a brand’s value from the point of view of customers is called brand equity.
 Branding
Product provides
a product or
service a unique
distinguishing
name, logo,
symbol, or image
which is used to
differentiate it
from other
similar products
and services
According to Durability: Consumable, Semi-Durable, and Durable Goods
Based on Durability, Products are either consumables, semi-durables, or durables. Durability refers
to the length of time a consumer can derive benefit from the product or good purchased.
A consumable is a product whose benefit can only be used by a consumer for a consumer for a short
period of time, sometimes only a few minutes. For this reason, many mis-interpret consumables to
exclusively include food, drinks, and edible items. Although these are consumables, non-edible items such
as detergents and toiletris are also considered consumables. The benefit one can derive from soap, for
example(for cleaning oneself) may only last few days.
On the other hand, semi-durables provide benefits to the consumer for a longer period of time,
usually spanning several months. Semi-durables are manufactured for longer-term use by consumers.
Examples of semi-durables are clothes, shoes, belts, jackets, etc.
Durables are products that are manufactured to last a long time. They are capable of providing
consumers with years of beneficial use. Durables are casually expensive, and many, therefore, require an
augmented product to market them effectively. Examples of durable goods are automobiles, houses
home appliances, customer electronics, furniture, sports equipment, and toys.
According to Type: Convenience, Shopping, Specialty, and Unsought Goods
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Convenience goods are products that are purchased frequently, are usually inexpensive, and do not
require much purchase effort and evaluation. Examples are newspapers, gum, and candy.
The key to the successful marketing of convenience goods is its availability in as many retail outlets
as possible, catering to consumer need where and when it arises.
Shopping goods, on the other hand, are purchased less frequently than convenience goods, are
relatively more expensive, and require some amount of information search and evaluation prior to
purchase. Consumers of shopping goods consider features, evaluate attributes, and compare prices.
Examples of shopping goods are shoes, clothes, and handbags. The successful marketing of shopping
goods depends on intensive advertising, well-trained salespersons, and positioning company products as
superior alternatives to competitors’ products.
Specialty goods are goods that require an unusually large effort on the part of consumers to acquire.
Consumers are usually willing to travel great distances to where these goods can be purchased. Examples
are branded luxury merchandise, works of art, automobiles, and homes. The successful marketing of
specialty goods require the promotion of strong brand image and identities.
Unsought goods are goods that consumers seldom actively look for, and are usually purchased for
extraordinary reasons, such as fear or diversity, rather than desire. Examples are investments, memorial
plans, and life insurance. These goods require advertising and aggressive selling and are usually marketed
using highly-trained and persuasive salespersons.
What’s More
Practice sheet
Activity 3: Marketing Process Diagram
Direction: Your going to eexplain the marketing process. Use the following diagram format.
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______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
_________________________________________________________
Activity 4: Classification of Products/Goods
Direction: Your going to ccomplete the diagram by giving an example for each of the following
goods/products.
According to Us:
1. Consumer goods - ___________________
2. Industrial goods - ____________________
1.
According to Differentiation:
1. Undifferentiated goods - ______________
2. Differentiated goods - ________________
According to Durability:
Product/Goods
1. Undifferentiated goods - _______________
2. Differentiated goods - _________________
According to Durability:
1. Convenience goods - __________________
2. Shopping goods - _____________________
3. Specialty goods - _____________________
4. Unsought goods - ____________________
Activity5: Classifying Goods
Direction: Classify the products or goods by checking the column that corresponds to their answer.
Examples Consumer Industrial Specially Unsought Shopping Convenience

Goods Goods Goods Goods Goods Goods
1. Clothes
2. Detergent
powder
3. Aluminum
4. Newspaper
5. Memorial
plans
6. Investment
7. Automobiles
8. Bags
9. Candy/Gum
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10. Luxury
items
What I Have Learned
Activity 6: Reflection
Direction: Answer the following questions.
1. Marketing involves, among others, the delivery of value to consumers. However, the value a
consumer places on a particular products or service is subjective. If you are a marketer, how can you
increase customer’s assessment of your product/service? Use a product/service of your choice
as an example.
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
____________________.
2. This is a common saying “All products sold involve the sale of service to a greater or lesser
extent. “Cite an example where product was sold because of an accompanying service.
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________.
Well done! Since you have completed the first lesson about the marketing principles,
marketing goals and marketing process, you may now proceed to the next lesson.
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Good luck!
NOTE: PLEASE WRITE ALL YOUR ANSWERS IN YELLOW PAPER. THANKS!
GOD BLESS!!
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Lesson 1.2
Marketing Approaches and Services
What I Need To Know
The traditional approaches in marketing focused on the production methods, product quality, and
effective selling methods as profit drivers in marketing. In contrast, contemporary marketing approaches
are centered on the customer, relationships, and the well-being of society.
General Objectives:
 Discribe the traditional approaches to marketing;
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 Identify contemporary approaches to marketing;
 Differentiate product marketing from marketing services; and
 Compute the market share
What’s In
Activity 7: Review from the past Lesson.
1. This is a common saying: “ All products sold involve the sale of services to a greater or
lesser extent.” Cite an example where product was sold because of an
accompanying service.?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
______________________________________________________________________________
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What's New
Activity 8: Explain in your own words.
1. Intangible - _____________________
2. Perishable - ____________________
3. Needs - ________________________
4. Wants - ________________________
5. Demands - _____________________
What Is It
Market Services
The characteristics of the services differentiate the services from the tangible goods.
The following are the characteristics of services:
1. Intangibility:
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A Services are intangible and therefore cannot be touched, handled, smelt or tasted (physical
senses). This is because service itself is an activity. A service however, can be experienced. A service
also gives a certain amount of satisfaction to the consumers. On account of the intangibility, there is
no ownership created in case of services. A service can only be generated and used and can never be
owned.
2. Perishability:
A service has to be consumed simultaneously with its production. A service cannot be stored
like a tangible commodity. Services are perishable in terms of delivery and time. An empty seat on a
plane never can be utilized and charged after departure. Revenue once lost is lost forever.
When the service has been completely rendered to the requesting service consumer, this
particular service irreversibly vanishes as it has been consumed by the service consumer. Example –
after the passenger has been transported to the destination, he cannot be transported again to the
previous location at the previous point of time.
3. Inseparability:
Commodities once produced can be sold at a later point of time but in case of services it is not
possible. Examples – In the cases of services of a doctor to his patient, teacher to his student, the
simultaneous presence of both-the producer of the service and the consumer of the service at that
point of time is absolutely necessary.
The service provider is indispensable for service delivery as he must promptly generate and
render the service to the requesting service consumer. Therefore the service provider, the service
itself and the service consumer are inseparable.
4. Simultaneity:
Services are generated and consumed during the same period of time. As soon as the service
consumer has requested the service (delivery), the particular service must be generated from scratch
without any delay. The service consumer instantaneously consumes the rendered benefits to satisfy
his wants. Therefore the production and consumption of services are always simultaneous.
5. Variability:
Each service is unique. Services lack homogeneity. Example – a doctor treats two patients with
similar ailments on the same day. The level of satisfaction in the minds of these patients after the
treatment will never be the same. The difference is caused by factors such as the mood of the
doctor, the fatigue level of the doctor, the way the service is perceived by the individual patient etc.
There will a difference in the service even if the same doctor treats the same patient on two different
occasions.
This is because the moods of the doctor and the patient do not remain the same on both the
occasions. No two units of service are identical even if they are generated by the same person. Factors
like quality control, standardization etc. which can be very successfully implemented in case of production
of tangible goods cannot be applied in case of services. Services always vary with each other.
No ownership is created in case of services. At the time of creating a service or delivering a service,
the service provider does not own the service. He only owns the physical infrastructure necessary to
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create the service. Similarly at the time of consumption or after the consumption, the service consumer
does not own the service. He only consumes the service.
After the consumption, the consumer has only the experience but the service itself would have
become non-existent. A service cannot be owned by anybody because it is basically an intangible product.
Needs, Wants, and Demands
Consumer needs are defined as physiological necessities required for human survival. These
universal needs include food, shelter, and clothing.
Wants, on the other hand, are more psychological, indicating preferences that can improve the
consumer’s life condition. For example, at noon, a consumer may have a sudden and uncontrollable need
to eat. This can be satisfied with food because eating is a need. However, the consumer will not satisfy
this need with just any type of food but will consider what kind of food he wants. He will decide whether
to have a pizza, a doughnut, a sandwich, or a rice meal.
Market and Market Demand
Market is defined as the group of individual or organizational customers who have both the
willingness and financial capability to purchase a particular product or service. Capability to purchase a
product/service can be variable as it can expand or contract depending on certain factors, e.g. selling
price. When a product’s or service’s selling price is reduced, even if the number of individuals willing to
purchase remain constant, the reduced price may increase the number of individuals who can now afford
to buy the product or service.
Market demand is the total demand of all potential customers for a specific product/service over a
specific period in a specific market area.
Measuring Market Demand
Market demand can either be primary or selective. Primary demand refers to the total demand for
all brands of a particular product or service. It is sometimes referred to as total industry demand.
Selective demand, on the other hand, is the demand for a specific brand of product or service.
Potential, Latent, and Current Demand
Potential demand emerges when there is no demand yet for a particular product/service, but there
exists a market with sufficient financial capability to purchase.
An example of this is an example of potential demand can be education courses where there is very
low demand or no demand at all. Such cases are very hard to counter.
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Latent demand results when customers in a market are unable to satisfy specific desires because no
products/services exist in the market that can satisfy them. It can also result when the product/service is
available, but is priced beyond their reach.
a smartphone brand’s success due to the company’s ability to close the gap between the current
product bought and the ideal product the customer would like to use.
In order to satisfy latent demand, marketing organizations must:
 Introduce goods currently unavailable that are desired by customers;
 Influence and persuade customers to reallocate their expenditures towards the company’s
product; or
 Offer credit, installment, or similar terms to make the product affordable to customers.
Current demand is defined as the number of people of a particular market at present that would
actually purchase the product or service offered. This can be measured in several ways, the most popular
of which is through “intent to buy” survey.
An example of current demand are seasonal products like umbrella, air conditioners or resorts.
These products sell irregularly and sell more during season whereas their demand is very low during non-
seasons.
Utility, Value, and Satisfaction
Utility refers to the total satisfaction consumers can receive from the consumption of a product or
service.
Value, on the other hand, refers to the value customers place on a product or service. Since
consumers have different needs and buying capacities, consumers assign varying values on the same
product or service. The product with the highest quality does not always provide the highest value for
customers. The perception of value is affected by the cost required to acquire the product or service.
Satisfaction is the measure of how well customer expectations from a purchased product or service
have been met.
To ensure maximum customer value and satisfaction, marketers must:
 Balance product or service quality and price.
 Establish consistency among product availability, level of customer service, and efficiency.
 Create a buying atmosphere and deliver purchase convenience.
Customer-Perceived Value
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Customer-perceived value is the quantitative difference between the expected benefits and costs of
a particular product or service in comparison to a similar product or service. Customers rarely have an
accurate assessment of the value and cost of a product or service, and make purchases based on their
perception of its ability to satisfy his/her needs and requirements.
To enhance their customers’ perceived value of products or services, marketers advertise

aggressively and invest heavily in highlighting products features. In the case of cosmetics and personal
care products, companies invest heavily in packaging and labeling.
Some marketing organizations conduct marketing research to identify the perceived values
consumers attach to specific products/services.
Customer Value Proposition
A customer value proposition is a comparison of the benefits offered by a company’s products to its
customers in relation to the amount it is asking customers to pay. Customers always ask question:
“What’s in it for me?”
Marketing strategies enhance a product’s customer value proposition by emphasizing key attributes
of the brand in relation to competitors’ brands and communicating to customers: ”Why us?”
Competition
A competitor is any company in n industry or similar industry that offers a similar product or service
Levels of Competition
A firm’s competition can be classified either as a desire, generic, form, or brand competitor.
Figure 4: Levels of Competition
1. Desire Competitors 2. Generic Competitors
“What desire do I want to satisfy?” ‘What do I want to eat?”
 Eat  Sandwich
 Text  Dimsum
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 Read  Pasta
 Drink  Chicken
3. Form Competitors 4. Brand Competitors
“What kind of sandwich?” “What brand of hamburger sandwich?”
 Chicken  Wendy’s
 Cheese  McDonald’s
 Hotdog  Jollibee
 Hamburger  Burger KIng
 Army Navy
The most basic type of competition is desire competitors. For example, eating is a “desire” or “need”
that a customer wants to satisfy at a particular time or occasion. This is identified and established first
before the customer starts thinking of a possible destination to satisfy his “desire” or “need”.
The customer then considers a number of available options. These are the generic and form
competitors (sometimes called “indirect” competitors). Although these two levels a customer selects a
chicken sandwich instead of a hamburger, the hamburger fast food chain can no longer generate revenue
from the customer because:
1. The “desire” or “need” of the customer has already been satisfied and he is no longer (for the
moment) interested in food.
2. If the customer is on a limited budget, he/she may have already spent his/her monetary
allocation for food.
On the other hand, brand competitors are the most “direct” competitors because they offer the
same form of product the customer has finally decided to consume.
The Concept of Market Share
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The effectiveness of marketing strategies in an industry can be measured using what is referred to as
market share. Market share, expressed in percentage, is the share of a company’s revenues divided by the
total revenues of its industry in a particular year.
Market share is calculated using the following formula:

Company A’s annual revenue
Company A’ Market Share - x 100
Total annual revenue of Company A’s Industry
Since sales revenue is the basis for determining market share, companies often boost sales through
product introduction and innovation, price reduction, intensive advertising, and aggressive promotional
efforts, among other activities.
The company with the largest market share in an industry is the industry’s market leader. Market
leadership is aspired after by many industry is the industry’s participants. Aside from the prestige, market
leaders usually lead the industry in price changes, advertising and promotional intensity, and new product
introductions. More often than not, market leaders manufacture and market the largest number of
product units in an industry. They are likewise often the most profitable due to production scale and
distribution efficiency.
Traditional Approaches to Marketing
Evident up to the late 1960’s traditional approaches in marketing focused on production methods,
product quality, and effective selling methods as profit drivers in marketing.
1. The Production concept
The Production concept assumes that customers prefer products that are inexpensive,
affordable, and widely available. Efforts are concentrated toward expanding distribution, and
improving production efficiency. The objective is to lower production costs resulting in lower
process. However, this concept is relevant only if customer tastes and preferences are stable and
product demand is high.
2. The Product Concept
The product concept assumes that customers will always prefer and patronize products of high
quality. Resources are focused on product improvement and innovation. Product attributes and
features are continuously enhanced. While this may be important, too much preoccupation on
product quality may neglect the customer’s changing needs.
3. The Selling Concept
The selling concept emphasizes aggressive selling and promotional efforts. It assumes that
customers are generally timid and must be persuaded into buying. The objective is to sell what is
manufactures rather than manufacture what the market wants.
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Contemporary Approaches to Marketing
Marketing is all about understanding the needs and preferences of your audience rather than serving
them what the company has to offer. The contemporary approach of marketing focuses on the customer
and their needs towards the product and the services. This theory is based on the importance of
traditional marketing orientation versus customer orientation. They use different tactics and strategies to
build a relationship with their clients and targeted audiences.
Contemporary approaches to Marketing includes the following;
 Relationship marketing
 Industrial marketing
 Social marketing
Relationship marketing is a strategy that helps the brand develops a strong connection with their
customers. It helps the brands in forming long-term bonds with their loyal customers. It is essential to
maintain and establish relationships with customers and other brands these days. It is beneficial for
brands as it helps them understand their audience in the long-run.
Industrial marketing, also known as B2B or business-to-business marketing is a branch of marketing

which involves one business dealing or marketing their goods and services to another business. Rather
than the customer base, the brands are targeting industrial customers in this type of marketing. Long-
term relations can be built if the industrial buyers are adequately satisfied. However, the total number of
business buyers will be less in comparison to the number of customer buyers.
Social marketing is an approach of marketing which seeks to bring any social change. It integrates
marketing theories and tactics with other plans to achieve social change. Social marketing is aimed at
benefiting individuals and different communities of society. Social marketing should not be mistaken with
social media marketing in any way. This approach focuses on changing human behavior. This branch of
marketing works for the welfare of the people which helps the brands creates their positive image in the
eyes of the customer. Thereby, helping the brands create long-term relations with their customers.
Contemporary approaches followed by organizations:
 Cause Marketing – It is the type of marketing in which a company and charity team up together
and spread awareness for a good cause. If the campaign is successful, it can help in increasing the
business value for the company.
 Event marketing – It is the type of marketing in which marketers conduct promotional events and
promote their products and services in those events. This involves face to face contact and helps
in increasing the credibility of the brand.
 Green marketing – It is the practice of marketing in which the services and goods are marketed
from their environmental benefits. Research has shown that the customers are willing to pay
extra for products from companies which are concerned about the environment and committed
to sustainable development
22
What's More
Activity 9: Market share

Complete the table below by computation.
Company Market Share Company’s Annual Total revenue of

Revenue Company’s Industry
1. A P 600,500,000.00 P 950,000,000.00
2. B P 350,000,000.00 P 765,000,000.00
3. C P 156,000,000.00 P 845,000,000.00
4. D P 65,000,000.00 P 487,000,000.00
5. E P 120,000,000.00 P 355,000,000.00
What I Have Learned
Direction: Write your own answer. (Shorts Explanation only).
1. A company makes a pair of shoes (a semi-durable) that can last for more than 10
years, Is this art advantage or a disadvantage for its customers? Explain
2. People “need” to eat. Some “want” to eat pizza or a sandwich. Is it possible for a
“want” not to emanate from a “need”? Explain by relating your experience.
23
What I Can Do
Activity 11: Compare and Contrast
Direction: In a separate sheet of paper. Using Venn Diagram, Write the similarities and
differences of the traditional and contemporary approaches to marketing.
Traditional
Aproaches to
Marketing Contemporary
Approaches to
Marketing
Similirities
24
Post Test
Direction: Multiple Choice
1. This refers to measure of how well customer expectation from a purchased product or service have
been met.
a Consumer goods b.Satisfaction
c. Marketing d. Brand equity
2. This is the appreciation in a brand’s value from the point of view of customers.
a. Brand equity b.Satisfaction
c.Marketing d. Consumer goods
3. These are products whose physical characteristics are so identical, that it would be difficult, it not
impossible, to distinguish one purchased from one vendor or another.
a. Brand equity b. Consumer goods
b. Marketing d. Primary Demand
4. It is a form of communicating or promoting the value of a product, service, or brand to the

consumers.
a. Durable b. Primary demand
c.Marketing d. Consumer goods
25
5. This can used in marketing to describe the way in which a service capacity cannot be stored for sale in
the future. Services cannot be stored, saved, returned, or resold once they have been used. Once
rendered to a customer, the service is completely consumed and cannot be delivered to another
customer.
a. Intangible b. Inseparable
c.Perishable d. Variable
6. This is the ability of manufacturers to successfully distinguish their products from other competitors.
a. Undifferentiated goods b. Industrial goods
c.Differentiated goods d. Branding
7. These is more psychological, indicating prefenrences that can improve the consumer’s life condition.
a. Needs b. Demands
c.Value d. Wants
8. These are products that are manufactures to last a long time.
a. Durable b. Semi-durables
c.Consumable d. Shooping goods
9. These give thier potential clietns an impression of their competence and capability to render the
service required.
26
a. Intangible b. Inseparable
c.Perishable d. Variable
10. It refers to the total demand for all brands of a particular product or service.
a. Latent demand b. Current demand
c.Primary demand d. Selective demand
11. It is the total demand in the Philippines is challenging because few accurate published industry
statistics are available.
a. Demands b. Wants
b. Value d. Needs
12. These are goods that are purchased for personal consumption and/or for household use.
a. Branding b. Differentiated goods
c, industrial goods d. Undifferentiated goods
13. This is defined as physiological necessities required for human survival.
a. Demands b. Wants
c.Value d. Needs
27
14. The number of people of a particular market at present that would actually purchase the product or
service offered.
a. Primary demand b. Current demand
c.Selective demand d. Latent demand
15. It is a product whose benefit can only be used by a consumer for a short period of time, sometimes
only few minutes.
a. Consumable b. Semi-durable
c.Durable d. Satisfaction
28
Answer key
Activity 1 Activity 7
1. Marketing Answers may vary
2. Undifferentiated goods
Activity 8
3. Consumer goods
Answers may vary
4. Branding
Activity 9
5. Brand equity
1. 63.2%
2. 45.7%
Activity 2
3. 18.4%
Activity 3
Activity 10
Answer May Vary

Answers May Vary
Activity 4
Activity 11
Answers May Vary
Answers May Vary
Activity 5
1. Shopping Post-Test Answer
2. Consumer 1. B
3. Industrial 2. A
4. Convenience 3. B
5. Unsought 4. C
5. C
Activity 6 6. D
Answers may vary 7. D
8. A
29
References
Principles of Marketing for Senior High School Textbook, Author: Real C. So and Oscar G. Torres; and
Editor: Angeles A. De Guzman, DBA
http://www.marketingteacher.com/three-levels-of-a-product/
https://www.google.com/url?sa=i&url=https%3A%2F%2Fphvntom.com%2Funilever-gets-marketers-
to-take-dna-tests-to-challenge-stereotypes-beyond-gender
%2F&psig=AOvVaw0tRCE7wmpo9vdGjlcTEhJz&ust=1595838454073000&source=images&cd=vfe&ved=0C
A0QjhxqFwoTCKDxuNO_6uoCFQAAAAAdAAAAABAS
https://www.economicsdiscussion.net/marketing-2/what-is-service-marketing/31875
https://www.airtract.com/question/What-is-the-contemporary-approach-to-marketing
https://www.google.com/search?
q=marketing+images&tbm=isch&chips=q:marketing+images,g_1:social+media:_gl5XrAVglw%3D&hl=en-
GB&sa=X&ved=2ahUKEwjSy4Klmo3rAhVFWpQKHdy-
A4gQ4lYoA3oECAEQGw&biw=1349&bih=576#imgrc=c870KTecJ5KW6M&imgdii=BpVqZLBepkp75M
30
SENIOR HIGH SCHOOL
Quarter 1 - Module 2
Customer Relationship: Customer Service
This instructional material was collaboratively developed and

reviewed by educators from public and private schools, colleges,
and/or universities. We encourage teachers and other education
stakeholders to email their feedback, comments, and recommendation
to the Department of Education at action@deped.gov.ph
We value your feedback and recommendation.
31
Introductory Message
For the facilitator:
For the learner:
32
TABLE OF CONTENT
What I Need To Know
33
Learning Competency:
 Define “relationship marketing” (ABMˍPM11-Ic-d-5)
 Explain the value of customers (ABMˍPM11-1c-d-6)
Learning Objectives:
At the end of the lesson, students are expected to:
 Define relationship marketing
 Explain the value of customers
 Identify and describe relationship development strategies
 Illustrate successful customer service strategy in the Philippine business enterprise
What I Know
Activity 1.1 Pre-test

Directions: Read each statement carefully. In a separate sheet of paper, write TRUE if the statement is
correct and FALSE if the statement does not fit the description.
______________ 1. A customer is a person or organization that transacts with a business person or
business organization to buy goods or services for monetary or other valuable considerations.
______________ 2. Customer Relationship Management can take on many forms-salespersons
assistance, product delivery, technical advice, help desks, or other means.
_______________ 3. Companies can best manage customer service quality by establishing service
objectives with specific and measurable targets.
_______________ 4. Customer service is a process of managing an organization’s interactions with
current and future customers.
________________ 5. By Knowing the value or worth of its customers, a company can focus its resources
in attracting and keeping the “right” type of customers.
________________ 6. The customers are the lifeblood of any business.
________________ 7. The business is the one responsible for sealing the deal with customer.
________________ 8. A customer’s lifetime value can be based upon the potential value and profitability
of his/her relationship with the company.
________________ 9. Organizations must constantly bear in mind that it is better to exceed customer
service expectations than to simply fulfil or underachieve them.
________________ 10. In order to ensure the consistency of customer service quality, organizations
conduct rigid customer service training and assess seldom how well services are delivered.
What’s New
Have you ever experienced good customer service from a certain establishment? Recall the details of this
experience. Why do you think good customer service is important for an establishment to progress? What
are the different ways to provide good customer service?
34
What Is It
(DISCUSSION)
Relationship marketing
Is a form of marketing developed from direct response marketing campaigns that emphasizes customer
retention and satisfaction rather than sales transactions. It differentiates from other forms of marketing in
that it recognises the long-term value of customer relationships and extends communication beyond
intrusive advertising and sales promotional messages. With the growth of the Internet and mobile
platforms, relationship marketing has continued to evolve as technology opens more collaborative and
social channels such as tools for managing relationships with customers that go beyond demographics
and customer service data collection. Relationship marketing extends to include inbound marketing, a
combination of search optimization and strategic content, public relations, social media and application
development.
Customer
Is a person or organization that transacts with a business person or business organization to buy goods or
services for monetary or other valuable considerations. Acquiring and keeping customers is the end goal
of businesses because customers create demand. Through customers’ purchases, organizations are able
to cover manufacturing costs, operating expenses, and generate profits. Because businesses have to be
sustainable, products or services are not expected to be purchased only once. They need to be purchased
over and over again in order to maintain profitable and sustainable operations.
Consumables such as biscuits and instant noodles are bought frequently. Other products like
shopping goods are purchased less frequently. A mobile phone maybe bought once every year, and a car,
perhaps every five years. Real estate and properties may be purchased every 10-15 years, or even longer.
Because customers have varying needs and preferences over time, organizations must be able to
offer products and services at the time when customers need them. Marketers cannot force the
customers to buy any product or service that the company offers. Instead, consumer needs and wants
must be understood and anticipated, as well be satisfied adequately and exceedingly. Companies must
predict customer needs.
Since there are other businesses that offer the same product or service to the same customers,
companies outdo each other in terms of value offering. Once an individual becomes a customer,
everything must be done to ensure that the customer is kept and retained.
Customers wield tremendous influence over other people. A satisfied customer shares his
experience with relatives and friends, which can result in additional sales. On the other hand, when a
customer is not satisfied, the experience he shares will dissuade other people from purchasing the
product. This becomes a cause for concern when the customer vents his dissatisfaction to social media
which has the tendency to magnify these positive and negative experiences.
Customer Service
Is the process of ensuring customer satisfaction with a product or service. Customer service can take on
many forms – salesperson assistance, product delivery, technical advice, help desks, or other means. It
involves activities designed to enhance customer satisfaction, or the perception that a product has met or
exceeded expectations. This perception can be shaped and influenced by the level and type of service that
the customers receive before, during, and after the actual purchase. Good customer service can lead
35
Let PV = ₱2,000.00
RP = 24 (twice a month for 1 year)
RT = 5
CVL =?
CVL = (PV) (RP) (RT)

customers to perceive the value offered as superior over its competitors. This is because a customer not
= (2000) (24) (5)
only buys a product or pays for a service, but also the entire purchase or shopping experience.
= ₱240,000.00
The value of customer service is evident in the local setting. Call center representative is one of the
most in demand jobs in the Philippines where they assist customers with online transactions and/or
The athlete’s Customer Lifetime Value is ₱240,000.00
reservations, product information and many others via telecommunications.
It is important to know the customers’ feedback from using their product as well as their
competitors’ product. That is why organizations provide platforms for the customers’ feedback.
Managing Customer Service Quality
Maintaining high levels of customer service quality may be challenging due to variability of services. In
order to ensure the consistency of customer service quality, organizations conduct rigid customer service
training and assess periodically how services will are delivered. This assessment can result in the
identification of customer service problems, areas of improvement, and current levels of customer
satisfaction.
Maintaining customer service quality is important. Disgruntled customers tend to tell others about a
bad service experience more often than a pleasant one. This can lead to deterioration of the
organization’s image. It shall be perceived as being unable to deliver the level of service expected by
customers.
Companies can best manage customers’ service quality by:
 Establishing service objectives with specific and measurable targets
 Committing sufficient organizational resource towards the achievement of these targets
 Collecting customer feedback on service quality regularly
 Reviewing target accomplishment
 Identifying customer service weaknesses and connecting them
Organizations must constantly bear in mind that it is better to exceed customers’ service
expectations than to simply fulfil or underachieve them.
Managing Customer Service Differentiation
How can organizations make their customer service stand out? How they can they protect their services
from being duplicated by competitors? For physical product, differentiation can be easily undertaken and
protected through patents. This is, however, not the case with services.
Customer-centered organizations can differentiate their customer service through: (1) the
development and training of competent customer contact personnel and (2) designing and implementing
a superior service delivery environment and process.
Organizations should continuously improve their customer service. An intimate knowledge and
understanding of customer needs and wants can lead to effective customer service that can result in long-
term customer loyalty.
The following are some of the more popular customer service practices in the Philippines:
Customer Service Practice Practicing Organization (s)
Free delivery Most restaurants and fast food chains
Automated in-home ordering system Some supermarkets and drug stores
Free gift wrapping/plastic book jacket Some department stores and book stores
Merchandise/document pick-up Selected courier services
Free parking Some churches and religious organizations
Valet parking Some hotels and resorts
Reservations, instalment plans Some large department stores, bookstores
Complimentary refreshments, waiting lounge Most car dealership
Help desk, touch phone access, 24-hour customer Most utility firms and telecommunication firms
hotline
Free appliance installation Most appliance stores
Scheduled floral bouquet delivery Some flower shops
Drive-Through Most fast food outlets
Free-alterations on garments Selected apparel retailers
Complimentary massage Some barbershops and salons
36
Customer Relationship Management
At its core, customer relationship management (CRM) is all of the activities, strategies and technologies
that companies use to manage their interactions with their current and potential customers. A saying
frequently heard and said in many businesses is "customer is king."
CRM helps businesses build a relationship with their customers that, in turn, creates loyalty and customer
retention. Since customer loyalty and revenue are both qualities that affect a company's revenue, CRM is
a management strategy that results in increased profits for a business. At its core, a CRM tool creates a
simple user interface for a collection of data that helps businesses recognize and communicate with
customers in a scalable way.
Initially, marketing companies create and maintain customer database that record and keep the
following information: customer names, birthdates, contact numbers and physical and email addresses.
The information progresses to include customers’ buying history and behaviour (i.e., what they buy, when
and where they buy, in what quantities and prices, and their responses to sales promotion efforts).
While most consumers may not be willing to share personal information, product retailers utilize
different strategies to coax customers into sharing. A common practice is through shopper’s club. Benefits
of joining the club include earning points on purchases or participation in in-store contests. The customer
swipes his membership card at the check-out counter every time he/she shops. This updates his/her
purchasing history. The information can yield customer purchased value, preferences, and buying habits,
among others.
Customer database information is also used in customer segmentation and profiling. Through
databases businesses can have a precise identification of their customer base. This information could
include the geographical area of their residence or work, the distance they are willing to travel to shop,
their age profiles, and occupations. Knowing the customer’s date of birth can reinforce relationship with
the customer. It is common for loyal customers to receive greetings from stores. Email addresses can be
used to update customers on new merchandise, promotional offers, and other store activities.
Customer shopping history can be used to accurately identify the type of merchandise frequently
purchased, the amount spent, the preferred days for shopping, etc. Promotions can be personalized so
that customers will only receive those that truly interest them and are most likely to purchase.
Effective guidelines in the implementation of customer relationship management:
1. Adopt the right mind set towards customer service.
2. Purchase or develop CRM software.
3. Quantity customer acquisition and retention costs.
4. Develop and implement a customer service training program.
5. Empower sales persons to make decisions.
6. Establish communication lines between your customer and customer contact staff.
7. Shop your competition.
37
8. Keep innovating customer service.
9. Promote genuine customer service with passion.
Customer Lifetime Value
Customer Lifetime Value (CVL) is the forecasted sales or profits that a company can derive from the entire
span of its future relationship with a particular customer.
A customer’s lifetime value can be based upon the potential and profitability of his/her relationship
with the company.
The CVL perspective has several distinct implications:
 It considers a longer-term perspective of a company’s relationship with customers in contrast to
a short-term view of “take the customer’s money and run.”
 It calculates and compares costs of acquiring customers and keeping old ones. This can be used
to determine the revenues that are lost when an existing customer switches to another product.
Costs for getting new customers are called acquisition costs, whereas, cost for maintaining
existing customers are called retention costs. These are normally in the form of customer
support and promotional incentives.
 It highlights the importance of market segmentation, with the recognition that some customer
groups are more profitable than others.
CVL can be measured using the formula:

CVL= (PV) (RP) (RT)
Where: PV is the average peso value of a sale to a particular customer or customer group
RP is the repeat purchase in a year
RT is the retention time in months or years
CVL is the customer lifetime value
For example, an athlete who spends ₱2,000.00 for every visit to a spa and goes to the spa twice a month
for an expected time period of five years would have a CVL computed as:
38
Let PV = ₱2,000.00
RP = 24 (twice a month for 1 year)
RT = 5
CVL =?
CVL = (PV) (RP) (RT)

= (2000) (24) (5)
= ₱240.000.00
The athlete’s Customer Lifetime Value is ₱240.000.00
What’s More
Activity 1.2: Customer Lifetime Value
39
Direction: In a separate sheet of paper, compute the CVL for the following situation. Follow the guide
provided below. (5 points each)
1. Mrs. Abad spends ₱4,000.00 for every visit to a supermarket twice a month for an expected time
period of five years.
2. Mr. Alfonso spends ₱1,500.00 for every visit to a fast food chain with his wife and 2 children once
a month for an expected time period of one year.
3. A senior high school student spends ₱500.00 for every visit in a bookstore once every 3 months
for an expected time of 9 months.
4. An overseas Filipino Worker from Dubai spends ₱3,000.00 for every package she sends to the
Philippines via courier service once a year for an expected time period of three years.
PV = ________
RP = ________
RT = ________
Computation:
WHAT
CVL =I _______
HAVE LEARNED
What I Have Learned
WHAT I HAVE LEARNED

Activity 1. 3: Reflection
40
Direction: In a separate sheet of paper, answer the following questions.
1. Why is it important to have an excellent customer service for your customers?
_______________________________________________________________________________
_______________________________________________________________________________
__________________________________________________________
2. In what ways can employers empower their salespeople to provide excellent customer service?
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
___________________________________________________
What I Can Do
Activity 1.4
Direction: in a separate sheet of paper, using the graphic organizer below. Cite some importance of a
good customer service. Write it in each partition on the wheel. (Answer may vary)
41
Importance of a good customer service
Post Test
ASSESSMENT
Activity 1.5
Directions: Read each statement carefully. In a separate sheet of paper, write TRUE if the statement is
correct and FALSE if the statement does not fit the description.
__________ 1. CRM helps businesses build a relationship with their customers that, in turn, creates
loyalty and customer retention
__________ 2. Customer database information is also used in customer segmentation and profiling.
__________3. An intimate knowledge and understanding of customer needs and wants can lead to
ineffective customer service that can result in long-term customer loyalty.
__________ 4. Acquiring and keeping customers is the end goal of businesses because customers create
demand.
__________ 5. Maintaining high levels of customer service quality may be simple due to variability of
services.
__________ 6. Customer’s lifetime value involves activities designed to enhance customer satisfaction, or
the perception that a product has met or exceeded expectations.
42
__________ 7. Customer Relationship Management can take on many forms-salesperson assistance,
product delivery, technical advice, help desks, or other means.
_________ 8. Organizations must constantly bear in mind that it better to exceed customer service
expectations than to simplify fulfil or underachieve them.
_________ 9. Store owner is a person that transacts with a business person or business organization to
buy goods or services for monetary or other valuable considerations.
__________ 10. companies can best manage customer service quality by establishing service objectives
with specific and measurable targets.
ADDITIONAL ACTIVITY
Activtity 1.6
Direction: In a separate sheet of paper, answer the following questions:
A. Why is there a need to maintain relationships with customers? Does this apply to the
neighbourhood sari-sari store? Explain.
B. Narrate your recent shopping experience. Was it pleasant? Were you satisfied? Explain how
customer service played a role in your experience.
43
ANSWER KEY:
Activity 1.1
1. True
2. False
3. True
4. False
5. True
6. True
7. False
8. True
9. True
10. False
Activity 1.2
1. ₱480,000.00
2. ₱36,000.00
3. ₱1,200.00
4. ₱9,000.00
Activity 1.5
1. True
2. True
3. false
4. true
5. False
6. False
7. False
8. True
9. False
10. true
44
References
Principles of Marketing for Senior High School Textbook, Author: Real C. So and Oscar G. Torres; and
http://www.marketingteacher.com/three-levels-of-a-product/
https://www.google.com/url?sa=i&url=https%3A%2F%2Fphvntom.com%2Funilever-gets-marketers-
to-take-dna-tests-to-challenge-stereotypes-beyond-gender
%2F&psig=AOvVaw0tRCE7wmpo9vdGjlcTEhJz&ust=1595838454073000&source=images&cd=vfe&ved=0C
A0QjhxqFwoTCKDxuNO_6uoCFQAAAAAdAAAAABAS
https://www.economicsdiscussion.net/marketing-2/what-is-service-marketing/31875
https://www.airtract.com/question/What-is-the-contemporary-approach-to-marketing
q=marketing+images&tbm=isch&chips=q:marketing+images,g_1:social+media:_gl5XrAVglw%3D&hl=en-
GB&sa=X&ved=2ahUKEwjSy4Klmo3rAhVFWpQKHdy-
A4gQ4lYoA3oECAEQGw&biw=1349&bih=576#imgrc=c870KTecJ5KW6M&imgdii=BpVqZLBepkp75M
45
SENIOR HIGH SCHOOL
MARKETING OPPORTUNITY ANALYSIS AND CONSUMER ANALYSIS

46
For the learner:
47
TABLE OF CONTENT
What I Need To Know
Learning Competencies:
 Distinguished between strategic and tactic marketing; and Planning in terms of objectives
andprocesses (ABM_PM11-le-i-9)
48
 Analyze the elements of macro- and micro-environment and their influence to marketing planning
(ABM_PM11-le-i-10)
 Define marketing research, it’s importance to a business enterprise and identify the steps in
marketing research (ABM_PM11-le-i-11)
 Differentiate the buying behavior and decision making of individual/household customer versus the
business (organizational) customer (ABM_PM11-le-i-13)
 Identify and segment market for a product or service (ABM_PM11-le-i-14)
 Select the appropriate target market segment and its positioning (ABM_PM11-le-i-15)
What I Know
Activity 1: Diagnostic Test

Instructions: Match column A with the correct phrase in column B. Write only the letter of the answer on
the space provided.
A B
_____________ 1. The information from these researches helps a. Usage, attitude, and image
marketers identify macro-environment shifts. studies
______________ 2. These studies can provide cost-effective b. Consumer markets
ways on how to increase a c. Observation research
product’s/service’s awareness level and brand is a valuable d. Test marketing
tool in site selection. e. Advertising pre- and
______________ 3. It determines ideal retail store locations and post-testing
is a valuable tool in site selection. f. Concept, product
_____________ 4. It can be used to decide on the packaging, to development, and product
determine the market reaction, and to justify brand positioning. studies
____________ 5. It reveals the effectiveness of point-of- g. Pricing tests
purchase collateral materials. h. Target market studies
________________ 6. These help identify, quantity, and i. External factor research
understand the target market better. j. Location studies
______________ 7. These tests can determine advertising copy k. Data analysis
effectiveness, advertising re-call, sales promotion, response
rates, and outdoor advertising traffic results.
_____________ 8. It can be utilized by marketers to calculate a
product’s or service’s optimal price, and to determine price
elasticity.
____________ 9. Based on these results, the company shall
gauge the acceptability of a proposed product/service.
______________ 10. It includes individuals and/or house-holds
that purchase products and services for personal consumption.
Lesson 1
49
Distinguished between strategic and tactic marketing; and Planning in terms of objectives andprocesses
(ABM_PM11-le-i-9)
Analyze the elements of macro-environment and micro-environment and their influence (ABM_PM11-
le-i-10)
What I Need To Know
The strategic marketing process seeks to establish a clear and concerted direction for all marketing
activities of an organization while the tactical marketing process determines the means or tactics to
implement the strategies. Thie marketing environment refers to factors and forces that affect a firm’s
ability to build and maintain successful relationships with customers. Its elements include Micro-
environment and Macro-environment.
General Objectives:
 Distinguish between strategic and tactical marketing in terms of Objectives and processes; and
 Analyze the elements of macro-environment and micro environment and their influence to
marketing planning processes.
What’s New
Activity 2:
Direction: Differentiate in your own words. 2 sentence only
1. Strategy -
___________________________________________________________________
__________________________________________________________________
2. Tactics ___________________________________________________________________
__________________________________________________________________
What Is It
50
Strategic Marketing Process
The strategic marketing process seeks to establish a clear and concerted direction for all marketing
activities of an organization. It includes plans to reach specific goals/objectives. The strategic marketing
process is depicted in the following diagram:
Mission Situation Objective

identification setting
analysis
Strategy Marketing
evaluation strategy
and control development
Step 1: Mission Identification
51
The company’s mission statement is articulated. A mission statement defines what an organization
is, why it exists, its reason for being, its primary customers, the products and services it produces, and its
geographical area of operation.
For example, an international consumer goods company’s mission statement is “to provide branded
products and services of superior quality and value that improve the lives of the world’s consumers. As a
result, consumers will reward us with industry leadership in sales, profit, and value creation, allowing our
people, shareholders, and the communities in which we live and work to prosper.”
Step 2: Situation analysis
This step assesses and evaluates the market, customers, competitors, and the company’s internal
and external environment. The objective is to identify the company’s strengths and weaknesses, as well as
the available opportunities and possible threats.
Step 3: Objective setting
Objectives are marketing targets that are specific, Measurable, Attainable, Realistic, and Time-bound
(SMART). These enable a company to control its marketing plan and provide a consistent focus all
functions of an organization. These objectives include sales revenues, market share, and profits. They are
used as basis for strategy selection and development.
Step 4: Marketing strategy development
The development of a marketing strategy involves market segmentation, identification of target

market, positioning, selection of broad marketing strategies, and the translation of strategies into action
plans.
Strategy can be broadly classified into three categories. These are cost leadership, differentiation,
and focused.
(Authors’ note: Examples are hypothetical and for academic purposes only.)
Cost Leadership
This is a strategy primarily for achieving low cost leadership among industry competitors. Cost
leadership can be achieved through low cost supply contracts, overhead expense control, economics of
scale, and comprehensive cost-cutting efforts, among others.
Example: While 16” desk fans ordinarily retail fro P 1,000.00, a local appliance brand is able to
market the same at 635.00 through mass production.
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Differentiation
Differentiation seeks to achieve superior product attributes and features that are different from
industry competitors. This results in pronounced consumer preferences for the company’s products.
Example: A mobile phone brand introduces its version of the smartphone that does not have a
keyboard but is activated and controlled by thought.
Focused
Efforts are concentrated on a relatively small but profitable market. The development of products
and services primarily ensures that the needs and want of this addressed and that satisfaction is provided.
Example: A convenience store that concentrates on the very high-end niche market by converting its
operations into convenience stores with superior customer service, selling purely imported and high
quality products and gourmet food prepared by resident chefs.
Cost leadership, differentiation, and focused strategies may be implemented through the following
sub-categories of strategies:
1. Forward integration
This involves gaining ownership or increased control over distributors or retailers.
Example: A known newspaper company buying 418 newspaper stands in Metro Manila
2. Backward integration
This involves gaining ownership or increased control over suppliers.
Example: A consumer goods company in the Philippines purchasing a cow farm and dairy
facility in General Santos City
3. Horizontal integration
This involves purchase of or increased control over competitors.
Example: A pizza company buying a controlling interest in another pizza company
4. Market penetration
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The objective of this strategy is to increase market share of current products or services in
current markets through greater and more intensive marketing efforts.
Example: A doughnut company launching a P 56 million advertising campaign directed at

current customers
5. Market development
This strategy involves the introduction of existing products or services into a new geographical
area or market.
Example: A private learning institution opening a campus in Cebu City
6. Product development
This strategy involves the improvement of current products or services or the development of
new products with the purpose of increasing sales.
Example: A company on carbonated beverages introducing its product line in tetra pack
7. Related diversification
This involves introducing new but related products or services.
Example: Battery manufacturers introducing solar powered automotive batteries
8. Unrelated diversification
This involves introducing new but unrelated products or services.
Example: A bank opening a chain of ice cream parlors
9. Retrenchment
This involves halting or reversing declining sales and profits through cost or asset reduction.
Example: A shopping mall selling off its hardware department and laying off 847 of its
department store employees
10. Divestiture
This involves selling a division or part of an organization.
Example: A conglomerate selling an airline
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11. Liquidation
This involves selling all of a company’s assets, in parts or as a whole, for their tangible worth.
Example: A prime holdings company selling all its companies.
Step 5: Strategy Evaluation and Control
After the strategy is developed, periodic monitoring and evaluation are needed. This is necessary to
identify deviations and necessary adjustments and corrections.
The Tactical Marketing Process
Completing the strategic marketing process, the tactical marketing process determines the means or
tactics to implement the strategies. It involves the identification of specific activities, timetables,
responsibilities, and budgets and their implementation. The objective is to ensure that the strategies are
implemented successfully
Marketing Action Plans/ Marketing Activity

Strategies Tactics Activities Timetables
Monitoring Activity Responsibility/

and Control Budgets Accountability
For example, a company determines to increase sales by 10% by the end of the calendar year. After
careful consideration, it selects market penetration as its strategy.The current task is to identify the
tactics, or activities that it should undertake to ensure that the strategy will be successful. The firm may
decide to increase selling prices. It may opt to do intensive promotions, or it may invest in heavy product
advertising.
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Once the tactics and activities are identified, they are developed into an action plan. An action plan
is a sequential series of marketing activities. It includes timetables for each activity, pinpointed
responsibilities or accountability for each, and the corresponding budgets. Oftentimes, it is necessary to
utilize two or more action plans to ensure successful implementation. These are monitored regularly to
ensure effectiveness.
MARKETING MICRO-ENVIRONMENT
The marketing micro-environment includes forces that are internal to the company or those that are
relevant to its operation. It is composed of the company itself, its suppliers, market intermediaries,
customers, competition, and its various public's. The consideration of these is important as they affect the
company’s ability to build and maintain sustainable relationships with current and prospective customers.
1. The Company
Marketing may be the “lifeblood” of an organization, but it cannot exist independently of other
organizational functions. These functions include research and development, finance, operations,
and human resources. Recognition of the importance of these functions is essential for marketing.
Moreover, marketing cannot function in a vacuum as marketing decisions must always be aligned
with the organization’s goals and strategies.
2. Suppliers
Suppliers provide raw materials, utilities, labor, capital, and equipment. The availability and
prices of these supplies should be monitored. Effective partnership or relationship management with
suppliers is essential. The performance of suppliers can directly impact an organization’s ability to
continuously satisfy its consumers. Substandard raw materials will negatively affect product quality,
and the unstable supply process may hurt profits and affect the organization’s ability to provide
superior value to customers.
3. Market Intermediaries
Intermediaries are channels that link the organization to its customers. Most products are
delivered and distributed to customers through intermediaries. In comparison to organizations
distributing products by themselves, distribution through intermediaries is more practical and less
costly. The most common intermediaries are distributors, wholesalers, and retailers. Aside from
distribution, market intermediaries also help in the promotion of products.
4. Customers
Customers create the demand for products and services. They can either be customers or end-
users, businesses, or organizations. Companies must attract and maintain customers through
products and services that meet and exceed customer expectations.
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5. Competition
The demand for a company’s products and services is affected by the nature and intensity of
competition. Knowing a competitor is critical to the success of the firm. Monitoring the movements
of competitors is essential because competition is not static and is very volatile. Competitors may
introduce new and/or improved products in the market. They may also actively implement price
changes and launch advertising and promotional campaigns. To create and maintain relative
advantage, companies must be ready and quick to respond to these movements.
6. Public's
Public's may include any individual or entity with an actual or potential interest in company and
its products or services. These include the shareholders, the community, financial institutions, media,
the government, and society. Shareholders expect a reasonable return on their investment.
Consumer advocate groups and the media may build or destroy the reputation of the product or
service. Financial institutions can hinder a company’s ability to secure funds. The government may
pass and implement laws that can either liberalize or restrict a company’s actions. An organization’s
public’s can affect the competitiveness of the company, and to some extent, pose a threat to its
survival.
Identifying Strengths and Weaknesses
Strengths and weaknesses can either be controllable or uncontrollable. The factor s present
within the company are within the firm’s control. The five other forces (suppliers, market
intermediaries, customers, competition, and the various public’s) are essentially uncontrollable
although they are within the sphere of the company’s influence.
For example, a poor or confrontational working relationship between marketing and the other
organization’s functions can result in delayed, stunted, or even aborted marketing plans.Suppliers
that are not treated as essential partners can result in poor material quality, delayed deliveries, and
unwarranted price increases.
In like manner, highly motivated market intermediaries can give preference to a company’s
products over others. Financial institutions can just as readily provide loans and credit on a timely
basis.
Marketing micro-economic factors that are favorable to a firm are classified as strengths, while
unfavorable factors are termed as weaknesses. Companies should utilize strengths as the foundation
for effective strategies, with the most dominant and sustainable strength as its major competitive
action, and eventually be converted to strengths.
MARKETING MACRO-ENVIRONMENT
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All business organizations operate within a particular macro-environment. The marketing macro-
environment includes factors that are external to the organization. Essentially, these can neither be
influenced nor threats; which the company must avoid.
The importance of the macro-environment can be compared to the scenario of a commercial flight
from Manila to the United Arab Emirates (UAE). Pilots request information from the air control tower to
determine the route. Weather forecasts are crucial in determining particular areas of turbulence and
other weather anomalies. Timely reports are received en route to avoid unwanted delays due to air
traffic. Updates from the control tower identify the positions of other aircraft to prevent collisions. The
date on wind speed and direction can be used to take advantage of strong tailwinds to reduce flying time
and fuel consumption. Prior to landing at the UAE airport, the pilot requests for a wind shear report to
determine if the wind conditions at the point of destination is conducive for a safe landing.
In business, the macro-environment refers to the economic, politico-legal, sociocultural,

demographic, technological, and natural environments. Although there are many, only the factors that
are directly relevant are considered. The factors that indicate some level of uncertainty and may affect
the organization (depending on the nature of the business and product or service offering) are evaluated.
1. Economic Macro-environment
The economic macro- environment represents economic factors that can directly affect an
organization, Examples of these are inflation rate, foreign exchange rates, consumer spending shifts,
and consumer price index, among others. Economic factors are significant because they indicate the
cost of doing business as well as consumer buying power.
An economic macro-environment factor may pose a threat to an industry, while presenting an

opportunity to another. The effect of the foreign exchange rate is different on establishments that
have large imported inputs in comparison to firms that rely on purchases driven by foreign
remittance.
2. Politico-legal Macro-environment
The politico-legal macro-environment includes both political and legal factors. A highly
uncertain political situation, such as an impending national election, may affect the stability of
businesses. A new administration may have different economic and monetary priorities and may
favor a divergent legislative agenda. Political unrest may lead to government instability. This will
always cause economic and business uncertainty.
Legal factors include laws passed recently, as well as legislative bills that could be enacted into
law. The effects of these should be in a company’s planning agenda. One example is the recently
approved legislation increasing tax exemption on the amount of 13 th month pay of employees
(Republic Act 10653, February 12, 2015). The exempted amount translates into higher consumer
spending at the end of 2015. This is highly favorable for retailers. In contrast, the proposed
legislation imposing a 10% ad valorem tax on soft drinks and other sweetened beverages may result
in the decline or flattening of the demand for carbonated beverages, juices, and similar
refreshments. Companies belonging to these industries may consider product development and
operational alignment to lessen the effects of the law.
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3. Sociocultural Macro-environment
Each geographical area has a specific culture that dictates how business is conducted. Culture is
defined as the beliefs, customs, arts, etc., of a particular society, group, place, on time. Having been
colonized by the Spaniards, Americans, and the Japanese, the Filipino sociocultural macro-
environment is far more challenging to understand than that of its ASEAN neighbors. The most
evident result of Philippine colonial history is colonial mentality. All things being equal, Filipinos rend
to prefer products manufactured by certain countries (such as the United States, Japan, and some
countries of the European Union) over products manufactured locally.
Perhaps as a direct result of low wages and relatively high poverty incidence, some Filipino
families have to contend with providing for their needs and that of their families on a daily basis. This
has led to the necessity of the tingi or piecemeal retailing system. Products that are needed on a
small amount and on a daily basis, such as detergents, shampoo, mobile phone credits, candies, and
the like are sold individually in small packets or sachets.
The Filipino trait of intrinsic closeness between mothers and daughter is exemplified in the very
personal concern exhibited by a Filipino mother towards her daughter’s aesthetic dilemma in a
popular skincare product culture-based television advertisement introduced in 2002.
There are few sociocultural traits of Filipino that have been monitored and exploited by
companies doing business in the Philippines. Fortunately, the sociocultural macro-environment is not
as unpredictable as the economic and politico-legal macro-environment. A country’s culture hardly
changes over time, and may sometimes require several generations to alter substantially.
4. Demographic Macro-environment
A company’s demographic macro-environment consists of changes in population

characteristics. These include population rate, gender, age, income composition patterns, civil status,
and family size. Population increase rates can be particularly beneficial for mass marketing efforts.
Positive shifts in gender and age composition patterns can be utilized as opportunities for gender
and age-specific products like sanitary napkins and toys. The growing population with higher income
presents opportunities for higher-priced products. Increased family size can predict a higher demand
for mini-vans and full-sized vans, and lower demand for studio condominium units.
5. Technological Macro-environment
The technological macro-environment is composed of current and impending technological

change. This is sometimes the single factors that can cause the rapid acceleration or bring about the
untimely demise of products, services, or companies.
There are recent examples of this phenomenon. The development of electronic word
processing machines and computers with enhanced features have launched Apple Microsoft, etc. To
the top of their industries. At the same time, popular typewriter brands have disappeared from the
market. Electronic mail has rendered snail mail, telegrams, and the telefax practically obsolete.
Digital photography has made photograpic films less popular. Social media platforms, such as
Facebook, Twitter, and Instagram, have decreased the popularity of traditional media. The multi-
tasking features of smartphones have dethroned the still reliable basic feature phones as devices of
choice.
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The changes in the technological macro-environment can be threatening. Properly channeled,
they can be opportunity springboards for future successes.
6. Natural Macro-environment
The natural macro-environment refers to natural resource inputs and environmental concerns.
Uncontrolled use of finite natural resources including fossil fuel in organizational activities has
heightened concern for the sustainability of the rampant denudation of forests. Although legislation
is in place, the preservation of the natural environment is a major factor to consider in a company’s
activities.
An analysis of the natural environment must also include calamities, often referred to as “acts
of God”. These include floods, earthquakes, tornadoes, landslides, tropical cyclones, volcanic
eruptions, and storm surges. Specific geographical areas of the world are particularly susceptible to
these calamities (e.g. earthquake-prone countries located in the so-called “ring of fire”). Businesses
operating in these areas can expect frequent operational disruptions. On the other hand,
opportunities also abound in these localities. There could be a higher demand for flashlights, power
generating units, medical survival kits, and other goods needed for frequent emergencies.
Identifying Opportunities and Threats
After relevant economic, politico-legal, sociocultural, demographic, technological, and natural

macro-environmental factors have been identified and analyzed, the company shall now proceed to
identify threats or opportunities among these factors.
Although both opportunities and threats are external in nature and essentially uncontrollable,
opportunities are favorable to a company and, therefore, can be capitalized on, while threats are
unfavorable and require mitigation.
For example, a company can take advantage of the increased economic growth in the Visayas
by developing the market through the opening of outlets in the region. Through product
development, a fruit juices manufacturer can develop a healthy line of beverages to minimize or
avoid the potential threat of increased tax on its current products.
What’s More
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Activity 3- Strategic Marketing Process
Direction: Present the “Strategic Marketing Process” by creating a flow chart. Write each of
the step in bold letters and write for the definition per step.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
_____________________________________________________
Activity 4- Tactical Marketing Process
Direction: Complete the diagram below and explain the process.
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______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
________________________________________
Activity 5: Follow Through
Direction: Write A if it is marketing micro-environment and B, if it is marketing
macro-environment. Write your answer on the space provided before the number.
___________1. Suppliers ____________ 6. Politico-legal
___________ 2. Sociocultural ____________ 7. Market Intermediaries
___________ 3. Demographic ____________ 8. The company
62
What I Have Learned
Direction: Answer the following
1. Is it possible with no distinct differentiating feature to be successful in the market?

Give examples and explain briefly.
_______________________________________________________________
_______________________________________________________________
______________________________________________________________
2. Some companies market their products without first identifying their target market.
After several months of operation, they profile their customers and classify them
geographically, demographically and psycho-graphically. The most recurring profile of
customers is identified as the “target market” is this workable? Explain briefly.
_______________________________________________________________
_______________________________________________________________
______________________________________________________________
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Post Test
Direction: From the Pool of word;s inside the box, choose the opproapriate term for each
description below.
Economic Cost leadership Liquidation Forward integration
Politico-legal Market development Suppliers
1. This involves gaining ownership or increased control over distributors or retailers.
2. This is a strategy primarily for achieving low cost leadership among industry competition
3. This involves selling all of a company’s assets, in parts or as a whole, for their tangible worth.
64
4. It provide raw materials, utilities, labor, capital, and equipment in marketing micro-environment.
5. Its part of the marketing micro-environment that creates the demand for products and services.
6. This involves or reversing declining sales and profits through cost or asset reduction.
7. This strategy involves the introduction of existing products or services into a new geographical area
or market.
8. This involves introducing new but unrelated products or services.
9. Is a marketing may be the lifeblood of an organization, but it cannot exist independently of other
organizational functions.
10. Is the demand for a company’s products and services is affected by the nature and intensity of
competion.
11. It represents economic factors that can directly affect an organization.
12. It consists of changes in population characteristics.
13. It refers to natural resources inputs and environmental concerns.
14. It composed of current and impending technological change.
15. It includes both political and legal factors of marketing.
65
66
Answer Key
Activity 1
Activity 5
1. i
1. A
2. A
2. B
3. J
3. B
4. F
4. B
5. C
5. A
Activity 2 Activity 5
Answers may vary Answers may vary
67
Activity 3
Answers may vary
Activity 4
68
References
Principles of Marketing Teacher’s Manual and Texbook
Authors: Real C. So and Oscar G. Torres
69
70
You have done your lesson between strategic and tactic marketing with their
objectives. And also the macro-environment and micro-environment. Keep it up for
a job well done! Now, you may proceed to the next lesson.
Good luck!
Lesson 3
Define Marketing Research, Its importance to a Business Enterprise and Identify the Steps in Marketing
Research
(ABM_PM11-le-1-11)
What I Need To Know
Marketing research is the function responsible for acquiring and evaluating market and consumer-
based information for decision making and the determination of marketing strategic direction. It is
primarily responsible for the gathering, analysis, and timely distribution of information for the use of
marketing decision makers.
General Abjectives:
 Define marketing research and its importance to a business enterprise; and
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 Identify the steps in marketing research
What’s In
Activity 1:
Check your understanding about the Marketing Research:
1. Caroline started doing her marketing research process by Identifying the problem of
poor marketing message penetration. What does Caroline need to articulate next? Choose
your answer below and Explain briefly
a. Develop the research plan
b. Objectives for the research
c. Conduct research
__________________________________________________________________________
__________________________________________________________________________
___________________________________________________________
72
What Is It
MARKETING RESEARCH
Marketing research is a function under a business organization’s Marketing Information System

(MIS). MIS is primarily responsible for the gathering, analysis, and timely distribution of information for
the use of marketing decision makers.
Definition
Market research is the process of determining the viability of a new service or product through
research conducted directly with potential customers. Market research allows a company to discover
the target market and get opinions and other feedback from consumers about their interest in the
product or service.
The Purpose and Importance of Marketing Research
Companies have complete information about their products from production to distribution.
However, it is a challenge for the companies to know what happens to the product after it was purchased.
Who uses the product, how it is used, how much or how little of it used, and the general attitudes of the
consumer toward the product are not known explicitly. Thus, for new products or new markets, the
company may not be completely certain whether the product will be accepted by the market. The value
of the product to the consumer is difficult to measure because perceptions of the value are subjective.
Although marketing research can be costly, it is indispensable. The following are some of the issues
that can be addressed by marketing research:
 Identify viable new products and services
 Enable risk reduction
 Identify market opportunities and threats
 Determine the level of customer satisfaction
 Pinpoint and anticipate market trends or changes
 Decide on the best advertising medium
73
 Pre-test and post-test advertising and promotional campaigns
 Evaluate the results of test marketing
 Evaluate the results of packaging, brand name, and label testing
 Determine consumer price awareness and sensitivity
 Undertake location studies
Steps in the Marketing Research Process
Marketing research can and should be used for various reasons. Marketing research can be used to
identify marketing opportunities and problems,generate and evaluate potential marketing actions or
plans, monitor marketing performance and improve marketing as a process. But, how does one carry out
marketing research? I delved into the Marketing Research textbook by Alvin C. Burns and Ronald F. Bush
for the answers.
Here are the 11 steps to conducting marketing research, but note that not all marketing research
follows these steps.
1. Establishing the need for marketing research

This could seem basic but is in fact fundamental to conducting marketing research. Research takes
time and money. Marketing research is not needed when information is readily available (this could be
through secondary data), when there is not enough time to conduct a proper research study and answers
are needed immediately, when you can afford the research or when the costs outweigh the value.It could
also simply be that the answer is obvious.
2. Defining the problem

According to the authors, this is by far the most important step. If the problem is incorrectly defined,
all is wasted effort. Marketing research should only be conducted to answer a problem. There are also
needs to be alternatives. If there are no alternatives, no decision is necessary.
3. Establishing research objectives

Objectives tell a researcher exactly what he or she should be looking for and what he or she must do
to obtain the information necessary to allow the manager to choose between the decision and the
alternatives.
4. Determining research design

 Exploratory research: informal search to learn more about the research problem, learn terms and
definitions or identify opportunities
 Descriptive research: most basic; used to describe the marketing phenomena
 Causal research: uncover factors that cause on event
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5. Identifying information types and sources
 Primary: information collected specifically for the problem at hand
 Secondary: information already collected
6. Determining methods of accessing data

This can be done through observing consumers, surveys, online etc.
7. Designing data collection forms

Designing the form in which data will be collected. It can be a questionnaire or an observation form.
8. Determining sample plan and size

Sample plan: describes how each sample element is to be drawn from the total population
Sample size: how many elements of the population should be used to make up the sample
9. Collecting data
Non-sampling errors in data are likely to occur and researchers need to know the sources of these
errors to implement controls to minimize them.
10. Analyzing data

Data analysis involves entering data into computer files, inspecting data for errors, and running
tabulations and various statistical tests.
11. Preparing and presenting the final report

It is important that it is not overstated as it is the report that properly communicates the results to
the client.
Making Marketing Research-based Decisions
Marketing research reports include a lot of information that can aid organizations in making effective
marketing decisions, rather than resorting to unsupported “gut feel”decisions.
Some examples of reports and the marketing decisions they can support are:
 External factors research- The information from these researches helps marketers identify
macro-environmental shifts. These are bases in pinpointing opportunities and anticipating
threats.
 Observation research - This is an invaluable aid in determining consumer behavior. It assists

marketers in determining the retail shelf placement strategy to use. It also reveals the
effectiveness of point-of-purchase collateral materials.
 Test marketing- Based on test marketing results, the company shall gauge the acceptability of a
proposed product/service. The company can, have the opportunity to re-calibrate elements in
the marketing mix and to measure their effects on consumer demand and overall satisfaction.
Its finding can result in the discontinuance of a proposed product/service if results indicate a
general lack of interest.
 Target market studies- These help identify, quantify, and understand the target market better.
Companies may decide to redefine its target market by including characteristics the market
should possess
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 Concept, product development, and product studies- Using the results generated by concept,
product development, and product studies, marketing organizations shall select the proposed
product/service concepts that have the highest level of market acceptance. It can also be used
to decide on the packaging, to determine the market acceptance. It can also be used to decide
on the packaging, to determine the market reaction, and to justify brand positioning.
 Pricing tests- Pricing tests can be utilized by marketers to calculate a product’s or service’s
optimal price, to determine price elasticity, or to determine how price adjustment can effect
total demand for the product or service.
 Location studies- Location studies determine ideal retail store locations and is a valuable tool in
site selection.
 Advertising pre- and post-testing- These tests can determine advertising copy effectiveness,
advertising recall, sales promotion response rates, outdoor advertising traffic results, and the
effectiveness of public relations media placement. A product’s/service’s advertising theme or
message and the mechanics of consumer sales promotions can be adjusted based on these
results.
 Usage,attitude, and image studies- These studies can provide cost- effective ways on how to
increase a product’s/ service’s awareness level and brand trial. In addition, the results can
reveal product usage and allow the company to develop strategies to increase usage frequency.
The effectiveness of current distribution outlets can be ascertained. This can help in
determining if distribution outlets can be ascertained. This can help in determining if
distribution should be expanded or alternate distribution outlets should be developed. Finally,
product/service purchase drivers can be quantified to calibrate its value offer effectively
What’s More
Activity 2: Multiple Choice
Directions: Circle the correct answer
1. Clearly communicate the research findings to the client.
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a. 5. Identify Information Types and Sources
b. 6. Determine Methods of Accessing Data
c. 1. Establish need for marketing research
d. 11. Prepare and Present the Final Research Report
2. Research objectives tell the researcher exactly what information needs to be

gathered and analyzed to allow managers to make decisions related to a
problem. They need to be clear and measurable.
a. 4. Determine Research Design
b. 1. Establish the need for Marketing Research
c. 5. Identify Information Types and Sources
d. 3. Establish Research Objectives
3. You don’t need MR if:
- The information is already available
- The timing is wrong to conduct MR
- Costs outweigh the value of MR
a. 3. Establish Research Objectives
c. 5. Identify Information Types and Sources
d. 1. Establish the need for making Research
77
4. Can be found online, using surveys, or observing customers
a. 2. Define the Problem
c. 4. Determine Research Design
d. 11. Prepare and Present the final Research Report
Activity 3: True or False
Directions: Write TRUE if the sentence is correct and right FALSE is not correct.
1. Using IBM or SPSS, data analysis is to use statistical tools to present data in a form
that full fills the research objectives - 1. Establish the need for Marketing Research
____________
2. Primary Information: collected specifically for the problem at hand
Secondary: information already collected (always look at first)- 1. Establish the need of
marketing research
____________
3. Define a Problem Statement that summarize the problem briefly - 6. Determine

Methods of Accessing Data
____________
What I Have Learned

78
Activity 4: Reflection:
1. Why is marketing research important for business owners?
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________
2. In what ways can marketing research help you as a consumer? Explain
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
____________________________________________.
What I Can Do
79
Activity 5: Newspaper Research
Directions: You may look for a newspaper articles pertaining to an actual marketing
research done in the Philippines. Paste the articles inside the box and answer the following
questions below.
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1. What was their research about?
______________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
_________________________
2. Why was this marketing research made? What were its goals and objectives?
______________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
____________________
3. What were the outcomes of their research?
______________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
________________________________________________________
4. Do you think their research was successful based on how they achieved their goals and objectives?
Explain shortly
81
______________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
_________________________________________________________________________________
82
ANSWER KEY
83
Activity 1:Answers may vary
Activity 2:
1. 11. Prepare and Present the Final Research Report
2. 3. Establish Research Objectives
3. 1. Establish the need for Marketing Research
4. 6. Determine Methods of Accessing Data
Activity 3:
1. False
2. False
3. False
84
References
Senior HIgh School Textbook:
85
Principles of Marketing Author: Real C. So and Oscar G. Torres; Editor: Angeles A. De Guzman, DBA
(pp. 35-55)
https://courses.lumenlearning.com/suny-marketing-spring2016/chapter/reading-the-
marketing-research-process/
https://www.investopedia.com/terms/m/market-research.asp#:~:text=Market%20research%20is
%20the%20process,in%20the%20product%20or%20service.
If you are interested in Marketing Research, I strongly recommend the book, Marketing Research,
Alvin C. Burns and Ronald F. Bush, available on Amazon. It comprises the right amount of detail. The 11
steps detailed above are well-define and described in the book.
Source: Marketing Research, Alvin C. Burns and Ronald F. Bush
http://festa-marketing.blogspot.com/2013/12/11-steps-to-conducting-marketing.html
https://quizlet.com/148996577/test
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Lesson 4
Differentiate the buying Behavior and Decision Making of individual/household customer versus the
Business (organizational) customer
(ABM_PM11-le-i-13)
What I Need To Know
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At the end of the lesson, you are expected to:
 Describe consumer and business markets; and
 Differentiate the buying behavior and decision making of individual/household customer versus
the business (organizational) customer.
What’s New
Activity 1: Research of a companies that are part of organizational markets and explain only What
purpose and operationg of these markets? And Research also a picture of consumers and explain why
consumer purchase products and services? After that you are going to determine at least one similarity
and differences between consumers and organizational markets.
__________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
_______________________________________________.
What Is It
Consumer and Organizational Markets
Business offer products and services to both consumer and organizational markets.
Consumer Markets
Consumer markets include individuals and/or households that purchase products and services for
personal consumption. Consumers normally make purchase in smaller quantities, due to their tendency to
consume products gradually over a period of time. Moreover, consumers tend to be more emotional
about their purchases. The purchases are at times impulsive or spontaneous.
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Differentiate the buying Behavior and Decision Making of individual/household customer versus the
Business (organizational) customer
The customer buying process (also called a buying decision process) describes the journey your
customer goes through before they buy your product. Understanding your customer’s buying process is
not only very important for your salespeople, it will also enable you to align your sales strategy
accordingly.
The five stages framework remains a good way to evaluate the customer’s buying process. John
Dewey first introduced the following five stages in 1910:
1. Problem/need recognition
This is often identified as the first and most important step in the customer’s decision process. A
purchase cannot take place without the recognition of the need. The need may have been triggered by
internal stimuli (such as hunger or thirst) or external stimuli (such as advertising or word of mouth).
2. Information search
Having recognized a problem or need, the next step a customer may take is the information search
stage, in order to find out what they feel is the best solution. This is the buyer’s effort to search internal
and external business environments, in order to identify and evaluate information sources related to the
central buying decision. Your customer may rely on print, visual, online media or word of mouth for
obtaining information.
3. Evaluation of alternatives
As you might expect, individuals will evaluate different products or brands at this stage on the basis
of alternative product attributes – those which have the ability to deliver the benefits the customer is
seeking. A factor that heavily influences this stage is the customer’s attitude. Involvement is another
factor that influences the evaluation process. For example, if the customer’s attitude is positive and
involvement is high, then they will evaluate a number of companies or brands; but if it is low, only one
company or brand will be evaluated.
4. Purchase decision
The penultimate stage is where the purchase takes place. Philip Kotler (2009) states that the final
purchase decision may be ‘disrupted’ by two factors: negative feedback from other customers and the
level of motivation to accept the feedback. For example, having gone through the previous three stages, a
customer chooses to buy a new telescope. However, because his very good friend, a keen astronomer,
gives him negative feedback, he will then be bound to change his preference. Furthermore, the decision
may be disrupted due to unforeseen situations such as a sudden job loss or relocation.
5. Post-purchase behaviour
In brief, customers will compare products with their previous expectations and will be either
satisfied or dissatisfied. Therefore, these stages are critical in retaining customers. This can greatly affect
the decision process for similar purchases from the same company in the future, having a knock-on effect
at the information search stage and evaluation of alternatives stage. If your customer is satisfied, this will
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result in brand loyalty, and the Information search and Evaluation of alternative stages will often be fast-
tracked or skipped altogether.
On the basis of being either satisfied or dissatisfied, it is common for customers to distribute their
positive or negative feedback about the product. This may be through reviews on website, social media
networks or word of mouth. Companies should be very careful to create positive post-purchase
communication, in order to engage customers and make the process as efficient as possible.
Consumer Buying Roles
There are five roles individuals may portray in a consumer buying decision:
 Initiator- person who initially suggests buying a particular product or service.
 Influencer- person who tries to convince others of the need for the product/service and
influences the purchase decision.
 Decider- the person who makes the final decision to purchase or makes the final decision
on any product/service components such as what to buy, how to buy, where you buy, etc.
 Buyer- the person who makes the actual purchase.
 User- the person who actually uses the products/service whether or not he/she was
involved in the buying decision.
As an example, the wife in a family may suggest to her husband that since their eldest son is about to
start working, it may be time for him to have his own car. In this case, the wife is the initiator. The
younger son agrees with the suggestion and informs his parents of make, model, and color. Both the
younger son and elder sister are influencers. The father may visit several car showrooms, until he
eventually decides on the purchase and pays for the car. The father is the both the decider and the buyer.
The eldest son receives the car ans uses it as his personal vehicle. He is the user.
Consumer Markets and Buying Behavior
Consumers are of different genders and ages. They have varying income levels, live in different
regions of the country, and have various personalities and psychological profiles. This makes developing a
single way to sell to consumers. Difficult as they are influenced by different factors when buying goods
and services.
Consumers’ purchases are initiated by marketing stimuli. Marketing stimuli refer to the elements of
the marketing mix, oftentimes referred to as the 4P’s: Product, Price, Place, and Promotion. Consumers
are influenced by the products/services that they see, hear from mass media, the Internet, and through
word of mouth. Marketing organizations organize these four elements so marketing stimuli can result in
experted sales and brand loyalty.
Marketing Inputs Purchase Decisions

Consumer
 Products  Product choice
 Price  Brand choice
90  Location choice
Psychological Inputs
Figure 9. The  Culture

Consumer Behavior
Model
 Attitude
Buyer characteristics comprise of cultural, social, personal, and psychological factors. Cultural
characteristics, particularly, play a large role in consumer interest and eventual purchase. Products and
services must “fit” the cultural background of the potential buyer and not run contrary to it. An
individual’s personal culture is developed overtime. This includes his manner of upbringing, his
educational background, and the collective culture consciousness” or “ keeping up with the Joneses” will
favorably influence an individual’s attraction toward products and services with prestigious brand
reputations. A consumer, therefore, may be drawn to an advertisement of a high-end model but may
selectively ignore advertisements of a high-end model but may selectively ignore advertisements of other
lesser known brands that he perceives are relatively inferior or does not promote his culture of brand
consciousness.
Sub-cultural factors are minute parts of one’s culture that provide specific identification of its
members. This can include one’s nationality mix (e.g. Tsinoy, Mestizo, Fil-Am) or regional origins (e.g.
Ilocano, Batangueño, Ilonggo, or Manileño). These factors play a critical role in one’s buying behavior. For
example, Chinese-Filipinos are supposedly very practical in their spending habits, and Ilocanos have been
know to be thrifty.
This behavior may likewise be influenced by one’s social class. Social class is a status heirarchy in
which individuals and groups are classified through economic success and accumulation of wealth. The
four most common social classes are upper class, middle class, working class, and lower class.
Commonly, consumers belonging to a particular economic class (such as class A, the highest
economic class), purchase products and services consistent with their economic status. An income class A
senior corporate executive may therefore drive or be driven in an expensive car, wear branded clothes,
own a high-end smart phone, dine in the finest restaurants, and speak and act in a restrained, measured,
and socially eloquent manner. In cases of this nature, this person’s income classification is consistent with
his/her social class (income class A= upper social class).
Consumers usually purchase products and services befitting what they perceive as “acceptable” by
their own social class. Purchases made outside this “acceptable” classification can lead to one being
openly or silently ostracized by other members of their social class.
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Therefore, if this senior executive suddenly decides to purchase a 15-year old obviously dilapidated
car and decides to begin driving it personally to and from work, he may raise many of this office mates
and acquaintances eyebrows as “acting outside his social class” or may even be suspected of having lost
his previously enviable economic status.
Conversely, if one of this senior executive’s lowest ranking employees belonging to the lowest
income classes (classes D and E), invests all his pay, maximizes his credit, purchasing and coming to work
consistently in branded clothes, communicates with others higher ranking, substantially wealthier office-
mates and otherwise exhibits the purchasing his true economic standing will frown upon this behavior as
spending beyond one’s means, and may even brand him as a “social climber.”
Reference groups, likewise, exert a strong influence on buyer behavior. Reference groups include
individuals or groups that influence consumer opinions, beliefs, attitude, and behaviors. They often serve
as role models and inspiration. Many consumers belong to reference groups such as families, friends,
schoolmates, and co-workers. These are people whom they have extended and intimate contact with.
These groups exert continuous influence on an individual’s choice of products/services or brands to
purchase.
On the other hand, aspirational groups are groups that a person currently does not belong to but
wishes to belong to or to be associated with. What aspirational groups purchase also influences and
individual considerably, as he may feel that buying products/services and brands make him feel some
degree of belongingness to the aspirational group:
The challenge to marketers with reference and aspirational groups is to identify the leaders of these
groups and to shape their opinions that influence their followers in favor of a product or service.
Sometimes, product or service. Sometimes, products advertisers produce aspirational ads to appeal to
customers’ desire to be affiliated with a particular group.
An even stronger influence on buyer behavior is the family. This phenomenon is particularly true
among Filipinos. Because of the length of time one spends with his family, an individual adopts the values,
habits, and philosophical orientation of his family, i.e. self-worth, spending habits, and general
perspective and outlook towards life. This continues even after he has married. Spouses exert varying
levels of influence in the purchase of goods/services so marketers must be able to identify the decision-
maker in the relationship. In the Philippines, the wife is often the decision-maker in the purchase of daily
household items, while the husband exerts a greater influence in the purchase of large ticket items such
as durable and specialty goods.
Each individual performs a particular role in relation to his environment. This role is related to his
occupation or profession. His buying decisions shall befit the image or status that he projects. For
example, a vice-president of a company is expected to drive a luxury car and wear high-end clothing, and
to be seen frequenting prestigious commercial establishments.
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Figure 10. Buyer
Characteristics
Influencing Purchase
Behavior (Source: stock
photo
An individual’s personal factors also play a sizeable influence in his buying behavior. People’s need
and wants change as one ages-- from toys in early childhood, to denim pants as teenager, to suits and
dress clothes as one joins the workforce. A very useful guide to buying prospensity was developed by
William D. Wells and George Gubar-- the nine stages of a family’s life cycle. The authors have modified it
to fit to the Philippine context.
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Stage 1: Bachelor/bachelorette stage- They are highly dependent on their parents for finances
in the form of allowances. Some may be employed part-time in fast food chains or business
out sourcing companies. They spend primarily on entertainment, eating out, fashion, dating,
and activities with friends.
Stage 2: Young, newly married couple with no children- Most have dual income as both spouses
may be working. They may be renting a house or temporarily staying with parent/in-law.
They buy household appliances and audio and video equipment, and spend to make their
living space comfortable. If living with parent/in-law, they may share in household
expenses.
Stage 3: Married couple, with eldest child below elementary school age- They may be renting
their living facility or still staying with parent/in-law. They spend their income on nursery
and kindergarten education, food, children’s clothes, juvenile furniture, toys, and trips to
amusement parks.
Stage 4: Married couple, with youngest child six years old or over- They spend primarily on
school tuition, uniforms, books, and allowances. They usually live independently in an
apartment or condominium. They may join social and civic clubs and begin investing in
insurance. They purchase groceries and food items frequently and in larger quantities.
Stage 5: Older married couple, family head still working, all children living on their own- They
have increased savings as a result of reduced financial requirements. Their expenditures
include vacations, some luxury items, health and fitness, vitamins and supplements. They
initiate retirement fund investments.
Stage 6: Widow/widower, in labor force - They have substantial savings. They may move out
from a conventional home to live in a small condominium unit. They spend on eating out,
movies, other forms of entertainment, health and fitness, and dietary supplement. Also,
they spend a lot of free time with friends who share similar lifestyles.
Stage 7: Widow/widower, retired - Pensioner. They may be asked to move in by one of their
adult children for better care. Substantial expenses are for ambulatory and healthcare,
usually with host child’s family.
An individual’s occupation also plays an important indicator in the products and services he/she
purchases. Lawyers are expected to buy a lot of dress shirts, neckties, suits or barong tagalogs. Blue collar
workers purchase work purchase work boots and denims, while students regularly buy school supplies
such as pens, paper, and notebooks.
Buyer behavior is also dictated by economic capability. It is evident that individuals need money to
purchase goods and services. The more money available, the greater the amount and quantity of
purchase.
Lifestyle is defined as a manner of living that reflects a person’s values and attitudes. One’s lifestyle
is independent of his/her occupation, social class, or status. Therefore, a person may occupy a high
position in a bank, and yet prefer to maintain a frugal lifestyle. In contrast, an entry-level teller in the
same bank may live an extravagant lifestyle: always eating out, buying branded clothes, and using the
latest communication gadget.
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Personality refers to individual differences in characteristics patterns of thinking, feeling, and
behaving. Typical personality traits are dominance, deference, defensiveness, adaptability, autonomy,
sociability, and self-confidence. The individual personalities of consumers likewise influence their buying
behavior. Marketers can use personality as a means of enhancing product. For example, a car
manufacturer may discover that most buyers of its brand are self-confident and highly sociable. The car
company can then proceed to compose advertising copy or advertising messages that appeal to these
personality types in marketing its cars.
Similar to psychological factors, motivation addresses the issue of why a consumer buys a product or
what needs he is trying to satisfy. Most individuals purchase products and services in order to satisfy one
or more of the five need levels identified by Abraham Maslow.
Figure 11. Abraham

Maslow’s Hierarchy
of Needs (Source:
stock photo)
For example, three friends decide to meet and dine in a restaurant. One of the three may look
forward to the event because it will strengthen her relationship with her friends. She is satisfying her
social needs. Another may anticipate the event as she wants to take advantage of the occasion to make
an emergency loan from one of her friends. In this case, she is satisfying her safety or security needs. The
third may actually just want to attend the occasion because she has heard the food in the restaurant is
particularly good. She is attending the affair to satisfy her physiological needs.
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Perception is the process by which people translate sensory impression into a coherent and unified
view of the world around them. Because of perception, consumers may view marketing stimuli in
different ways. Although a housewife may have been motivated to buy a pair of shoes for an important
occasion, she may have a negative perception of the level of service in a shoe store. She may judge the
efforts of an extremely motivated salesperson as being “too pushy.” She may just prefer to just ask for
assistance when necessary. Another consumer in another shoe store that gives shoppers “space” to
browse may perceive the store as totally lacking in customer service and concern.
Three perceptual processes guide an individual’s perception:
 Selective attention - because consumers are exposed to hundreds of commercial messages

each day, they tend to pay attention to only those that address a current need. This is the
reason why therefore meal time, consumers are selectively attracted to food commercials, but
almost totally ignore them when their hunger has been satisfied. This is also why companies
develop advertisements that’s stand out and are different from other firms. They may, for
example, use black and white as their medium to set their advertisement apart, or use extreme
dramatization in their messages.
 Selective distortion - pertains to the tendency of individuals to twist or “distort” information to

fit their existing mindset toward a brand. A first time customer in a restaurant with excellent
market reputation may, for example, “twist” or rationalize the unreasonably long time it takes
for his order to arrive. He may convince himself that the chef is taking extra care in selecting the
ingredients and preparing his order. In reality, however, the delay could simply have been
caused by the order being overlooked by the kitchen staff.
 Selective retention - means that consumers tend to remember only the positive things that
reinforce their attitudes and beliefs. Therefore, a shopper in a supermarket may only remember
the wide product selection, affordable prices, and relaxing shopping atmosphere and totally
“forget” the spill he had seen at the meat section, or the delay he encountered at the checkout
counter.
Learning is a relatively lasting change in behavior that is the result of experience. When a consumer
purchases a particular brand of product and is completely satisfied with it, his/her positive experience
with the brand is reinforced. This learning can easily be applied to another product of the same brand. If a
consumer purchases a particular brand of mayonnaise and is completely satisfied with it, he may project
the same positive experience to tomato sauce with the same brand. This is a strong argument for building
brand equity, so that consumers will view several, if not all, the products under the brand favorably.
A belief is defined as confidence in the truth or existence of something not immediately susceptible
to rigorous proof. On the other hand, an attitude is a settled way of feeling about someone or something,
typically one that is reflected in a person’s behavior.
Consumers acquire both beliefs and attitudes through learning. Sometimes, consumers hold strong
beliefs about specific products or their qualities and attributes. Some of these beliefs may be correct,
some may be wrong. Correcting an erroneous belief can be expensive. This is also true with attitudes.
For these reasons, organizations must study and understand various consumer beliefs and attitudes
regarding their product. One way of discovering consumer attitudes is through the conduct of marketing
research, particularly a usage, attitude, and image survey.
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What role do beliefs and attitudes play in consumer marketing? Many of those who are regularly do
their own laundry believe that detergents that produce a lot of suds clean clothes better. This has caused
many households to reject new detergents in the market that do not produce a lot of suds. A new
detergent manufacturer, therefore, must either tailor his product to fit this belief or engage in a massive
campaign to correct or alter consumer attitudes.
The study of consumer buyer behavior is already complex. Cultural, social, personal, and
psychological characteristics all come into play. Some of these factors are largely uncontrollable.
What’s More
Activity 2: Explain in one pharagraph
A popular shampoo brand in the market is “Smooth and Fragrant Hair All Day” The brand is
positioned as a fragrance shampoo, curently a very desirable attribute to both men and women. However,
consumer preferences and priorities change over time. If, example, five years from now, consumers give
more importance to the ability of shampoo to make their hair and shiny, how should “Smooth and
Fragrant Hair All day” reposition itselt in the market?
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______________________________________________________________________________________
_______________________________________________________________.
Activity 3: Explain in one pharagraph
If you are going to visit a large supermarket and observe shoppers in the personal care or toiletries
section buying either toothpaste, soap, or shampoo. What do you observe of their buying behavior and
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decision making process. Classify specific shopping behaviors with certain population segments such as:
men, women, teenage, middle-aged, elderly, wealthy, middle-class, etc. And after that, you are going to
document and evaluate their observations.
__________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
__________________________________________________________________
What I Have Learned
As a student;
1. What do you think is a good way to improve your buying behavior?
_______________________________________________________________
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______________________________________________________________
2. Does impulse buying considered a negative consumer behavior? Giv some

instances and explain.
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_______________________________________________________________
_______________________________________________________________
______________________________________________________________
Answer key
Activity 1
May vary
Activity 2:
May vary
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Activity 3:
May vary
Activity 4:
May vary
100
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References
Principles of Marketing Teacher’s Manual and Texbook
Authors: Real C. So and Oscar G. Torres
By: Euan Johnston

Marketing Manager
Bellcom Worldwide
https://www.b2bmarketing.net/en-gb/resources/blog/5-steps-understanding-your-customers-buying-
process
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You have done your lesson between strategic and tactic marketing with their
objectives. And also the macro-environment and micro-environment. Keep it up for
a job well done! Now, you may proceed to the next lesson.
Good luck!
Lesson 3
Lesson 5
Identify and Segment Market for Product or Service
(ABM_PM11-le-l-14)
Select the appropriate target market segment and its positioning
(ABM_PM11-le-I-15)
What I Need104To Know

The learners are expected to:
 Identify and segment market for a product or service; and
 Select the appropriate target market segment and its positioning
What’s New
Activity 1:
Activity 1: Picture
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The picture above are part of the organizational markets about theIR 3W purpose and operation of
these markets.List down the product what they want. And explain why you did not choose the other
product? five sentence only.
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______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
_______________________________________________________________________
What Is It
Market Segmentation
Market segmentation is the process of dividing a market of potential customers into groups, or segments,
based on different characteristics. The segments created are composed of consumers who will respond
similarly to marketing strategies and who share traits such as similar interests, needs, or locations.
Why is market segmentation important for marketers?
Market segmentation makes it easier for marketers to personalize their marketing campaigns.
By arranging their company’s target market into segmented groups, rather than targeting each potential
customer individually, marketers can be more efficient with their time, money, and other resources than
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if they were targeting consumers on an individual level. Grouping similar consumers together allows
marketers to target specific audiences in a cost effective manner.
Market segmentation also reduces the risk of an unsuccessful or ineffective marketing campaign. When
marketers divide a market based on key characteristics and personalize their strategies based on that
information, there is a much higher chance of success than if they were to create a generic campaign and
try to implement it across all segments.
Marketers can also us segmentation to prioritize their target audiences. If segmentation shows that some
consumers would be more likely to buy a product than others, marketers can better allocate their
attention and resources.
Consumer Segmentation Variables
These are four major variables used in market segmentation:
1. Geographic- pertains to where the population is located. Geographic segmentation divides the
market by regions, cities, urban and rural area, coastal and central land masses, by density or areas with
low, medium or heavy concentration of population, or by areas of the country with either relatively
temperate or hot temperature, among others.
Some examples of geographic segmentation sub-variables are:
 Region
 Density
 Climate
2. Demographic - refers to the general characteristics of the population. Using demographic

segmentation, males may be grouped together in one segment, and females in another. Those belonging
to the higher income (income class A and B) may form a segment, the middle income class (income class
C) another segment, and the lower income (D and E) yet another. Age can also be an effective
segmentation variable. Teenagers may compose a segment, young adults another, and mature individuals
and senior citizens may form two more individual segments. Educational attainment can be an effective
segmentation sub-variable as well, such as those with higher education (holders) of master’s degree, or
doctorate degrees), individuals who have completed their college education, graduated from high school,
completed elementary education, and those with little or no education.
Some examples of common demographic segmentation sub-variables are:
 Gender
 Age
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 Income
 Occupation
 Education
 Civil status
 Religion
 Nationality
 Race
 Family size
3. Psychographic - these are variables that represent the psychological profile of consumers. This is
one of the most effective segmentation variables in predicting purchase behavior. However, the psycho-
graphic profiles of different segments of the population are difficult to measure as no government agency
undertakes regular studies and release data to identify and quantify these segments. This is in contrast
with geographic and demographic population data, which is collected every five years by the Philippine
Statistics Authority. Another is through Expectation Surveys undertaken by several government agencies
as the Bangko Sentral ng Pilipinas.
Examples of psycho-graphic segmentation sub-variables are:
 Lifestyle
 Personality
 Social Class
 User status
 Usage rate
 Loyalty status
 Benefits sought
4. Behavior-graphic - is the segmentation variable most indicative of purchase behavior.

Unfortunately, it is not available to all organizations as it depends on the meticulous maintenance and
conversation of internal databases. Retailer databases, for example, can provide information such as
customer listings, their home and email addresses, and contact numbers. When customer database is
organized and synchronized with point-of-sales system, retailers can pinpoint individual customer
purchases, by item, transaction size, time of day, and frequency. When the database of a particular
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female customer, for example, indicates a preference for capri pants, the retailer can send an email to this
customer to advise her of the arrival of new capri pants. Without the database, the email will be sent to
all of the retailer’s customers. Behavior-graphic segmentation not only enhances the likelihood of sales,
but dramatically reduces direct marketing costs.
The organization has to decide which segmentation sub-variables are relevant to the successful and
cost-efficient marketing of its product or service. For example, a fruit juices company may decide to
concentrate the marketing of its products to teenagers from the middle class income bracket. It may also
decide not to segment its potential consumers by education, as educational attainment may be irrelevant
in fruit juices purchase and consumption.
Target Market
After segmenting the market into various homogeneous parts (or segments possessing similar
characteristics), the marketer decide which parts/segments he/she wants to actively pursue. The target
market of a product or service is defined as its most probable and most logical consumers, and may
likewise be its heaviest consumers. A company may, for example, decide its product’s target market to be:
“Males and females residing in Metro Manila who belong to income classes A, B and C, single, are
between the ages of 21 to 30, who are sports-minded and are looking for a sports drink that can provide
relief after strenuous physical activities.”
Research into national statistical database (e.g. the Philippines Statistics Authority) shows the
following population profile:
Figure 13. Population Statistic
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Metro Manila Population 11,278,564
By gender: By marital status:
Male 49.3% Single 31.1%
Female 50.7% Married 46.2%
Separated/Widow/Widower 22.7%
By income class: By age:
Class AB 21.2% Below 10 14.8%
Class C 41.3% 10 to 20 21.4%
Class D 22.4% 21 to 30 19.7%
Class E 15.1% 31 to 40 17.9%
41 to 50 11.7%
51 to 60 8.4%
Above 60 6.1%
Elements of an Ideal Target Market
A company may finalize the selection of its market upon consideration of its conformity with the
following elements:
 Substantial - the select target market must be large enough in terms of quantity and/or total
consumption capability. The size of a target market can be determined as follows:
Target market: Males and females residing in Metro Manila who belong to income classes A,B, and C,
single, are between the ages of 21 to 30, who are sports-minded and are looking for a sports drink that
can provide relief after heavy physical activity.
11, 278, 564 (Metro Manila Population)
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x 1.00 (decimal equivalent of the percentage of the population who are
male and female)
x 0.625 (decimal equivalent of the percentage of the population who

belong to income classes A,B, and C)

single)

between the ages 21 to 31)
431,877 Target market size
Although psychographic segmentation sub-variables (such as being sports-minded, or those engaged

in heavy physical activity) may be the most indicative in determining potential consumption, no database
on these factors are available in public database. In most cases, organizations may have to conduct
market research to determine the percentage of the total population processing these psychographic
characteristics.
After the total size of the target market is determined (in this case 431.877), the organization then
decides on the substantiveness of the total market. If the organization feels the size is sufficient to
generate substantial sales revenues to make a profit, the company can proceed to market its
product/service offering.
If, however, the organization feels that the target market is not substantial enough to generate
sufficient revenues, the organization can either:
A. Expand its target market to include other segment brackets previously not targeted
The company may decide to not just target ages 21 to 30 but likewise include ages 31 to 40. This will
result in a larger target market, as follows:
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11,278,564 (Metro Manila Population)

are male and female)


are single)

are between the ages 21 to 30 and 31 to 40)
824,294 Target market size
B. Expand its target market by reducing the number of sub-variables
The company may decide to exclude civil status as a segmentation sub-variable by targeting all men
and women regardless of marital status. The resulting target market size is as follows:

are made and female)
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2,650,463 Target market size
C. Combination of the two options
The company may decide not to use civil status as a segmentation sub-variable. It may expand its
target market to include ages 31 to 40. The resulting target market size is as follows:

are male and female)


2.650,463 Target market size
However, expanding one’s target requires necessary adjustments in the elements of the product’s or
service’s marketing mix. For example, extending the original target market from income classes A and B to
include income class C would require adjustments in its suggested retail price, an expansion of its
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distribution network, and a possible re-calibration in the details of its intended advertising and
promotions plan.
In market segmentation, the more segmentation sub-variables are used, the smaller the target
market becomes. This results in a focused market, where the market may feel that the product has been
made exclusively for me. Inversely, the less segmentation sub-variables are used, the larger the target
market becomes.
The target market should ideally be:
 Financially capable - must have the financial means to afford means to afford the purchase
price of the product/service. Since organizations require a selling price for their
product/service, financial capability is an essential element of an ideal target market. For this
reason, most profit-oriented organizations exclude income class E as part of their target
market.
 Reachable - must be within physical reach to permit product distribution. It should also
reachable by various marketing activities (advertising, promotions, Internet and digital
marketing, etc.)
 Homogeneous - must react similarly to specific marketing stimuli. A homogeneous market is an

ideal target market. Since companies employ various marketing stimuli to attract, persuade, or
retain the loyalty of its target market, homogeneous markets will ensure that the marketing
activities will be efficient and effective.
Target Market vs. Consuming Market
How does a product’s target market differ from its consuming market? A company’s target market is
the group of individuals with specific characteristic to whom the company has decided to focus its
marketing efforts. For example, a fruit juices brand may have identified its target market to be “males and
females residing in major urban centers nationwide, who are between the ages of 12 and 25, belonging to
income classes A,B and C who are looking for a carbonated beverage with a high caffeine content that can
reinvigorate them and keep them active enough to perform their daily activities.” Individuals who fit this
description is the brand’s target market.
On the other hand, the consuming market comprise of actual consumers of the product/service. The
great majority of its consuming market would naturally come from their selected target market. However,
some individuals outside the product’s target market description (above the age of 25, for example) may
also buy the fruit juices brand and may also find its value proposition applicable to them (although to a
lesser extent). A product’s or service’s consuming market, therefore, is larger than its target market,
because it includes individuals that are not target market of the product/service.
Positioning
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Positioning is the process of communicating the image of a brand into the minds of consumers. The
objective is to make the brand stand out in comparison to its competitors.
Why should a brand have an image or a brand position? The first reason is to recall. Customers have
difficulty remembering brand position? The first reason is to recall. Customers have difficulty
remembering brands that have no distinct image. This can be illustrated using a typical high school
student attending a reunion of his elementary graduating class. Upon seeing his former schoolmates, he
may remember some schoolmates immediately, some even by name. These schoolmates are memorable
because of some distinct image they had when they were together in primary school: the most intelligent,
the neatest, the cutest, the tallest, the darkest, the funniest, etc. He may struggle to remember the names
of the majority of his schoolmates because they were just “faces in the class,” little known for anything in
particular.
The same holds true with customers. When a customer needs a particular product or service, he will
only include in his/her mental list of possible brands to purchase. Those brands that he remembers and
recalls. The customer will exclude other brands that have not established their position in his memory.
Having a catchy brand

name is good strategy
for branding
Elements of Good Brand Position
What is a good brand position? These are three requirements:
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 Unique - A brand must select a position that is not currently occupied by another brand. For
example, it would not be good for a new bank to position itself as a full service financial
institution that is willing to go out of its way to satisfy customer needs and adopt other bank’s
tagline. The new bank must identify its own distinctive features and communicate them to its
customers using a different tagline
 Beneficial - The selected position must be perceived by its customers as beneficial Customers
always ask when considering a product or service, “what in it for me?” They are willing to
patronize market offerings that they perceive as capable of satisfying their needs and/or wants.
Hence, if a commercial bank that is slow in processing transactions.
 Credible - Once a brand position is selected, it must ensure that it performs and fulfills the
promise of its position. If a retailer positions itself as customer-friendly and communicates this
through the tagline “service with a smile,” the organization must ensure that this positioning is
implemented 100% of the time for it to be credible, perhaps requiring employees to smile all
the time when dealing with customers.
Selecting a Good Brand Position
There are several tools available that can be used in the selection of a good brand position. One of
the most powerful of these tools is perceptual mapping.
Perceptual Mapping
Perceptual mapping involves the identification of a competitive brand’s position using two variables
or axes (for example, price and quality). Each variable represents a factor relevant and important to
customers. Using perceptual maps, new products launched into the market can select the position they
wish to occupy. This is after a comprehensive assessment of the number, size, and intensity of
competition in each quadrant of the map.
For existing brands,

perceptual mapping is
useful in identifying
industry participants
perceived by customers to
be the brand’s most direct
competitor’s
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Communicating Brand Position
The brand position of a product/service must be consistent and communicated effectively to its
target market. It is pointless to adopt a brand position if it is known only to the company’s executives and
employees. The continuous and consistent communication of the brand’s positioning to its target market
is important to create impact in the market. All elements of the product must be consistent to the brand’s
selected positioning.
For example, products intended for the female market are packaged in relatively small containers
(for comfortable handling by a woman’s hand), in soft shapes, and labeled in colors, e.g. pink, lavender,
etc.. For products intended for the upper income classes, they would be priced relatively higher.
Some of the elements to be considered in communicating brand positioning are:
 Packaging
 Labeling
 Selling Price
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 Advertising
 Brand endorser
 Tagline
Examine this caselet: (Note: the following was established through the authors’ observation)
In 2015, kopiko launched 78°C, a ready-to-drink coffee latte. As lattes are mixtures of espresso coffee
and milk, Kopiko positioned itself as the “best tasting latte,” extracted a temperature of 78°C. It claims
that 78°C degrees in the optimum extraction temperature for coffee. The result is a latte that has “rich
taste and tempting aroma. “It comes in a “shapely” PET bottle. The 30-second video advertisement casts
European-looking endorsers. It used the University Athletic Association of the Philippines (UAAP) as its
major advertising vehicle. This is particularly effective since the primary target market are students of the
UAAP member schools and viewers of the athletic games. In addition, the campaign also focuses on the
78th year of UAAP. The product or brand is placed prominently in all advertisements announcing UAAP
game schedules.
Identifying and Selecting Competitive Advantage
Competitive advantage is defined as the superiority of an organization over competitor. It typically

answers the question “Why should the customer purchase from this company instead of its competitors?”
 Cost advantage - results when firm has the ability to produce a product or service at a lower
cost compared to its competitors
This cost superiority will result in the company either being able to sell its products or
services at a lower price than its competitors, or generate a larger margin from its sales.
 Differential advantage - when a company’s product or service differs from its competitors and
are perceived by consumers to be better or of greater value.
 Focus advantage - When a company knows its target market very well, and can service its needs
better than any of its competitors.
Competitive advantage can be achieved through external or internal means. Companies can take
advantage of opportunities that arise from changes in macro-environmental factors, and being responsive
to these changes. Internally, a company can achieve cost advantage or differentiation through
improvements int he production process, cost efficiency measures, branding, or product innovation. Focus
advantage, on the other hand, can be attained by studying and predicting the needs and preferences of
the target market.
118
Sources of competitive advantage include the company’s cost structure, products/service offerings,
and distribution networks, among others. In selecting its competitive advantage, the company must know
what operational attributes ( such as products/service offerings, and distribution network, among others.
In selecting its competitive advantage, the company must know what operational attributes (such as
product quality, technology, price, availability, service, etc.) are important to its target market. Selecting
an operational aspect with low importance to a company’s target market will result to incremental
competitive advantage.
What’s More
Activity 2:
Enumerate and briefly explain the following:
A. Major variables used in market segmentation
__________________________________________________________________________________
__________________________________________________________________________________
____________________________________
B. Elements of target market
__________________________________________________________________________________
__________________________________________________________________________________
________________________________
119
C. Elements of a good brand position
__________________________________________________________________________________
__________________________________________________________________________________
_______________________________
What I Have Learned
Research for an advertisement of a famous Philippin company. Then let them answer the following
questions:
1. Who do you think is the target market of this company? Why?
__________________________________________________________________________________
___________________________________________________________________________
2. Do you think their company’s target market is appropriate with the products / services they are
offering? Why?
__________________________________________________________________________________
__________________________________________________________________________________
__________
3. For you, why is it important for companies to have a particular target market?
__________________________________________________________________________________
______________________________________________________________________________
120
What I Can Do
Mini-Marketing Research Guidelines
The purpose of these research project is to challenge the students to think like a marketing
manager/researcher by applying the knowledge accumulated throughout the chapter. Your
going to conduct your own research study by formulating a research problem, determining the
Activity 4: Research
research Project
methodology to be used, collecting the data, presenting the research report to the
class.
Conduct a mini marketing research. Follow the guidelines and format provided below:
Step 1: Choose a Topic
Your going to choose a topic that is home-based related to. Here are some ideas:
1. E-load business
2. Snacks
3. Mini Store
Step 2: Develop a Research Proposal
The sond step of the project is to develop a research proposal. This research proposal will
include the research objectives and an outline of their research design.
Step 3: Date Collection
During this step in the process, you will prepare for data collection and do the field work
necessary to collect the data. Use the following precedure as a guide:
1. Write the questionaire

121
2. Pre-test questionaire
3. Make revisions to the questionaire, if necessary, based on the pre-test.

122
Step 5: Write and Present the Research Report
The number of pages are meant to be guidelines, Your written report should
Include the following.
1. Title Page (1 page)
2. Table of Contents (1 page)
3. Executive Summary (5-10 pages max.)
123
The exucutive summary is considered by many to be most important part of the
research report. There may be only a few people who will have the time to read
the entire research report in detail. Most people will only focus on the executive
summary so it is important not to try to summarize the entire report, but rather
provide a concise summary of the following:
1. Brief statement of problem & reasearch objectives
2. Major findings
3. Conclusions
4. Recommendations
Oral Presentation
The oral presentation should be approximately 10-12 minutes and include:
A. Introduction of Presenters
B. Problem Definition
C. Research Objective
D. Research Methodology
E. Findings/Conclusions
F. Recommendations
Note: This oral presentation should be conduct by face to face presentation.
This involve by the 3 critiques and 1 presenter only . Your going to use as many
visual aids dduring the presentation as deem necessary. (follow the health
protocol: wear facemask, faceshield and observe social distancing
124
POST-TEST
Note: This covered as a whole chapter:
I- Write the blank the correct answer given inside the box.
Consumer markets Test Marketing Location studies
Data analysis Observation research Advertising pre-and pos-testing
125 studies
Concept, product development, and product Pricing tests
___________ 1. It can be used to decide on the packaging, to determine the market reaction, and to
justify brand positioning.
___________ 2. It can be utilized by marketers to calculate a product’s or service’s optimal price, and to
determine price elasticity.
___________ 3. These studies can provide cost-effective ways on how to increase a product’s/service’s
awareness level and brand trial.
___________ 4. The information from these researches helps marketers identify macro-environmental
shifts.
___________ 5. It includes individuals and/or house-holds that purchase products and services for
personal consumption.
____________6. It reveals the effectiveness of point-of-purchase collateral materials.
126
____________7. It determines ideal retail store locations and is a valuable tool in site selection.
____________ 8. These help identify, quantify, and understand the target market better.
____________ 9. These tests can determine advertising copy effectiveness, advertising re-call, sales
promotion response rates.
____________ 10. Based on these results, the company shall gauge the acceptability of a proposed
product/service.
Post-Test
1. f
2. g
3. a
Activity 1
4. i
May vary
5. b
Activity 2
6. c
May vary
Answer key
Activity 3 7. j
May vary 8. h
Activity 4 9. e
127
May vary 10. d

128
129
References
https://trackmaven.com/marketing-dictionary/market-segmentation/#:~:text=Market%20segmentation
%20is%20the%20process,interests%2C%20needs%2C%20or%20locations.
q=branding+image&tbm=isch&ved=2ahUKEwjFoo6E24rrAhUIfpQKHYr_CZUQ2-
cCegQIABAA&oq=branding+image&gs_lcp=CgNpbWcQAzIECCMQJzIECCMQJzICCAAyAggAMgIIADICCAAyA
ggAMgIIADICCAAyAggAOgQIABBDUO8jWOsqYLgtaABwAHgAgAFriAGcA5IBAzEuM5gBAKABAaoBC2d3cy13
aXotaW1nwAEB&sclient=img&ei=JSIuX4X8CYj80QSK_6eoCQ&bih=625&biw=1366#imgrc=K-
b0LWpeDna64M
q=a+perceptual+map+of+mobile+phones+using+usage+and+excitement&tbm=isch&ved=2ahUKEwjOrLm
H24rrAhVIUJQKHVgrA78Q2-
cCegQIABAA&oq=a+perceptual+map+of+mobile+phones+using+usage+and+excitement&gs_lcp=CgNpbW
cQAzoFCAAQsQM6AggAOgQIIxAnOgQIABBDOgcIABCxAxBDOgYIABAIEB46BAgAEBg6BAgAEB5QmudQWO
7wUWDp81FoAHAAeACAAYMEiAG5NJIBDTM4LjE5LjEuMS4wLjGYAQCgAQGqAQtnd3Mtd2l6LWltZ8ABAQ
&sclient=img&ei=LCIuX87mCcig0QTY1oz4Cw&bih=625&biw=1366#imgrc=2uc8s861GE8xrM
Principles of Marketing Textbook and Manual by Real c. So, Oscar G. Torres (Authors) and Angles A. De
Guzman, DBA
130
SENIOR HIGH SCHOOL
Customer Relationship: Customer Service


131
For the learner:
132
TABLE OF CONTENT
133
134
Quarter II – Lesson 1-ABM_PM11-IIa-e-16
CONTENT STANDARD:
The learners demonstrate an understanding of the essence of the new product development,
pricing, placing (distribution), and promoting a product or service.
PERFORMANCE STANDARD:
The learners shall be able to design a new product or service, decide types of pricing approach, and
choose distribution methods and promotion tools that respond to market trends
WHAT WILL YOU LEARN?

At the end of this module, you should be able to:
1. Define a product.
2. Differentiates the product, services and experiences
WHAT DO YOU ALREADY KNOW? PRE-TEST

Directions: From the pool words inside the box, choose the appropriate term for each description
below.
Satisfaction Market share Label

Marketing Products Packaging
Goods Idea Generation Marketing Mix
______________ 1. It is a product’s “silent salesman”
______________ 2. It refers to tangible products that consumers can actually observe with their senses.
______________ 3. It applies to anything that is offered to satisfy the needs and wants of consumers
______________ 4. It serves to contain and protect, and sometimes, identify and promote the product
______________ 5. It is the initial stage of the new product development process
LET US STUDY:
In order to appeal to the customers, organizations must align all of the four elements of the
marketing mix (4P’s: product, price, place, promotion) effectively. All four elements must focus on the
target market. They should create value by satisfying the customers’ needs and wants.
We will learn more about the four elements of marketing mix. We’ll start by discussing the first
element in the marketing mix which is the Product. After identifying need in the market, a company may
have a product that is capable of satisfying the need”.
Just to be very clear, product in the context of marketing does not refer to tangible products such
as grocery items and automobiles. The word “product” applies to anything that is being marketed,
whether it is a tangible product, an intangible good, a service, a place, or even a person.
Here are some of the examples of products:
 Amusement parks
 Apps on smartphones
 Banking services
 Coffee shop: the coffee, the food, and the place itself
135
 Hotel accommodations
 Legal advice
 Musical bands
 Pet care
 Radio stations
 Social media sites
 Telecommunication services
 Television programs
The term “product” applies to anything that is offered to satisfy the needs and wants of
consumers, whether these are tangible goods or intangible services. Nevertheless, we do need to step
back momentarily, in order to discuss the critical differences between goods and services.
Goods refer to tangible products that consumers can actually observe with their senses. Goods
are objects with physical manifestations and attributes that can be detected by our senses.
Services, on the other hand, refer to intangible offerings that are abstract in nature and cannot
be observed with our senses. In fact, a key characteristic of services is that the act of delivery itself is the
product. Some of the services as products are banking, investments and insurance; hotel
accommodations, restaurants, bars, and catering; news and entertainment; transport and freight;
education, health care, wholesaling and retailing; and professional consultations.
The following questions are asked:
1. What need does it satisfy?
2. What value does it offer to its customer?
3. What makes it unique?
4. What is its Unique Selling Proposition (USP)?
All of these must be answered with product’s target market in mind. Any changes in any of the
product’s features or attributes may necessitate a consequent change in one or all of the other elements
of the marketing mix (price, place and promotion).
Physical products have several added components: the packaging and labelling.
Packaging differs from labelling. Packaging serves to contain and protect, and sometimes, identify
and promote the product. A product’s packaging is different from its label. Product packaging has several
purposes:
 It protects the product en route to the customer
 It makes product storage and display more practical and effective
 It preserves the product for further customer use
When deciding on product packaging, four factors must be considered:
 The quantity of the product that should be contained in the package
 Physical attributes of the packaging that facilitate customer use
 The legal requirements that packaging may comply with
 And the most appropriate shape of the package
On the other hand, labelling is a display of information about a product on its container,
packaging or the product itself. The following factors must be considered in deciding on the labelling of a
product:
 Establish the image or personality of the product based on the tastes and
preference of the target market
 Determine the most important feature of the product to the target market
 Determine where the product will be sold and the applicable regulatory
requirements, if any
 Determine the placement of the product in relation to other products,
particularly competitors
Labels are, a product’s “silent salesman” and labelling is not an easy task considering that there
are many other competitive brands and products displayed on the same shelves, all trying to attract the
customer’s attention. Legal requirements must also be considered in a product’s labelling for food and
beverages. All food products must contain the name of the manufacturer, country of origin, net content
136
and its nutritional value table. It must also include the product handling and preservation requirements.
Some marketers include other facts on their package label that enhance marketability and even
costumer’s trust. Examples are: the Sangkap Pinoy seal, organizational endorsement such as by the
Philippine Dental Association or the Department of Health, ISO Certification, “free from animal testing”
label or if it conforms to the requirements of Muslim practices, the Halal seal.
One of the most effective ways to get ahead of the competition is through new product
development. Introduction of new products are instances when customers are forced to buy existing
products and services in the market even if these only partially serve their needs. This is because there are
only limited product options available in the market. History is full of successful new product launches
that have changed the shape of entire industries and created entirely new ones. You may also add the
rationale behind new product development and elaborate the rationale.
The New Product Development Process

Idea Concept Business
Idea Screening Development Analysis
Generation and Testing
Product Marketing Product

Commercialzation Testing Development
Step 1: Idea Generation-the initial stage of the new product development process where any
or all of several idea generation techniques (need/problem identification, attribute listing, forced
relationship, morphological analysis, brainstorming, etc.) are used to generate as many new
products as possible.
Step 2: Idea Screening-the stage where the ideas generated in the initial step are screened
using the predetermined criteria to reduce them to a manageable few.
Step 3: Concept development and Testing-where new product ideas are converted to
customer-centered product concepts and tested by a representative sample of customers for
acceptability, believability, and potential intent.
Step 4: Business Analysis-pencil-purchasing stage where, based on concept development and
testing results, probable sales of the new product are calculated together with its costs and
potential probability
Step 5: Product Development-the new product development stage where the product concept is
converted into a tangible working prototype.
Step 6: Marketing Testing-the stage where the new product is marketed in a limited
LET US REMEMBER:
geographical area to are
Product and services determine whether
created because fine-tuning
of human needs of
andattributes, positioning,
wants. Information about pricing, advertising
consumers’
and promotions
tastes, program are
preferences, perceptions, andnecessary.
priorities has significant contribution to the design of the product.
We cannotStepcreate
7: Product
products Commercialization-the
without any existing need orfinal stage
want in of the This
the market. process where
enables a newtoproduct is
the company
launched.
satisfy the needs and wants of the consumers. Satisfied consumers mean satisfactory sales and income for
the company. This is the very essence of the product as an element of the marketing mix.
LET US APPLY WHAT YOU HAVE LEARNED

Pretend that your company has been making and selling one product for the past five years. Plan to
make additional three products. These may be in the same category as the first product or not. Use the
following format.
PRODUCTS NEEDS/WANTS THAT GOODS OR SERVICES REASON FOR OFFERING
137
HAS BEEN SATISFIED THE PRODUCT
Original Product
New Product 1
New Product 2
New Product 3
HOW MUCH HAVE YOU LEARNED FROM THIS MODULE? POST TEST
Answer Key
Pre-test
1. Label
2. Goods
3. Products
4. Packaging
5. Idea Generation
REFERENCES:
AB Ilano, Principles of Marketing, Rex Book Store
Real C. So & Oscar G. Torres, Principles of Marketing, Vibal Group
138
Quarter II – Lesson 2-ABM_PM11-IIa-e17
CONTENT STANDARD:

1. Identify and describe the factors to consider when setting prices and new product pricing.
2. Enumerate the general pricing approaches.

True/False. Draw a heart if the statement is true and write F if the statement is otherwise.
________ 1. The unit variable cost includes the cost of direct materials, direct labor and direct overhead.
________ 2. Total fixed costs incurred in a specific period must be shared by all units of the product
produced in the same period.
139
________ 3. Total cost of production need not to be taken into account before determining the price of a
product or service.
________ 4. The break-even point is the lowest possible price the company can set for its product, under
normal circumstances
________ 5. The choice of pricing strategy depends almost exclusively on a company’s objectives.
LET US STUDY:
The price that a marketer charges for a product or service is a vital decision that has far-reaching
consequences. From the point of view of the business, products and services are offered with the
intention of making a profit. However, the customer has a specific price in mind that he considers as “fair
and profitable”. This is related to the value or benefit that he expects to derive from the product or
service. This makes pricing tricky and challenging for marketers.
Total cost of production must be taken into account before determining the price of a product or
service. This is because it would make no business sense if the price is less than the cost of production.
There are two types of production cost. The first one is the unit variable cost which refers to all
expenses incurred in manufacturing one unit of a product. This includes the cost of direct materials, direct
labor and direct overhead. The second one is the fixed cost or the unit share of operating and other
expenses.
Product Cost Estimation

With physical products, two types of costs are calculated: (1) unit variable cost and (2) unit share of
operating and other expenses, or what is sometimes referred to as fixed costs.
The unit variable cost refers to how much it would cost to manufacture one unit of the product. This
includes the cost of direct materials, direct labor and direct overhead.
Direct materials used in the manufacture of a shirt may include the fabric, thread and buttons. For
example, if two meters of fabric, five meters of thread, six buttons and one cardboard box for product
packaging are used, its material cost would be computed as follows:
Material Cost Cost per Shirt
Fabric P100.00 per meter P200.00
Thread P4.00 per meter P20.00
Buttons P5.00 per meter P30.00
Cardboard Box P10.00 per meter P10.00
Total P260.00
The total direct material cost for producing each shirt would be P260.00
Direct labor would include the wages of all workers directly responsible for making the shirt. If, for
example, workers are paid on a per-piece basis, its unit direct labor cost would be as follows:
Process Labor Cost per Piece
Fabric cutting P30.00
Sewing 25.00
Collar Attachment 5.00
Button Attachment 5.00
Total P65.00
The total direct labor per shirt would then be P65.00
If workers are paid on a daily basis, weekly, or semi-monthly rate rather than on a per-piece basis,
the computation of labor cost would be more complex as the total unit output per period of production
would have to be included.
The unit’s direct overhead is the amount that was spent in the manufacturing overhead (energy,
water and other utility costs) for every shirt produced. This can be computed by dividing the total factory
manufacturing overhead in a month by the number of units of shirts produced within the same month. If
the total factory manufacturing overhead for a particular month is P20,000 and the total number of shirts
produced within the same month is 4,000 pieces, the direct overhead cost per unit would be P5.00
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The sum of the three costs (direct materials, direct labor, and direct overhead) is the product’s unit
variable cost or the cost to produce one unit of the product.
The second type of cost unit share of fixed costs. Fixed costs are expenses incurred by the
organization that are not related to the manufacture of the product. These include executive and staff
salaries, office rental, advertising, and promotions, professional; fees and other similar expenses. Total
fixed costs incurred in a specific period must be shared by all units of the product produced in the same
period. This means that if in a particular month, the shirt factory incurred total fixed costs of P400,000
and was able to produce 4,000 units of shirt for the same month, each shirt would have to absorb P100.00
of fixed costs.
Taking the entire costing example, therefore, the total unit cost of each shirt would be:
Cost Component Amount
Direct Materials P260.00
Direct Labor 65.00
Direct Overhead 5.00
Unit Fixed Cost 100.00
Total P430.00
Therefore, if the shirt factory is able to sell each of the 4,000 shirts it produced in a particular month
at its unit cost of P430.00, the company would make no profit but will also incur no loss. This is called the
break-even point. This is the lowest possible price the company can set for its shirts (under normal
circumstances)
If the company decides to sell its shirts at only P425.00, it will incur a loss of P5.00 per shirt. If in a
given month it is able to sell 4,000 shirts at this price, it stands to lose P20,000
However, the shirt manufacturer may decide to price its shirt at P500.00. At this price, it shall make a
profit of P70.00 per shirt. If it sells its entire month’s output at this price, the company would make a
profit of P280,000
Service and experience costing are also computed, with unit variable costs represented by the cost
of the service/experience providers.
Pricing Strategies
The following are strategies that can be used in pricing a product:
1. Mark-up pricing – is a pricing strategy that allows the seller a fixed mark-up every time the product is
sold
The biggest weakness of this pricing strategy is the inclusion of unit sales in determining the
product’s mark-up price. In reality, total unit sales is affected by the product’s final mark-up price
See the example below to find out how to compute the mark-up price of a product.
UC = VC/U + FC
US
Where:
UC - Unit Cost
VC/U - Variable Cost per Unit
FC - Fixed Cost
US - Unit Sales
Given:
VC/U - P10.00
FC - P300,000.00
US - 50,000 units
DMU(Desired Mark-Up) - 20%
UC = VC/U + FC MUP = UC__

US (1-DMU)
=P10.00 + P300,000.00 = P16.00__
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50,000 units (1 - 0.20)
= P16.00 = P20.00
Mark-up price (MUP) is P20.00

2. Target Return Pricing – is a pricing method that allows a product manufacturer to recover a certain
portion of his/her investment every year. Because unit sales is also included in its target price
determination, target return pricing has the same weakness as that of mark-up pricing.
The formula for obtaining a product’s target return price is as follows:
TRP = UC +DR x IC
US
Where:
TRP - Target Return Price
UC - Unit Cost
DR - Desired Return
IC - Invested Capital
US - Unit Sales
Given:
UC - P16.00
DR - 25%
IC - P1,000,000.00
US - 50,000 units
TRP = UC +DR x IC = P16.00 + 0.25 x P1,000,000.00 = P21.00

US 50,000 units
Target Return Price (TRP) is P21.00

3. Odd pricing or Psychological pricing – is a pricing method premised to the theory that consumers will
perceive products with odd price endings as lower in price than they actually are. As such, consumers may
find products priced at P99.95 closer to P99.00 than to P100.00. There are about an equal number of
researches that say this is true, and those that say that it is inconclusive.
4. Loss leader pricing – a pricing strategy frequently utilized by supermarkets. It is based on the practice
of housewives to use only a few selected essential products (e.g. sugar, coffee, eggs, laundry detergents,
and some canned good products) as their sole basis for price comparison. Supermarket retailers will
deliberately price these “loss leaders” or comparison items low to make their products appear more
affordable than others. The mark-up lost on these loss leader items are recovered from other items where
mark-ups are higher.
5. Price lining – a pricing strategy designed to simplify a consumer’s buying decision. This method involves
reducing the number of price points on merchandise to as little as possible, in extreme cases to only one
price point. For example, some stores price all the merchandise in their store at P66.00 or P88.00
6. Prestige pricing – a pricing strategy that disregards the unit cost of a product or service. Instead, it
capitalizes on the high value perception or positive brand reputation of a product or service. It charges a
price much higher than its unit cost.
This is s pricing strategy implemented by some fragrance and skin care products. Using prestige
pricing, it would not be unusual for a fragrance brand to have a unit cost of P1,300.00 and a selling price
of P3,500.00
7. Marginal pricing – where a business organization prices its product at a range below its unit cost but
higher than its unit variable cost
This is in order to offer the lowest price in a sealed bidding or other highly competitive situations.
The failure to adequately cover some or all of the company’s fixed costs is justified by citing that theses
fixed costs are “sunk” or would be incurred whether or not the order is required. The main objective of
marginal pricing is to out maneuver competition, expand customer base and increase market share.
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8. Predatory pricing – a pricing strategy where the firm prices its product lower than unit variable cost,
initially resulting in short-term losses.
The objective of this pricing strategy is to price a new or persistent competitor out of the market.
After its purpose is achieved, the product’s original selling price is restored and short-term losses
recovered. Predatory pricing is illegal in most countries including the Philippines (under Republic Act
8479)
9. Going rate pricing – a pricing strategy where a company prices its product at the same level as or very
close to its competitors’ prices.
This effectively maintains the product’s price competitiveness in its market. The danger of going rate
pricing is that it may result in price wars, with each company trying to outprice another, to the detriment
of all industry participants.
10. Promotional pricing – a pricing strategy involving a temporary reduction in the selling price of a
product/service in order to induce trial or to encourage repeat purchase. Almost companies, especially
those involved in fast-moving consumer goods (FMCGs), implement promotional pricing at one time or
another.
When new products are introduced into the market, one of the two pricing strategies can be used:
1. Price skimming – where the product’s selling price is way above its unit cost. This allows the company
to recover its research and development costs and expenses. This is usually accompanied by intense
expensive advertising and promotional campaign. This pricing decision is usually effective with electronic
products, especially when the said products are still non-existent in the market. There is hardly a way to
compare prices. Customers are usually left with little or no choice. This was the strategy employed by a
mobile company when it launched its mobile phone in the Philippines in the early 1980’s. The mobile
phone was initially priced at almost P60,000.00. The price was reduced gradually when similar devices
were introduced in the country and initial advertising, promotions and research and development costs
were recovered. The inherent weakness of the price skimming strategy is that it makes the market very
attractive for would-be competitors because of the appeal of large price markups.
2. Penetration pricing – a pricing strategy where the new product is priced only marginally above its unit
cost. The objective of this strategy is to capture a large part of the market at an early stage by making the
product affordable to the greatest number of people. An advantage of this strategy is that it can
discourage would-be competitors from entering the market because of low price mark-up. The major
disadvantage of this pricing method is that it can prolong the recovery period for research and
development, advertising, and promotions costs.
Pricing Strategy Selection
The choice of pricing strategy depends almost exclusively on a company’s objectives. The correspondence
between pricing strategy and objective is illustrated below:
Pricing Objective Pricing Strategy
Maximum revenue Penetration pricing
Marginal pricing
Going rate pricing
Promotional pricing
Maximum market share Penetration pricing
Marginal pricing
Going rate pricing
Promotional pricing
Maximum profit Price skimming
Prestige Pricing
Survival Marginal pricing
LET US REMEMBER:
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Pricing depends on the business objectives set by the company. Finding the right price for a product is not
a simple matter of adding a mark-up on the cost of a product or services, as some companies do. The
company should set the prices of its products or services based on its business objectives.

In your opinion, should wealthier people pay more for the exact same products that less fortunate people
buy? Explain why or why not.
SUPER PREMIUM HOTEL ROOMS
Choose a hotel and research (online or otherwise) on its room rates as well as the amenities that it
offers for the price. Identify the most expensive room that it is currently offering.
You are to propose an even more premium-priced room, with a price point that is very much higher
than the current premium rates which the hotel offers. Identify the amenities that you feel would satisfy
the high price point you are proposing.
Rubrics:
CRITERIA DETAILS TOTAL YOUR
POINTS POINTS
Price Canvassing Did the group give a clear picture of the hotel’s
prices? 10
Viability of Proposal How viable is the proposed price and amenities?
30
Creativity How creative or innovative is the proposal? 10
Total 50
Answer Key
Pre-test
1.
2.
3. F
4.
5.
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REFERENCES:

CONTENT STANDARD:

1. Discuss the structure of distribution channels, its functions, and.
2. Discuss the nature of supply chain management
3.
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1. Is the method of distribution of products to the end-users important?
2. If you were the manufacturer, what method of product distribution would you prefer?
3. Many products are now being sold online. Name three products that you believe should
never be bought online but only in real store. Explain why.
LET US STUDY:
Place
How can a company deliver its products to its customers effectively and efficiently? This is the next
vital marketing decision. Similar to the first P (product), product distribution decisions are almost
permanent, as distribution channels do not change on a daily basis. The product type is also a major
consideration in deciding the type of distribution channel or intermediary. Mass market or a fast-moving
consumer goods may require intensive distribution, while products like expensive fragrances may
necessitate only selective, if not exclusive, distribution.
The Need for Marketing Intermediaries
Because most companies today serve relatively large markets and their consumers are geographically
dispersed, they rarely sell their products directly to the consumer. Instead, they utilize marketing
intermediaries, also called distribution channels, to bring their products to the customer. Although most
marketing intermediaries, i.e. wholesalers and retailers, are independently owned, some product
manufacturers may decide to own a few, if not all, of their retail outlets.
Intermediaries provide access and convenience for the product’s consumers. The following are other key
functions of intermediaries:
1. Information collection and dissemination. – marketing intermediaries, particularly retailers, provide
product manufacturers with vital marketing research information on consumer profiles and product
movements. These are valuable for decision-making.
2. Product storage and movement – the warehousing facilities of manufacturers are relieved of large
amounts of merchandise. Intermediaries or channels take care of storage and transport of products to the
customer.
3. Operational financing – distribution channels that take care of storage and transport assumes the costs
of these activities
4. Product promotion – intermediaries, particularly retailers, help in the development and
implementation of communications programs to enhance product sales
5. Risk-taking – most marketing intermediaries eventually pay for merchandise they carry. They assume
financial risk if the product does not sell as expected.
The use of marketing intermediaries increases the price of the product. However, the absence of
intermediaries would result in greater expense for the customer. A customer wanting to drink a bottle of
soda will have to go to the bottling plant because the soda is not available in the convenience store (a
marketing intermediary). A customer has to buy a piece of candy from the manufacturer because it
cannot be purchased at the sari-sari store (another marketing intermediaries)
Supply Chain
A supply chain is the network of all the individuals, organizations, resources, activities, and technology
involved in the creation and sale of a product. The chain starts from the delivery of materials from the
supplier to the manufacturer, to the eventual delivery of the finished product to the user. The supply
chain segment involved in the delivery of the product from the manufacturer to the consumer is known as
distribution channel.
With supply chain management, partnerships and collaborative efforts are established among
product material suppliers, the labor force, warehousing, shipping and transportation companies and
product intermediaries. The objective is to optimize the supply chain that results in better product
manufacturing and distribution. This also leads to overall cost reduction and higher sales.
Product Distribution Types
There are three general ways on how a product can be distributed using marketing intermediaries:
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1. Exclusive distribution – distribution is limited to a select number of dealers, usually one or a few. The
objective of exclusive distribution is to have more control over how a particular brand is priced, displayed
and promoted. Products that are distributed exclusively usually enjoy higher markups and better brand
equities. The major disadvantage of this type of product distribution is that brands are not very accessible
to customers. Customers need to travel long distances to get where the product is available. OshKosh
B’Gosh, a popular and upscale children’s apparel brand, for example, is exclusively distributed in the
Philippines by Cinderella Marketing Corporation.
2. Intensive distribution – this product distribution type, used mostly by fast-moving consumer goods and
convenience goods, involves making a product available in as many retail outlets as possible.
This type of product distribution gives consumers the highest level of utility and convenience.
However, product manufacturers have very little control on how the product is priced, displayed or
promoted. When a local soft drink was launched in the market to compete against lower-priced soft
drinks, the bottler implemented an extensive advertising campaign, promoting its low P7.00 price to
customers. However, few sari-sari stores sold the soft drink at P8.00 suggested retail price (SRP). The
stores continued to sell the product at P8.00. This reduced the company’s effort to erode the market
share of competitor brands.
Some examples of products sold via intensive distribution are bottled drinking water, candy, and
snack foods, etc.
3. Selective distribution – positioned between exclusive and intensive distribution, this type of product
distribution involves the use of more than one but not as many dealers as in intensive distribution. This
allows adequate manufacturer control over retail prices, displays and promotions. However, it permits
selected product distributors some level of independence. Products commonly sold through selected
distribution are brands of canned foods, seasoning, and personal care products.
Wholesaling and Retailing
Wholesalers and retailers are two of the most crucial distribution intermediaries, most especially in
providing place utility for a product’s customers.
Wholesaling – is the sale of goods for resale. Wholesaling is an important product distribution function.
Without wholesalers, product manufacturers would have to deliver goods directly to retailers.
Because wholesalers perform a valuable distribution function, manufacturers allow them a markup
for the goods distributed. Wholesalers perform the following key functions:
 Information collection and dissemination
 Bulk-breaking
 Assortment-building
 Product storage and transportation
 Financing
 Risk-taking
Retailing – is defined as the sale of goods/services to the final customer for his personal consumption.
Typical examples of retailing establishments are drug stores, sari-sari stores, restaurants, movie houses.
Convenience stores and supermarkets.
Among others, product retailers perform the following key functions:
 Information collection and dissemination
 Product assortment selection
 Product storage
 Financing
 Product promotion
 Risk-taking
Retail stores are accessible to its customers where purchases are done in a single and simple
transaction.
LET US REMEMBER:
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The product is not necessarily produced and consumed in the same place. The place of production or
the plant site can be different from the place of distribution or selling. The service is produced and
consumed in the same place. It cannot be owned and taken away from the location.

Three different kinds of stores are presented below. Identify what you believe makes each one different
from the other.
Store In Terms of Size In Terms of Items In Terms of Prices
Supermarkets
Groceries
“Sari-sari” stores
1. Give an example of a locally made product that you believe will have a good chance of competing in a
regional market. Explain why?
2. What advantages can a convenience store chain, such as 7-eleven have over traditional sari-sari stores?
3. What is your favorite grocery store destination? Explain why it is your destination of choice. What does
the place provide?
REFERENCES:
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CONTENT STANDARD:

1. Define and identify relevant promotional tools, namely, advertising, sales promotion, personal
selling, public relations, and direct marketing
2. Create awareness and persuade the target market to buy the product or patronize the service
3.

1. Discuss how you feel about advertising. Is it good? Is it bad? Explain why?
2. In your own opinion, what is the best way to promote a product, for instance a new burger outlet,
without having to resort to expensive advertising? Explain your answer
LET US STUDY:
Promotion
Promotion as used in the 4P’s is a general term which includes the following: advertising, promotions,
personal selling, publicity, and public relations.
Sender Receiver
Advertiser
Encoding Message Decoding Consumer
Barriers
The
Marketing Model on the above figure illustrates how marketing companies communicate product
information and other advertising messages to their customers. In the context of advertising, the
Feedback
advertiser is the party that intends to send a commercial message to the consumer.
For the initial step, the adviser first encodes his/her message. He does this by incorporating signs,
images, language, words, colors, sounds, personalities, and characters that best capture the message that
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he intends to communicate to the customer. Before this, the advertiser must identify his target market.
Different consumer geographic, demographic, and psychographic profiles require different messages. For
example, message intended for the elderly need to be restrained as compared to a message intended for
teenagers. Messages for the younger market can be colourful, loud, and exciting. The advertiser then
decides on the medium to be used to transmit the message. Radio, for example, is unable to present
visuals, making its advertising copy (i.e. advertising textual content and voiceover) more critical and
important. Television, on the other hand, is effective with visuals.
The advertising message is sent to the intended customer through a selected medium (e.g. television
or newspaper). The advertiser expects that the customer (1) sees/hears the advertising message, (2)
decodes/understands and interprets the message accurately as intended, (3) remembers and/or recalls
the message, and (4) is affected by the message and responds by making a purchase.
However, barriers in message transmission may prevent the customer from receiving or
understanding the intention of the message. For example, in television advertisements, the video signal
and sound reception may be poor, or there is background noise while the advertisement is being aired.
The purpose of promotions is to elicit a change in behaviour. Getting people to buy your product,
when previously they did not, constitutes a change in behaviour. But the behavioural objective need not
be abrupt. Often, consumers first need to be primed in order to allow them to collect positive feelings
towards the product, before finally getting them to actually purchase it.
The Hierarchy of Effect model states that consumers need to go through six stages before finally
buying a product. (Steiner 1961) These are:
1. Awareness – the realization that your product exists
2. Knowledge – comprehension about your product’s features and benefits
3. Liking – gaining positive feelings toward your product
4. Preference – deciding that your product is better than others
5. Conviction – the belief that your product is worth buying
6. Purchase – actually buying your product
Promotions are often designed to guide consumers through these stages
Advertising
Advertising is defined as any paid and public presentation of products, services or ideas by an identified
sponsor through a medium. The most common objectives of advertising are:
 To build awareness
 To inform
 To persuade
 To remind
Brand awareness is the extent to which consumers are familiar with the distinctive qualities or
image of a particular brand of goods or services. Achieving a high level of awareness provides the brand
the following advantages:
1. Learning advantages – which heavily influence the formation and strength of
associations that comprise the brand’s image
2. Consideration advantages – which increase the likelihood that the brand will be
included in the comsumer’s “consideration set”, or the set of brands that receive serious consideration for
purchase.
3. Choice advantage – which can affect choices among brands included in the
consideration set, despite the fact that there may be no other associations to those brands.
Advertising Campaigns
Before launching advertising campaigns, companies go through the following steps:
1. Identifying the target market.
All marketing efforts always begin with the identification of the target market of the product/service. This
is the preliminary step to identify the type of message, the medium to be used, the advertising appeal to
create, and the celebrity endorsers (if any) to be selected.
2. Establishing advertising objectives
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After the target market is determined, the company formulates the objectives of the advertising
campaign. It the purpose is to create awareness, the desired level of awareness should be identified.
Targets with the high level of awareness require multiple advertising placements with greater frequency
of exposures.
3. Determining advertising objectives
The message is the most important component of the advertisement. It varies depending on the
objective. Objectives can be to inform, to create awareness, to persuade, or to remind. Examples of
advertising message styles are as follows:
 Functional – attempts to provide a product brand as the solution to a current
comsumption problem experienced by customers (e.g. a deodorant advertisement launched in 2007)
 Symbolic – attempts to associate brand ownership with an inspirational group. It
addresses other abstract need states that involve aspects not addressed by functional product benefits
(e.g. another skincare product advertisement (a product facial cream) showing physical transformation
aired in 2016).
 Experimental – attempts to promote brands using high sensory value. It satisfies
customers’ desire for products that provide sensory pleasure. (e.g. advertisement of a popular vitamin E
product)
4. Selecting media
After determining the content of the message, the company now selects among available media vehicles
(i.e. television, radio, print, or web). Media vehicles vary in cost, with distinct advantages and
disadvantages, and varying levels of reach.
5. Managing and coordinating the marketing communication process
With various media vehicles available, the company may utilize multiple vehicles (e.g. television and radio
advertising, public relations, and publicity) to deliver the message to its target market. These efforts must
be coordinated to ensure unity of message. This is referred to as integrated marketing communications
(IMC). At the conclusion of the advertising campaign, the company evaluates the effectiveness of the
program by determining its return on marketing investment (ROMI).
Types of Media and Techniques Used in Advertising

Traditional Media and Techniques
Radio – A viable advertising vehicle in the Philippines since 1922, radio is the most accessible media.
Philippine radio stations broadcast in either the AM or FM bands, with AM stations broadcasting mostly
talks, news, or opinion programs. On the other hand, FM stations primarily broadcast music, with each
radio station specializing on a particular type, such as classical, hip-hop, rock or pop.
Advantages Disadvantages
relatively inexpensive audio only
Target marketing possible frequency required for effectiveness
passive medium
Print – The first magazine in the Philippines was printed in the 1980s, while the first English newspaper
was published and circulated in 1898. Many advertisers still favor newspapers as their vehicle of choice
because of their national circulation, population penetration, and pass-on readership.
Newspaper
credible spillage
pass-on readership obsolescence
target marketing possible poor image quality
Magazine
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good image quality long lead time
target marketing possible difficult to time advertising
not subject to obsolescence
Television – Television networks and stations broadcast through both free and cable channels. Similar to
radio, some television stations select programming content to be exclusively public affairs, entertainment,
children’s programs or educational TV.
audio, video, and movement expensive
target marketing possible frequency necessary for effectiveness
Alternative Media and Techniques

Cinema – The first motion picture in the Philippines appeared in 1904. Since then, a large number of
cinema houses and movie theaters have sprouted in major metropolitan cities, particularly in Manila.
audio, video and movement Not cost efficient
larger than life Limited to reminder advertising
captive audience Short attention span
Relatively inexpensive
Billboard – The relatively low cost but high exposure to heavy traffic along major thoroughfares have led
to the popularity of billboard advertisements. Despite increasing rental costs and the imposition of
government regulations on this type of outdoor advertising, billboards continue to thrive and has
technologically evolved from traditional billboards to the use of light-emitting-diodes (LED).
relatively inexpensive short messages only
larger than life reminder advertising only
exposed to many potential customers may be damaged by elements
legal restrictions
Websites – Almost all legitimate companies have developed websites that customers can access for
product information and services. Websites have become highly interactive. However, the media suffer
from clutter due to the sheer number of websites currently online. As of January 2013, there is a total of
634 million websites, with almost 50 million added yearly.
low cost must be upgraded regularly
high level of detail clutter
customized
interactive
Social Networking Sites – The large number of social media users all-over the world has led to the
popularity of social networking sites as media for advertising. Statistics indicate that there are currently
over 1 billion active monthly users of Facebook, 200 million on Twitter, and 187 million members in
LinkedIn as of 2016. (Source: The Statistics Portal.com)
low cost May be ignored
high level of detail
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well-segmented audience
Directory Advertising – More commonly known as the “Yellow Pages”, this medium has been declining
rapidly. This is brought about by an increasing number of households discontinuing landline subscription.
Moreover, the availability of online search engines has made the search for specific products and services
more convenient.
pinpointed advertising accompanies declining technology
timely
Product Placement – Product placement is an advertising technique used by companies to promote

products subtly through a non-traditional advertising technique, e.g. appearances on film, television, or
other media. Pierce Brosnan’s use of a BMW in his James Bond film or John Lloyd Cruz in You Changed My
Life, taking a Biogesic tablet to relieve himself of a headache, are examples of product placement in the
film.
unique exposure little stand-alone value
well-segmented audience sometimes used abusively
E-mail advertising – there are currently 2.2 billion e-mail users worldwide, transmitting 144 billion e-mails
daily. The biggest downside to e-mail advertising is that 68.8% of it is classified as “spam” and often left
unopened and unread by the recipient.
no cost clutter
highly targeted messages sometimes classified as “spam”
Transit Advertising – buses and jeepneys in the Philippines ply the same route every day. An advertising
signage on the side or back of a bus, a jeepney spare tire cover, or perched atop a taxicab can create good
brand recall for the market.
mobile short messages only
relatively inexpensive reminder advertising only
consistent daily audience may be damaged by the elements
Online Ads – Out of 2.4 billion Internet users worldwide, 1.1 billion are from Asia. These figures have led
to the popularity of Internet advertising, which permits target marketing through the use of cookies
generated by a web page server.
well-segmented audience Easy to ignore
low cost
Direct Response Advertising – Used extensively on television during specific periods of the day and
usually presented in telemarketing programs, direct response advertising mostly showcases products not
available through conventional retailers. Characteristics of direct marketing messages are dramatization
and the use of incentives to solicit early response. This type of advertising, however, suffers from poor
image as customers complain of products not being faithful to how they are represented in the
advertisement.
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high-information content clutter
measurable poor image
Point-of-Purchase, Signs, Posters and Leaflets – these are relatively inexpensive ways to advertise and
promote a product. For example, point-of-purchase materials (e.g. shelf talkers and retailer floor signs)
are effective in persuading a customer to prefer one brand of product over another.
last ditch purchase reminder short messages only
close proximity to physical product reminder advertising only
Promotion
Promotions are activities or a series of activities, usually short-term, that are intended to boost the sales
of a product or service. These are actions a company can take to stimulate customers to buy immediately
than later.
There are essentially two types of promotions:
1. Trade promotions – Trade promotions are intended for marketing intermediaries such as retailers. The
purpose of trade promotions is to encourage the intermediaries to increase purchases, to stock a
particular product, to accelerate purchases or payments for purchases, or to extend preference towards a
particular brand. Some examples of trade promotions are 10+1 (if a retailer orders ten cases of a product,
the manufacturer delivers 11 cases but does not charge for the extra case), giving retailers free store
signages to carry a specific product brand, and contests among participating retailers. Trade promotions
“push” products to the retailer or trade outlet.
2. Consumer promotions – Consumer promotions, on the other hand, are intended for consumers. The
purpose of consumer promotions is to induce product trial, encourage brand switching, or reward
consumer patronage. Examples of consumer promotions include the distribution of product samples,
consumer contests, sweepstakes, coupons, and raffles. Consumer promotions “pull” consumers to brand
retailers or trade outlets to see, try, and/or purchase the product.
Personal Selling
Personal selling occurs when an individual salesperson sells a product, service or solution to a client.
Personal selling is necessary in the marketing mix when products/services are highly technical, fairly
complex, durable, expensive or not actively sought out by customers, especially when its customers are
companies and institutions instead of individual customers.
The success of personal selling depends on company salespeople understanding customer needs and
their ability to build long lasting client relationships. Personal selling is a very expensive method of
product promotion where product/service pricing is often negotiated.
Products and services most commonly promoted and sold through personal selling are institutional
product such as equipment, recurring supplies, motor vehicles, homes, financial services, and unsought
goods such as life insurance memorials plans.
Public Relations
Public relations is creating and maintaining goodwill of an organization’s various publics (customers,
employees, investor, suppliers etc.) through publicity and other nonpaid forms of communication. These
efforts may also include the support of the arts, charitable cause, education, sports events, and other civic
engagements.
Public relation looks after the public’s perception of company or its brands reputation, with the end
of influencing opinion and behaviour. A lot of companies engage in public relation efforts. A fast-food
chain, for example, has a toy-giving program for indigent children. Other companies support one or more
charities such the hospicio financial support during natural calamities, e.g. typhoon.
Publicity
Publicity is a communication written and produced by the public relations professionals intended to
create a favourable public image for a client. Publicity usually takes the form of text, audio, and video
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news releases about individual or organization. They are distributed to newspapers, magazine, radio and
television stations, internet sites, and other form of media.
Many regards publicity as a more effective promotional tool compared to advertising. Publicity
reaches a wider audiences, making it more cost-effective and may have higher recall from general public
than advertisement. Because publicity is often published or circulated by third party entities such as
magazines and newspapers, it has a higher level of credibility as compared to advertising.
In the early 1990s, rumors spread that the Philippine hamburger fast food chain was using earth
worms, instead of beef, for its burger patties. In response, the chain launched a publicity campaign
through third parties. It convinced the public that it does not make business sense to use earthworms are
more expensive than ground beef. Soon, the public realized that the allegation was not logical and the
rumors died. Raffles. Consumer promotion ‘pull’ consumers to brand retailers or trade outlets tp see try,
and/or purchase the product.
Personal Selling
Personal selling occurs when an individual salesperson sells a product, service or solution to a client.
Personal selling is necessary in the marketing mix when products/services are highly technical, fairly
complex, durable, expensive or not actively sought out by customers, especially when its customers are
companies and institutions instead of individual customers.
The success of personal selling depends on company salespeople understanding customer needs and
their ability to build long lasting client relationships. Personal selling is a very expensive method of
product promotion where product/service pricing is often negotiated.
Products and services most commonly promoted and sold through personal selling are institutional
product such as equipment, recurring supplies, motor vehicles, homes, financial services, and unsought
goods such as life insurance memorials plans.
Public Relations
Public relations is creating and maintaining goodwill of an organization’s various publics (customers,
employees, investor, suppliers etc.) through publicity and other nonpaid forms of communication. These
efforts may also include the support of the arts, charitable cause, education, sports events, and other civic
engagements.
Public relation looks after the public’s perception of company or its brands reputation, with the end
of influencing opinion and behaviour. A lot of companies engage in public relation efforts. A fast-food
chain, for example, has a toy-giving program for indigent children. Other companies support one or more
charities such the hospicio financial support during natural calamities, e.g. typhoon.
Publicity
Publicity is a communication written and produced by the public relations professionals intended to
create a favourable public image for a client. Publicity usually takes the form of text, audio, and video
news releases about individual or organization. They are distributed to newspapers, magazine, radio and
television stations, internet sites, and other form of media.
Many regards publicity as a more effective promotional tool compared to advertising. Publicity
reaches a wider audiences, making it more cost-effective and may have higher recall from general public
than advertisement. Because publicity is often published or circulated by third party entities such as
magazines and newspapers, it has a higher level of credibility as compared to advertising.
In the early 1990s, rumors spread that the Philippine hamburger fast food chain was using earth
worms, instead of beef, for its burger patties. In response, the chain launched a publicity campaign
through third parties. It convinced the public that it does not make business sense to use earthworms are
more expensive than ground beef. Soon, the public realized that the allegation was not logical and the
rumors died. Raffles. Consumer promotion ‘pull’ consumers to brand retailers or trade outlets to see try,
and/or purchase the product.
LET US REMEMBER:
Promotion refers to the mode of conveying the presence and attributes of the product to the target
consumers. The business communicates to the target consumers the pertinent information about the
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product including its benefits, price, and position in the market. It creates awareness of the product in the
minds of consumers and elicits their desire to buy it.

Select a widely available product that you believe is not doing so well in the market. Your objective is to
revive interest in the product, all while maximizing exposure and minimizing cost. Which tri-media vehicle
will you choose (select only one) and why? Create a mock-up of your message, and explain what reactions
(communication objectives) you want to elicit from your audience.
Rubrics:
Criteria Details Total Your
Points Points
Media Selection rationale How appropriate is the selected medium? 20
Communication objectives How strategic are the communication objectives? 20
Audience engagement How engaging is the message? 10
Total 50
Identify a popular TV program that airs on primetime. Describe what its target market is likely to be and
what products are therefore a fit for this program.
Program:
Possible target market/s:
Fit for the following products:
156
REFERENCES:
157
Quarter 4 – Week 7-9:

Workshop and Preparation of Marketing Plan
Lesson Integrate the marketing concepts and techniques learned by preparing a marketing
plan ABM_PM11-11g-J-24; present a mini-marketing plan, orally and in writing
2 ABM_pm11-11g-j-25
Whats In…….
A marketing plan is a comprehensive document or blueprint that outlines a company’s advertising and
marketing efforts for the coming year. It describes business activities involved in accomplishing specific
marketing objectives within a set time frame. The purpose of marketing plan is to clearly show what steps
or actions will be taken to achieve the plan goals.
What I need to know

At the end of this module, you are expected to be:
1. Integrate the marketing concepts and techniques learned by preparing a marketing plan.
2. Present a mini-marketing plan orally
What’s New…
Instructions: Enumerate the factors for the following marketing analysis and briefly describe each.
Micro-environment Macro-environment
A. ____________________________ A. ____________________________
B. ____________________________ B. ____________________________
C. ____________________________ C. ____________________________
D. ____________________________ D. ____________________________
E. ____________________________ E. ____________________________
F. ____________________________ F. ____________________________
1. What is your greatest goal in life?
158
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
2. How can you achieve your goal?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
3. Do you think it is possible for you to achieve such goal? In what ways?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
What is it….
At this point, you are now ready to combine and integrate all the knowledge and learning you have
acquired on the basic principles of marketing. There is no way better for you to demonstrate this than
through the preparation of a mini-marketing plan.
Below is a brief outline of a mini-marketing plan:
I. Executive summary
II. Study Background
a. Brief history of the company
b. Mission and Vision
c. Product/service offerings
III. Macro-environmental analysis
a. Economic
b. Politico-legal
c. Socio-cultural
d. Demographic
e. Technological
f. Natural
IV. Opportunities and Threats
V. Micro-environmental Analysis
a. The company
b. Suppliers
c. Marketing Intermediaries
d. Customers
e. Competition
f. Publics
VI. Strengths and Weaknesses
VII. The Market
159
a. Market size
b. Market needs
c. Market trends
VIII. Marketing Objectives
IX. Marketing strategiesn
A. Product/service strategy
1. Target Market
2. Brand positioning
B. Pricing strategy
C. Distribution strategy
D. Advertising and promotions strategy
X. Tactical Implementation
XI. Marketing Budget
XII. Feedback and Control
XIII. Financial projections
Let us now proceed to complete each part of the plan:

I. Executive summary
The executive summary presents, in a very concise manner, vital information contained in
the marketing plan such as its marketing objectives, strategy recommendations, marketing
budget, projected sales, and profitability. A well-written executive summary is usually no
longer than one or two pages. Because it is a summary of the significant points and figures
contained in the marketing plan, the executive summary can only be composed after the
marketing plan is completed.
II. Study Background
A. Brief history of the company

As the starting point for your paper, select a product brand. Identify its manufacturer
and write a brief history of this company. Most companies’ historical background can be
found in the internet. Whenever you use material from the Internet, always cite your
source.
B. Mission and vision
Research on the company’s mission and vision through the internet. These statements
ca give you a vital information on its business philosophy and long-term directions.
C. Product/service offerings
List down the company’s current product offerings, classifying them by type (hair care,
personal care, home care, etc) and also indicate their suggested retail prices (SRP). This
product listing can determine the specific role your selected product brand plays in the
company’s entire product offering or product portfolio.
III. Macro-environmental analysis

Make an assessment on each of the company’s macro-environments. Get the latest data
possible. A marketing plan of a particular product is a plan of action for the future and is
intended to be implemented in the coming year. It is therefore important that after
160
accessing current information, secure also authoritative information on how figures may
look like in the following year. Since the marketing plan is to be implemented a year after, it
is the following year’s macro-economic environment that the product will have to contend
with. Future indicators are readily available on the internet.
A. Economic
Latest economic data is projected. Inflation rate and peso-dollar exchange rates are
usually critical in determining future cost, price, and consumer purchasing power. Gross
Domestic Product (GDP) can indicate the general business environment in the coming
year. These data are available at the Bangko Sentral ng Pilipinas website
(www.bsp.gov.ph). Make sure only relevant economic data are used. Economic factors
should be concisely stated and the accompanied figures and projections acquired should
also be indicated.
B. Politico-legal
The political macro-environment is assessed. Unless there is obvious political stability,
there is no need to project the political environment. An exception would be a national
election, which may cause the economic and business climate to change dramatically.
Bills currently pending on the senate or in congress that maybe enacted into law in the
coming year should be considered.
C. Socio-cultural
Identify relevant socio-cultural factors that may affect the manner of how the selected
brand will be marketed. There may, however, be no possible change In the coming years
because socio-cultural factors take years, if not generation, to change.
D. Demographic
Based on target market, cite current and relevant figures that may affect the
marketability of the product. Therefore, if and target market is “female residents of
Metro Manila between the ages of 18 and 25, who are career oriented,” determine the
population of Metro Manila, the gender mix f population, and the distribution of the
population by age are all relevant to your brands marketability. As discussed in chapter
3, although psychographic segmentation (“who are career oriented”) is important in
determining consumer behavior, there is little to n Philippine population psychographic
information available on the internet. Because it takes many years before demographic
trends to change substantially, there is no need to project demographic data acquired.
E. Technological
Depending on the industry relevant technological developments that may favorably or
unfavorably affect the chosen brand. This may include, for example, a new production
process which the company can adopt to reduce manufacturing cost, or an innovative
type of packaging, the patent of which may be owned by one of the competitors.
F. Natural
A thorough analysis of the natural macro-environment is undertaken in this section:
pollution, global warning and acts of God, among others. There’s no need to project this
into the marketing plan’s implementation phase, however, because this issues are not
volatile over the short term period
IV. Opportunities and Threats
161
Enumerate identified opportunities and threats from the macro-environment analysis.
Arrange them chronologically. Relate them directly to a specific macro-environmental factor
and justify why they classified as opportunities or threats.
V. Micro-environmental analysis
The six micro-environmental factors assessed and evaluated. Because the micro-
environment is not expected to change dramatically over the short-term, it is largely
unnecessary to project the situation to the following year. The only aspect which may
situationally require projection is the competitive situation. It may be possible that there is
public knowledge of the entry of new competitor that may affect the industry’s competitive
landscape.
A. The company
The company is evaluated in terms of its organizational ability to implement marketing
strategies. The relationship among functional areas must be evaluated to determine if
there are bottlenecks in decision-making, and if other functional departments are
supportive of the marketing. It would also be helpful to look at the latest company
income statement to evaluate the company’s cost structure. Financial statements are
available from the Securities and Exchange Commission.
B. Supplier
In this section, the relationship between the company and its suppliers is assessed. This
is especially for suppliers involved in the supply of raw materials vital to product
manufacturing. Any opportunities to improve the company’s supply chain should also be
investigated with the objective of reducing the product cost and increasing value to the
customers.
C. Marketing intermediaries
The company’s distribution network is illustrated and explained in this section. The
choice of distribution type is reviewed and possible improvements in intermediary
relationships is determined.
D. Customers
In this section of the marketing plan, identification of the geographic, demographic and
psychographic profile of the brand’s typical customer is expected. The buying behavior
should be explained and understood, e.g. why they buy, where they buy, how
frequently they buy, and how they use your product.
E. Competition
This is where the brand competitors and the companies that manufacture them are
identified. If necessary, draw a perceptual map to identify the closest competitors.
Identify also the relative positions of the different competing brands (including your
own) in terms of market share.
In this case high organized industries, information is available from Euromonitor
(www.euromonitor.com/philippines). Otherwise, interview with product retailers can be
used and shelf checks conducted (normally the larger the shelf space a particular brand
occupies, the larger its sales). It would also be important to discuss the recent
competitive actions of the competitors in order to anticipate how they will most likely
respond to the proposed marketing strategies.
F. Publics
162
Evaluate the company’s relationship with its publics; corporate stockholders, the
community, financial institutions, media, the government, and society as a whole. This
can prevent any future need for the company to engage in public relations and publicity.
VI. Strengths and Weaknesses

Enumerate the identified strength and weaknesses from the micro-environmental analysis.
Arrange them chronologically. Relate them directly to a specific micro-environmental factor
and justify why they are classified as strength and weaknesses.
VII. The market

A. Market size
Show the size of your market. The total market is the sum total of the group f individual
or organizational consumers who have both the willingness and financial capability to
purchase a particular product or service. Some industries have their total market size
published in Euromonitor. If you can identify your industry competitors, simply add the
total sales of all different brands to arrive at the market size. If this information is not
available, you may need to conduct interviews or surveys to determine purchase size,
frequency of purchase, and average price paid. When this is combined with the market
population data you will arrive at market size. Market size is expressed either in units or
in value (pesos).
B. Market needs
Know your market intimately to be able to serve its needs. Understand and express
what exactly the market is looking for in the product that you are offering. Describe the
market needs and wants and its value perceptions of various product/service attributes.
C. Market trends
Based on the historical trend, the segment or t=sub-segment’s growth rate is projected
over the plan period. Trends are also identified with the respect to market needs and
preferences.
VIII. Marketing objectives
In this section state the marketing objectives. Arrange the objectives in sequence. Marketing
objectives may include brand awareness target and sales revenue objectives. They must be
specific, measurable, attainable, realistic and time-bounded. An example of marketing
objective pertaining to brand awareness is as follows:
“To attain a brand awareness level of 65 % by December 31, 2020
IX. Marketing strategies

In this chapter, marketing strategies are proposed based n a thorough analysis of
opportunities and threats, strengths and weaknesses, and the market for the proposed
product/service. Strategies must collectively be able to achieve all marketing objectives.
A. Product/Service
Product or service should be fully explained. Indicate any innovations you plan to
implement in your product or service; e.g. a change in packaging label, supplements on
your service offering, etc. Identify the value proposition or unique selling proposition of
the product/service.
B. Target Market
163
Describe in detail the target market of the product/service. Use as many or a few
segmentation variables as necessary to outline the target market’s geographic,
demographic, and psychographic profile. Quantify the size of your target market. If you
plan to expand, contract, or totally change your brands present target markets, indicate
the changes and justify it convincingly.
C. Brand positioning
State the current positioning of the brand/service. Fully explain if you think it is relevant
for use. If revision is needed, state the proposed alternative brand positioning. Fully
justify the proposed brand positioning and explain convincingly why it is more
appropriate than the current one. Remember that positioning of your proposed
product/service must be unique, beneficial and credible, and must revolve around a
product or a service attribute that is relevant to your target market.
D. Pricing strategy
Based on the marketing objective formulated, decide on a general pricing strategy for
the brand. It is possible to implement general pricing strategies for a brand during an
operating year. For example, a brand may have a general strategy of going-rate-pricing
but implement promotional pricing during the last quarter of the year.
E. Distribution Strategy
Review the brands current distribution strategy to determine if it is still applicable for
the marketing plan’s implementing period. When adjustments or modification are
required, give recommendations as to how the selected brand can be distributed more
efficiently.
D. Advertising and promotional strategy
In this section, propose your advertising and promotion strategy. Based on the
advertising and promotional objectives and target audience profile, decide on the
message, creative style, vehicles, media you will utilize. Provide details of media and
promotional plan, including locations for advertising placements, their frequency and
approximate cost. Also indicate the mechanics of the trade and consumer promotions. If
any, their corresponding costs. Select media carefully, giving consideration on cost
effectiveness.
X. Tactical implementation
Develop tactics for each strategy. Some strategies may only require a little a two tactical
plan, while others may need to be supported by five or more tactics. In essence, there is no
precise number of tactics per strategy. There should be as many tactics as necessary to
ensure the success of the strategy, but no additional tactics may be proposed if it does not
contribute to successful strategy implementation.
Write a brief discussion of the operating details of each tactic including the timetable as to
when each will be implemented.
An example of this is provided below:
Marketing strategy: Market development

Tactics Operating details Time table
Establish a warehouse in To accommodate store September 2020
cebu merchandise to support Cebu
164
retail operations
Hire and train Cebu store Hiring must be localized and September 2020
personnel extensive training
undertaken to maximize
customer service
Open a retail outlet in cebu This is to take advantage of October 2020
the growing market in the
Vizayas
IX. Marketing Budget
In this chapter, indicate the total cost involved in the implementation of the proposed
marketing plan. Only third party expenditures are to be included in the marketing budget.
Capital expenditures like retail outlet construction expenses and the purchase of packaging,
machinery, are excluded from the marketing budget.
An example below:
Marketing Budget 2020
Advertising expenses, which include the ff: P10, 600, 000.00
Television 7, 500, 000.00
Radio 1, 870, 000.00
Newspaper 1, 230, 000.00
Leaflets 25, 000.00
Point-of-purchase materials 220, 000.00
Sales promotions 650, 000.00
Total 11, 495, 000.00
XI. Feedback and Control

The purpose of this section is to ensure that each of the tactics is carried out as planned.
There should be feedback and control write up for each of your tactics. In paragraph for
discuss individual tactic benchmark or milestone to indicate that the tactics is implemented
according to plan. Corrective measures that can be taken to ensure adherence to plan must
be developed; e.g. reporting procedures and forms, coordination among parties and
accountabilities.
An example is shown below:
Action plan: Hire and train Cebu store personnel Timetable: September 2020
By the end of August 2020, personnel required for all position in the Cebu store should already have been
screened and prequalified. If this deadline will not be met, the company should contact a local
employment office to fill in missing positions. At the latest, this should be completed by September 10.
Training should commence immediately on September 12 to be completed by September 28. At this
point, the company should subject all who have completed the necessary training to standard
performance appraisal to determine which trainees will be hired. By September 30, the trainee should be
informed of their hiring status. If there are no qualified trainees for specific critical positions such as
165
Assistant Store Manager and Store Inventory Supervisor, qualified employees from Manila stores shall be
flown in to temporarily occupy these positions. Continuous recruitment, prequalify cation and training for
unfilled Cebu store positions shall continue by October 2020, however all vacant position should be filled.
XII. Financial projections
At the point, present the financial viability of your proposed marketing plan.
The latest available incoming statement of your company can be used. Begin by calculating
the expected revenues to be generated by your marketing plan. Add the expected amount of
your average historical sales of the company. The sum is the total sales generated for the
year. Using the same percentage of costs of sales from the latest available income
statement, deduct the percentage amount of the total sales to obtain the gross profit. The
difference is the income before tax. Deduct income tax (currently at 30 % of income for
corporations) from the gross income.
The resulting amount is your income after tax. (net income).
If latest income statement is not available, you can prepare projected income statement
using the incremental method. Simply calculate the additional incremental sales the brand
can realise as a result of the proposed marketing plan.Use a close competitors historical
income statement to determine percentage cost of sales. Because the competitor
manufactures a similar product, its costs should be similar to yours. Apply this percentage to
your incremental brand sales and deduct this amount from your incremental brand sales to
arrive at incremental gross profit. Deduct your marketing budget from your incremental
gross profit to determine your incremental income before income tax. Deduct incremental
income tax at 30% of income before income tax for corporations to arrive on you
incremental income after income tax.
Whats more…..
1. Complete the mini marketing outline and briefly describe each

I. ______________________
II. Study background
a. Brief history of the company
b. ______________________
c. Products service offerings
III. Macro environmental analysis
a. Economic
b. Politico-legal
c. _______________________
d. Demographic
e. Technological
f. Natural
IV. ________________________
V. Micro-environmental analysis
a. The company
b. Suppliers
c. Marketing intermediaries
d. ___________________________
e. Competition
166
f. Publics
VI. ______________________________
VII. The market
a. Market size
b. Market needs
c. Market trends
VIII. Marketing objectives
IX. ___________________________________
a. Product/service strategy
1. Target market
2. _______________
b. Pricing strategy
c. Distribution strategy
d. Advertising and promotion strategy
X. Tactical implementation
XI. _____________________________________
XII. Feedback and control
XIII. _____________________________________
What I have learned….
Mini-marketing plan presentation

You are required to submit a mini-marketing plan based on the format given above. The mini
marketing plan will be graded based on the rubrics presented below:
Level of achievment
Criteria Excellent Satisfactory Unacceptable
(3 points) (2 pts) (1 pt)
Introduction The introduction clearly The intrductin is There is no introduction that
and cosisely introduces somewhat unclear and/or states the purpose of the
the purpose of the not concise in stating the marketing plan
marketing plan purpose of the marketing
plan
Company analysis Information about the Information about the Company or organization is
company or organization company or organization provided but there is a great
is thoroughly and clearly is, for the most part, deal of potential important
reported, inclui=ding thoroughly and clearly information missing.
such things as the type reported. But some
of product or service, information that may be
employees company critical to the marketing
history, previous and plan is missing
current marketing
efforts, current
knowledge of customer
167
and cometitors etc.
Market definition, A visual depiction and Either the visual depiction There is no visual depiction of
Potential, Demand verbal description of the or verbal description of the the market definition. More
market definition is market definition is than one estimate/calculation
provided that is missing. Both maybe of arket potential, market
reasonable and based provided but not clear or demand and company demand
on the company or reasonable. One of the are missing or clearly
organization. estimates/calculations for miscalculated.
Reasonable estimates or market potential, market
calculations of market demand and company
potential, market demand are missing or
demand and company clearly miscalculated.
demand are provided
and clearly stated.
SWOT Analysis A thorough SWot SWOT analysis is provided, SWOT analysis is provided but
analysis is provided, but there are some there are more than six missing
based on preceding missing points from points from preceding analysis.
analysis. Reasoning for preceding analysis. There is no reasonable points
each item in the SWOT Reasoning for each item is provided for the items. More
is provided and logical. not always thoroughly than two
Strengths and provided and/or logical. strengths/weaknesses or
weaknesses are clearly One or two opportunities/threats are
internal factors, while strengths/weaknesses are inappropriate.
opportunities and external, or one/two
threats are clearly opportunities/threats are
external factor internal
Marketing The marketing Linkage of marketing Marketing goals and objectives
objectives and objectives and goals are objectives and goals to are missing or those that are
goals clearly related to the company/organization identified are not quantified or
company/organization mission is not clearly are inappropriate
mission. Objectives and stated. Some of the
goals are clearly stated objectives and goal are
and appropriately unclear and/or not
quantified. appropriately quantified.
Marketing Strategy The marketing direction Marketing strategy is The marketing strategy is
that will frame identified but is unclear or missing or is illogical given the
marketing tactics of the unspecific in some aspects. marketing objectives and goals.
marketing plan is clearly The marketing strategy is
and specifically stated in logically linked to the
3-5 sentences. The marketing objectives and
marketing strategy is goals
logically link to the
marketing objectives.
Implementation A thorough and specific An implementation plan is An implementation plan is
and control implementation plan is identified, but one to two identified, but more than two
clearly identified for tactics are not addressed. tactics are not addressed, and
every tactic; the plan Specifically of some the plan generally lacks
identifies who is components of the plan specificity. Because of missing
responsible for could be improved. The information, the plan will not
implementing the tactic, company will be able to help the company/organization
when it should be use the plan to implement implement the marketing plan
implemented, the cost the marketing plan, but
168
measurement of maybe confused about
effectiveness, and any some aspects because of
other relevant missing information
information
Conclusion A brief summary that A summary of expected There is no conclusion.
identifies the expected outcome is provided but
outcomes with lacks clarity.
successful
implementation of the
marketing plan is clearly
presented in short
paragraph
Writing styles The plan has writing The writing styles lacks The plan is clearly the works of
style that is uniform uniformity at times and is multiple authors with different
throughout the paper not always appropriate for writing styles, margins, printer
and appropriate for this a marketing plan. There is fonts, paper types
type of written project. some indication of
There is no indication multiple authors (different
that the paper involved fonts, different paper etc)
multiple authors.
Grammar spelling The plan has been There are few spelling There are frequent misspelled
and formatting thoroughly spell and/or grammatical errors. words, serious grammatical
checked and proofread. There are one to three errors, and formatting errors,
There are no to almost grammatical errors. indicating that time was not
none grammatical taken to spell-check and
errors. There are no proofread.
formatting errors
Criteria points Points Grade equivalent (30 pts=100%)

Introduction
Company analysis Points earned % Description
Market definition, 25-30 94-100 Outstanding
potential and 19-24 88-93 Exemplary
demand 13-18 82-87 Proficient
SWOT analysis 7-12 76-81 Partially proficient
Marketing 1-6 70-75 Incomplete
objectives and
goals
Marketing strategy
Implementation
and control
Conclusion
Writing styles
Gramar Spelling
and formatting
169
NOTE: PLEASE WRITE ALL YOUR ANSWERS IN YELLOW PAPER. THANKS!
GOD BLESS!!!
170

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Principles of Marketing

Department of Education Republic of the Philippines

Satisfaction Market share Durable Undifferentiated goods

Consumer goods Branding Current demand Primary demand

Brand equity Marketing Consumable

___________ 1. It is a form of communicating or promoting the value of a product, service,

What I Need To Know

The Marketing Process

The Situation Analysis

Marketing Mix Decisions

Products, Services, and Experiences

The Three Product Level

Features and benefits of products

According to Use: Consumer and Industrial Goods

According to Differentiation: Undifferentiated and Differentiated Goods

 All products carrying the brand must have quality consistency

 The brand must be advertised and promoted

According to Durability: Consumable, Semi-Durable, and Durable Goods

According to Type: Convenience, Shopping, Specialty, and Unsought Goods

Activity 3: Marketing Process Diagram

Activity5: Classifying Goods

Examples Consumer Industrial Specially Unsought Shopping Convenience

What I Have Learned

Direction: Answer the following questions.

Marketing Approaches and Services

What I Need To Know

After going through, you are expected to:

 Discribe the traditional approaches to marketing;

 Differentiate product marketing from marketing services; and

 Compute the market share

Activity 7: Review from the past Lesson.

Activity 8: Explain in your own words.

The following are the characteristics of services:

Needs, Wants, and Demands

Market and Market Demand

Measuring Market Demand

Potential, Latent, and Current Demand

In order to satisfy latent demand, marketing organizations must:

 Introduce goods currently unavailable that are desired by customers;

Utility, Value, and Satisfaction

To ensure maximum customer value and satisfaction, marketers must:

 Balance product or service quality and price.

 Create a buying atmosphere and deliver purchase convenience.

To enhance their customers’ perceived value of products or services, marketers advertise

Customer Value Proposition

Figure 4: Levels of Competition

1. Desire Competitors 2. Generic Competitors

“What desire do I want to satisfy?” ‘What do I want to eat?”

3. Form Competitors 4. Brand Competitors

“What kind of sandwich?” “What brand of hamburger sandwich?”

 Hamburger  Burger KIng

The Concept of Market Share

Market share is calculated using the following formula:

Traditional Approaches to Marketing

1. The Production concept

2. The Product Concept

3. The Selling Concept

Contemporary approaches to Marketing includes the following;

Industrial marketing, also known as B2B or business-to-business marketing is a branch of marketing

Contemporary approaches followed by organizations:

Activity 9: Market share

Company Market Share Company’s Annual Total revenue of

What I Have Learned

Activity 10: Reflection