Principles of Marketing 1st Semester

PRINCIPLES OF MARKETING
For Senior High School

Antique National School
SY 2020-2021
Prepared by:
KRISTIN M. CEPEDA
Teacher III
Approved:
DANILO J. SALMORIN
Education Program Supervisor - Math
Module in Principles of Marketing
1st Semester, SY 2020-2021
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Lesson 1: Marketing and It’s Scope

At the end of the lesson, the students will be able to:
1. define and understand marketing
2. define and understand important marketing concepts
3. illustrate the utility concept of marketing, and
4. identify the characteristics of marketing organizations
Procter & Gamble’s Tide: A Marketing Success Story
Procter & Gamble (P&G) is one of the leading manufacturing companies which developed over 100
product brands that are among the most recognized in the world. Some of P&G’s product are Crest toothpaste,
Gillette razors, Ivory soap, and Tide detergent. In particular, Tide detergent is recognized as a top brand and an
important household name in many countries.
The Origins of Procter & Gamble
Procter & Gamble was established in 1837 when William Procter, a candle maker, and his brother-in-law
William Gamble, who was a soap-maker, decided to become business partners and combines their professions to
establish a family-run business. During the first half of the 20th century, Procter & Gamble become one of several
manufacturing companies that were recognized as leaders in the industry. At that time, P&G strove to increase
the company’s lead over its competitors by developing new and more effective household products.
Introducing Tide: The Washday Miracle
In the 1930’s, the company scientists worked on developing a heavy-duty laundry detergent that would
clean heavy stains without leaving clothes hard and stiff. Their efforts, however, were unsuccessful and the
company shifted its focus to other projects. Despite the setback, one of the company’s researchers, David Byerly,
continues with developing the detergent as a side-project called Project X. In 1944, Byerly finally succeeded in
creating a prototype cleaning agent and in 1946, Procter & Gamble launched the product with the brand name
Tide. Tide was launched with the slogan “Oceans of Suds” and was marketed as “The Was Day Miracle.”
Marketing Efforts
Procter & Gamble put much effort in building the Tide brand as an effective cleaning agent. At that time,
consumers were looking for a detergent that easily dissolves in water and can wash well. Tide was developed as
a cleaning agent which dissolved well in water compared to soaps; it also made a lot of suds, which aided the
cleaning process. These characteristics were used by the company as the main selling points of the product.
One significant factor which aided marketing efforts was the Tide logo, which was developed to be eye-
catching and memorable. The logo used the bright yellow and orange colors for the concentric circles that formed
the target on the Tide logo. The brand name was colored blue to symbolized calmness, and was perfect
complement to the bright colors of the logo. The logo is so effective that through the years, the company has not
made any significant changes to it; it retains the color combination and concentric ring design.
With the advent of washing machines in the 1950s, Procter & Gamble made sure that a box of Tide was
provided free with every purchase of a washing machine. This partnership continued until the 1970s, and resulted
in Americans becoming accustomed to using Tide detergent with their washing machines. This paved the way for
Tide to gain dominance in the detergent market in the United States.
Over the years, Procter & Gamble continued to innovate the Tide product to meet the various needs of its
customers. In 1968, Tide XK was launched, which was designed to remove tough stains such as blood and food
stains. In 1984, Liquid Tide was introduced. Four years later the company launched Tide with Bleach which was
effective for both white and colored clothes. In 2005, a variant of Tide which can be used in cold water was
introduced, along with a compact Tide stain remover which came as a pen. The company also effectively utilized
advertising through multiple platforms such as television, radio, print, billboard ads and the internet.
Marketing Dominance
The marketing effort of Procter & Gamble eventually established Tide as a leading detergent product in
many countries throughout the world. Tide has become a household name in the United States. In 2009 a US
consumer survey included Tide as one of three products that consumers would be unwilling to give up despite
difficult economic conditions brought about by the recession in 2007. Tide is also one of the strongest brands in
terms of consumer recall. As of 2013, it is estimated that Tide has captured around 30 to 40 percent of the
worldwide detergent market and has sold twice as much as the next leading detergent brand. This is even though
Tide costs twice as much as other competing products in the market.
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Discussion Questions:
1. What consumer need was address with the introduction of Tide detergent in the market?
2. Describe the marketing efforts implemented by Procter & Gamble with regards to Tide. Which of them,
in your view, had the most significant impact on the popularity of Tide?
3. How does P&G maintain Tide’s “staying power” in the market?
4. What proof can you cite regarding the effective marketing for Tide?
Marketing Defined
 Marketing is typically seen as the task of creating, promoting, and delivering goods and
services to consumers and businesses.
 According to American Marketing Association, marketing is the set of activity, set of
institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partner and society at large.
 Marketing activities apply not only to profit-oriented businesses but also to non-profit
organizations.
 Marketing is also a set of processes because there are essential tasks that must be engaged
in order to produce a viable marketing strategy.
 As a core function, selling is one aspect of marketing.
 Marketers seek to provide valuable products and services to customers. In return, they also
need to benefit from it.
 Marketing is about changing behavior through communications in order to achieve
objectives.
 Marketing is about meeting needs profitably.
 The aim of marketing is to know and understand the customer so well that the product or
service fits him and sells itself.
 Marketing is the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods, and services to create exchanges that satisfy individual and
organizational goals.
The Scope of Marketing

Marketing people are involved in marketing different types of entities:
1. Goods. Physical goods constitute the bulk of most countries’ production and marketing
efforts.
2. Services. Services include the work of airlines, hotels, car rental firms, barbers, as well as
professionals working within or for companies.
3. Experiences. By orchestrating several services and goods, a firm can create, stage and
market experiences.
4. Events. Marketers promote time-based events, such as the World Cup, company
anniversaries, major trade shows, sports events, and artistic performances.
5. Persons. Celebrity marketing is a major business.
6. Place. Places compete actively to attract tourists, factories, company headquarters, and new
residents.
7. Properties. Properties are intangible rights of ownership of either real property or financial
property.
8. Organizations. Organizations actively work to build a strong, favorable image in the minds
of their target publics.
9. Information. Information can be produced and marketed as a product.
10. Ideas. Products and services are platforms for delivering some idea or benefit. Social
marketers are busy promoting such idea as “Say No to Drugs,” Exercise Daily,” or “Eat
Healthy Food.”
Core Marketing Concepts

 Target Markets and Segmentation
A marketer can rarely satisfy everyone in a market. Therefore, marketers start by dividing up
the market. They identify and profile distinct groups of buyers who might prefer or require varying
product and services mixes. Market segments can be identified by examining demographic,
psychographic and behavioral differences among buyers. The marketer then decides which
segment present the greatest opportunity – which are its target markets.
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 Marketplace, Marketspace and Metamarket

Businesspeople often use the term market to cover various groupings of customers. The
marketplace is physical, as when one goes shopping in a store; marketspace is digital, as when
one goes shopping on the Internet. The concept of metamarket is used to describe a cluster of
complementary products and services that are closely related in the minds of consumers but are
spread across a diverse set of industries.
 Marketers and Prospects

A marketer is someone seeking a response (attention a purchase, a vote, a donation) from
another party, called the prospect.
 Needs, Wants and Demands

Needs are the basic human requirements. These needs become wants when they are directed
to specific objects that might satisfy the need. Wants are shaped by one’s society. Demands are
wants for specific products backed by an ability to pay.
Marketers do not create needs: Needs preexist marketers. Marketers, along with other societal
factors, influence wants. Marketers might promote the idea that a Mercedes would satisfy a
person’s need for social status. They do not, however, create the need for social status.
 Product, Offering and Brand

Companies address needs by putting forth a value proposition, a set of benefits they offer to
customers to satisfy their needs. The intangible value proposition is made physical by an offering,
which can be a combination of products, services, information and experiences.
A brand is an offering from a known source.
 Exchange and Transactions

Exchange is only one of four ways in which a person can obtain a product. Exchange, which is
a core concept of marketing, is the process of obtaining desired product from someone by offering
something in return. Exchange is a value-creating process because it normally leaves both parties
better off.
Two parties are engaged in exchange if they are negotiating. When the agreement is reached,
we say that a transaction takes place. A transaction is a trade of values between two or more
parties. Transaction is an agreement between a buyer and a seller to exchange goods or services.
The exchange should involve money or some other resources that is of value to the organization
offering the need-satisfying product or service.
 Marketing Program
The marketer’s task is to build a marketing program or plan to achieve the company’s desired
objectives. The marketing program consists of numerous decisions on the mix of marketing tools
to use. The marketing mix is the set of marketing tools the firm uses to pursue its marketing
objectives in the target market. These tools can be classified into four broad groups called the four
P’s of marketing: product, price, place and promotion.
Utility Concept of Marketing

Marketing has also used the concept of utility, which is the power of a good or service to
satisfy a particular need or want of customer. It is also the term for the benefit that customers
derived from acquiring and using a particular good or service.
In marketing, a firm creates and distributes a good to create a particular value for the
consumers. Marketing uses four kind of utility.
1. Form Utility. It refers to the conversion of raw materials into products that suit the
preferences of consumers so that they do not have to create their desired products
themselves. A similar utility called task utility refers to the offering services which
consumers may not be capable of doing or may not like to do themselves.
2. Place Utility. Refers to the availability of the product or service at accessible locations.
Marketers devise ways to provide value through availability, ensuring that consumers can
easily have the goods or use the service. Example: delivery, online shopping, automated
teller machines, and customer service centers.
3. Time Utility. It refers to the satisfaction derived by customers in availing of products or
services on time.
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4. Possession Utility. It refers to ensuring that consumers have full possession of the
product or service at the right time, so this overlaps with time and place utilities. Marketers
facilitate this utility though fast payment processing and delivery.
The Marketing Organization

The marketing organization refers to the department in a corporation at ensures the smooth
flow of marketing plans, policies and programs that monitor all sales activities, customer services
and distribution and promotion efforts. The marketing organization can be described with the Cs of
marketing which describe six aspects of the organization:
1. Consumer Content. The exchange process gas changed dramatically in recent years as
consumers are now able to study a wide array of choices before they make the actual
purchase. Businesses rely on their marketing organizations to keep customers loyal to the
products and services they offer. Any organization that employ marketing should keep
customers informed about what they offer an should always be in constant contact with
them. Marketers should be updated on their customers’ behaviors, values, interests and
other factors that influence their purchases.
2. Company Capabilities. To be on par with competitors, marketing organizations need to
strengthen their capabilities in production and operations to develop and produce goods that
will meet customer needs.
3. Communication. A marketing organization must have a positive, long-lasting relationship
with its customers because they constantly look for cues provided by the organization as
they make their purchase decisions.
4. Competition. The real challenge for any organization is to face its strongest competitor
head on. It should know its competitor’s strength and weaknesses and determine the best
way to respond.
5. Cross-Functional Contact. A marketing organization cannot work alone without the
support and assistance of other departments.
6. Community Contact. A marketing organization is updated with local, international and
community news. It has constant contact with different agencies and organizations within
its surroundings.
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Performance Name Grade Level 12 Score

Task
No. 1 Section Learning Area Principles of Marketing
1st Semester
2020-2021 Date Topic Marketing and Its
Scope
CASE 1: Fast Food Restaurants

Filipinos love to eat; an average Filipino family spends a big chunk of its budget on food. Today, more and
more Filipinos eat out especially in fast food restaurant. This is the reason why the fast food industry has grown
rapidly by the turn of the 21st century. At least 2,000 fast food restaurants thrive in the Philippine market, with 25%
of consumers eating at fast food restaurants at least once a week.
The Growing Popularity of Fast Food Restaurants

There is an increasing desire for Filipino consumers to eat outside of their homes to avoid the hassle of
preparing home-cooked meals. Increasingly, marketers of fast food restaurants have found ways to attract more
customers. Aside from individual budget meals, group meals or sets of dishes offered at affordable prices are
offered as well.
Have you observed the proliferation of fast food outlets in many locations where people go most of the
time? Marketers use place and time utilities in fast food restaurants. They are readily accessible at any time when
a hungry stomach starts looking for something to eat fast.
Since most fast food restaurants like Jollibee and McDonald’s target children, they package their meals
with toys and partner with movie outfits to feature famous cartoon characters. They also have outlets with
playgrounds to attract more young customers.
Fast food restaurants offer budget meals, making them a cheap alternative for budget-conscious Filipinos.
They also have convenient drive through and polite and courteous service crews.
Rising Cases of Health-Related Problems

Despite the steady growth of the fast food industry, health care practitioners blame the high calories, salt
and fat content of fast food for causing serious health problems like obesity among children and adults.
The rise of obesity cases in recent years all over the world has been very alarming. In the Philippines,
obesity is fast becoming a problem and the primary suspect is unhealthy food like items served in fast food
restaurants. Burgers, fries, soft drinks, hotdogs and chickens are prepared with artificial colors, flavors,
preservatives and chemicals which may have negative long-term effects on children. A national survey reveals
that the percentage of overweight children among those aged 0 to 5 years old has increased significantly, from
1% in 1989 to 5% in 2013; the percentage in children aged 5 to 10 years went from 5.8% in 2003 to 9.1% in 2013.
Filipino consumers still eat fast food despite the detrimental health effects especially to children for a
number of reasons. Firms, fast food is a fast and affordable way to satisfy one’s hunger. Second, not all parents
are educated about its harmful effects. Lastly, fast food items and advertisements attract young and adult
consumers alike, convincing them even more to patronize fast food establishments.
Questions
1. What factors contribute to the steady growth of the fast food industry?
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2. What is the primary reason of Filipinos for patronizing fast food restaurants despite the harmful effects
of the food they offer?
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3. How to marketers use place and time utilities in fast food restaurants?
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4. What solutions can you give to address the health problems experienced with fast food products?
Explain how these can be integrated in the marketing plans of fast food restaurants.
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Marketing Experience
Select one type of marketing utility. Come up with five examples of products or services for this type of utility.
Discuss each example.
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Self-Reflection
Are you interested in becoming a part of a marketing organization? If you are, what characteristics do you
have that can make you a successful marketer?
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Application and Advancement
Marketers charge consumers for the cost of their goods plus a markup for profit and overhead. Consumers are
therefore paying more than the actual cost of a good. How do you feel about this? Do you think that there are
any moral implications to this?
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Explain why there is a multitude of different types of shampoos in the market shelves, many of which are from
the same manufacturers.
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Lesson 2: Goals of Marketing

1. enumerate and discuss the goals of marketing, and
2. explain the importance of the goals through specific examples.
Starbucks
Stabucks has not only changed the way coffee is perceived and served, but it has also erased the
imaginary line between adult consumers and young coffee drinkers. The world’s coffee lovers look at Starbucks
not only as a unique coffee-drinking experience but also an anywhere, anytime beverage company. It has also
become a way of life for many young professionals.
History
Starbucks was established in 1971 in Seattle, Washington by teachers Jerry Baldwin, Zev Siegel, and
writer Gordon Bowker. The three were inspired by their friend Alfred Peet, who founded Peet’s Coffee & Tea, and
decided to establish a company which sell high-quality roasted coffee and coffee-roasting equipment. The
company was named “Starbucks” after a character from the novel Moby Dick. The iconic logo of Starbucks was
inspired by a siren, a mythical sea creature, in keeping with the nautical theme of the company. Starbucks soon
made a name for itself as a popular coffee roaster. At that time, the store was a coffee bean hub, meaning it sold
roasted coffee beans to its customers. Coffee was only provided for customers as samples.
The present concept of Starbucks stores as coffee houses is based on an idea proposed by Howard
Schultz, who was brought in as a director of marketing in 1982. He was inspired by his experience in Italy, where
cafes not only sell gourmet coffee but also provide a place where customers can meet, talk and relax. When
Schultz bought the company from its founders in 1987 and became CEO, he expanded Starbucks and opened
several outlets throughout Seattle. Starbucks outlets were also opened in the cities of Vancouver and Chicago. By
1989, Starbucks had 46 stores throughout the United States.
The Starbucks Experience
Every Starbucks bar counter has a barista who is an expert in preparing coffee. A Starbucks barista is
trained in grounding coffee beans, brewing, and serving fresh coffee. He/She should know all the regular
customers of the store by name and remember their coffee preferences. He/She must also pour coffee with one
hand and whipped cream with the other while talking with the customer. This is what is later on called the
Starbucks experience. This is a unique way of serving coffee while building a more personal relationship with the
patrons.
Today, Starbucks is the number one provider of not only the finest coffee but also of a unique coffee-
drinking experience in the world, specifically in 24,000 stores in 70 countries. True to its mission, “to inspire and
nurture the human spirit – one person, one cup and one neighborhood at a time,” Starbucks continue to meet this
goal by creating value and satisfaction for its customers.
1. How did Starbucks evolve from a coffee bean roaster to a café?

2. What customer need did Schultz seek to meet with the changes he made in Starbucks?
3. What is the distinguishing characteristics of the “Starbucks experience”?
The Common Goals of Marketing
Marketing activities have five common goals: building brand awareness, generating
high sales lead volume, establishing though leadership, boosting sales, and increasing
brand engagement.
Building Brand Awareness
Marketing primarily influences what the product or service is trying to project in the
minds of the consumer and how they can relate to the brand. It increases that retention
of the brand and product, resulting in brand awareness. For example, a company that
produces infant milk will use marketing strategies to ensure that when a customer enters
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the supermarket and looks for infant milk, this customer will get their brand, and ignore
the other competing brands.
 Brand is a symbol, logo, words, or a combination of these elements that a
company uses to distinguish its products or services from others.
 Brand awareness is the extent to which a brand is recognized by potential
customers and is correctly associated with a product or service.
Marketers use a variety of ways to establish brand awareness. The most popular
strategy is to put together a catchy logo, color combination, and slogan to create to create
a brand that can potentially be a household name.
Supporting High Sales Lead Volume
Marketing activities support high sales lead volume, many of the activities, like
extensive promotion, prompt customers to eventually buy the product or avail of the
service.
The sales force can lead customers to purchase using persuasive selling. However,
aside from getting information about the product or service from a salesperson, customers
also check out brochures, flyers, billboards, or TV commercials to support the product or
service claims.
 Lead volume is the number of sales leads that will ultimately be converted into customers
 Sales lead is a potential customer who is interested in the product or service.
Establishing Thought Leadership

The term thought leader was first coined by Joel Kutzman in 1994. He defined it as
a person who has “new important ideas that are worth sharing and that have real
application.” These fresh ideas can be in the form of a new product or a new method of
teaching. To be a thought leader, a person should be an expert in issues that affect the
industry.
Today, though leadership is used in marketing to tap the expertise of people who
can provide the best answers to customers’ most challenging questions about the product
or service using formats that the latter would like to see and use. Company websites
usually have Frequently Asked Questions (FAQs) page that answers common questions
about their product and services.
Established companies and firms, given their track record and clientele, are already
experts in their respective fields but they still make it a point to further show their
knowledge and strengthen their credibility. They usually feature content that is related to
what they offer and what they stand for on their websites.
*Thought leadership is a technique that uses the expertise of people who can
provide the best answers to customers’ most challenging questions about the product or
service.
Boosting Sales
Marketing greatly helps in boosting sales. For example, a customer who is
contemplating buying a new dress may be attracted to its style and quality, but a good
sales talk from a salesperson will further encourage her to buy it in short, product and
marketing efforts go hand in hand in increasing sales.
Increasing Brand Engagement

The ultimate goal of marketing is to build and maintain lasting relationships with
customers. In doing so, the company is able to generate profits, develop a loyal customer
base, and further strengthen the brand. When customer identify with the brand, they form
an emotional attachment to it. When their expectations from the brand are met, this may
translate to sales and profitability. Effective brand management is evident when
customers feel guilty when they switch to another brand.
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The popularity of Facebook increased brand engagement among various brands. In

the social networking sites, companies can connect to customers through various creative
ways. They can organize contests, feature social media images, seek audience insight,
and provide valuable and interesting content.
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Task
1st Semester
2020-2021 Date Topic Marketing Goals
CASE 2: Yellow Cab Pizza Co.

Often mistaken as an international brand, Yellow Cab Pizza Co. is actually a local fast-food chain that
offers New York-style pizzas. The name Yellow Cab came from the colors yellow and black, which are common
colors of taxicabs. Albert Tan, Eric Puno, and Henry Lee founded the pizza company in 2001 and it is now owned
by the Max’s Group. It currently has 130 stores nationwide. Each store features an open kitchen, exposed pipes,
graffiti, and concrete walls that capture the New Yorker vibe.
The company’s vision is customer engagement and its goal is customer loyalty. Achieving this goal is
concerted effort. The company creates products that embody innovation and value for money and employees are
trained to be customer-oriented and improve food, service and cleanliness on a daily basis. This ensures that
customers keep coming back and that more will follow.
Questions
1. What does Yellow Cab do to maintain customer loyalty?
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2. Do you think that the goal of keeping loyal customers is enough to sustain the business, considering
that it has many competitors? Why or why not?
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Research on two brands that no longer exist and create a separate report that answer the
following:
What caused the brand to fail? What unfilled marketing goals contributed to this? (Use additional
paper if needed.
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Lesson 3: Approaches in Marketing

1. describe the traditional approaches to marketing
2. identify and explain contemporary marketing approaches, and
3. discuss how companies implement these marketing approaches.
Google
Two graduates students of Stanford University changed the way we searched for information on the Internet. Larry
Page and Sergey Brin embarked on a research project which developed Google Search (formerly named BackRub). It is
search engine that is considered better than the others because it features the availability of page rankings, which is better
than just indexing of content because it gives more relevant search results.
The domain name google.com was registered in 1997 and Google Corporation was formed in 1998. Google’s growth
has been unprecedented ever since. It currently has more than 70 offices in 50 countries and continues to keep up with the
times and offer innovative and useful products and services to its clientele.
Products and Services
Google ensures quality service through its sophisticated information technology resources which are more distinct in
functionality and form than those of its competitors. Its search engine provides quick access to information and delivers them
in its fifteen data centers located in the Americas, Europe, and Asia. These servers allow Google to handle the large volume of
data utilized in implementing numerous online searches.
Google’s success opened more opportunities to develop other products and services specific to target audiences.
Adwords. It is the venue for companies who want to promote their products and services through text-based search
ads, graphic display ads, YouTube video ads, or in-app mobile ads.
Gmail. It is a web-based email service launched in 2004 and has outperformed the same services offered by Yahoo
and Microsoft.
YouTube. In 2006, You Tube became a popular search engine and platform for videos.
From 2005 to 2007, Google also launched Google Talk, Google Analytics, Google Docs and the street view feature of
Google Maps. Google+, as social network introduced in 2011, links Gmail, YouTube, and Google Search.
Android and Chrome. The T-Mobile G1 is the first phone that used Android in September 2008. Android has
become the most popular mobile operating system while Google Chrome soon followed as the most popular web browser.
Search Engine Marketing
Marketing now has more innovative ways of increasing sales and brand awareness. One of them is search engine
marketing (SEM). SEM is a marketing tool that promotes websites by making them more visible in the search engine result
page. It can be executed through search engine optimization (SEO) and paid search (through Adwords).
SEO includes strategies that will make sure a website is seen on the first page of Google’s organic search engine listing for
relevant search key words. It adjusts the content of websites to achieve a higher level of visibility in the SERP (search engine
result page) to improve pay-per-click listings.
When it comes to paid search, it normally involves getting the AdWords advertisement seen easily by the target
customers on mobile phones and computers. In addition, Google incorporates Quality Score in paid search, which provides a
general sense of the ad’s quality. Expected click through rate, ad relevance and landing experience determine an ad’s Quality
Score.
1. What makes Google a highly successful company?

2. What possible products or services can you see Google offering in the next five years?
3. How is search engine marketing beneficial to companies and individual entrepreneurs?
Traditional Approaches in Marketing
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There are three traditional approaches in marketing, which focus less on the
customers’ needs and wants and more on other factors such as production, product and
sales.
Production Concept
The production concept is one of the oldest concepts in business. The production
concept holds that consumers will prefer products that are widely available and
inexpensive. It starts with the production process and ensures that the firm produces high
quality goods. Then the next task is to find people who will buy the products. Managers of
production-oriented businesses concentrate on achieving high production efficiency, low
costs and mass distribution. They assume that consumers are primarily interested in
product availability and low prices.
Product Concept
Product concept holds that consumers will favor those products that offer the most
quality, performance, or innovative features. Managers in these organizations focus on
making superior products and improving them overtime. They assume that buyers admire
well-made products and can evaluate quality and performance. Manufacturers who use
this approach emphasize the importance of innovation as the key to business success.
Sales/Selling Concept
The sales or selling concept holds that consumers and businesses, if left alone, will
ordinarily not buy enough of the organization’s products. The organization, must
therefore, undertake an aggressive selling and promotion effort. Companies employ a
sales force to persuade customers to buy. The purpose of marketing is to sell more stuff
to more people more often for more money to make more profit.
Sales personnel use the art of persuasion to influence consumers’ purchase
decisions. In this approach, marketing becomes synonymous with selling. The selling
concept is practiced more aggressively with unsought goods, goods that buyers
normally do not think of buying, such as insurance, encyclopedias and funeral plots.
Most firms practice the selling concept when they have overcapacity. Their aim is to
sell what they make rather than make what the market wants.
Contemporary Marketing
Through the years, marketing has broaden its functions beyond the traditional
approaches. There are contemporary or non-traditional approaches that focus on specific
target customers. Traditional approaches gave way to more modern ones to address
customer needs and wants and ultimately deliver total customer satisfaction.
Marketing Concept
The marketing concept holds that the key to achieving its organizational goals
consists of the company being more effective that competitors in creating, delivering and
communicating superior customer value to its chosen target markets.
The marketing concept emerged when a shift from a seller’s market to a buyer’s
market took place. The seller’s market, as the name implies, is an economic situation
wherein there are many buyers for a limited number of goods and services available in the
market. Therefore, the number of products or services to be offered is the seller’s call. On
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the other hand, the buyer’s market means that there are more products and services than
consumers who are willing to buy them, resulting in low prices.
The marketing concept rests on four pillars: target market, customer needs,
integrated marketing and profitability. Companies do best when they choose their target
market(s) carefully and prepare tailored marketing programs. Once a company has
defined its target market, it must understand the customer’s needs. When all the
company’s departments work together to serve the customer’s interests, the result is
integrated marketing. And the ultimate purpose of the marketing concept is to help
organizations achieve their objectives.
Societal Marketing Concept
This concept is defined as a marketing philosophy that emerges profitability and

corporate social responsibility: in producing goods and services, a company must consider
consumer needs and wants, its stakeholders and more importantly, the long-term interest
of society. The societal marketing concept holds that the organization’s task is to
determine the needs, wants, and interest of target markets and deliver the desired
satisfactions more effectively and efficiently than competitors in a way that preserves or
enhances the consumer’s and society’s well-being.
The societal marketing concept calls upon marketers to build social and ethical
considerations into their marketing practices. They must balance and juggle the often
conflicting criteria of company profits, consumer want satisfaction, and public interest.
HSBC is practicing a form of the societal marketing concept called cause-related
marketing. This is an activity by which a company builds a relationship or partnership
with a “cause” or a number of “causes” for “mutual benefits.”
Relationship Marketing Concept
This concept focuses on establishing lasting relationships with customers and

suppliers. This relationship further creates customer and supplier loyalty which also results
in successful organizational performance in the long run. It is used to consistently attract
repeat business; which means that every customer must be a returning customer. The
goal of the marketer is not just one-shot deal or a one-time sale but rather a continuing
sale of superior products and services.
Relationship marketing also teaches that while customers should be satisfied with
the product or service, improvements in customer service must also be implemented
because it can influence the buying decision process or customer perception.
Technology also comes into play as it enables a company to keep track of pertinent
information about its clientele. With the power of the internet, it is now very easy to
transact and communicate with customers.
Social Marketing
This concept aims to sell ideas and behaviors or transform negative habits or
attitudes to positive ones for the benefit of individuals or society as a whole. It is mostly
used by non-profit organizations to endorse their advocacies, raise awareness on critical
issues and ask for financial support for their projects. The primary focus of social
marketing is for people to learn specific values and think and act for the greater good,
rather than enticing them to purchase something.
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19

Task
1st Semester
2020-2021 Date Topic Approaches to
Marketing
CASE 3 : JOHNSON & JOHNSON’S TYLENOL CRISIS

In 1982, Johnson & Johnson’s – a leading pharmaceutical and household product manufacturer in the United States
– experienced a great crisis with one of its products. Reports emerged that seven people in Chicago died because they took
Extra-strength Tylenol, a bestselling drug of the company at that time, which was laced with cyanide. The news had a
significant impact on the sales of Tylenol. Previously, the product enjoyed great success in the market, gaining 35 percent of
the over-the-counter pain reliever market, and contributing 17 percent to Johnson & Johnson’s total income in 1981. Weeks
after the deaths were reported, the market share of Tylenol slid to eight percent.
It was predicted that the brand would never recover from this fiasco. However, J&J proved this prediction wrong as it
was able to counter the effects of the poisoning spree on their market value and image through effective corporate crisis
management. Despite knowing that the company has no fault in the poisoning, J&J sought to uphold public safety and made
the daring and costly move of recalling all 31 million bottles of Tylenol capsules distribute nationwide. The company also
worked openly with the media in informing the public about the situation through press releases and by establishing a hotline
for customer inquiries. To ensure the safety of the consumers in the future, it developed an innovative tamper-proof packaging,
which set the standard for other drug manufacturers. The crisis even led to the passing of the Tylenol Bill in 1983; the law
ensured that malicious tampering with consumer products is considered a federal offense.
After investing more than $100 million in recalling and relaunching Tylenol and implementing a strong marketing
campaign, J&J was able to put the brand back on track in terms of sales and popularity and regain its position in the market.
Questions
1. What was the effect of the cyanide poisoning on Tylenol as a brand and on Johnson & Johnson’s as a
company?
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2. What did J & J do to address the crisis? Where the steps taken effectively?
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3. Which among the contemporary marketing approaches is applicable in this case? Explain.
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Self-Reflection
Think of yourself as a loyal customer of a pizza parlor. Considering the contemporary marketing
approaches, what additional features or services do you expect to be offered along with your order
and/or patronage of the establishment?
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List at least three marketing practices that you think can be considered as a contemporary marketing practice.
Identify the company or brand and discuss briefly the activities.
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Assess what it takes for a product or services to become worthy of word of mouth promotion. What does it
takes for you to share something to your peers? List down the requirements.
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If you are a condominium developer, can you think of a better way of selling your developments other than
just fielding sales teams to try searching for potential buyers?
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Give an example of a popular product that you believe to be is marketing oriented. Explain why you believe
this to be so and note down all the indicators that seem to prove your point.
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Lesson 4: Relationship Marketing

1. define relationship marketing,
2. enumerate the levels of relationship marketing
3. explain the value of customers,
4. describe the tier of customer value,
5. discuss the different types of customers,
6. identify and describe relationship development strategies, and
7. illustrate the successful customer service strategy in the Philippine business enterprise.
Nike + and the Active Lifestyle
In 2010, the global sports brand Nike developed technologies that allow users to live an active lifestyle and keep track
of their performance in their respective sports. Nike organized a Digital Sport division which created applications that helps its
customers maintain an active life.
Nike also launched an online platform, Nike+, where users can sign up to access various applications. Two of the
popular applications in the Nike+ platform are Nike+ Training Club and Nike+ Run Club.
The Nike+ Training Club serves as an online personal trainer. It features more than 100 workout videos of Nike
trainers and athletes. The application can also create a personalized training plan adapted to the user’s lifestyle.
The Nike+ Run Club helps users engaged in the running lifestyle prepare for races and track their progress. The
application provides accurate details about pace, distance, routes, and personal records. Users also get personalized
coaching and are able to share their training journeys with fellow runners.
1. How do Nike+ applications help customers maintain an active lifestyle?

2. In what way will the fitness applications help Nike’s sales performance?
3. What values are being upheld by the company through these applications?
4. Do you see these applications reinforcing the relationship between Nike and its customers? Explain.
Relationship Marketing
Relationship marketing is the process of building and maintaining profitable

customer relationships by delivery superior customer value and satisfaction, thus ensuring
brand loyalty. When customers are satisfied, it is more likely that they will become loyal
customers because they will keep on patronizing the brand.
A key factor in relationship marketing is customer loyalty (also known as brand
loyalty). This arises when a customer has had several positive experiences with a
company’s products and services and thus, is motivated to continue to support the
company and patronize its products and services. Customer loyalty tends to persist
despite the actions of the company or changes in the business environment.
Customer Perceived Value
Our premise is that customers will buy from the firm that they see as offering the
highest perceived value. Customer perceived value (CPV) is the difference between
prospective customer’s evaluation of all the benefits and all the costs of an offering and
the perceived alternatives. It is defined as the satisfaction derived from what a customer
may experience or expect to experience by choosing a particular action relative to the cost
of that action. The action can be a purchase, a visit, an order or a sign up. Total
customer value is the perceived monetary value of the bundle of economic, functional
and psychological benefits customers expect from a given market offering. Total
customer cost is the bundle of costs expect to incur in evaluating, obtaining, using and
disposing of the given market offering. The cost refers to anything that can be given up to
receive the desired product or service, which can be in the form of money, time,
knowledge, data or others.
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Buyers operate under various constraints and occasionally make choices that give
more weight to their personal benefit than to the company’s benefit. However, customer
perceived value is a useful framework that
applies to many situations and yields rich Figure 1 Determinants of Customer
insights. Here are its implications: First, the Delivered Value
seller must assess the total customer value and
total customer cost associated with each
competitor’s offer to know how his or her offer
rates in the buyer’s mind. Second, the seller
who is at a customer perceived value
disadvantage has two alternatives: to increase
total customer value or to decrease total
customer cost. The former calls for
strengthening or augmenting the offer’s
product, services, personnel and image
benefits. The latter calls for reducing the
buyer’s costs by reducing the price, simplifying
the ordering and delivery process, or absorbing
some buyer risk by offering a warranty.
Levels of Customer Value
The levels of customer value indicate

what the consumers expect and do not expect
from their purchase decisions.
Basic and expected levels. These
levels include the basic requirements of conducting a business. For instance, restaurants
are expected to have a spacious dining are and clean tables and utensils. If these
requirements are not met by the business, it cannot provide high-quality customer value.
Desired customer value. This involves what the customers want from the
purchase or service experience. This is the first opportunity for a business to get ahead of
the competition. For example, a retail shop can provide friendly and helpful staff who can
assist the customers in making the right purchase.
Unanticipated customer value. It pertains to an unexpected purchase or service
experience that may go beyond what the customers desire. For example, in a gasoline
station, the gasoline boy cleans the car windows after filling up the customer’s gasoline
tank without an extra charge.
Total Customer Satisfaction
Whether the buyer is satisfied after purchase depends on the offer’s performance in
relation to the buyer’s expectations. In general, satisfaction is the person’s feelings of
pleasure or disappointment resulting from comparing a product’s perceived performance
(or outcome) in relation to his or her expectations. If the performance falls short of
expectation, the customer is dissatisfied. If the performance matches the expectations,
the customer is satisfied. If the performance exceeds expectations, the customer is highly
satisfied or delighted.
The link between customer satisfaction and customer loyalty is not proportional.
Suppose customer satisfaction is rated on scale from one to five. At a very low level of
customer satisfaction (level one), customers are likely to abandon the company and even
bad mouth it. At levels two to four, customers are fairly satisfied but still find it easy to
switch when a better offer comes along. At level five, the customer is very likely to
repurchase and even spread good word of mouth about the company. High satisfaction or
delight creates an emotional bond with the brand or company, not just a rational
preference.
Customer expectations. How do buyers form their expectations? From past
buying experience, friend’s advice, and marketers’ and competitors’ information and
promises. If the marketers raise expectations to high, the buyers are likely to be
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disappointed. However, if the company sets expectations to low, it will not attract enough
buyers (although it will satisfy those who do buy).
Some of today’s most successful companies are raising expectations and delivering
performance to match. These companies are aiming for TCS – total customer satisfaction.
One of Honda’s ads says, “One reason our customers are so satisfied is that we aren’t.”
Nissan invites potential Infiniti buyers to drop in for a “guest drive” (not a “test drive”),
because the Japanese word for customer is “honored guest/”
Delivering High Customer Value. The key to generating high customer loyalty is
to deliver high customer value. A company must design a competitively superior value
proposition aimed at a specific market segment, backed by a superior value-delivery
system.
The value proposition consists of whole cluster of benefits the company promises
to deliver; it is more than the core position of the offering. For example, Volvo’s core
positioning is “safety,” but the buyer is promised more than just a safe car; other benefits
include a long-lasting car, good service, and a long warranty period. Basically, the value
proposition is a statement about the resulting experience customers will gain from the
company’s market offering and from their relationship with the supplier. The brand must
represent a promise about the total experience customers can expect. Whether the
promise is kept depends on the company’s ability to manage its value-delivery system.
The value-delivery system includes all the experiences the customer will have on the
way to obtaining and using the offering.
In addition to tracking customer value expectations and satisfaction, companies
need to monitor their competitor’s performance in these areas.
For customer-centered companies, customer satisfaction is both a goal and a
marketing tool. Companies that achieve high customer satisfaction ratings make sure that
their target market knows it.
Types of Customers
There are four types of customers based on projected customer retention and
loyalty to the brand.
Strangers are customers whose needs do not fit the company’s offerings. The
company does not need to invest and exert effort to win them.
Butterflies, as the name implies, are not loyal to a specific brand because they
keep on looking for the best deals which may lead to patronizing other brands. The
company can enjoy profits from these customers only for a short period.
True friends have needs that match the company’s offerings. They make repeat
purchase and patronize the brand so long as it satisfies their needs. The company must
invest in these customers and strengthen its relationship with them.
Freeloaders are loyal but not profitable because of the limited fit between their
needs and the company’s offerings. For example, a few customers of a salon patronize its
services regularly but do not generate enough to sustain the maintenance costs; it can
earn only if it raises the prices of its services.
Attracting and Retaining Customers
Many companies are intent on developing stronger bonds with their customers –
called customer relationship management (CRM). This is the process of managing
detailed information about individual customers and carefully managing all the customer
“touchpoints” with the aim of maximizing customer loyalty.
Attracting Customers. Many customers are becoming harder to please. They are
smarter, more price conscious, more demanding, less forgiving, and they are approached
by many more competitors with equal or better offers. The challenge is not to produce
satisfied customers; several competitors can do this. The challenge is to produce delighted
and loyal customers.
Companies seeking to expand their profits and sales have to spend considerable
time and resources searching for new customers. To generate leads, the company
develops ads and places them in media that will reach new prospects; it sends direct mail
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and makes phone calls to possible new prospects; its salespeople participate in trade
shows where they might find new leads; and so on. This produces a list of prospects. The
next task is to identify which really good prospects, by interviewing them, checking on
their financial standing, and so on. Then it is time to send out the salespeople.
Cost of Lost Customers. It is not enough to be skillful in attracting new
customers; the company must keep them and increase their business. Too many
companies suffer from customer churn – namely, high customer defection.
There are steps a company can take to reduce the defection rate:
1. The company must define and measure its retention rate.
2. The company must distinguish the causes of customer attrition and identify
those that can be managed better.
3. The company needs to estimate how much profit it loses when it loses
customers. In the case of an individual customer, the lost profit is equal to the
customer’s lifetime value – that is, the present value of the profit stream that
the company would have realized if the customer had not defected prematurely.
4. The company needs to figure out how much it would cost to reduce the
defection rate.
5. Listen to customers. Some companies have created an ongoing mechanism that
keeps senior managers permanently plugged in to front-line customer feedback.
The Need for Customer Retention. Unfortunately, most marketing theory and
practice centers on the art of attracting new customers rather than on retaining and
cultivating existing ones. The emphasis traditionally has been on making sales rather than
building relationships; on preselling and selling rather than caring for the customer
afterward. A company would be wise to measure customer satisfaction regularly, because
the key to customer retention is customer satisfaction.
A highly satisfied customer stays loyal longer, buys more as the company
introduces new products and upgrades existing products, talks favorably about the
company and its products, pays less attention to competing brands and is less sensitive to
price, offers product or service ideas to the company, and costs less to serve than new
customers because transactions are routine.
Here are some interesting facts bearing on customer retention:
1. Acquiring new customers can cost five times more than the cost involved in
satisfying and retaining current customers. It requires a great deal to induce
satisfied customers to switch away from their current suppliers.
2. The average company loses 10 percent of its customers each year.
3. A 5 percent reduction in the customer defection rate can increase profits by 25
percent to 85 percent, depending on the industry.
4. The customer profit rate tends to increase over the life of the retained customer.
Levels of Relationship Marketing
Customer loyalty is found on excellent customer services. The five levels of

relationship marketing define the levels of interaction between the customer and the
company. It is also a guide in improving customer satisfaction.
1. Basic marketing. The salesperson simply sells the product. This is also called “direct
sales” and is the most basic level of interaction between the company and the customer.
In basic marketing, a salesperson takes charge of selling the products or services to
consumers.
2. Reactive marketing. The transaction moves to a higher level because the sales person
tells the customer that he or she can be contacted to answer any inquiry about the
product or service. The salesperson sells the product and encourages the customer to
call if he pr she has questions, comments or complaints.
3. Accountable marketing. In this level, the salesperson voluntarily contacts the
customer to ensure that the product is in perfect condition and asks if it met the latter’s
expectations. Also, the salesperson encourages the customer to provide suggestions on
how to improve the product or service.
4. Proactive marketing. The company works closely with a group of regular customers
who provide constructive feedback for the improvement of the product or service. This
group also helps in the development of new products or services.
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5. Partnership marketing. In the final level, the company has already built a loyal group
of customers who can help in improving its performance and offerings.
Relationship Development Strategies
Recent research has shown that loyal customers prove to be more profitable than
ordinary customers. This is the reason why companies are challenged to maintain
customer loyalty. Companies should practice the following relationship development
strategies to retain loyal customers.
1. Get cross-departmental participation. Make sure that all departments
participate in planning and managing the customer satisfaction and retention
process.
2. Communicate with customers frequently and effectively. Integrate the
Voice of the Customer in all business decisions. It is important to always get in
touch with customers through email and social networking sites to sustain brand
recall. Also, they should be provided with various means to give immediate
feedback so companies can promptly respond to them. Make it easy for
customers to reach appropriate company personnel and express their needs,
perceptions and complaints.
3. Create superior products, services and experiences for the target
market.
4. Keep data base of information. Organize and make accessible a database of
information on individual customer needs, preference, contacts, purchase
frequency, and satisfaction.
5. Offer customer rewards. Customer loyalty programs, which include special
discounts, perks and freebies, may work well for various types of products and
services. These encourage consumers to remain loyal to the brand because they
are rewarded of their patronage
6. Conduct special events and provide sponsorships. Companies can hold or
sponsor parties, concerts, contests and the like to boost interaction among loyal
customers and company representatives.
7. Enhance customer service. Some companies outsource their customer
services to third-party organizations to cater to complaints and inquiries,
promote their latest offerings and provide technical support.
8. Utilize languages to reach a wider customer base. Marketers can create
promotional materials in different languages to cater specific regions.
Consumers can also now choose the language they would like to use to
communicate with customer service representative.
There are three general retention-building approaches:

1. Adding Financial benefits. Two financial benefits that companies can offer are
frequency programs and club marketing programs. Frequency programs are
designed to provide rewards to customers who buy frequently and in substantial
amounts. Many companies have created club membership programs to bond
customers closer to the company.
2. Adding Social benefits. Company personnel work on increasing social bonds
with customers by individualizing and personalizing customer relationships.
3. Adding structural ties. The company may supply customers with special
equipment or computer linkages that help customers manage orders, payroll
and inventory. Strategies to create structural ties includes creating long-term
contracts, quantity discounts and long-term service.
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Customer Service in the Philippine Business Enterprise
The success of our homegrown companies lies not just on their offerings but also on
their customer service. Local businesses now utilize customer service tools that fit our
customer-oriented culture and extensive technology usage.
 Many companies provide a customer hotline that customers can call for
inquiries, concerns, and technical support.
 Email and SMS also help businesses communicate with their clientele more
easily as most consumers regularly check their inboxes. Online store
BeautyMNL sends texts and emails from the moment an order is placed until
it is on its way to the customer.
 Social networking sites, aside from their primary function of connecting
people, have become a channel for netizens to ask for customer support.
 Live chat support facilitates real-time correspondence between the
customer and the company representative.
 Given the amount of time people spend on using their smartphones,
companies know that creating mobile applications increases their visibility
and provides value to their customers.
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Task
1st Semester
2020-2021 Date Topic Relationship Marketing
CASE 4 : The Live in Levi’s Project
In 2014, American denim brand Levi Strauss & Co. launched the “Live in Levi’s Project. The campaign
included print, TV and online ads featuring young adults having fun while wearing the company’s products. The
taglines “For everybody who’s not just anybody” and “Look good on your way to what’s next” were highlighted in
the promotion. Levi’s also released a documentary-style film series showing different people living, working and
playing in their Levi’s apparel.
Jennifer Sey, Levi’s Global Chief Marketing Officer, said she and her team wanted to capture the warm
and optimistic feeling that comes with recalling stories. Sey also emphasized that “people who wear Levi’s have
always been the inspiration for our brand.” For the campaign, the company created a digital platform which
enables customers to share their personal Levi’s experiences using the hashtag #Live on Levi’s, be inspired by
fellow customers, and shop for featured products in the interactive ads. In their physical stores, Levi’s jeans were
displayed alongside stories written by their owners which explains the markings on them – providing an account
of the life of people who wore those jeans.
“Live on Levi’s” aimed to reinvigorate the brand’s soul through storytelling and social media, celebrate
authentic self-expression, and engage customers in both real life and virtual experiences that will strengthen their
personal connection to the brand. It positioned Levi’s not just as a leading denim brand, but also the consumers’’
“ultimate life companion.”
Discussion Questions
1. How can you relate the Live on Levi’s project to relationship marketing? What level of relationship
marketing was achieved with the campaign?
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2. What other marketing strategies can be employed to improve the campaign?
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1. Going local on building customer relationship: Select a local business establishment in San
Jose. Come up with 2-3 unique marketing strategies that help build the customer
relationship marketing of the chosen business establishment.
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2. Select five people and ask them to talk about the value of their mobile phones and their
satisfaction with them. Compare their answers and from the perspective of a cell phone
company’s marketer, develop five marketing strategies based on their feedback.
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3. Brand Promise Presentation: Find one company's brand promise/s. In a short bond paper,
create a poster board that shows the company and their brand promise. At the back of the
bond paper, list ways in which you think the company has lived up to their brand promise.
Example: Enervon promise to increase energy and enhance the immune system. You can
create a poster that shows Enervon user who is healthy, happier and has more energy.
Then list what are strategies of Unilab to convince the market such has having ads with
endorser who is active, energetic, dynamic, and achievement-focused; and use of Journey
to Happiness Campaign.
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Lesson 5: Service Marketing

1. define the meaning of service
2. identify the characteristics of service, an
3. discuss the components of service marketing.
Mobile Technology in the Hospitality Industry
Mobile technology, particularly mobile applications, has redefined the meaning of customer service in many
industries. It has improved how we avail of transportation services through apps like Uber and Grab. It has also enabled
customers to explore dining options through Zomato and Yelp, as well as organize their travels through Airbnb and
TripAdvisor.
One industry that can benefit greatly from the use of mobile technology is the hotel and hospitality industry.
Technology can complement and improve the ability of hotel staff to serve guests, and provide customers convenient and
efficient service.
The following are the potential uses of technology in hotels and other providers of accommodation.
Currency. Banks can provide mobile wallets which can allow guests to securely pay their accommodation using their
bank account or credit card.
Hotel room access. The guest’s mobile devise can be used as a room key by assigning it a unique encrypted
signal.
In-room phone. The guest’s cellular phone can be used to request for various hotel services. In this case, there is no
need to install and maintain telephone in hotel rooms.
Concierge desk. The device can act as a concierge for the guest by assisting in booking tickets for concerts and
tours and making dinner reservations. This eliminates the hassle of going to the reception to arrange one’s itinerary.
Front Desk. The guest can use his or her mobile device to facilitate the release of room keys as well as the billing for
the room and other services.
Promotion. Hotels will not need to put up printed ads of their promos and services in the establishment , as guest
can just use a quick response (QR) code to browse updates and news about the hotel using their smartphones.
Lights and airconditioner. An app can be installed in the guest’s device which can be used to switch on the light
room lights and adjust the temperature.
1. What positive effects will result from these potential applications of mobile technology in the hotel industry?
2. What challenges do you think will arise from the use of these applications?
3. What other possible uses of mobile technology in hotels can you think of?
Service Defines
A service is an act that is provided by a party that creates value and provides
benefits to the other party. Organizations that offer services includes restaurants, hotels,
airlines, banks, schools, hospitals, telecom companies, among others.
Characteristics of Service
1. Intangible. A service does not have a physical manifestation that can be seen,
touched and described quantitatively. For customers to remember and rate the
quality of the service, they must experience it. A vacation package in a resort
will be remembered and rated by the customer based on the accommodation,
food, facilities and staff.
2. Inseperable. A service involves simultaneous production and consumption, so
there is outright feedback. A haircut id done by the hairstylist at the same time,
done to the customer. The latter can provide feedback to the former during and
after the service.
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3. Perishable. Because they are intangible, rendered services cannot be stored or

returned. A poorly done massage, once rendered, can no longer be returned to
the service provider for improvement.
4. Heterogenous. The service in itself is the same but the way it is provided may
differ from time to time. A salesperson in a department store may be friendly
and accommodating today, but may also be rude and disrespectful the next day
due to various reasons.
Types of Service Processes
Services can be enacted through the use of tangible objects (the service is still
intangible, but is served via tangible tools) or it can be purely intangible. Services can also
be directed toward the “processing” of people or services can be applied to the processing
of people’s possessions.
Directed at People Directed at Possessions

Tangible Acts People Processing Possession Processing
Airlines, hospitals, hotels, Freight, repair, cleaning,
restaurants landscaping
Intangible Acts Mental Stimulus Processing Information Processing
Broadcasting, consulting, Accounting, banking,
education, therapy insurance, legal, research
Components of Service Marketing
1. Product and its elements. There are services that only supplement the main
product. The goal of the marketer is to create a bundle of supplementary
services that increases the value of the main product. For example, a high
quality appliance with superior quality has a higher value if it comes with free
delivery and extended warranty.
2. Time and place. The channel of distribution is crucial in service delivery. The
service should be rendered on time and in an appropriate venue or location. For
example, fast food restaurant do not take long in preparing and serving meals
as they are expected to deliver speedy service. Also, these restaurants must be
located somewhere accessible and with high food traffic.
3. Process. This is the method of service delivery. Marketers should be able to
make the process of availing and receiving the service convenient for the
customers. For example, banks are now offering online and mobile banking
services for clients who want to avoid the long lines in their branches.
4. Quality service or productivity. The kind and quality of service provided to a
customer cannot separate from how the service is rendered. The quality of
service is seen in how a service satisfies and meets the needs, wants and
expectations of the customer. For example, a couturier designs a wedding gown.
The productivity rests on how he or she transforms the raw materials into a
gown on schedule.
5. People or service providers. The ultimate proof of service quality manifests in
the people who provide the service to the customers. They must be skilled,
knowledgeable, friendly, accommodating and customer-oriented. For example,
the quality of a dining establishment does not depend on the food or the place
alone; the servers’ skills and attitude towards the diners are also taken into
account.
6. Promotion. Companies must use various means to inform the public about the
service and reach a wider customer base. This may be through word-of-mouth
and advertisements. For example, a salon can benefit from customers
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recommending their services to others as well as promo flyers distributed in

crowded palaces.
7. Physical evidence. While a service is inherently intangible. There should still
be visible cues that will indicate its quality. For example, a hotel with elegant
furnishing and a beautiful landscape creates an impression of quality service.
8. Price. The price of the service depends on its perceived quality. For example,
two salons in the same neighborhood with the same services may have different
price points because of many factors. The first salon may have more
sophisticated ambiance and a group of well-known professional hairstylists so
they charge more; the other one may be an establishment with simple interiors
and self-taught hairdressers so customers pay less for their services.
9. User Interface. For services that are delivered through automated means such
as ATMs, online services, the quality of the service will be assessed based on the
ease of use of the service. This is why online services need to make excellent
user interfaces (UIs), making it easy for customers to navigate websites and
being intuitive enough to be used with little or no assistance.
Points of Contact
As services are evaluated based on composite factors, all points of contact or avenues for
interacting with customers should be manage and controlled. This includes the atmosphere of the
service venue, the quality of the seating waiting areas, the type of music played, and perhaps even
the scent in the air.
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33

Task
1st Semester
2020-2021 Date Topic Service Marketing
CASE 5: Amazon.com’s Customer Service
Amazon.com is an electronic commerce company founded by Jeff Bezos in 1994. It sells consumer
goods, digital media, and reading devices. Its logo, which shows a smile that goes from A to Z, symbolizes the
company’s willingness to deliver everything to everyone in any part of the globe.
The organization considered itself customer-centric and believes that it will fail if it does not listen to
customers. Its employees, including the CEO, even spend two days every two years at the customer service desk
to understand the customer service process,
Amazon creates a unique, personalized, and rewarding online shopping experience for its users.
Shoppers can rate and review what they bought and they can also publish reviews of other users before making a
purchase. This helps customers make smart buying decisions and increase engagement in the site. The company
also monitors customers’ browsing and purchasing patterns and recommends products based on its information.
Recently, Amazon launched Amazon prime, which provides members with unlimited free two-day shipping as well
as access to Amazon Instant Video and Kindle Owners’ landing Library.
The firm’s consumer-oriented culture also manifests in its commitment to protecting customer data. Its
information security terms all over the world assess risk, classify data and systems; look out for potential intrusion;
and focus on security intelligence, application security, incident response, security operations, and related areas.
1. How did Amazon set the standard in online shopping in terms of customer service?
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2. Which customer service practice implemented by Amazon can be applied to other businesses?
Choose one particular practice and identify a business that can benefit from implementing it.
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Self-Reflection
In availing of a particular service, when do you say that you got your money’s worth or that it is
sulit? Reflect on the time when you availed of a service and felt that you did not get your money’s
worth.
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Marketing Experience – Choose a service-oriented establishment in your neighborhood (e.g.

internet café, restaurant, salon). Describe the business and its services using the components of
service marketing.
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A Better Gift Wrapping Service
Design a grift-wrapping business. It will be a chain of shops that will offer to wrap gifts for
consumers, whether they are for birthdays, holidays, or for any other occasion.
1. Identify all the points of contact between the business and the customer. How you
will want these to be experienced by customers? (use additional paper if needed)
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2. Identify ways to make your service truly exceptional in terms of service quality.
Hint: choosing a target market may be key in making this possible. (use additional
paper if needed)
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Criteria
 Points of contact. How in-depth is the identification of points of contact (10 points)
 Control measures. How well are the points of contact managed (10 points)
 Service excellence. How viable are the service quality strategies (15 points)
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Lesson 5: Strategic and Tactical

Marketing
1. differentiate between strategic marketing and tactical marketing, and
2. discuss how strategic marketing and tactical marketing are implemented.
Overall, strategic marketing expresses the goals of the organization that achieved
through marketing efforts, while tactical marketing expresses the specific activities that
are needed to achieve the goals of the organization,
Strategic Marketing
Strategic Planning is defined as the process of developing and maintaining a

strategic fit between the organization’s goals and capabilities and its changing marketing
opportunities. This is carefully thought-out course of action developed for the purpose of
achieving a desired results such as profitability and high productivity. It puts heavier
emphasis on external environment scanning to develop strategies to respond to the
environmental forces that confront the company. It is the thinking process that outlines
the course of action towards the achievement of a goal. Strategic marketing has a longer
time frame, usually three to five years. One type of marketing strategy is to offer more
expensive and branded products to a small number of loyal customers as done in Rustan’s
department Stores. Another strategy is to offer different products, from cheap to more
expensive ones, catering to different types of customers, as done in SM Stores.
For strategic marketing to work, marketers should determine the objectives the
company wants to achieve and how the outcomes will be measured. There must be a
starting point to determine where the company is right now and where it wants to go.
According to Lambin, the role of strategic marketing is “to lead the form towards
attractive economic opportunities, that is, opportunities that are adapted to its resources
and know-how and offer a potential for growth and profitability.”
Tactical Marketing
Tactical marketing refers to the actions of a company undertakes in order to

execute an organization’s strategy. It also refers to a a detailed action program covering a
shorter period.
In writing the marketing plan, one should indicate the marketing tactics needed to
achieve the marketing strategy. These tactics must cover the factors that address
consumer needs and wants: product, price, promotion, place, people, process and
physical evidence. Here are the following steps in describing marketing tactics in the
marketing plan:
1. Prepare an action plan. List down the steps in delivering each tactic and note
important details such as time frame, suppliers, requirements, issues, and persons
in charge.
2. Name the necessary resources and monitor the allocated budget. Get
quotations for all elements of the proposed tactics and make a detailed budget
plan.
3. Identify ow the success of the tactics will be measured. Outline how to
evaluate the effectiveness of the tactics b setting goals and benchmarks, this will
help in implementing changes or improvements on the tactics. For example, one of
the tactics of a start-up show business is to participate in bazaars to introduce the
brand to the market and generate leads. The measure of the tactic’s success may
be specific number of customers or pairs of shoes sold during the event.
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Applying Strategic Marketing and Tactical Marketing

Strategic marketing will always come first because it shows where the company
wants to go in terms of growth and in relation to its competitors. Tactical marketing
consists of the activities need to implement the strategies. In short, strategic marketing is
the idea and tactical marketing is the action.
GOAL: Increase Global Presence

Company Strategic Marketing Tactical Marketing
Domino’s To achieve global presence, 1. The pizza has bread, sauce
Pizza Domino’s innovated its menu. and cheese in all countries
except China.
2. Half of the toppings are
standard all over the world,
while the other half is
customized depending on the
country in question.
Nike Form long-term partnerships with Participated in championships and
international companies for tournaments with partners where
sponsorships. Nike was exposed to a global
audience.
Creation of NikeID platform which Creation and delivery of customized
caters to international markets products depending on the
preference of the customers.
McDonald’s Adapt its menu by including a local Introduction of menu items
flavor specific to each country exclusive to certain countries
where McDonald’s is located.
Coca-cola Focus on charitable programs that 1. Put up The Coca-Cola
impact small communities around Foundation
the world. 2. Prioritize three areas which
have impacted million of
lives: women (economic
empowerment and
entrepreneurship), Water
(access to clean water, water
conservation and recycling);
and Well being (education,
youth development and other
community projects)
3. Coca-Cola supports
worthwhile projects such as
strengthening arts and
culture in the US, as well as
HIV/AIDS awareness and
prevention programs in Latin
America and Africa
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Task
1st Semester
2020-2021 Date Topic Strategic and Tactical
Marketing
CASE 6: Dunkin Donuts
In 1950, Willian Rosenburg launched a food and beverage company in Massachusetts, USA. The primary aim of
his company was to provide customers with doughnuts and a hot cup of coffee. This idea created a steady
following, which eventually resulted in more baked products such as muffins, crossaints, munchkins and
sandwiches. While the brand name suggests that doughnuts are its main product, its bestseller is actually coffee,
with estimated sales of 1.7 billion cups annually. Beverages are served hot or cold, and include varieties such as
iced coffee, latte and tea.
As a marketing strategy, Dunkin Donuts provides special attention to children with the aim of influencing
food selection and encouraging healthy eating habits. When its double-brewed coffee is offered primarily for
adults, donuts are popular among children. One product line, Nutty Donuts, is offered in several variations – with
walnuts, raisings, almonds and with or without sugar. The variety of products is intended not only to cater to
different tastes. But also to customers who are watching their sugar intake.
Another strategy is putting up Dunkin Donuts outlets in strategic locations that can generate maximum
customer traffic. Dunkin Donuts put up branches in gas stations, food courts, supermarkets, and malls. They also
target countries with large coffee markets, such as South Korea, which contributes forty percent of the company’s
international sales.
Dunkin Donuts also offers its food items at fairly reasonable prices. Its products are priced variably so
customers can find items at any price. Dunkin Donuts also has a policy of buying supplies and raw materials in
bulk to lower overall prices.
The company’s promotional strategy maximizes advertisements through print, TV, radio and social media.
Dunkin Donuts implements its promotional strategy in many ways. Its pink and orange logo with a coffee cup has
become iconic. Its commercials are regularly broadcast on TV and radio and they feature catchy slogans such as
“It’s worth the trip.” The company also makes use of social media, where they encourage consumers to tell stories
of their Dunkin Donuts experiences.
1. What are the marketing tactics and strategies employed by Dunkin Donuts?
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2. Which among the tactics and strategies, in your view is most effective?
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Think of three popular brands. What could be the reasons why they became popular? What could
their strategies be? Their tactics? Discuss in class using a PowerPoint presentation (3-5 slides)
Self-Reflection
Think of a particular product or service that you would like to offer to your classmates. Use a
strategy and some specific tactics to attract your classmates to buy it.
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Lesson 7: The Marketing Environment

1. identify and discuss the aspects of the marketing environment,
2. describe the microenvironment and its internal factors, and
3. describe the macroenvironment and external factors.
Kodak
The Eastman Kodak Company was once a big name in the photographic film industry. It made
photography, once a practice exclusive to professionals, available to ordinary American consumers. For decades,
it dominated a market that has largely its own creation; at its peak, it was responsible for 90% of film sales and
85% of camera sales in the United Stated. However, the boom of digital photography in the 1990s and early
2000s undercut the photographic film market, eventually replacing it. In January 2012, Kodak filed for bankruptcy.
The History of Eastman Kodak
In 1880, George Eastman recognized a need for innovation in photography industry. He then established
the Eastman Dry Plate Company. In 1888, Eastman released the Kodak, the world’s first easy-to-use camera,
marketing it with the slogan “You press the button, we do the rest.” This was the birth of snapshot photography.
The next year, Eastman and his company introduced the first commercial transparent roll fil to the market. In
1900, they introduced the first Brownie camera, which sold for $1, and used film that cost 15 cents a roll. In 1923,
the release of Cine-Kodak Motion Picture Camera and Kodascope Projector made amateur motion pictures
viable. In 1929, the company released a new type of film designed for motion pictures with sound – at the time a
revolutionary innovation.
In the succeeding decades, the name “Kodak” became practically synonymous with photography. The
term “Kodak moment” became a part of the culture of the English-speaking world, referring to moments that are
worth capturing or documenting by taking a photograph.
What Went Wrong
Digital photography was actually first developed by Kodak. Steve Sasson, one of Kodak’s engineers,
experimented with spare parts from different devices, and the result of his work, first successfully tested in 1975,
became known as the world’s first digital camera. Sasson’s machine was an electronic system that captured an
image and displayed it on a screen, and it achieved this without need for film. The images it produced were not of
the same quality as those of film, and it was bulky and not portable. Kodak recognized that one day, such
technology might become a viable consumer product but it chose not to invest in further research and
development. The company refused to take a chance on an idea which could potentially endanger its core
product – film. Decades later, digital photography proved to have been more disruptive power than they had
imagined, and by the early 2000s, digital photography had already overtaken film.
Other Strategic Slips
While the rise of digital photography is generally acknowledged as being the biggest reason behind
Kodak’s downfall, there were a number of other factors which made a significant impact.
In 1948, Edwin Land, inventor and co-founder of the Polaroid Corporation, invented the instant camera.
This threatened Kodak’s film revenues. It developed its own line of instant camera, and in 1976, Polaroid sued for
damages. In 1990, Kodak lost the lawsuit, and was made to pay Polaroid $909 million.
In the 1980s, Japanese company Fujifilm began selling mass-produced rolls of film to retailers like Wal-
Mart at prices muck lower than those of Kodak. This caused a significant shift in the firm market – by the late
1990s, Fujifilm had captured a large chunk of Kodak’s market share.
In 1988, Kodak bought the American pharmaceutical company Sterling Drug for $5.1 billion in the hopes
that they could use their existing chemical engineering expertise to develop pharmaceutical drugs and sell them
to high margins. However, it failed to do so, and six years later, it sold off Sterling at a significant loss.
New Focus
In September 2013, Kodak announced that it had recovered from bankruptcy and was shifting its focus
from goods, in the form of film and cameras, to services, in the form imaging for businesses. While it has kept
some of its legacy products alive – it has a deal with major Hollywood studios to continue producing movie film,
courtesy of support from directors like Quentin Tarantino and J.J. Abrams – these are mostly for niched markets,
rather than the huge market shares it enjoyed in its heyday. Jeff Clarke, the company’s new CEO, is also leading
the charge in mining its remaining stock of 7,000 patents, conducting research and development in digital imaging
and touch screens. In the third quarter of 2016, Kodak posted modest profits of $12 million.
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Questions for Discussions:
1. How did Kodak respond to the changes in the photography industry? Why did Kodak lose its former
customers?
2. How did Kodak recover from bankruptcy?
3. What are the internal factors which have direct contact with and a direct influence on the company?
4. What are the external factors which affect not only the firm itself, but also the entire industry of the
region or country?
A company’s marketing environment consists of the actors and forces outside

marketing that affect marketing management’s ability to develop and maintain successful
transactions with its target customers. The marketing environment offers both
opportunities and threats. Companies must use their marketing research and intelligence
systems to watch the changing environment and must adapt their marketing strategies to
environmental trends and developments.
The marketing environment consist of a microenvironment and a
macroenvironment. The microenvironment consists of the forces close to the company
that affects its ability to serve its customers – the company, suppliers, marketing channel
firms, customer markets, competitors and publics. The macroenvironment consists of
the larger societal forces that affect the whole microenvironment – demographic,
economic, natural, technological, political and cultural forces.
The Company’s Microenvironment
The microenvironment is divided into the Internal Environment and the Competitive
Environment. The internal environment refers to the business itself or the company: what
are you selling, how your organization is set up, what are your organization’s strengths
and weaknesses, what your resources happen to be, what your company’s core values
and missions are, and essentially anything about your company that matters. The
competitive environment, on the other hand, refers to the immediate industry in which
the company is doing business.
Internal Environment
The Company
In designing marketing plans, marketing management takes other company groups
into account – groups such as top management, finance, research and development,
purchasing, manufacturing and accounting. All these interrelated groups from the internal
environment. Top management sets the company’s mission, objectives, broad strategies
and policies. Marketing managers must make decisions within the plans made by top
management, and marketing plans must be approved by top management before they
can be implemented.
Marketing managers also must work closely with other company departments.
Finance is concerned with finding and using funds to carry out the marketing plan. The
R&D department focuses on the problems of designing safe and attractive products.
Purchasing worries of getting supplies and materials, whereas manufacturing is
responsible for producing the desired quality and quantity of products. Accounting has to
measure revenues and costs to help marketing know how well it is achieving its
objectives. Therefore, all of these departments have an impact on the marketing
department’s plan and actions.
Here is a checklist of things that may be assessed in the company’s internal
environment:
 Company cash flow. How much money does it have and how much does it
expect to flow in over time?
 Organizational Structure. What personnel are available and who is
accountable for marketing initiatives?
 Assets and other resources. What property and equipment would it have
access to?
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 Strategic alliances. What organizations (or even influencing individuals) do

the business currently have good working relation with?
 Products and services. What are already being offered, if any?
Competitive Environment
Michael’s Porter’s classic 5 Forces Model is popularly used framework for
understanding the competitive structure of an industry. The model implies that it is just
not rivalry from competitors that threaten a firm’s existence, but even its suppliers,
buyers, new players and product substitute.
Competitors
The risk faced by a firm due to its competitors is the most obvious form of
operational risk. Competitors can spend sums of money to steal market share from the
firm or even alter the market’s perception about the firm’s products.
The marketing concept states that to be successful, a company must satisfy the
needs and wants of customers better than its competitors do. Thus, marketing must do
more than simply adapt to the needs of target consumers. They also must gain strategic
advantage by positioning their offerings strongly against competitors’ offerings in the
minds of consumers.
New entrants
A firm also faces risks from new entrants possibly joining the industry, especially
if the industry offers attractive growth prospects.
Substitutes
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Substitutes refer to alternative products or services your market might be

considering rather than your core product.
Suppliers
Suppliers are firms and individuals that provide the resources needed by the
company to produce its goods and services. Supplier developments can seriously affect
marketing. Marketing managers much watch supply availability. Supply shortages or
delays, labor strikes, and other events can cost sales in the short run and damage
customer goodwill in the long run. Marketing managers also monitor the price trends of
their key inputs. Rising supply costs may force price increases that can harm the
company’s sales volume.
Buyers or Customers
The company must study its customer market closely. There are five types of
customer markets:
1. Consumer markets consist of individuals and households that buy goods and
services for personal consumption.
2. Business markets buy goods and services for further processing or for use in
their production process.
3. Seller markets buy goods and services to resell at a profit.
4. Government markets are made up of government agencies that buy goods
and services in order to produce public services or transfer the goods and
services to others who need them.
5. International markets consist of buyers in other countries, including
consumers, producers, resellers and governments.
Marketing Intermediaries
Marketing intermediaries are firms that help the company to promote, sell, and
distribute its goods to final buyers. They include:
1. Middle men who are distribution channel firms that help the company find
customers or make sales to them. These include wholesalers and retailers who
buy and resell merchandise.
2. Physical distribution firms help the company to stock and move from their
points of origin to their destinations. Warehouses are firms that store and
protect goods before they move to the next destination. Transportation firms
include railroads, trucking companies, airlines, barge companies and others that
specialize in moving goods from one location to another. A company must
determine the best way s to store and ship goods, balancing such factors as
cost, delivery, speed and safety,
3. Marketing services agencies are the marketing research firms, advertising
agencies, media firms, and marketing consulting firms that help the company
target and promote its products to the right markets. When the company
decides to use on these agencies, it must choose carefully because these firms
vary in creativity, quality, service and price.
4. Financial intermediaries include banks, credit companies, insurance
companies and other businesses that help finance transactions or insure against
the risks associated with the buying and selling of goods.
Publics
A public is any group that has an actual or potential interest or impact on an
organization’s ability to achieve its objectives.
1. Financial publics influence the company’s ability to obtain funds. Banks,
investment houses and stockholders are the major financial publics.
2. Media publics are those that carry news, features and editorial opinion.
3. Government publics. Management must take government development into
account. Marketers must often consult the company’s lawyers on issues of
product safety, truth-in-advertising, and other matters.
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4. Citizen-action publics. The company’s marketing decisions may be questioned by

consumer organizations, environmental groups, minority groups and others. Its
public relations department can help it stay in touch with consumer and citizen
groups,
5. Local publics. Every company has local publics, such as neighborhood residents
and community organizations.
6. General publics. A company needs to be concerned about the general public’s
attitude toward its products and activities. The public’s image of the company
affects its buying.
7. Internal publics. A company’s internal publics include its workers, managers,
volunteers and the board of directors.
The Company’s Macroenvironment
Macro environment factors which consist of external forces. These external factors
influence the company marketing strategy in a great length. The external environment
factors are uncontrollable and the company finds it hard to tackle with the external
factors. The macroenvironment consists of demographic factors, economic factors,
natural forces, technology factors, political factors, and cultural factors.
Demographic Environment
Demography is the study of human populations in terms of size, density, location,
age, gender, race, occupation and other statistics. The demographic environment is of
major interest to marketers because it involves people, and people make up markets.
Demography is the study of population characteristics that are used to describe
consumers. Demographics tell marketers who are the current and potential customers,
where are they, how many are likely to buy and what the market is selling.
Marketers are keenly interested in studying the demography ethnic mix,
educational level and standard of living of different cities, regions and nations because
changes in demographic characteristics have a bearing on the way people live, spend their
money and consume.
 Income. Income determines purchasing power and status. Higher the income,
higher is the purchasing power. Though education and occupation shape one’s
tastes and preferences, income provides the means to acquire that.
 Life-style. It is the pattern of living expressed through their activities, interests and
opinion. Life-style is affected by other factors of demography as well. Life-style
affects a lot on the purchase decision and brand preferences.
 Sex. Gender has always remained a very important factor for distinction. There are
many companies which produce products and services separately for male and
female.
 Education. Education implies the status. Education also determines the income and
occupation. With increase in education, the information is wider with the customers
and hence their purchase decision process is also different. So, the marketers group
people on the basis of education.
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 Social Class. It is defined as the hierarchical division of the society into relatively
distinct and homogeneous groups whose members have similar attitudes, values
and lifestyle.
 Age: Demographic variables help in distinguishing buyers, that is, people having
homogenous needs according to their specific wants, preferences and usages. For
instance, teenagers usually have similar needs. Therefore, marketers develop
products to target specific age groups.
The youth are being targeted through advertisements and promotional campaigns,
stores are being designed with ‘youthful’ features, youth events are being
sponsored, and even new technology is developed with their tastes in mind.
Economic Environment
Economic Environment is those macro factors that affect the consumer buying
power and spending patterns. It includes the level of income, policies, and nature of an
economy, economic resources, trade cycles, distribution of income and wealth. When the
income of a family or country it also changes the buying behavior and spending pattern of
the family or country.
Economic factors play an important role in consumer buying behavior decision. It
also directly affects the purchasing power of consumers. If consumers’ purchasing power
is weak, they cannot make the decision to buy goods or services even if they like very
much. But, if they have purchasing power, they can take prompt decision to buy goods or
services they like. Income level, the income of their family members, liquid asset,
spending attitude, credit facility etc. are the economic factors to determine consumers’
buying decision.
Marketers should pay attention to income distribution as well as average income. At
the top are upper-class consumers, whose spending patters are not affected by current
economic events and who are a major market for luxury goods. There is a comfortable
middle class that is somewhat careful about spending but cans till afford the good life
some of the time. The working class must stick close to the basics of food, clothing, and
shelter and must try to hard to save.
Natural Environment
Natural environment involves the natural resources that are needed as inputs by
marketers or they are affected by marketing activities. Issues included:
 Shortage of Raw Materials
 Increased cost of energy
 Increased pollution
 Government intervention in natural resource management
Technological Environment
Technological forces are perhaps the most dramatic forces which are changing
rapidly. These macro-environmental forces create a new product, new markets and
marketing opportunities for marketers. Technological forces are perhaps the forces which
are changing customer habit by introducing a new product for the customer. Companies
must look into the changes concerning the fast pace of technological change, High R&D
budgets, concentration on minor improvements and increased regulations.
Political Environment
It includes government actions, government legislation, public policies, and act
which affect the operations of a company or business. These forces may affect an
organization on a local, regional, national or international level. So, marketers and
business management pay close attention to the political forces to judge how government
actions which will affect their company. Political factors that affects the company includes
legislation regulating business, changing government agency enforcement, growth of
public interest groups and increased emphasis on ethic and social responsible actions.
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Socio-Cultural Environment
Socio-cultural environment covers those areas that involve the shared beliefs,
attitudes and behavior prevalent within the society in which the organization operates.
Cultural factors in heritage, living styles, religion etc. also affects a company marketing
strategy. Culture is crucial when it comes to understanding the needs and behaviors of an
individual. Throughout his existence, an individual will be influenced by his family, his
friends, his cultural environment or society that will “teach” him values, preferences as
well as common behaviors to their own culture and buying behavior. Changes in taste and
fashion are also components of the social-cultural environment.
The following cultural characteristics can affect marketing decision making.
 Persistence of cultural values. People in a given society hold many beliefs
and values. The core beliefs and values have a high degree of persistence.
Secondary beliefs and values are more open to change.
 Shifts in secondary cultural values. Although core values are fairly
persistent, cultural swings do take place. Consider the impact of popular
music groups, movie personalities and other celebrities on young people’s
hairstyle, clothing and sexual norms.
 People’s View of Themselves. People vary in their emphasis on serving
themselves versus serving others. Some people seek personal pleasure,
wanting fun, change and escape. Others seek self-realization through
religion, recreation, or the avid pursuit of careers or other life goals. People
use products, brands and services as a means of self-expression and buy
products and services that match their views of themselves.
 People’s View of Others
 People’s View of Organizations
 People’s View of Society and nature
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47

Task
1st Semester
2020-2021 Date Topic Marketing Environment
CASE 7: Ethical Concerns in Marketing Research
Who would ever think that a country rich in farmlands could suffer from a rice crisis? Rice is a staple food
in the Philippines. To many Filipinos, no meal is complete without rice. As a nation, we consume around 33,000
tons of rice daily.
The Philippines is one of the top importers of rice, roughly importing about 15% of its total rice supply. Our
imported rice usually comes from neighboring countries such as Thailand and Vietnam. In 2008, there was an
increase in the demand for rice in China, Africa, the Middle East and India.
Today, the price of rice in the market is upwards of 42.50 pesos per kilo. The price increase due to
numerous reasons. First is the high cost of cultivation and maintenance of our agricultural lands, which are
scattered throughout different parts of the country. This means that mass production is difficult since the lands are
not confined to a single area. Transportation costs are also shouldered by the suppliers.
Second, our country lacks access to fresh water for irrigation. Also, more and more farm lands are being
converted into industrial areas.
Third is that price of crude oil. In recent years, the price of crude oil has fluctuated creating a domino
effect wherein agricultural materials such as fertilizers have also become more expensive. The National Food
Authority, the government agency in charge of rice production cannot keep the price and supply of rice stable,
leading to a tendency for rice dealer to increase the price because of the unsteady supply.
Fourth is global warming. Studies have shown that a one-degree Celsius increase in global temperature
will result in 15% less yield for agriculture. Natural disasters such as floods and droughts also have a negative
impact on agricultural production.
The rising population of the Philippines also contributes to the rice crisis. Rice production cannot cope
with the population growth. All these factors contribute to our dependence on rice imports, the continuing crisis in
rice production and the increased price of rice in the market.
Filipinos spend 24% of their income on rice, making it difficult for them to buy other basic necessities
when the price of rice increases. It may look like rice producers earn more by increasing the price of rice, but in
reality, the profit goes to the distributors, who buy rice from the producers at lower price.
1. Which forces in the macroenvironment contribute to increased price of rice and the rice
crisis in the Philippines?
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2. Which aspects of the microenvironment have been affected by the rice crisis?
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3. What do you think is the immediate solution to the rice crisis?
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Questions
1. What are the environmental variables that a small corner barbecue stand should be
most interested in?
Environmental Variables Why
2. Why should a company be concerned about substitutes and potential substitutes?
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3. Give examples of products and their potential Substitutes.

Product Potential Substitutes

1. Describe what kinds of firms may survive even without having to do much
environmental scanning.
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2. What is the difference between an opportunity and a threat? Site examples of these
for a particular industry.
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3. Now turn the tables around: can you site examples where the opportunities you
mentioned above can become threats, and the threats you mentioned above can
become opportunities? What does this tell you about the nature of opportunities
and threats?
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51
Lesson 8: Marketing Research

1. define marketing research,
2. discuss the importance of marketing research to a business enterprise, and
3. identify the steps in marketing research.
The Market Information System

The Market Information System is the people, equipment and procedures used to
gather, sort, analyze, evaluate and distribute needed, timely, and accurate information to
marketing decision-makers. The components of a market information system are:
Internal Records
This refers to documents in the company’s Order-to-Payment cycle, such as
invoices, shipping orders, etc. it also avails documents and resources that comprise the
sales information system, such as sales forecasts, information from sales personnel and
information culled from automated sales system.
How can you gather a lot of data from your clients? By encouraging them to provide
as much information as possible. The SM chain of department stores, for instance, offers
the SM Advantage Card that is packaged as a loyalty card for its clients, but it is actually a
means of gathering information for data analysis. SM knows the customers’ age, address
and socio-economic class based on the application forms submitted, the department store
then tracks the customers’ buying histories, with records of what they buy, when and how
much.
The Marketing Intelligence

The set of procedures ad sources used by managers to obtain everyday information
about developments in the marketing environment. This includes newspapers,
intermediaries, social networks, trade conferences, suppliers, ad agencies, the reverse
engineering of competitor products, published reports, purchased information, etc.
In layman’s terms, intelligence is gathered by simply “putting yourself out there.”
Having a network of people and sources of information in the right places, in general, is
the easiest way to get potentially useful knowledge. Being part of the right social network
of friends or groups on Facebook, for instance, can lead to getting a potential useful
insider tips faster than your competitors can. Encouraging also your sales team to do
small talk with clients is often a quick way to gather insights about what their future
needs are.
Marketing Research
Marketing research is the process of collecting and analyzing data to address a
specific marketing problem. It can be concerned with the different aspects of the market,
including product, sales, buyer behavior, promotion, distribution, pricing and packaging.
Many companies have used marketing research to decide whether to launch a product,
introduce a variant of the product, reinvent the branding, and so on. The role of
marketing research is not to make marketing decisions but rather help reduce risks in
decision-making.
Market research is a scientific in nature, utilizing the scientific method in order to
gain insights on how to solve real world problems. In this case, problems usually involves
resolving questions about how to best provide value to customers or about understanding
how consumers behave.
Importance of Marketing Research

Marketing research assists the marketing organization in many ways. It can
contribute to the success of different marketing activities. For example, conducting
marketing research before introducing a product to the market can help identify the
demographic of the target market, determine the probability of success, and the
52
alternative courses of action. This helps marketers avoid potential loss and iron out issues
that may occur.
Marketing research can help update marketers regarding the competitors’’ activities
and strategies through comparative studies. The results of the research will enable them
to devise ways to improve their competitive advantage.
It can also help determine aspects of the business that need to be changed or
upgraded. It may indicate the need for an organization to improve marketing strategies,
update products or services, and review its business plan. It can also identify
opportunities and new areas for expansion.
The Marketing Research Process
In conducting marketing research, it will help to follow these steps:

1. State the objectives. The marketing researcher should first establish the
objectives of the research which will be the bases for research questions and
potential research issues. They should be clear, concise, attainable, measurable
and quantifiable. Defining the objectives aids the researcher in designing a
market research process that suits the company’s capability and needs. Also, it
helps the researcher avoid setting conflicting expectations and gathering
irrelevant data.
2. Determine the research methodology. The researcher should choose a

combination of appropriate research methods to fulfill the research objectives.
The research methodology may be adapted to the manner of gathering

information.
Primary research gathers original information directly through surveys,

experiments, field tests, direct observations, focus group discussions, and
interviews.
Secondary research uses previously published information such as materials

on the Internet, existing marketing research results, data from the company’s
stock lists and customer databases, and information from external
organizations.
The methodology may also be based on the type of information to be

gathered.
Quantitative research involves numerical data such as customer return

frequency, sales figures, and financial trends. This type of research can be used
to understand the demographics of customers, identify the size of the market,
and discover areas for sales growth.
Qualitative research mainly studies views and attitudes in relation to the

company’s products and services. This may involve focus group discussions with
clients and potential customers and reviews of competitors.
It may also depend on the type of study.
Exploratory research involves reaching a better understanding of the research

problem and identifying the variables to be measured. This can be done through
trial studies, interviews, group discussions, and experiments.
Descriptive research describes marketing or marketing mix characteristics and

the extent of association between variables. Before conducting this type of
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research, the researcher must already have a good understanding of the

research problem through a prior exploratory study.
Causal research investigates cause-and-effect relationships or why a change in

one variable brings about a change in another.
3. Gather data. The researcher should collect data based on his or her chosen
research method. He or she should ensure that the gathered information is
detailed and complete to avoid misleading or irrelevant results.
Companies can also gather data through their marketing activities.
4. Interpret the results. After collecting the data, the researcher should now be
ready to interpret them. To select appropriate statistical tools for quantitative
data, the researcher must first figure out how many samples are to be
compared, whether these samples are related or unrelated to one another, and
the levels of data measurement. For qualitative data, the researcher can use
tables, flow charts, or perceptual maps to group similar information; identify
trends and themes; and take not of the major points that are uncovered.
5. Present the results. Interpreted data can be presented in a textual report with
graphs, charts, tables and figures. There should be a comprehensive
documentation of the entire research process so it can be helpful reference for
the firm’s future decision-making needs.
Research Methods
1. Observation is the best to use when trying to answer questions involving how a
market behaves. Thus, observation works for situations such as the following:
a. Identifying which section of a supermarket a shopper typically visits first;
b. Finding out how much toothpaste a consumer applies to his toothbrush
per use; and
c. Determining how long a type of customer typically stays in a quick-service
food outlet.
When questions are pertaining to how consumers actually behave, direct
observation can offer deeper insights about finer behavioral details that the
consumers themselves may not be aware of or may not be able to properly
elucidate if they were being subjected to more popular research methods such
as in-depth interviews or surveys.
2. Survey research is best to use when trying to determine a market’s opinions,
perceptions, and basic demographic data. Surveys are best for situations such
as the following:
a. Identifying discrete factual data such as the person’s age, gender, level of
education, place of residence, occupation, hobbies, etc.;
b. Knowing a person’s opinions about a particular product; and
c. Determining a person’s likes and dislikes.
Surveys are the principal vehicle for conducting quantitative studies, in other
words if you are after statistically significant findings, then a well-designed
survey with answers that lend themselves well to data processing may be the
most practical recourse.
3. Focus group are useful for gathering strong opinions and beliefs from a given
target market. Focus groups are actually a subset of survey research except
that, unlike surveys which tend to be composed of individual opinions, focus
groups are composed of a set of people who are place together in a close,
controlled environment to discuss a product or issue with a moderator. The idea
here is that by getting the group to discus and critique their own opinions, the
resulting answers to questions would reliably reflect their reality as compared to
answers obtained via surveys or interviews.
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The downside, however, is that focus group tends to reinforce any

commonalities ibn the group’s opinions, leading to “sensationalized” findings.
Moderators of focus groups should therefore be skilled in analyzing the entire
process in order to weed out questionable findings and extract information
properly. To this extent, a key critique about focus group studies is that its
output and quality is too dependent on the skills of the moderator.
4. Experimental research is a means of answering a hypothesis through the use
of an experiment. While the bulk of Philippine market research efforts typically
gravitates towards the use of surveys and field interviews, experiments are an
under-appreciated method for validating issues of causality.
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Task
1st Semester
2020-2021 Date Topic Marketing Research
CASE 8: Ethical Concerns in Marketing Research
Marketing Research is not just catering to the company’s needs. It also required the researcher to take on an
ethical approach in doing his or her work, given the involvement of customers and their personal information.
Deceptive research has long been an issue in marketing research. It occurs when the researcher provides wrong
or incomplete information to mislead test subjects or when the respondents are not even aware of their
participation in the research. While the main goal of any research is to acquire necessary and useful results, it is
also important that the subjects’ needs and risks are prioritized. The marketing researcher should therefore
consider the effects of the project on the respondent’s well-being and behavior.
Breaching respondent confidentiality is another pressing concern in conducting marketing research, ideally, the
user of the data(the company) shoud not know the identity of the data’s source (the respondent). Also the data
should not be passed on to another individual or organization. Maintaining confidentiality is a recognition of the
respondent’s right to privacy. If his or her privacy is infringe, the respondent may no longer participate in the
research. In this regard, the researcher should inform participants that they have the right to answer any question
or participate in the study, ask for their permission in advance, and interview them within a reasonable time limit.
Questions:
1. What are the significant ethical concerns in marketing research?
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2. What can be the effects of deception and breach of confidentiality on marketing research
results?
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3. As an aspiring marketer, what can you do to promote an ethical marketing research culture?
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1. What can a survey do that an in-depth interview cannot?

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2. Conversely, what can an in-depth interview do that a survey cannot?
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3. What are the possible biases that a focus group discussion can be prone to?
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4. Assess what may be the best research methodology for identifying the likes and
dislikes of an individual consumer. Survey, interview or others? Explain.
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Online Research
One way to define and describe target markets and their demographics is through
generational groups. These generations are broad divisions of people according to the
eras of their birth. Becoming familiar with the characteristics of each group is one way for
marketers to address the various needs, wants, lifestyles and experiences of each
generation. Some of the common groupings marketers use are Baby Boomers, Generation
X, Generation Y (also known as Millennials), and Generation Z (Centennials).
Conduct an online research the characteristics of the different generation groups and
answer the following questions.
1. What are the characteristics of each generation group?
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2. What factors gave rise to the characteristics of each group?

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3. How does each generation group respond to marketing efforts? What is the reason
for this?
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4. Why should marketers know the preferences of each generation?

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Lesson 9: Consumer and Business Markets

1. define consumer markets,
2. discuss consumer purchase decision process and the factors that influence consumer behavior,
3. enumerate and discuss the types of consumer buying behavior,
4. discuss the business market and its characteristics, and
5. discuss the buying decision process and its various aspects.
Selecta Ice Cream
Selecta had its beginning in 1948, when the Arce family established an ice cream parlor in Manila. Over
time, Selecta products became known for their creaminess and unique flavors, as well as their gold packaging.
In 1990, the Arce family decided to sell Selecta to RFM Corporation, a food and beverage company. This
led to the establishment of Selecta Dairy Products. The new company introduced new flavors and variants which
contained chocolates, fruits, nuts and other ingredients. These flavors and variants eventually became popular
not only with children and young people but also with adults. In addition, Selecta products were promoted through
TV advertisements highlighting how Selecta can be a part of building family bonds. These strategies eventually
propelled Selecta into one of the strongest competitors in the market. 1997, the company’s total ice cream sales
accounted for 60% of the total market for ice cream in the country.
With the partnership between RFM and Unilever, Selecta continues to offer new products and air
advertisements that have great emotional appeal to Filipino consumers. These strategies further strengthen the
position of Selecta Ice Cream in the market. At present, Selecta is recognized as one of the top ice cream brands
in the Philippines.
1. What strategies did Selecta use in order to become a market leader in the ice cream industry?
2. Why were the strategies employed by Selecta effective? Cite on example and discuss.
Consumer Market Defined

A consumer market is a system composed of all individuals or consumers who
purchase goods and services for personal consumption or use. Consumers make a lot of
purchasing decisions everyday as they choose to avail of certain products and services.
The decisions that consumers make are based not only on one but several factors. They
may buy based on style, color, variant, scent and the like.
Consumer Purchase Decision Process

There are five stages in the consumer purchase decision process.
1. Recognizing a need. The consumer thinks of brands and products that he or
she would purchase to satisfy his or her need or want. Marketers of different
brands also think of ways to show how their products would satisfy the needs or
wants of their customers. For instance, the need for food prompts marketers to
think of what will motivate consumers to buy a certain product or service
instead of another – will they purchase a burger instead of a pizza? Will they
choose to eat in a fine dining restaurant or a fast food chain?
2. Searching for information about the product or service. the consumer
then searcher for information about the product or service that he or she
considers purchasing. This information comes from various sources such as
advertisements, which in turn may utilize different approaches to convince a
consumer to purchase a certain product. Friends and family members are also
sources of information about products or services. If they are satisfied with a
certain product or service, they may recommend it to their relative and peers.
Simply put, the consumers perform the marketing themselves, and the company
spends less on promoting their products. This process is also known as the
word-of-mouth method.
3. Evaluating the different products available. After gathering information
about the products, consumers may gain review their options and evaluate them
for their strong points before making their final choice. The selection of brands
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may be aided by advertisements or reviews from friends, peers or relatives.

However, some may also utilize independent judgement in their evaluation.
4. Making final purchase decisions. In the actual purchase decision, consumers
will avail of their preferred services or products. The final choice of the consumer
is based on his or her evaluation of the products or services beforehand.
However, there may be times that the consumer makes sudden changes in his
or her purchase decision. In such situation, the consumer decides not to
purchase the product that he or she originally wanted to buy; instead, a second
or third choice is bought. Factors that cause sudden change in the purchase
decision may include insufficient amount of money to avail of the specific
product or service being considered.
5. Making an after-purchase evaluation. After the purchase, the consumer will
make an evaluation of the product or service. if the consumer is satisfied with
the product or service, there is a possibility of a repeat purchase. If there is
dissatisfaction, the marketers must identify what feature of the product has
fallen short of the consumer’s expectations. Thus, marketers should be careful in
making claims about their products r services. They should exercise truthfulness
and honesty in presenting the qualities of the product. Failing to do so may lead
to unmet expectations about the product or service.
Factors Influencing Consumer Behavior

1. Cultural Factors refer to an individual’s beliefs, traditions, mores, norms and
values learned from the family and other institutions in his or her society. Both
McDonald’s and Jollibee promote their products by showing how these are
relevant to the Filipino culture which values the needs of children and the
emotional bonds among family members.
2. Social Factors refer to the of the customer’s social functions and interactions
with the members of his/her group.
The social factors that affects consumer behavior are:
a. Reference groups which include family members, relatives, friends,
co-workers, and others who can influence the purchasing decisions of
an individual.
b. Social Role refers to the attitudes and behavior that is expected of
an individual based on his/her responsibilities. For example, a mother
to three kids who is also a manager of a popular hotel must decide on
clothing purchases based on these two roles.
c. Social Status or an individual’s standing relative to other
people in the society. Often based on how much the individual cab
earn and spend. A man with a low social status, for instance, most
likely has a small income, and will most likely be unable to afford as
car or a house of his own.
3. Personal Factors are exclusive to the individual alone, such as age, lifestyle,
occupation, civil status, religion, economic status, and personality. For instance,
rock concert tickets maybe saleable to the youth, while magazines on parenting
and housekeeping may be more saleable to housewives. Adventurous, people
can be primary consumers for travel packages.
4. Psychological factors are those which are associated with the human mind
and behavior. Some of the psychological factors that affect consumer behavior
are motivation, perception, learning and beliefs and attitudes.
a. Motivation is the reason that guides one’s behavior.

b. Perception is an individual’s unique way of viewing an object or
phenomenon. In terms of consumer behavior, people may have differing
perceptions about certain brands.
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c. Learning is defined as the change in behavior of the individual after

acquiring knowledge or experience. In marketing this translates to the
change in the consumer’s behavior and perception of the product or
service after availing of it.
d. Beliefs and attitudes are centered on the assumptions that an individual
makes regarding an object or phenomenon. In marketing, this is
translated to the assumptions that a consumer has regarding the product
or service. for example, a customer may believe that Tide is the most
effective brand in removing stans from clothes. The consumer will then
develop a favorable attitude regarding the product. Subsequently, this will
drive the consumer to buy the product, and to purchase it as a habit.
When the individual has become a habitual consumer, there is no longer a
need to persuade him or her to purchase the product. The consumer
takes the initiative to do so because of his or her positive belief and
attitude regarding the brand.
Income vs Socio-Economic Class

Income is a personal demographic factor while socio-economic class is a social
factor. Income is a factual number while SEC is an indicator of the king of group that a
consumer feels he or she belongs to. It is a social factor in the sense that it reflects the
consumption reality that the individual strongly believes in.
Age vs Lifecycle
Age is just a number, whereas where consumers currently are in their lifecycle
pretty much determine what products and services they will likely spend on.
Emotional vs Logical Decisions

We would like to think that all our purchases are the result of rational and logical
decisions on our part. But that is not necessarily true.
When you see a new gadget in a beautifully laid out display counter, this triggers a
positive emotional affinity for the product. Your emotional brain is stimulated by the
attractive display. It is therefore decides that it likes this. This fuels what you fell are
“inexplicable” urges to purchase this item.
But the interesting part in this: your logical brain will next kick in. however, your
logical bran is not there to calmly assess the pros and cons of acquiring this product.
Instead, your logical brain would more likely be utilized in order to rationalize your
potential purchase decisions.
In short, you are likely using your brainpower to justify what your emotional brain
has been wanting all along!
Buying Roles
1. Initiator. This is the person who first suggests the idea of buying particular product or
service.
2. Influencers. These people’s views or advices can influence the eventual selection of
what to buy.
3. Decider. The person who ultimately has the say on what to buy.
4. Buyer. The person who makes the actual purchase.
5. Users. The person or persons who end up actually using the product.
Types of Consumer Buying Behavior

The buying behavior is classified based on (1) the consumer’s perception of the
product category and (2) the consumer’s attitude toward the product category.
First, a consumer can perceive a product category to be simple, complex or
somewhere in between. So how does this distinction affect the buying behavior? A m ore
sophisticated buyer who understands the differences between the products will be willing
to shop around, gather brochures or data, check for specs online and generally take time
studying and comparing the products in the market. On the other hand, what will be the
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typical buying behavior of a non-savvy consumer? Likely this consumer will (a) ask an
acknowledged expert for advice on what to buy, (b) choose a brand that will seems most
familiar compared to all the others, or (c) choose the most attractive looking product
among the options.
Second, the consumer’s attitude toward the product can affect the buying
relationship as well. In this a product that is considered expensive, very important or
durable in nature? In this care, the consumer will spend more time and attention with the
decision-making process. It will require a lot of involvement – something known as high-
effort behavior. On the other hand, if the consumer does not have much at stake with the
purchase, if it is considered inexpensive or non-durable in nature, then the consumer will
tend to have less of an involvement in the buying process – also known as low-effort
behavior.
Putting these together, the figure below illustrates four different types of buying
behavior.
High Involvement Low Involvement
Significant Difference Complex Buying Behavior Variety-Seeking Behavior
Between Brands
Few Differences Dissonance-reducing Buying Habitual Buying Behavior
Between Brands Behavior
1. Variety seeking behavior requires very little to no amount of involvement.

Usually, a consumer manifests this type of behavior for the sake of trying
something new or when purchasing products that are cheap but not routinely used.
The consumer may opt to try each product at least once, leading to the trying of a
wide variety of the product.
2. Habitual buying behavior requires minimal amount of involvement as manifested
in purchasing products which are routinely used, but whose features do not
significantly differ from other brands. Consumers rather select the product that they
are most comfortable with. This is the outcome that is hoped by many fast-moving
consumer goods, such as personal care products, that seek to make consumers buy
their products out of habit.
3. Dissonance-reducing behavior often requires a relatively larger amount of
involvement as manifested after a consumer buys a certain product brand and
realizes that he or she may have made the wrong decision. This occurs when a
consumer wants to keep life simple, but yet the risks faced with the buying decision
for an important purchase are perceived to be high. The consumer may therefore
resort to decisions that simplify life, such as buying the brand that most people
choose, relying on the decision of a trusted friend, or relying on the word of the
salesperson.
4. Complex buying behavior requires the greatest amount of involvement. This
arises for important purchases where there are so many different features and
attributes with each brand having different manifestations of each feature. A
consumer manifests this type of behavior when buying a very expensive product,
such as a piece of furniture or a luxury car. The consumer would most likely acquire
as much information as possible regarding the product, and make extensive
comparisons among the brands to determine the best product to purchase.
Business Market Defined

Business markets are compose of firms and business organizations that purchase
semi processed goods and raw materials either for their operations or for reselling.
Decision-making in business markets involve large groups of people since
purchases tend to be expensive or large in quantity. The purchase decision of a company
is often entrusted to a group of employees or to members of the management. They
evaluate the products and the suppliers to ensure that the foods and materials are of the
highest quality. Oftentimes, the buyers base their purchase on certain product
specifications.
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Characteristics of Business Markets

Several factors define the business market. These are as follows:
1. Fewer and larger buyers. You will be dealing with private or public institutions
and these tend to be few in number for any given industry. Nut when they do
purchase items, they tend to do so in bulk.
2. The demand in business markets. The demand of products in the business
market is referred as a derived demand based on the needs of the consumers.
The increased demand of consumers, therefore, results in an increased demand for
raw materials and equipment which are necessary to produce the products.
3. Close customer relationships. The salespersons tend to be valuable resource
when dealing with organizational clients. They tend to build lasting relationships
with organizational customers, which generally includes the scheduling of regular
client calls to always be attuned to the client’s needs.
4. Potential for inelastic demand. Inelasticity refers to a relative sensitivity of the
sales of the product to any increase or decrease in its price.
5. The complexity of buying decisions. Business purchases often involve a lot of
money because the company either makes repeat purchases of a product, or it
buys a product which will be used for a long time such as heavy equipment and
machinery. Purchase decisions include careful attention to every detail of the
transaction and business transactions are formalized by contracts. Other companies
also issue policy manuals regarding bulk purchases to avoid any disagreements in
any stage of the buying process.
6. The involvement of professional purchasing agents. Since business purchases
tend to be highly complex and risky, companies and firms rely on the expertise of
professional purchasing agents who have skills in dealing with suppliers, and are
professionally trained to make purchasing decisions.
Business Buying Decision Process

Business markets follow the business buying decision process in making
decisions in their purchases.
1. Recognition of a need. Businesses identify a need will be addressed when they
purchase certain goods or raw materials.
2. Determining product specification. Product specifications refer to the function,
features, and requirements related to the product or service to be created or
improved.
3. Listing possible suppliers. This stage may take some time, as there is a need to
come up with an extensive list of suppliers who can comply with the product
specifications at an affordable price.
4. Selection of suppliers. The business selects the one which offers the product that
complies to its specifications at a reasonable price.
5. Periodic review. The after the purchase, the quality of the raw material or
equipment bought will be evaluated regularly by the personnel who use the
purchased product.
Types of Business Buying Situations

A buying situation involves the nature and frequency of a purchase. There are three
types of buying situations:
1. Straight Rebuy. The company is satisfied with the product or service of the
supplier and makes a rebuy on a regular basis.
2. Modified Rebuy. Happens when the company has encountered problems in the
supplier’s raw material or equipment. The company then makes changes in its
specifications, which may include the pricing of the product, terms of payment, or
the delivery schedule.
3. New Buy. Refers to a new purchase made by the firm or company from a different
supplier.
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Participants in the Business Buying Process

1. Users. Users directly utilize the products and services from suppliers. They are the
group of people who primarily determine what products, equipment or services
need to be purchased by the company. Users sometimes identify product
specifications.
2. Influencers. The influencers help in further defining the specifications and features
needed for a product or service.
3. Buyers. The buyers are usually the professional purchasing agents of the firms who
negotiate with the suppliers as part of the buying process. Buyers often use the
bidding process to arrive at a purchase decision, and supplier offering the product
at the lowest price is chosen.
4. Deciders. The deciders are people in the business organization who have the
authority to make or approve of decisions.
5. Gatekeepers. The gatekeepers control the flow of information from the business
markets to the suppliers.
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Task
1st Semester
2020-2021 Date Topic Consumer and Business
Markets
CASE 9: Kellog’s
Kellogg’s is one of the most well-known cereal companies in the world. It was established in 1906 by
brothers Will Keith Kellog and Dr. John Harvey Kellogg. The products of the company eventually became popular
among American consumers, as these changed their eating habits from heavy to lighter meals. A few decades
later, Kellog’s became one of the first companies to release its product information through their packaging.
Kellog’s also included the nutritional information about its product.
At present, Kellog’s remain one of the top cereal brands in the world. It is also ranked number 34 among
the top 100 global brands of 2015 according to Interbrand, a multinational brand agency. There are several
reasons why Kellog’s maintains its success in the cereal industry, Kellog’s puts the health of its consumers first,
and makes sure that its products are approved by nutrition experts. Kellog’s products also help Americans avoid a
carbohydrate-heavy diet and become more health-conscious in their eating habits. In addition, Kellog’s is now
working on removing artificial flavors from its products by 2018. In place of these artificial flavors, Kellog’s plans to
add more protein and fiber in its products.
1. What was one of the first innovations that set Kellogg’s apart from its competitors?
How this innovation help strengthens Kellogg’s position in the cereal market?
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2. How does Kellogg’s maintain its identity of being a brand that puts the health of its
consumers first?
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3. What other brands have exhibited the same characteristics or made similar
innovations as Kellogg’s? Cite an example and discuss how this brand obtained a
top position in the market through these innovations.
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Self Reflection
Reflect on your experiences as a consumer. Who or what usually influences you to
purchase certain products or services? Explain how these people or entities influence your
purchasing decisions.
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1. Recall the last time you bought something expensive. Identify the different buying
roles and who filled these roles.
Product: __________________________
Buying Role Person who filled this How a person affected
role the purchase decision
2. What are brands that you buy out of habit? What will make you decide to try a
different brand?
Brand you buy habitually What will make you choose

something else?
3. Why do buying behaviors become more pronounced as products become more

complex or risky?
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4. Why is social class a better indicator than income in assessing a person’s possible
product purchase?
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Marketing Experience 1: Breaking the Soap Habit

You were tasked with trying to convince a market to switch from their favorite
family healthy soap to using your brand of liquid soap. This is a pretty tall order as most
consumers are used to bar soaps and view liquid soap wearily as they perceived this to be
an expensive alternative.
1. Identify a market that you believe would be most receptive of your message.
Describe your market.
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2. Come up with a proposal on how you plan to make them switch to your brand of
liquid soap.
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3. Create a promotional poster that will clearly present your message to this market.
(use another sheet of paper)
Notes:
 Assume that a large bar of soap cost 2.50 to produce, while ml of liquid soap
in pump dispenser cost 15.00 to produce. Thus, you cannot compete through
price.
 Ignore all other liquid soaps in the market for now.
Criteria:
 Message Strategy: How promising is the message in terms of convincing
power? (15 points)
 Market Identification: How viable is the market selected? (10 points)
 Creativity: How well is the communication strategy put together? (5 points)
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Marketing Experience 2: Organizational Buying

Identify a business, an institution or a government unit. Ask them about their
purchasing process along with possible problems or pros/cons of the process. Groups
them map out the steps in the process, preferably using actual examples when possible.
Criteria:
 Depth of Research – How in-depth did the group comprehend the process?
(15 points)
 Analysis of process – Did the group offer its own analysis of the process? (10
points)
 Examples – Were examples used to illustrate the buying process? (5 points)
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Lesson 10: Market Segmentation,

Targeting and Positioning
1. Discuss target marketing and its stages,
2. discuss market segmentation and consumer market segments,
3. enumerate and discuss market targeting strategies, and
4. enumerate and discuss market positioning strategies.
San Miguel Beer: Creating a Beer That Appeals to Women
For years, the San Miguel Brewery had been trying to figure out how to appeal best to women. In the
1980s, the brewery launched Lagerlite, marketed as a light beer and presented in a slim bottle, in an attempt to
appeal to women in white-collar occupations. The brand made little headway: it turns out that women who do
drink beer would rather drink what the men were drinking while the women who did not drink beer simply would
not be convinced to drink any kind of beer at all.
San Miguel then did a market study in order to determine what non-drinking women did not like about
beer. They were then asked what would make them drink beer at all. The key results: women generally hated the
bitter taste of beer but they would consider drinking in only beer tasted more like “baby champagne.”
It was these findings that led San Miguel to develop what yould become a phenomenally successful
product, Cali Shandy. Cali Shandy was a carbonated beverage that targeted white-collar women. It worked
because the women quickly loved its “light and bubbly” taste. They quickly accepted the product, drinking it
alongside their fellow male workers who drank beer. They could now bond with the boys without having to suffer
through the bitterness of beer.
But here is what makes this success story so unusual: Cali Shandy is technically more of a soft drink
rather than a beer. Yet, because it was positioned to be a beer substitute, women treated it like a better tasting
beer. This was done by pricing Cali like beer rather than like a soft drink and placing it alongside beer in
supermarket shelves. It was also aggressively pushed to bars and drinking establishments.
In fact, its positioning as a beer alternative was so effective that many drinkers claim to get drunk on Cali
– even if it does not even have any alcoholic content!
1. What is the best way to get people understand what your product is all about?
Target Marketing
A target market is a group of people to whom a company intends to sell its
products and services. This group is the primary recipient of the company’s marketing
efforts. Identifying the target market helps the company maximize its marketing
resources and efforts to attract and retain a loyal group of customers. This is why
companies usually spend time, effort, and money to identify their target market.
Stages in Target Marketing

Companies and firms undergo three stages in target marketing.
The first of these is market segmentation, which refers to the process of the
process of dividing consumer markets into smaller groups of consumers. Marketers aim to
focus on the specific needs of these consumer groups, and make sure that their products
or brands respond to these needs.
The second stage is referred to as market targeting in which companies and firms
actually select their target market based on a number of factors, including the resources
of the company or firm, the strategies of competitors, and the profitability expected from
this specific market.
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The final stage is market positioning where companies and firms develop ways to
promote and position their brands effectively to their selected segment or target markets.
Through marketing campaigns, organizations show the uniqueness of their products or
brands to consumers.
Market Segmentation
During market segmentation, a company or firm essentially breaks down a larger
target market into a smaller group of consumers who all share specific characteristics and
interest. Market segmentations is based on a number of factors or variables which ae
analyzed by companies and firms to understand the needs of their consumers and ensure
that their product or brands respond to these needs.
Variables In Market Segmentation

1. Demographic Variables
a. Age.
b. Life cycle state.
c. Gender
d. Income
e. Religion, Race and nationality
2. Geographic variables
a. Climate
b. Population Size
3. Psychographic Variables
a. Lifestyle patters – as influences by social status, education background
and culture
b. Hobbies and interest
c. Opinions and beliefs
d. Personality
4. Behavioristic Variables
a. Loyalty
b. Special occasions
c. Benefits
Systematic Segmentation
1. Conduct a wide survey. Using a survey methodology, have a large group of
respondents identify the different product attributes and their importance
ratings for a selected industry; brand awareness and brand ratings; product
usage patterns; attitudes toward the product category; and demographic,
psychographic and mediagraphic profiles of the market.
2. Process the data. Using the statistical tool of cluster analysis where
respondents are grouped together based on similarities of their answers, the
respondents are grouped into a given number of clusters.
3. Profiling. This is the hard part. This is where the analytics skills of the
researcher come in.
A popular way of segmenting the market is through benefit segmentation, which Is

how many fast-moving consumer goods are segmented. The benefit segmentation,
attention is focus on the needs that people may have for a particular product rather than
the types of people who may be targeted.
Market Targeting
Once a company has identified possible target segments, the company or firm
further examines its potential as an actual target market. The company also deliberates
whether it has the resources to cater to that market segment. This process is known as
market targeting. Like market segmentation, market targeting also requires a great
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amount of resources. Thus, companies make sure that the market segment they will
choose by the end of market targeting has the greatest potential for a high rate of sales.
Types of Market Targeting Strategies

1. Undifferentiated Marketing (Mass Marketing). There are some companies
who deliberately choose not to focus on just one segment. These companies
perform undifferentiated marketing where they tend to sell a wide variety of
products or products with highly generalized features.
2. Differentiated Marketing (Segment Marketing). Companies who perform
differentiated marketing strategies make sure that their products cater to the
needs of particular segments in consumer markets. Their products tend to have
highly specific features.
3. Concentrated marketing (Niche Marketing). Like differentiated marketing,
products or services sold through concentrated marketing often have highly
specific features. However, in concentrated marketing, a company or firm tailors
its products or services to only one specific segment. This specific segment is
called a niche.
There is no hard and fast science to the selection process. In the end, it is primarily
the result of informed assessment and analysis. Some tips that come into play are:
1. Always consider a firm’s size and growth objectives when selecting a market for
it to target.
2. Assess the structural attractiveness of the potential market.
3. Identify the firm’s objectives and resources.
4. When planning for a long-term growth, immediately assess the segment’s
potential for economies of scope.
5. Consider the issue of segment-by segment invasion.
Can you target multiple markets? The answer is yes, provided that the brand
targets these discrete markets with distinct strategies.
Market Positioning
After a company or firm has identified its actual target market(s), its products or
services must now create a favorable impression on the consumer minds. This process is
called market or product position. Companies of firms may perform market positioning
based on a number of factors, such as the usability of product or service, or its features
that distinguish it from other brands.
Positioning is the act of establishing a strong brand image for a product. This
includes telling the market exactly what your product us, who it is for, what product
category it belongs to, what its most essential attributes or benefits are, and what it is
not.
In the early days of advertising, a product’s positioning was referred to as the
Unique Selling Point or USP. Basically, it is the answer to the question of “So what makes
your product different?” advertisers in particular were the people who were empowered to
assess the USPs for the products that they were pushing. To do this effectively, they first
had to hit upon a deep truth or an insight about the product, the target market and the
relationship between the two.
By the 1970s, advertisers Al Ries and Jack Trout popularized the term “positioning”
and argues for the need of products to focus on just one message and one message
alone.
Positioning has eventually evolved to become more than just clearly associating
brands with particular product categories. Today, creating a product position involves
determining its primary message; its target market profile, price point, brand personality;
and a host of other factors that work together to provide an integrated, coordinated brand
experience.
A product position is a space that a product owns in the minds of the consumers. If
a product can be tied to particular benefit, then it can use this effectively get the buying
votes of consumers who prioritize this particular benefit.
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Points of Difference and Points of Parity

Points of Difference or POD refers to attributes or benefits that the market
associates primarily with a particular brand, to the point that the market believes that no
other brands offer these attributes or benefits to the same degree as the brand. An
example of these include how, for the longest time, the market has associated the
attribute of safety with Volvo automobiles. The truth is that other premium vehicles would
be comparatively safe but since Volvo has managed to promote itself as the authority in
automobile safety, the market has perceived Volvo to be among the safest, if not, the
safest cars in the market.
Points of Parity or POPs, on the other hand, are market expectations about what
products in a particular product category should be or should have. For example, all soaps
are expected to smell good – this is a point of parity.
It may be difficult to differentiate based on a n attribute or feature that the market
already expects from the category, so consumers may not necessarily choose brands
based on these attributes or benefits. On the other hand, the absence of a POP that the
market expects from the category can become a deal-breaker – that is unless
communications can somehow manage to transform this weakness into a strength.
Category Membership
Category membership involves properly defining what category your product
belongs to. To understand this fully, it helps to appreciate how consumers tend to
mentally place products into distinct categories. Marketers would want to have full control
over how consumers would define or categorize their products, so marketers seek to
control all elements of the product experience in order to help communicate their
category.
 Red Bull is an energy drink.
 Flintstones Chewable Vitamins address a weakness that is often associated
with vitamins and medicine: bad taste.
 A Toyota Vios is categorized as an economy car that targets younger
professionals in need of a value-priced family mover.
 Toyota Land Cruiser is a premium sports utility vehicle that appeals to a
more senior and more affluent market base.
Marketers need to be aware of the elements that communicate a product’s
membership to a particular category, which includes elements such as price, color palette,
size, shape, medium of distribution, brand and packaging. Much of these elements are
cultural in nature.
Why be concerned with managing the categorization of your product? The answer
lies in competitive strategy. Being able to decide and to choose which category your
product should belong to allows you to manage your field of competition.
Law of the Category is a concept presented by Ries and Trout that says being the
first in a new category of product is an important advantage. The trick to competitively
position your product is by making sure that your product is places in a product category
where it will have a good fighting chance versus the existing competitive field. Under
extreme cases, it will even be possible for a marketer to develop a totally new category in
which to place the product under, effectively avoiding competition altogether.
Once the competitive “battlefield” has been decided upon, the next step is to decide
on what key attribute the product would focus on.
Products can use product-oriented positioning where emphasis shall be placed on a
feature, benefit, or attribute that is inherent in the product. Product can also take
advantage of consumer-oriented positioning where the focus is on the type of person who
is expected to purchase the product.
Types of Market Positioning Strategies

1. Features-based positioning
2. Use-based Positioning
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3. User-based positioning
4. Head-on competitive positioning
5. Lifestyle positioning

Task
1st Semester
2020-2021 Date Topic Segmentation,
Targeting and
Positioning
CASE 10: Toyota Motors Corporation
Toyota Motors Corporation is globally known as one of the market leaders in the car industry, particularly
in the selling of hybrid vehicles. Hybrid vehicles utilizes teo sources of energy for its function: fuel ad electricity.
One of the most well-known hybrid car products from Toyota is the Prius. Since it was introduced in 1997,
it has been positioned as a environment-friendly alternative to other types of vehicles, as they use less fuel,
therefore reducing greenhouse gas emissions. This positioning proved to be effective, and more and more
consumers have been enticed to purchase the Prius.
The Prius eventually became one of the most famous car products in japan and in the world. In 2009, the
2010 model of the Prius became the best-selling car in japan. The Prius has also developed into different
varieties, and has been sold in 90 countries. About 3.9 million Prius units have already been sold, while Toyota
has sold an overall number of 10 million hybrid car units worldwide.
1. Who do you think is the target market of Toyota in selling the Prius?
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2. How was the Toyota Prius positioned for its target consumers?
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3. What other brands do you think position their products in the same way as the Toyota
Prius? Cite one example and discuss.
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1. Why is it necessary to focus only on a particular segment of the market rather than
to try to sell to everyone?
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2. Why do we say that it is more efficient not to compete directly with existing
products? What exactly are the expenses that may be incurred when we do try to
compete with them?
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3. Identify and describe the different categories and even sub-categories in the
Philippine consumer beverage market.
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4. After describing the different categories of beverages, identify the defining
characteristics that are required for a product to belong to a particular beverage
category.
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Spot the Segments
Personal care products are a huge industry. Gaining even just a few percentage points of
any personal care category can reap great rewards for small market players.
You are to assess the personal soap market and do the following:
1. Identify and define the different markets that are being targeted by the major brands
(hint: most of these brands segment the market via benefits). Identify at least half a
dozen market segments.
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2. Identify a segment that you feel is yet to be tapped and describe this market segment.
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3. Propose a concept or mockup for the kind of soap product that you think would attract
this identified market segment.
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Criteria for assessment

Segment identification – How well has the group spotted key market segments? (15 points)
Proposed Segment – How viable is the identified market segment? (10 points)
Product Strategy? – How soundly does the proposed product address the identified market
segment’s potential needs? (10 points)
Competing In a Crowded Burger Market
Your group has formulated what can be one best-tasting, all-beef burgers ever in the local
market. The problem is that the quick service burger foods industry, where you believe your
product can best be appreciated, is a very crowded one. Still, you want to try your hand at
competing in any of the burger sectors. You believe that the way to survive is by identifying a sub-
category that you can own to yourself.
Identify as many categories as you can determine in the local quick service burger industry,
and then create your own distinctive category where you hope your product can stand out and
make a name for itself. Give your burger outlet a name, explain your category, and describe your
product concept – product description, price, packaging and other distinguishing features.
Use additional paper if needed.
Criteria for assessment

Analysis of categories – How thorough is the summation of existing categories? (10 points)
Category strategy – How viable is the proposed category? (15 points)
Creativity – How innovative is the product proposal? (10 points)
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Product
1. define a product,
2. enumerate and describe the parts of a product,
3. classify products,
4. explain the process of developing new products,
5. discuss the product line and product life cycle, and
6. discuss the marketing strategies for service firms.
LESSON 11: PRODUCT DEVELOPMENT & LIFE CYCLE

Creating the Business Model
Business model refers to the mode by which the product concept seeks to make
money so that it can have a sustainable operation. The business model should involve a
way of making money that best fits the nature of the product idea. Example of business
models includes, consumer purchase, advertising, sponsorship, donations, rent or lease,
and subscription.
New Product Development

New product development is a process that involve the conceptualization a creation
of innovative products that will catch the attention of customers and ensure their loyalty
to a particular brand. Developing new products often requires extensive research and
labor on the part of a company or firm.
There are seven stages in the process of developing new products. They are:
1. Idea generation. In this first stage, the company searches for and survey new
ideas to be used in developing a product. This can involve the company’s sales
and executive teams to generate ideas based on market trend research.
Scientist can also contribute to the generation of ideas.
2. Idea screening. This is the stage when ideas generated by the company’s sales
and science experts are carefully scrutinized to retain only those ideas which
have the potential for a successful sales performance, and eliminate those which
may fail.
3. Concept development and screening. Once an idea for a new product is
selected, it is further developed as a concept. It is assumed at this stage that
the product has at least a hypothetically high chance of succeeding in the
market. The concept is expanded and tested with the group of consumers. Their
feedback then serves as the basis for enhancing the concept for the product.
4. Market and business planning. After the concept of the new product is
developed, the next step is to plan how it will be marketed. The target market is
concretely identified and characterized and the profit objectives are planned. In
addition, other components of the 4Ps are identified. The sales projections are
also made, as well as the costs and profit estimates from the product.
5. Product development. At this stage, the concept is developed into a product
prototype. This stage involves the effort of both the marketing and research
department so companies. It may take months or years to create a product
prototype and ensure that it will pass both technical and commercial standards.
6. Test marketing. Once the product prototype is developed, its marketability is
tested with a particular group of customers in a specific location. The reactions
of customers towards the product are then gathered and analyzed. In turn, this
will help address any problem concerning the marketability of the product before
it is officially introduced to potential customers.
7. Commercialization. After the product prototype has been tested, the company
or firm will make its final decision on launching the product. Commercialization
can be a soft launch or a full-scale launch.
a. Soft Launch – the product will be tested with a limited number of
customers. Unlike test marketing, however, it is not only the marketability
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of the product is being tested but also the usability and features of the
product. This often involves one or two components of the 4Ps in the
marketing mix. After the soft launch, the responses of the potential
customers are again recorded and analyzed.
b. Full-Scale Launch – serves as the official launching of the product. It
involves the extensive utilization of the components of the 4Ps. The
product is sold at its official price, and it is marketed heavily through
various means.
Product Life Cycle
The product life cycle is defined as the period of time that a product is introduced,
sold and eventually removed from the market. The product life cycle is composed of four
stages:
1. Introduction. It is a stage when the product is launched in the market.
Companies spend great amount of money to develop and introduced their
products to customers. Thus, marketers are expected to find ways to launch
products in the best way possible, without incurring large costs.
2. Growth. This is the stage when the product gains acceptance in the market,
and the profits for the firm or company start to increase. This is also the point
when a product may be sold under different brands. These brands attempt to
make their own, distinct version of the product being sold. It thus becomes the
challenge for marketers and companies to maintain high sales and ensure the
loyalty of their customers.
3. Maturity. At this stage, the product has been in the market for a long period
and competition has also increased. With this, marketers face the challenge to a
possible decline in the sales of the product. They attempt to address this
challenged through improving the features of the product or even cutting down
its price.
4. Decline. This is the stage when the profits and sales for the product continue to
decrease. Consumers may begin to favor a new product which will eventually
prevail in the market. With this, companies and firms may be left with no choice
but to ultimately drop the product, in order to avoid incurring huge costs and
low profits.
The PLC concept can be used to analyze a product category (liquor), a product form
(White liquor), a product (vodka), or a brand (Absolut).
Style, Fashion and Fad Life Cycles
Three special categories of product life cycles should be distinguished – styles,

fashions and fads. A style is a basic and distinctive mode of expression appearing in a
field of human endeavor. Style appear in clothing (formal, casual, funky); and art
(realistic, surrealistic, abstract). A style can last for generations, and go in and out of
vogue.
A fashion is currently accepted or popular style in a given field. The length of a
fashion cycle is hard to predict. Some fashion end because they represent a purchase
compromise and consumers start looking for missing attributes. The length of a particular
fashion cycle depends on the extent to which the fashion meets a genuine need, is
consistent with other trends in the society, satisfies societal norms and values, and does
not exceed technological limits as it develops.
Fads are fashions that come quickly into public view, are adopted with great zeal,
peak early and decline very fast. Their acceptance cycle is short, and they tend to attract
only a limited following of those who are searching for excitement or want to distinguish
themselves from others.
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Typical Product Life Cycle
Introduction Stage
 Prices are high
 Slow sales volumes in the beginning
 Little or no competition
 Demand has to be created
 Customers have to be prompted to try the product
 Makes no money at this stage
Growth Stage
 Costs reduced due to mass production
 Sales volume increases
 Profitability begins to rise
 Public awareness increases
 Competition begins to increase
 Increased competition leads to price decreases
Maturity Stage
 Costs are lowered as production volumes increase
 Sales volume peaks and market saturation is reached
 Increase in competitors
 Prices tend to drop due to competition
 Brand differentiation and feature diversification is emphasized to maintain/increase
market share
 Industrial profits go down
Decline Stage
 Costs become counter-optimal
 Sales volume decline or stabilize
 Prices, profitability diminish
 Profit becomes more a challenge of production/distribution efficiency than increased
sales
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Product Extension Strategies

1. Finding new users
2. Finding new markets
3. Targeting specific market with promotion
4. Changing the appearance and format of a new product.
5. Encouraging the people to use the product more often.
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Task
1st Semester
2020-2021 Date Topic Product Development
and Product Life Cycle
1. Is it possible to launch a successful product without having to make a business plan

for it?
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2. Are there any products, which do not have a product lifecycle?
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3. Can you think of products that are coming to the end of their lives? What would you
do with them? Why?
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4. How does the Product Life Cycle concept affect the 4Ps?
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Bringing a New Product Idea to Life
Surely you must have a good idea for a product at one time or another? Choose an idea with
business potential.
1. Describe the market opportunity that you seek to address.
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2. Summarize the business model that you believe works best for your idea.
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3. Describe your target market and the positioning for your product that you hope will be most
attractive to the target market.
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Criteria:
 Viability of business proposal. How compelling is the potential business of the product?
(10 points)
 Business Strategy. How well thought out is the overall strategy? (5 points)
 Clarity of positioning. How focused and viable is the position vs market? (5 points)
Product Life Cycle
List at least 3 products or services in each category against the four stages of the life cycle.
STAGE IN LIFE FOOD & DRINK ELECTRICAL CLOTHES MOTOR
CYCLE GOODS/ VEHICLES
APPLIANCES
INTRODUCTION
GROWTH
MATURITY
DECLINE
Marketing Debate: Do Brands Have Finite Lives?
Often, after a brand begins to slip in the marketplace or disappears completely, communicators
observe, “all brands have their own day.” Their rationale is that all brands, in some sense, have a
finite life and cannot expected to be leaders forever. However, other experts contend that brands
can live forever, and their long-term success depends as much as on the skill and insight of the
marketers involved.
Take a position: Brands cannot be expected to last forever versus There is no reason for a brand to
ever become obsolete. Cite evidence from relevant brands to support your position.
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LESSON 12: PRODUCT MIX
Colgate and Its Valiant Attempts to Stretch the Brand
Colgate gas been (and probably always will be) known as a brand for oral care. In fact, this is its core
strength. Colgate brand of toothpaste is the leader in many markets globally while the Colgate brands of
toothbrushes and mouthwashes can always be relied upon to be either number one or number two in their
respective categories.
But if you were an ambitious marketer, you would be seeing this success from a different perspective: you
would think that Colgate is such a powerful brand that it deserves to be on more products. By not doing this, it
would be a waste of brand potential.
So, in 1982, the company launched Colgate Kitchen Entrees that was a line of frozen foods which hoped
to capitalize on the growing demand for microwaveable meals. Furthermore, the idea ere was that after eating a
Colgate meal, the happy consumers would move on to brush their teeth with Colgate products.
Result: Not only did the product turn out to be a horrendous flop but it also dragged the entire Colgate oral
care line down with it as sales for Colgate toothpaste and related products fell.
The lesson here was that if your brand is heavily associated with a particular category, trying to stretch it
toward other categories may only end up hurting your flagship products as the association of the brand with the
original category gets diluted.
Postscript: This did not stop Colgate from trying again and again. They will eventually experiment with
Colgate shaving cream, Colgate deodorant, and even Colgate foot power – none of which succeeded in the
market.
Product Defined
A product is anything that can be offered to a market to satisfy a want or need.
Products that are marketed include physical goods, services, experiences events, persons,
places, properties, organizations, information and ideas.
Levels of a Product
In planning its market offering, the marketer needs to think through five levels of
the product. Each level adds more customer value, and the five constitute a customer
value hierarchy.
1. Core Benefit. The fundamental service or benefit that the customer is really
buying. A hotel guest is buying “rest and sleep.” Marketers must see themselves as
benefit providers.
2. Basic Product. The marketer has to turn the core benefit to basic product. Thus a
hotel room includes a bed, bathroom, towels, desk and closet.
3. Expected Product. The marketer prepares an expected product, a set of attributes
and conditions buyers normally expect when they purchase this product. Hotel
guests expect a clean, bed, fresh towels, working lamps and a relatively degree of
quiet. Because most hotels can meet this minimum expectation, the traveler
normally will settle for whichever hotel is most convenient or least expensive.
4. Augmented Product. The marketer prepares an augmented product that exceeds
customer expectations. For example, several Malaysian hotels are offering
sunshine-and-surgery packages, including full medical check-up to attract
foreigners seeking treatment abroad. Product augmentation leads the marketer to
look at the user’s total consumption system – the way the user performs the task of
getting and using products and related services
Some things should be noted about product-augmentation strategy.
o Each augmentation adds costs.
o Augmented benefits soon become expected benefits.
o As companies raise the price of their augmented product, some
competitors offer a “stripped down” version at a much lower price.
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5. Potential Product. Potential product encompasses all the possible augmentations

and transformations the product offering might undergo in the future. Here is where
companies search for new ways to satisfy customers and distinguish their offer.
Successful companies add benefits to their offering that not only satisfy customers
but also surprise and delight them. Delighting customers is a matter of exceeding
expectations.
Product Hierarchy
Each product is related to certain other products. The product hierarchy stretches
from basic needs to particular items that satisfy those needs.
1. Need family. The core need that underlies the existence of a product family.
2. Product family. All the product classes that can satisfy a core need with
reasonable effectiveness.
3. Product class. A group of products within the product family recognized as
having a certain function coherence
4. Product line. A group of products within a product class that are closely related
because they perform a similar function, are sold to the same groups, are
marketed through the same channels, or fall within a given price ranges.
5. Product type. A group of items within a product line that share one of several
possible forms of the product.
6. Item (product variant). A distinct unit within a brand or product line
distinguishable by size, price, appearance or some other attribute.
Two other terms are frequently used with respect to the product hierarchy. A
product system is a group of diverse but related items that function in a compatible
manner. A product mix (or product assortment) is the set of all products and items that
a particular seller offers for sale to buyers.
Product Classifications
Marketers have traditionally classified products on the basis of characteristics:

durability, tangibility, and use (consumer or industrial).
Durability and Tangibility
Products can be classified according into three groups, according to durability and
tangibility:
1. Nondurable goods are tangible goods normally consumed in one or a few
uses, like beer and soap. Because these goods are consumed quickly and
purchased frequently, the appropriate strategy is to make them available in
many locations, charge only a small markup, and advertise heavily to induce
trial and build preference.
2. Durable goods are tangible goods that normally survive many uses:
refrigerator, machine tools, and clothing. Durable goods normally require more
personal selling and service, command higher margin and require more seller
guarantees.
3. Services are intangible, inseparable, variable and perishable. As a result, they
normally require more quality control, supplier credibility, and adaptability.
Example include haircuts and repairs.
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Consumer Goods Classification
Consumer goods are products and services purchased by customers for their own
use and this frequently purchased. The vast array of goods consumers buy can be
classified on the basis of shopping habits.
1. Convenience goods are those the customer usually purchases frequently,

immediately and with a minimum effort.
a. Staple are goods consumers purchase on a regular basis. Example: Lux
soap, Colgate toothpaste and Nissin instant noodles
b. Impulse goods are purchased without any planning or search effort.
Example: candy bars and magazines
c. Emergency goods are purchased when a need is urgent. Manufacturers
of emergency goods will place them in many outlets to capture the sale.
Example: umbrella
2. Shopping goods are goods that the customer, in the process of selection and
purchase, characteristically compares on such bases as suitability, quality, price
and style.
a. Homogeneous shopping goods are similar in quality but different
enough in price to justify shopping comparisons.
b. Heterogeneous shopping goods differ in product features and services
that may be more important than price. The seller of heterogeneous
shopping goods carriers a wide assortment to satisfy individual tastes and
must have well-trained salesperson to inform and advise customers.
3. Specialty goods have unique characteristics or brand identification for which a
sufficient number of buyers is willing to make a special purchasing effort.
Specialty goods do not involve making comparisons; buyers invest time only to
reach dealers carrying the wanted products. Dealers do not need convenient
locations; however, they must let prospective buyers know their location.
Examples: car, stereo components, photographic equipment.
4. Unsought goods are those the consumer does not know about or does not
normally think of buying. Example: life insurance, cemetery plots and
encyclopedia.
Industrial Goods Classification
Industrial goods are purchased by business and are used in the creation of a new
product which shall be eventually sold to others. Industrial goods can be classified by how
they enter the production process and their relative costliness.
1. Materials and parts are goods that enter the manufacturer’s product
completely.
a. Raw materials
i. Farm products (e.g. wheat, cotton, livestock, fruits and
vegetables) are supplied by many producers, who turn them over
to marketing intermediaries, who provide assembly, grading,
storage, transportation and selling services.
ii. Natural products (e.g. fish, lumber, crude petroleum, iron ore)
are limited in supply. They usually have great bulk and low unit
value and must be moved from producer to user.
b. Manufactured materials and parts fall into two categories:
i. Component materials (iron, yarn, cement, wires) are usually
fabricated further. The standardized nature of component materials
usually means that price and supplier are key purchase factors.
ii. Component parts (small motors, tires, castings) enter the
finished product with no further change in form, as when small
motors are put into vacuum cleaners, and tires are put on
automobiles.
c. Capital items are long-lasting goods that facilitate developing or
managing finished product. They include two groups:
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i. Installation consists of buildings and equipment. Installations are

major purchases.
ii. Equipment comprises portable factory equipment and tools and
office equipment.
2. Supplies and business services are short-lasting goods and services that
facilitate developing or managing the finished product. Supplies are of two
kinds: maintenance and repair items and operating supplies. Business services
include maintenance and repair services and business advisory services.
Product Mix
A product mix (also called product assortment) is a set of all products and items
that a particular seller offers for sale. A company’s product mix has a certain width,
length, depth and consistency.
 The width of a product mix refers to how many different product lines the
company carries.
 The length of a product mix refers to the total number of items in the mix.
 The depth of a product mix refers to how many variants are offered of each
product in the line.
 The consistency of the product mix refers to how closely related the various
product lines are in end use, production requirements, distribution channel or
some other way.
These four product-mix dimensions permit the company to expand its business in
four ways. It can add new product lines, thus widening the mix. It can lengthen each
product line. It can add more product variants to each product and deepen its product
mix. Finally, a company can pursue more product line consistency.
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Task
1st Semester
2020-2021 Date Topic Product Mix
CASE 11: Coca-Cola
Coca is one of the most well-known carbonated drink brands in the market today. One of the reasons
behind the continued success of Coca Cola is the distinctive taste of its products. This was developed in 1886 by
Dr. John Smith Pemberton, a pharmacist. Coca-Cola then became known in the market for its “delicious yet
refreshing” flavor.
In 1985, Coca-Cola announced that it was planning to change the formula and taste of its product. This
was motivated partly by the decreasing sales of Coke products and carbonated drinks in general at that time.
Another factor was the result of the taste tests that Coca-Cola conducted – Coca-Cola changed its trademark
formula according to the preferences of the taste test respondents.
However, the general American public at the time became alarmed at the announcement. It turned out
that consumers had a sentimental “attachment” to the taste of Coke as concocted by Dr. Pemberton. The sweet
taste of Coke already became its identifying trait. With this, consumers started to react negatively towards the
company’s plan. The Coca-Cola Company began to receive thousands of phone calls as well as letters with
complaints regarding the taste change. The consumers clamored for the return of the original Coke formula.
The Coca-Cola Company listened to the complaints and negative reactions of its consumers. After only
three months, the company again used its original formula in producing its carbonated drinks. This move was
positively received by the consumers, and since then, Coca-Cola has maintained its status as one of the market
leaders in the soft drink industry. Coke products have also gone through significant product developments. These
include the emergences of the low-sugar and low-calories Coke variants, as well as the smaller, cheaper variants
of the product. All of these variants, however, still maintain Coke’s trademark “delicious yet refreshing” flavor.
1. Why did the Coca-Cola Company consider changing the formula of its carbonated drinks?
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2. What was the response of consumers toward this change?
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3. How did the Coca-Cola Company react to the responses of its consumers? Was it effective?
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4. What is the core product of the carbonated drinks from the Coca-Cola Company? How did
the idea of the “core product” help the company strengthen its status as a market leader in
the soft drink industry?
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1. Select a brand and present the members of its product line, identifying the markets that
each product targets. Do the products together form a strategic fit?
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2. When a carmaker offers different types of models under a particular brand, such as the
Mitsubishi Montero Sport utility vehicle that is offered as GLX (arounf 1.2 million pesos),
GLS (around 1.4 million), and GTV (around 1.7 million) variants, is this an example of
product length or of product depth? Explain.
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3. A brand of soap offers both bar soaps and liquid soaps. Will these be classified as being
under the same product line, are these considered as different categories (width), or are
these considered as product variants (depth)? Explain.
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4. Can a producer of popular low-cost or budget items effectively penetrate the high-end
market? Give an example of a popular low-cost brand. What will it take for this to
successfully move toward the high-end market?
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5. Conversely, identify a well-known premium-only brand. Identify the price point at which its
products sell. Assume that you are to offer new mid-priced products under this brand. What
will it take to successfully move this brand toward the mid-end of the market?
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LESSON 13: BRANDING
What is a Brand?
Perhaps the most distinctive skill of professional marketers is their ability to create,
maintain, protect and enhance brands. Branding is the art of and cornerstone of
marketing. The American Marketing Association defines brand as a name, term, sign,
symbol or design, or a combination of them, intended to identify the goods or services of
one seller or group of sellers and to differentiate them from those of competitors. Thus, a
brand identifies the seller or maker.
A brand is complex symbol that can convey up to six levels of meaning:
1. Attribute. A brand brings to mind certain attributes. Mercedes suggests expensive,
well-built, well-engineered, durable, high-prestige automobiles.
2. Benefits. Attributes must be translated into functional and emotional benefits. The
attribute “durable” could translate into the functional benefit “I won’t have to buy
another car for several years.” The attribute “expensive” translate into the
emotional benefit “The car makes me feel important and admired.”
3. Values. The brand also says something about the producer’s values. Mercedes
stands for high performance, safety and prestige.
4. Culture. The brand may represent a certain culture. The Mercedes represents
German culture: organized efficient, high quality.
5. Personality. The brand can project a certain personality. Mercedes may suggests a
no-nonsense boss (person), a reigning lion (animal) or an austere palace (object).
6. User. The brand suggests the kind of consumer who buys or uses the product. We
would expect to see a 55-year-old top executive behind the wheel of a Mercedes,
not a 20-year-old secretary.
Companies need to research the position their brand occupies in the customers’
minds. What distinguishes a brand from its unbranded commodity counterparts in the
consumer’s perceptions and feelings about the product and how it is experienced. A brand
resides in the minds of consumers. There are three commonly used research approaches
to get at the brand meaning:
1. Word association. People can be asked what words come to mind when they hear
the brand’s name.
2. Personifying the brand. People can be asked to describe what kind of person or
animal they think of when the brand is mentioned.
3. Laddering up the brand essence.
a. Brand essence relates to the deeper, more abstract goals consumers are
trying to satisfy with the brand.
b. Laddering up help the marketer get a deeper understanding of the person’s
motivation. The answers suggest some possible campaigns. The campaign
can center on the brand essence, or the marketer can ladder down at a more
concrete level, such as emotional benefit, functional benefit or attribute.
Marketers must decide at which level(s) to anchor the brands identity. One way is
to visualize a brand pyramid when constructing the image of a brand. At the lowest level
are the brand attributes, at the next level are the brand’s benefits, and at the tip are the
brand’s beliefs and values. Thus marketers of Dove soap can talk about its attribute of
one-quarter cleansing cream,; or its benefit of softer skin; or its value, being more
attractive.
A brand can be better positioned by associating its name with a desirable benefit.
Some successful brand positioning examples are Toyota (trustworthy, family-oriented),
Raffles Hotel (mature, aristocratic), Sony (creative), Tiger Balm (powerful but gently at
the same time), and Lexus (quality). These positionings work best when they are
passionately felt by everyone in the organization, and the target market believes that the
company is best at delivering that benefit.
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Building Brand Identity

Building the brand identity requires additional decisions on the brand’s name, logo,
colors, tagline and symbol.
Elements of the Brand

1. Trade name
2. Generic category. The category in which the brand would fall under, such as
beverage, search engine or quick service restaurant.
3. Logo. The visual symbol or image that will identify the product. Logos are also
registered alongside the trade name.
4. Visual cues. Brands can be presented with distinctive visual identifiers.
5. Shapes. The actual shape or form of the product or packaging.
6. Colors.
7. Sounds. Such as advertising jingle or even very short intro sounds such as those
heard upon starting up a computer.
8. Scents.
9. Tastes. This includes special recipes or secret ingredients.
However, a brand is more than a name, logo, colors, a tagline or symbol. These are
marketing tools and tactics. A brand is essentially a marketer’s promise to deliver a
specific set of features, benefits and services consistently to the buyers.
At best, the brand campaign will create name recognition, some brand knowledge,
maybe even some brand preference, but an ad campaign does not create brand bonding,
no matter how much the company spends on advertising and publicity. Brand bonding
occurs when customers experience the company as delivering on its benefit promise. The
fact this that brands are not built by advertising but by brand experience. All of the
customers’ contact with company employees and company communications must be
positive. The brand idea will not take unless everyone in the company lives the brand.
Many companies make brand promises but fail to train employees to understand and
deliver on the brand promise.
Brand Equity
There are five levels of a customer attitude toward a brand, from lowest to highest:
1. Customer will change brands, especially for price reasons. No brand loyalty.
2. Customer is satisfied. No reason to change the brand.
3. Customer is satisfied and would incur costs by changing brand.
4. Customer values the brand and sees it as a friend.
5. Customer is devoted to the brand.
Brand equity is highly related to how many customers are in classes 3, 4, or 5. It is

also related to the degree of brand-name recognition, perceived brand quality, strong
mental and emotional associations, and other assets such as patents, trademarks and
channel relationships.
Brand equity is defined as the positive differential effect that knowing the brand
name has on customer response to the product or service. brand equity results in
customers showing a preference for one product over another when they are basically
identical. The extent to which customers are willing to pay more for the particular brand is
a measure of brand equity. Amazon.com for example, is able to charge 7 to 12 percent
more than lesser-known online book vendors.
A brand needs to be carefully managed so that its equity does not depreciate. This
requires maintaining or improving brand awareness, perceived quality and functionality,
and positive associations.
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Branding Challenges
Branding Decision: To Brand or Not To Brand

The first decision is whether to develop a brand name for a product. Today,
branding is such a strong force that hardly anything goes unbranded. In some cases,
there has been a return to “no branding” of certain staple consumer goods and
pharmaceuticals.
Why do sellers brand their products when doing so clearly involve costs? Branding
gives the seller several advantages:
1. The brand name makes it easier for the seller to process orders and track down
problems.
2. The seller’s brand name and trademark provide legal protection of unique product
features.
3. Branding gives the seller the opportunity to attract loyal and profitable set of
customers. Brand loyalty gives sellers some protection from competition.
4. Branding helps the seller segment markets.
5. Strong brands help build the corporate image, making it easier to launch new
brands and gain acceptance by distributors and consumers.
Brand-Sponsor Decision
A manufacturer has several options with respect to brand sponsorship.
5. Manufacturer brand (sometimes called national brand)

6. Distributor/ Private brand
7. Licensed brand name
Brand-Name Decision
Manufacturers and service companies who brand their products must choose which
brand names to use. Four strategies are available:
a. Individual names. This policy is followed by Procter & Gamble (Head &
Shoulders, Pantene, Rejoice). A major advantage of an individual-names
strategy is that the company does not tie its reputation to the product’s. if the
product fails or appears to have a low quality, the company’s name or image is
not hurt. The strategy permits the firm to search for the best name for each
new product.
b. Blanket family name. This policy is followed by Hitachi. A blanket family name
also has advantages. Development cost is less because there is no need for
“name” research or heavy advertising expenditures to create brand-name
recognition.
c. Separate family names for all products. This policy is followed by
Matsushita (Panasonic for audio-visual products; National for household goods;
and technics for hi-fi products). Where a company markets quite different
products, it is not desirable to use one blanket family name. When Toyota
introduced the high-end luxury cars, it used Lexus.
d. Corporate name combines with individual product names. This policy is
followed by Sony (Sony Wega, Sony Walkman, Sony Vaio, Sony PlayStation) as
well as Honda, GE ad Hewlett-Packard.
Once a company decides on its brand name strategy, it faces the task of choosing a
specific brand name.
 It should suggest something about the product’s benefits.
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 It should suggest the product/service category.

 It should be easy to spell, pronounce, recognize and remember.
 It should be distinctive.
 It should not carry poor meanings in other countries and languages.
 It should be culturally sensitive
 It should convey appropriate symbolism.
 It should consider prior brand usage and complexities.
Brand-Strategy Decision
A brand strategy will vary with whether the brand is a functional brand, an image
brand or an experiential brand.
 Consumers purchase functional brand to satisfy a functional need such as to
shave, to clean clothes, to relieve a headache. Functional brands have the best
chance to satisfy a customer if they are seen as providing superior performance or
superior economy. Functional brands rely heavily on “product” and/or “price”
features.
 Image brands arises with products or services that are difficult to differentiate, or
to assess quality, or convey a statement about the user. Strategies include
creating a distinctive design, associating them with celebrity users or creating a
powerful advertising image. Typically, they are designed to say something positive
about the brand user. Image brands rely heavily on advertising, creativity, and
high advertising expenditures.
 Experiential brands involve the consumer beyond simply acquiring the product.
The consumer encounters “people” and “place” with these brands.
Over time each type of brand can be developed further. A company can introduce
line extensions (existing brand name extended to new sizes or flavors in the existing
product category), brand extensions (brand names extended to new-product
categories), multibrands (new brand names introduced in the same product category),
new brands (new brand name for a new category product), and cobranding (combining
two or more well-known names).
Brand-Management Decision
Companies also have to make several decisions related to managing their brands.
These includes:
 Brand asset management - how manage their brands as assets
 Brand relationship management - how to manage the relationships their brands
have with their customers
 Brand auditing and rebranding – how to review and reposition their brands.
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Task
1st Semester
2020-2021 Date Topic Branding
1. Give an example of a brand that you are totally not familiar with. What inferences or messages are
you getting from the brand alone? What does it say about brand communications?
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2. Give an example of a brand that you do not like. What is it about the brand that affects you? Discuss
how this could be resolved so that you can gain positive feelings for the brand?
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3. At the time that a brand concept is being created, it still has little or no brand equity. Do you believe
that having a well-thought branding process will already give it some equity even before the first
sale?
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Marketing Debate: Are Line Extensions Good or Bad?
Marketing consultants Al Ries and Jack Trout have vociferously denounced the practice of
line extensions, referring to the “line extension trap.” Other maintain the brand extensions are a
critical growth strategy and source of revenue for the firm.
Take a position: Line extension can endanger brands versus Line extensions are an important
brand growth strategy.
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Build a Brand Experience

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Writing pens are a dime a dozen and so many brands are fighting for attention in bookstores
and office supply shelves. But what if you can create a totally captivating brand experience for a
new brand of writing pens?
Criteria:
 Depth of planning. How well thought out was the ground work? (15 points)
 Creativity. How impressive are the proposed brand elements? (10 points)
 Impact. How likeable is the brand? (5 points)
1. Define the target market or markets.

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2. Create a brand and its meaning.

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3. Create the brand identity.

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4. Describe how to create a brand bonding experience.

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5. Describe the branding strategy (be specific).

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Lesson 14: Pricing Mix

1. define price,
2. discuss pricing approaches
3. explain how the price for a product is set, and
4. identify and discuss pricing schemes
Ukay-Ukay
A flea market is a place where secondhand goods are sold at cheap prices. In the Philippines, a flea
market is better known as the ukay-ukay which is derived from the Tagalog work halukay. It is where shoppers
search among racks of various items, hoping for a good find – that is, a product for which you “pay less for more.”
An ukay-ukay is the perfect place for thrifty buyers who are on a tight budget to shop for goods. It sells
low-priced secondhand products of well-known brands or in most cases, cheap imitations of the original.
Many ukay-ukay stores dot the streets, especially near dry and wet markets or palengkes. Although, the
most popular places where many ukay-ukay vendors gather are Divisoria, Greenhills, and Cartimar. Meanwhile,
ukay-ukay depots, where most vendors buy their goods, are located in Bambang in Manila, Cebu, Cagayan de
Oro and Baguio.
Ukay-ukay goods are bought in bulk from retailers and traders. For instance, one bundle of clothes
usually contains hundred of clothing items. Each individual item is then priced by the seller. Buying in bulk allows
sellers to set a low and affordable base price for products.
In many cases, the number of competitors in the area can also influence the pricing. To stay relevant to
customers’ preferences, vendors tend to set the price of their goods to equal that of their competitors. Another
common practice in flea markets is the tawad or the practice of haggling for a lower price. Customers and vendors
often engage in haggling and this results in a reduction of price by about 10 to 30 percent. Some vendors
anticipate this practice and set their prices at a higher ceiling.
Ukay-ukay stores have become a cheaper option to regular retail stores which sell the original goods at a
higher price. These stores have formed a unique market which caters to the needs and preferences of the
ordinary masses and customers who wish to cut costs by buying cheaper items.
1. What kind of goods does a flea market or an uka-ukay sell?

2. How do ukay-ukay owners set the price for their goods?
3. What factors influence the pricing of products in an ukay-ukay?
Setting the Price
The firm must decide where to position its product on quality and price.
There can be competition between price-quality segments.
The company must set its price in relation to the value delivered and perceived by
the customer. If the price is higher than the value received, the company will miss
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potential profits; if the price is lower than the value received, the company will fail to
harvest potential profits.
The firm has to consider many factors in setting its pricing policy. The six-step
procedure is:
1. Selecting the pricing objective
2. Determining the demand
3. Estimating the cost
4. Analyzing the competitors’ costs, prices and offers
5. Selecting a pricing method
6. Selecting the final price.
Step 1: Selecting the Pricing Objective
The company first decides where it wants to position its market offering. The
clearer the firm’s objectives, the easier it is to set price. The company can pursue any of
five major objectives through pricing:
1. Survival. Companies pursue survival as their major objective of they are plagued
with overcapacity, intense competition, or changing consumer wants.
2. Maximize current profits. The company estimates the demand and costs
associated with alternative prices and choose the price that produces maximum
current profit, cash flow or rate of return on investment.
3. Maximize market share. Some companies believe that a higher sales volume will
lead to lower unit costs and higher long-run profit. They set the lowest price,
assuming the market is price-sensitive.
4. Maximum market skimming. Companies unveiling a new technology favor
setting high prices to “skim” the market. Market skimming makes sense under the
following conditions: (1) a sufficient number of buyers have a high current demand;
(2) the unit costs of producing a small volume are not so high that they cancel the
advantage of charging what the traffic will bear; (3) the high initial price does not
attract more competitors to the market; and (4) the high price communicates the
image of a superior product.
5. Product-quality leader. Companies may opt to aim for leadership in terms of
product quality.
Step 2: Determining Demand
In normal cases, demand and price are inversely related: the higher the price, the
lower the demand.
Price Sensitivity. Generally speaking, customers are most price-sensitive to

products that cost a lot or are bought frequently. They are less price-sensitive to low-cost
items or items they buy infrequently. The following list of factors are associated with lower
price sensitivity.
 The product is more distinctive
 Buyers are less aware of substitutes
 Buyers cannot easily compare the quality of substitutes
 The expenditure is a smaller part of the buyer’s total income
 The expenditure is small compared to the total cost of the end product
 Part of the cost is borned by another party.
 The product is used in conjunction with assets previously bought.
 The product is assumed to have more quality, prestige or exclusiveness
 Buyers cannot store the product.
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Price Elasticity of Demand
If demand hardly changes with a small change in price, the demand is inelastic. If
demand changes considerably, demand in elastic.
Demand is likely to be less elastic under the following conditions:
1. If there are few or no substitute/competitors
2. Buyers do not readily notice the higher price
3. Buyers are slow to change their buying habits
4. Buyers think that higher price is justified.
Step 3: Estimating the Cost
Demand sets a ceiling on the price the company can charge for its products. Cost
set the floor. the company wants to charge a price that covers its cost of producing,
distributing, and selling the product, including a fair return for its effort and risk.
Types of Costs
1. Fixed costs (also known as overhead) are costs that do not vary with production or
sales revenues, Example: rent, heat, interest, salaries.
2. Variable costs vary directly with the level of production. These costs tend to be
constant per unit produced.
3. Total costs consist of the sum of the fixed and variable costs for any given
production.
Step 4: Analyzing Competitors’ Costs, Prices and Offers
The firm should first consider the nearest competitor’s price. If the firm’s offer
contains positive differentiation features not offered by the nearest competitor, their
worth to the customer should be evaluated and added to the competitor’s price. Of the
competitor’s offer contains some features not offered by the firm, their worth to the
customer should be evaluated and subtracted from the firm’s price.
Step 5: Selecting a Pricing Method
Companies select a pricing method that includes one or more of these three
considerations – customers’ demand, cost function and competitors’ prices.
1. Mark-up pricing. The most elementary pricing method is to add a standard

markup to the product’s cost.
2. Target-return pricing. In target-return pricing, the firm determines the price that
would yield its target rate of return on investment.
3. Perceived-value pricing. An increasing number of companies base their price on
the customer’s perceived value. They must deliver the value promised by their
value proposition, and the customer must perceived this value. They use the other
marketing-mix elements, such as advertising and sales force, to communicate and
enhance perceived value is buyers’ mind.
Perceived value is made up of many several elements, such as the buyer’s image of
the product performance, the channel deliverables, the warranty quality, customer
support, and softer attributes such as the supplier’s reputation, trustworthiness and
esteem
4. Value pricing. In recent years, several companies have adopted value pricing, in
which they win loyal customers by charging a fairly low price for a high-quality
offering. To offer value prices, a company must undergo a major overhaul. It must
redesign the way it develops, manufactures, distributes, prices, markets and sell
products to deliver better value at every point in the supply chain.
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5. Going-rate pricing. In going-rate pricing, the firm bases its price largely on
competitors’ prices. The firm might charge the same, more or less than the major
competitor(s).
6. Auction-type pricing. Auction-type pricing is growing more popular, especially
with the growth of the internet.
• English auctions (ascending bids). One seller and many buyers. The
seller puts up an item and bidders raise the offer price until the top price is
reached.
• Dutch auctions (descending bids). One seller and many buyers or one
buyer and many sellers. In the first kind, an auctioneer announces a high
price for a product and then slowly decreases the price until a bidder accepts
the price. In the other hand, the buyer announces something that he wants
to buy and then potential sellers compete to get the sale by offering the
lowest price.
• Sealed-bid auctions. Would-be suppliers can submit only one bid and
cannot know the other bids.
7. Group pricing. The Internet is facilitating a method whereby consumers and
business buyers can join groups to buy at a lower price.
Step 6: Selecting the Final Price
Pricing method narrow the range from which the company must select its final
price. In selecting the price, the company must consider additional factors, including
psychological pricing, gain-and-risk sharing pricing, the influence of other marketing mix
elements on the price, company pricing policies and the impact of price on other parties.
Adapting the Price
Companies usually do not set a single price, but rather a pricing structure that reflects
variation in geographical demand and costs, market-segment requirements, purchase
timing, order levels, delivery frequency, guarantees, service contracts and other factors.
Price-adaptation strategies
1. Geographical Pricing. Geographical pricing involves a company deciding how to

price its products to different customers in different locations and countries.
2. Price Discounts and allowances. Most companies will adjust their list price and
give discounts and allowances for early payment, volume purchases and off-season
buying.
• Cash discounts. A price reduction to buyers who pay bills promptly.
• Quantity discount. A price reduction to those who buy large volumes.
• Functional Discount. Discount offered by a manufacturer to trade-channel
members if they will perform certain functions, such as selling, storing, and
recordkeeping.
• Seasonal discount. A price reduction to those who buy merchandise or
services out of season.
• Allowance. An extra payment designed to gain reseller participation in
special programs. Trade-in allowances are granted for turning in an old item
when buying a new one. Promotional allowances reward dealers for
participating in advertising and sales support programs.
3. Promotional Pricing. Companies can use several pricing techniques to stimulate
early purchase.
 Loss-leader Pricing – supermarkets and department stores often drop the
price on well-known brand to stimulate additional store traffic. Manufacturers
of loss-leader brands typically object because this practice can dilute the
brand image and bring complaints from retailers who charge the list price.
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 Special event pricing – sellers will establish special prices in certain

seasons to draw in more customers. Ex: back-to-school sales
 Cash rebates – Auto companies and other consumer-goods companies offer
cash rebates to encourage purchase of the manufacturers’ products within a
specific time period.
 Low-interest Financing – instead of cutting its price, the company can
offer customers low-interest financing.
 Longer Payment Terms – sellers, especially banks and auto companies,
stretch loans over longer periods and thus lower the monthly payments.
 Warranties and service Contracts – companies can promote sales by
adding a free or low-cost warranty or service contract.
 Psychological Discounting – this strategy involves setting an artificial high
price and then offering the product at substantial savings; for example, “Was
$359, now $299.”
4. Discriminatory Pricing. Price discrimination occurs when a company sets prices to
earn different margins on various units of the same or a similar product or service.
• Customer-segment pricing - Different customers are offered different
prices
• Product-form pricing - Different versions of the product are priced
differently
• Image pricing - Price the same product at different levels based on image
differences
• Channel Pricing – a product such as Coca-cola is priced differently
depending on whether it is purchased in a fine restaurant, a fast-food
restaurant or a vending machine.
• Location Pricing - the same product is priced differently at different
locations even though the cost of offering at each location is the same.
• Time pricing - prices are varied by season, day or hour.
5. Product-Mix Pricing.
• Product-Line Pricing - Companies develop product lines rather than single
products and introduce price steps.
• Optional Feature Pricing – companies offer optional products, features,
and services along with their main product.
• Captive-Product Pricing – Some products require the use of ancillary, or
captive products. Manufacturers of razors and printers often price them low
and sell high markups on razor blades and ink, respectively.
• Two-Part Pricing - Service firms often engage in two-part pricing,
consisting of a fix fee plus a variable usage fee.
• By-Product Pricing - The production of certain goods often results in by-
products. If the by-product have a value to a customer group, they should be
priced on their value.
• Product-Bundling Pricing - Sellers bundle products and features.
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Task
1st Semester
2020-2021 Date Topic Pricing Mix
CASE 13: McDonald’s

A good pricing strategy is a more important factor in staying competitive in the fast-food industry. Thus,
McDonald’s, one of the largest fast-good chains in the world, has always been practicing creative pricing
strategies to attract customers. Its campaigns have been successful as they are still one of the dominant
companies in the fast-food industry.
One of these pricing strategies is their “value meals.” These are essentially a group of menu items that
are sold together in a bundle but are priced cheaper than when they are bought individually. As the fast-food
industry tends to cater more towards being an economical and “on-the-go” food option, this pricing scheme aims
to widen their customer base by increasing their affordability.
The same pricing scheme is used in the United States as McDonald’s faces competition against Burger
King. While Burger King uses the “5 for $4” deal (five set food items for $4), McDonal’s uses the “McPick 2 for $2”
menu (two food items of choice for $2). The products in Burger King are fixed with a bacon cheeseburger, small
fries, small drink, four-piece nuggets, and a chocolate chip cookie. On the other hand, McDonald’s deal has
choices such as McChicken, McDouble, small fries, or mozzarella sticks. This pricing scheme aims to attract more
customers to visit the store. It was launched in Janauary 2016 and was patronized by many customers. However,
it was only a limited time offer as it ended in February 2016, much to the dismay of its patrons. It was permanently
replaced by the “McPick 2 for $5” deal which is comprised of its previous menu choices and additional options
such as the Big Mac, Quarter Pounder, and the Filet-O-Fish.
In recent reports, the McPick 2 deal will continue to be offered worldwide as long as McDonal’s operators
in the US stick with the $5 price, despite the negative comments on the price increase. However, the company is
still optimistic with the success of its strategy. While its competitor, Burger King provides more but fixed items for
a lesser price, McDonald’s capitalizes on allowing the customers to pick their preferred food.
Questions
1. What do you think is the edge of the McPick 2 for $2 as compared to its competitor’s deal before it
was changed?
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2. Do you think that the “pick your own food choices” compensates the price change of McPick 2 to $5?
Why or why not?
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3. Based on the selection, how can you define the importance of the price of a product in attracting
customers?
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1. Why do we say that the “Rip Off,” “False Economy,” and “Overcharging” strategies are not
market-oriented strategies? Are there instances when any of these price positions may be
justifiable? Explain.
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2. Why do many firms try to steal market share from market leaders by offering low prices? Try to
explain the rationale for this behavior. In your opinion, does it really work?
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3. What are the possible problems that will be encountered if a firm uses perceived-value pricing
and lets the market determine the price of its products?
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4. Identify a product that practices optional pricing. Discuss the nature of the base
product and its add-ons - how basic is the base product and how varied are the add-ons?
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5. Identify a product that practices captive product pricing. Spot the ways by which the
company seeks to lock up the consumer, ensuring that buyers are held "captive" by the
product.
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6. If an airline takes off with hardly any passengers in business class, can it simply fill it
up with lucky passengers from economy class? What do you think stops the airline from
doing so?
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Repositioning a Low-End Product
Choose a product that is generally perceived to be an economy strategist (low price,

low quality). Your job is to use pricing to reposition it into a medium value or even a
high-value product – without altering the product’s quality! (Hint: while you cannot
change the product itself, you can alter packaging, distribution, presentation and other
factors).
Criteria:
Depth of Price Research (20 points)
Was a sufficient picture of the competition presented.
Potential of Strategy (20 points)
How viable are the proposed repositioning strategies?
Creativity (10 points)
How creative or innovative is the proposed execution?
1. Identify the principal products in your selected category as well as their prices.
Identify their respective price-quality points.
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2. Identify your selected product’s price. Make sure it falls under the economy
strategy price point.
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3. present your strategy for lifting up the market’s perception of this product from
being an economy strategist to being of medium- or high-value. What price do you
recommend for it and how do you justify this without changing the product itself?
Explain.
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Super Premium Hotel Rooms
Choose a hotel and research on its room rates as well as the amenities that it offers for
the price. Identify the most expensive room that 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 justify the price point you are proposing.
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Criteria:
Price Canvassing (10 pts) - Did the group give a clear picture of the hotel's prices?
Viability of Proposal (20 pts) - How viable is the proposed price and amenities?
Creativity (10 pts) - How creative and innovative is the proposal?
Name of Hotel: __________________________________________________________

Most expensive room that is currently offering and amenities in included in the room.
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Price point of your proposed premium-priced room

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Amenities that will be included in your proposed premium-priced room
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Lesson 15: Place and Placement

1. discuss the meaning of channel distribution
2. identify the two main types of channel distribution,
3. describe retailing and the different types of retailers, and
4. discuss wholesaling and the types of wholesalers
Selling Automobiles in Malls
How does the typical Filipino middle-class family go about buying a family car?
Studies show that for this class of market, car-buying is a family venture. In fact, when the time comes to
check out the likely car models for consideration, the entire family wants to come along so that they can check out
the vehicle for themselves, sit inside, appreciate the interiors, and even slam the car doors shut ta few times to
“test for quality.” In many instances, seeing the family being happy with a car already seals the deal for the
parents, and the car gets sold right away there and then.
Yet for the longest time, car showrooms kept regular office hours – opening from 8 a.m., or later, closing
by 5 or 6 p.m., and being closed on Sundays. With this kind of schedule, how often can an interested family gets
to check out a promising vehicle as a group?
In was not until the 2000s when car dealers finally saw the wisdom of going where their market was and
this was in the malls. Dealers began exhibiting their latest vehicles in mall lobbies, especially on weekends when
entire families were likely to visit. Coupled with aggressive installment payment plans, this resulted in a
dramatically increased awareness for the exhibited vehicles along with increased sales as deals become easier to
close on the spot.
It can even be argued that malls have become a primary reason for the explosive growth of car sales in
recent years.
Distribution Design
Purpose of Place
The third P of the marketing mix, Place (aka distribution channels, is all about efficiency. It
seeks to answer the question of how best to move products from the producer to the consumers.
What is the best way to place your products into the consumers’ hands? Where is the best place to
set up a shop?
Distribution has three key objectives, namely:

1. To effectively reach your target market;
2. To minimize cost of dissemination; and
3. To maintain consistency.
Distribution channels are the set of interdependent organizations that are involved in the
process of making a product or service available for use or for consumption by the consumer or
individual user. These can include wholesalers, sales personnel and territory managers, authorized
distributors, and retail stores. It also involves the contractual relationships between these entities,
if any, as well as the selection of actual points of distribution.
Terms and Responsibilities of Distributors

Before distribution can commence, the following issues need to be ironed out and be made
very clear in order to minimize future problems.
1. Price policies. Ideally, a firm will want to have control over how its products ar epriced
down the line, all the way to the retail level. The way to do this is through a well-mapped
price list that gives the suggested retail price (SRP) at the retail level, along with distributor
prices and even a schedule of volume incentives and discounts.
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2. Condition of sale. This involves key transactional details between the firm and the
distributor pertaining to the transfer of goods, such as terms of payment for goods received,
credit terms and guarantees for matters such as defective products.
3. Territorial rights. The scope of coverage for sales by the distributor needs to be made
clear as possible in order to minimize the possibility of territorial disputes between fellow
distributors.
4. Service and responsibilities. This specifies the duties and responsibilities of both the firm
and its distributors. Firms, for example, may be held responsible for ensuring that proper
level of stocks are always available for ensuring that proper level of stocks are always made
available to the distributor with penalties to be imposed to the firm should stocks fall below
required level. Distributors, on the other hand, may be made responsible for matters such
as meeting sales targets and submitting sales reports with penalties to be imposed for non-
compliance.
Functions of Distribution Channels

1. Gather information about customers
2. Communicate and promote products
3. Reach the proper market
4. Negotiate with buyers
5. Take orders
6. Finance inventory-keeping
7. Finance consumer purchases
8. Assume risks of channel work
9. Move physical products
10. Provide payment facilities
11. Oversee transfer of ownership
Consideration in Distribution Design

Firms can opt to sell their products themselves, with no channels to avail of which is called a
zero-level or direct distribution system. This may be possible if (a) the firm only expects low
volumes of transactions and has no ambition to sell to a wider market, or (b) it is ready to invest in
the technical skills and logistics required to set up a widely-spanning distribution system.
If a firm deals directly with retailers, then there is one layer of distributors between the firm
and the customers. This is a case of single-level distribution system. If a firm assigns regional
wholesalers who in turn deal with retailers, then there are now two layers between the firm and the
customers which is now a case of two-level distribution system. There can be any number of levels
between the firm and the end consumers, it depends on the design of the distribution system.
Should a business set up its own distribution system or should it rely on other parties to
take care of the distribution functions for them?
Pros Cons
In-house distribution Full control over Expensive to set up, requiring new skills
system distribution process and investments
Outsourced distribution Ease and speed of May not have full control over the results
system mobilization Margins and payment periods are subject
to negotiations
Bargaining power is a very important factor when considering whether or not to deal with
third party entities for distribution. If you happen to have a very strong and very “powerful” brand
then it may be easy to convince distributors to abide by your terms.
If you do not have sufficient bargaining power with your distributors, then you may have to
offer incentives such as higher distributor margins, longer terms of payment, or bonuses and other
extras. At the very least, you may have to develop a very good personal relationships with them in
order to get better terms.
Perhaps the lowest form of distributor arrangement would be consignment. Here, you
simply ask a distributor to stock your goods for you. There is no transfer of ownership, which
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means that you still carry the risks should the goods not sell sufficiently and your working capital
will be tied up until such time the goods actually sell.
Service issues that affect the design of a distribution system:

1. Lot size
2. Waiting time
3. Location
4. Variety
5. Add-on services
The nature of your product will also affect your choice of distribution system. Among these
are:
1. Product size
2. Perishability
3. Technical complexity
Types of Distribution Channels

Types of Distributorship
1. Online resellers. Companies like Lazada exist to serve as Internet-based distribution
points for a number of manufacturers and dealers especially as online buying is steadily
growing in the local market.
2. Wholesalers. These buy your products in bulk, typically taking ownership and therefore
transferring the risks involved with ownership into their hands. In exchange, wholesalers
ask for territorial exclusivity and long credit terms, allowing them to practically make money
without having an initial outlay.
3. Company sales force. In-house sales teams may be manageable when lean, such as when
a firm is just starting up. But complexity can escalate quickly as the team grows in number.
A sales force works best when there is order and discipline among the ranks.
4. Value-added Resellers (VARs). These are firms that put together products from different
suppliers in order to come up with a systems or solutions that appeal to markets with
specific needs. A VAR serves as a short of one-stop shop and firms that supply to VARs
hope to become exclusive suppliers for particular system components.
5. Professional Sales Agencies. Professional sales organizations take on the selling of
products in exchange for commission schemes. These organizations ask for, at least 20% of
SRP as their revenue share.
6. Specialty dealers. These are distributors that specialize in either particular product
categories or in the specialized needs of very distinct target markets. The more specialized
the store, the higher the margins that it can charge.
Distribution systems can be exclusive, intensive or selective.

 Exclusive distribution means giving exclusivity to appointed distributors.
 Intensive distribution means that the supplier will push its products to as many
different points of distribution as possible.
 Selective distribution is a mix of exclusive and intensive distribution systems,
often involving the assignment of exclusivity to distributors in limited areas.
Types of Retailers
1. Specialty Store. These stores have very narrow width in terms of product mix but each of
the product lines that they o offer have extensive length and depth.
2. Department Stores. These stores are typically large because they offer a broad width of
product categories. Each product line will be showcased under its own department, hence
the need for the store to have a lot of floor area.
3. Supermarkets. These stores have an extensive variety of low margin, high volume goods
that mostly consist of food staples. Typical margins hover at just around 15 percent but its
through volume that supermarkets earn.
4. Convenience Store. These can be sari-sari store or store chains such as 7-Eleven and
Ministop. These stores offer a very shallow depth in their product mix mainly because shelf
space is limited, so there is no room for offering variety. These stores stock only the
essentials and it is not unusual for these to stock juts one brand for each item.
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5. Discount Stores. Shops that offer big discounts for everyday items. Serious discounters
manage to provide steeply discounted prices through creative deals with manufacturers
such as by offering to buy non-moving inventory straight from manufacturers for cash in
exchange for steep discounts that are then passed on to shoppers.
6. Superstore. These stores such as S&R, are characterized by gigantic selling spaces as well
as bulk selling. The idea is for the store to get deep discounts from manufacturers by buying
and selling in bulk, with part of the discounts being offered to consumers.
Distribution Strategies
Sources of Channel Conflicts
Vertical conflicts. These refer to issues that may arise between different levels along the
distribution system. Because these involve different distribution levels, these usually mean that the
conflicts are contractual in nature and may involve matters of accountability.
Horizontal conflicts. These refer to issues that may arise between distributors along the
same distribution level. Often, these involve territorial conflicts, where one distributor claims that
another is infringing into what is supposed to be its rightful territory.
Retail is About Real Estate

At the retail level, where wars between competing brands can be won or lost through sheer
visibility alone, firms vie for as much prime real estate as possible.
Shelf space allotments are measured in terms of facings or the number of instances of the
product along a shelf.
Distributor Ploys
1. Forwarding. When a suppliers push a price promo towards the consumers by dropping
the price for its distributors with instructions to pass on a substantial part of the price
drop to consumers via promotional suggested retail prices, the distributors could stock
up on these lower-priced products, hoarding these and storing the items, and to be sold
at regular price once the promo period ends. The distributors benefit by taking
advantage of the unusually large margins that they would end up having. This however,
would be at the expense of the suppliers whose total sales after the promo period ends
would plummet.
2. Diverting. Nationwide distributors could also resort to a practice that is called diverting
where they would buy heavily in regions where products go on sale, only to ship these
products to regions where product is not on sale. In this way, it maximizes its profit
margins, but at the expense of the regional units of the suppliers.
The Rise of Private labels

Private label goods, also known as house brands, refer to brands that are owned by the
distributors themselves. Examples include the Bonus brand that can be found in SM supermarkets,
Supersavers in Robinson’s supermarkets, and Lady Rustan leather products that can be found in
Rustan’s department stores.
Distributors do not manufacture their own products because manufacturing is not normally
this distinctive competence. Instead, they rely on while label producers or factories that produce
foods for rebranding of other firms. Private labels are typically positioned at the low price end of
the product line.
Conflicts can arise when these private labels end up competing directly with the same
products that are stocked on the distributor’s shelves.
Gray Markets
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Gray market goods refer to products that somehow make it to the market without going
through distribution channels. These products are often called gray goods because they typically
exist along the gray area of the law: legally people can sell any product that they buy, so there is
no criminal liability for selling goods that was legally bought elsewhere. But in doing so, the seller
is competing with official resellers.
Regionalization and Localization

As global market open up – manufacturing may tend to become concentrated so that local
manufacturers become displaced in favor of having single manufacturers that service multiple
countries. This provides economies of scale for multinational firms as they take advantage of free
trade to ship goods from a central location. local offices of multinational firms therefore effectively
become national distributors and marketers for the goods upon receipt as opposed to previous
organization structures that also included manufacturing and logistical units.
This would work for as long as the products in question hold international appeal. On the
other hand, there are products that fare better of they are localized or customized according to
local tastes and preferences.
Online vs Brick-And-Mortar
Brick-and-mortar refers to actual physical stores. As more and more consumers enabled
and educated in buying products online, a threat looms over the sustainability of physical stores.
How can brick-and-mortar stores compete with online vendors? Shopping experience may be a
key. Customers may have to feel delighted with their real-store experience, to the point that they
want to close the deals right there and then regardless of cheaper online alternatives.
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Task
1st Semester
2020-2021 Date Topic Place and Placement
CASE 14: The Benefits and Risks of Online Shopping

Online shopping has recently gained popularity due to the ease by which a consumer is able to search
for, chose and purchase. Online stores provide a vast array of products and services, as well as information
regarding the specifications and features of a specific product. This guides the consumers in choosing their
orders. Many online stores allow customers to make a review or post comments regarding a product which can
then be viewed publicly. These reviews can have either a positive or negative effect on the sales of the product.
While online shopping provides convenience to customers, this does not always come without risks.
Since an online shopping website requires the creation of an account to access its services and features,
shoppers need to provide their personal information for verification during the registration process. These
accounts can then become targets for identity theft by hackers. Hackers can also gain access to customer
information through advertisements posted on the website. These ads usually feature “clickbait” content which
entices the customer to click on the ad; upon clicking, the customers are transferred to another site which infects
their computer with malicious software (malware) that enables hackers to access their files, emails and online
accounts. Many unwary customers have been victimized by hackers using this tactic.
This is why online shopping websites have invested on online security to combat the threat of hacking
and safeguard the personal information of their customers. Online shoppers are likewise urged to shop only at
trusted websites and protect themselves by not sharing personal information with other people online.
Questions
1. Why has online shopping gained popularity among consumers?
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2. What is the most significant risk of engaging in online shopping?
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3. How have online stores addressed the risk of online shopping?
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4. What other steps can consumers take to protect themselves online?
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1. Give examples of tangible products that you believe have to be sold directly by a producer rather than
through distributors. Explain why.
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2. Give examples of tangible products that you believe require many levels of distributors. Explain why.
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3. Much of the distribution involves selling of tangible goods. Do service businesses also deal with third-
party distributors? What examples can you think of?
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4. Appliance chains such as Abenson’s or Automatic handle a number of brands. If you are a relatively
unknown appliance brand that is in their stores, what are ways by which you can make your brand
stand out?
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5. As a follow-up in the above question, how can you ensure that the appliance store will comply and
implement our suggested tactics for making your brand stand out?
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6. What is your favorite shopping destination? Explain why it is your destination of choice? What does the
place provide?
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7. What advantages can a convenience store chain, such as 7-Eleven, have over traditional sari-0sari
stores?
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8. Supermarkets charge a “placement fee” before they agree to stock your products on their shelves.
This fee can be in the five-digit range. Analyze why this is now an industry norm. Why can
supermarket get away with this practice?
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9. If you were to sell a highly perishable low-priced product, such as ice cream sticks for a broad market,
what would be your considerations for your distribution system? What would be your likely
recommended distribution points?
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10. Shop around in supermarkets and you are likely to find products with wordings in regional languages,
such as Bahasa Indonesia or Malaysian. What does this tell you about the distribution strategy for
these brands?
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11. Give an example of a brand that is most likely being hurt by a big retailer’s private label brand. Give
suggestions on how this brand can survive the competition.
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12. Give an example of a locally made product that you believe will have a good chance of competing in a
regional market. Explain why.
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Revenue Sharing with Distributors
Wonderbar is a chocolate bar that costs you 10 pesos to manufacture, its distinguishing trait is being
made from the finest chocolate from Davao. You want to make at least 100 percent margin over cost
and you want to motivate distributors to sell it for you.
How would you propose to sell Wonderbars, assuming that your objective is to maximize your sales
volume as quickly as possible?
Criteria:
Distribution Strategy – How promising is the proposed distribution setup? (10 points)
Incentive Strategy – How viable is the suggested distributor margin? (5 points)
Price Strategy – How viable is the SRP? (5 points)
1. Through what distribution channels would you want your customers to get these?
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2. How much would you set as your suggested retail price (SRP)? With this SRP, how much will
you offer to your distributors/s? Explain.
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Lesson 16: Promotion

1. identify and discuss the elements of promotion,
2. discuss relevant promotional tools,
3. discuss advertising, its objectives and various styles, discuss how effective promotion impacts product
performance and sales, and
4. evaluate how companies conduct promotion
Well-loved Filipino Advertisement
What makes a commercial memorable? Of the dozens of commercials that people see each day, what
sets apart the ones that audiences remember after first watching them?
A good commercial must represent a brand and reflect what it stands for. It must express an idea or tell a
story by establishing and developing a clear, simple character or theme. A good commercial must also make a big
impact on the audience within the time constraints of a commercial.
Here are some Filipino commercials that have stood the test of time and made a big impact on viewers.
1. McDonald’s “Karen Po”
In this commercial, a young woman named Karen and her grandfather are eating at McDonald’s. Karen
struggles to remain patient as her grandfather, showing signs of senility keeps referring her as “Gina,”
despite her correcting him. She then takes notices as he cuts his hamburger in half and wraps up one of
the halves, as if to save it for later. “ this,” he explains, “is for my favorite granddaughter, Karen.”
What makes this commercial distinctly Filipino is its subtle yet powerful use of the themes of familial
bonds and respect for one’s elders – traits that are highly valued in Filipino culture. Karen’s pasalubong in
the form of half a burger, symbolizes the kind of undying love that not even senility can erase. That a
McDonald’s burger is the mode of expression for such love is an example of effective corporate branding.
2. PLDT’s “Suportahan Ta Ka”
This commercial also banks on Filipino family values, but goes on a different direction: A young man
nerviously calls up his father, saying that he will be shifting courses from medicine to fine arts. The father
expresses his confusion and exasperation in a single word: “BAKIT?” By his attire, we can surmise that
the father himself is a doctor, and it may have been upon his insistence that his son took up medicine. By
shifting to fine arts, his son is disobeying his wishes – something almost unthinkable among conservative
Filipino families the son then explains that his heart is not in medicine, and that he hopes his father
understands. After a brief pause, the father responds: “What makes you happy, I will support you.”
The backbone of this commercial is the text that serves as subtitles to the scenario: “May mga usapang
dapat masinsinan. May mga usapang dapat malinaw. Buti na lang may maaasahan.” Through this, PLDT
positions itself as the medium for vital communication between loved ones, capable of providing not only
clarity, but also the immediacy and intimacy that such important conversations require.
3. Fita’s “Kahilingan”
Some commercials find success not by tagging at heartstrings or discussing “serious” themes, but
through humor: A young man seated on a park bench gives a Fita cracker to a small child. As he is about
to put the last remaining cracker in his mouth, an old woman appears beside him, visibly hungry. He
pauses, then breaks the cracker in two, giving the old woman one half and eating the other. The old
woman magically transforms into a beautiful fairy, and offers to grant the young man one wish in return for
his “generosity.” He asks for a red sports car. Lo and behold! Before him appears a red sports car – cut in
half. As the young man shared his last cracker less than wholeheartedly, his reward us also less than
expected.
4. Purefood’s “Goodbye, Carlo”
A young girl writes in her diary that her crush, Carlo, sat beside her today, and said that she is pretty,
albeit fat because she eats too much. She decides to go on a diet. “Goodbye, chocolates. Goodbye,
spaghetti. Goodbye, hotdogs.” She pauses and glances wistfully at the two Tender Juicy hotdogs sitting
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on a plate on her bedside table. She crosses out the last line in her diary, and below it, writes, “Goodbye,
Carlo.” She then happily takes a bite out of a hotdog.
Despite the rather humorous outcome, it is worth seriously considering the assertion made in this
commercial’s twist: In a moment of self-actualization, the girl decides that no matter how much she likes
Carlo, her insecurities over her looks should not take precedence over her own happiness – and one of
the path to her happiness is eating hotdogs!
Questions for discussions:
1. What do you think are the factors that make commercials impactful and memorable?
2. Choose one of the advertisements and research further on that brand. Does the advertisement effectively
convey the characteristics of the brand?
The last P in the marketing mix is Promotion, which is also called marketing
communication. This comprises the activities done to increase the target customers’
knowledge of the product. Promotion is creating a channel for conversation with the
targeted consumer base. Through promotion, the company aims to attract the customer’s
attention and give them enough information about the product to foster enough interest
to motivate them to purchase.
The promotion that a company will undertake depend on the budget it sets aside,
and there are several ways to set a promotional budget.
The first is to allocate a set percentage of the sales (or, alternatively, the net
profits). Although this practice is fairly common and make sense on paper, some
marketing practitioners criticize it because it is generally difficult to accurately predict
sales and profits. An inaccurate prediction may mean that the predetermined promotional
budget is either too big or too small.
The second method for setting a promotional budget is by examining a
competitor’s budget; then adjusting the budget to be less than, equal to, or more than
theirs. However, while this method ensures that spending will be at a similar pace to the
competitor’s it also means that their practices will restrict the company’s pacing.
Another method is to plan out the different tasks and types of promotion to
be done within a certain timeframe, and setting the budget according to the requirements
of those tasks. This is the most sophisticated approach to setting a promotional budget,
as it lays out the specific objectives of a promotional campaign, and the methods to be
used to achieve those objectives.
The right combination of methods for setting a budget, and adjusting them
according to the situation, can be the deciding factor in whether or not a promotional
campaign succeeds.
Objectives of Promotional Activities
The purpose of promotions is to elicit a change in behavior. Of course, getting

people to buy your product, when previously they did not, constitutes a change in
behavior. But the behavioral objective need not be this 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.
Different organizations have different expectations from their promotional activities.
These expectations are developed into objectives which then shape the selection and
execution of these activities. The marketer might want to put something into the
consumer’s mind, change an attitude, or get the consumer to act. Some possible
objectives of promotion for any company may include:
1. Building awareness – The realization that your product exists. Often, a product or
brand may need to create an identity within the market. For the most part, this applies to
a new company, a new brand or a new product. But often it may also be needed in times
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of rebranding or building up a failing product. The aim then is to select those promotional
activities that help inform the customer about the company and the product. (OPPO)
2. Providing Information - Sometimes, a company may just need to provide necessary

information regarding the product, its benefits, features or usage to the consumer. This
may be the case if a new product is introduced into the market. Unique features or
benefits may need to be explained. In other cases, a new feature on an existing product
may need to be highlighted. In some cases, such as in instances where environmental
impact or health scares may be in play, information about a change in business practices
and company policy may need to be communicated.
3. Stimulate Demand-A company may seek to enhance its sales through promotion. If
sales have been lower than usual, then the aim may be to get them back up to target
level by re-engaging old customers and encouraging new ones to try a product out. In
other instances, the aim may be to increase sales further at certain times of the year such
as near a major holiday. Free demonstrations or special deals may be used to reach these
ends.
4. Differentiate Product-In situations where there are many competitors in the market,
a company may seek to use promotional activities to differentiate its product in the
market and make it stand out from the crowd. The focus here remains on those features,
functionalities or benefits that may not be offered by a competitor or may not be offered
so well.
5. Reinforce the brand-One basic aim of a promotional activity may be to further

strengthen the brand and its place in the market. This helps turn a first time purchases
into a life time purchaser. This can also help create advocates for the product from within
the customer base.
The Promotional Tools

Each promotional tool has its own unique characteristics and costs.
Advertising
Generally speaking, advertising is a nonpersonal form of communication, meant to
bring a product or service to the attention of potential or current customers. More
formally, the American Marketing Association define it as the “placement of
announcements and persuasive messages in time or space purchased in any of the mass
media by business firms, nonprofit organizations, government agencies, and individuals
who seek to inform and/or persuade members of a particular target market or audience
about their products, services, organizations, or ideas.”
It is the most expressive among the promotion types because it relies on visuals,
color, words, and sound. Well-executed advertisements are remembered for a long time,
and the product being advertised enjoys strong brand recall. When using advertising, it is
important to understand the company’s advertising objectives. A company cannot launch
an advertising campaign without a clear grasp of its objectives.
Common Communication Platforms: print and broadcast ads, packaging, motion
pictures, brochures and booklets, posters and leaflets, directories, reprints of ads,
billboards, display signs, point-of-purchase displays, audiovisual materials, symbols and
logos, videotapes and CD-ROMS
Because of the many forms and uses of advertising, it is difficult to make
generalizations. Yet the following qualities can be noted: public presentation,
pervasiveness, amplified expressiveness and impersonality.
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Reach is the percentage of the target market who is exposed to a particular

advertisement while frequency is the number of times the target audience is exposed to
the message. Impact is the value of the exposure to the target audience. The most
widely used medium today is television. Marketers can choose from various timeslots: the
early morning slot, the noontime and mid-afternoon slot, the early evening slot, the
primetime slot, and the late evening slot. Networks have different rates on the various
time slots. Rates also depend on the show’s ratings. Top raters usually have high
advertising rates.
Pricing for print ads can vary greatly depending on factors such as size, color, and
the popularity of the publication selling the ad space. Billboards also depend on size and
location. Many billboards are placed strategically along expressways and highways. In
addition to outdoor advertising such as billboards, tarpaulins, and ads on buses and taxis,
companies may also opt for indoor advertising in malls, restaurants, bars, airports and
even restrooms.
An alternative to print ads is advertising on the Internet. Companies may buy ad
space on existing websites, and/or create their own and use this as a communication arm.
Websites offer some flexibility and creativity. Aside from advertising, they may be used as
online store, repositories of information such as events, new product offer3ings, and job
vacancies, or as avenues for customer service.
In marketing, there are two types of websites. The first is the intermediary website,
which acts as gateway to different content. Common examples are social sites like
Facebook, Twitter, and LinkedIn. The second is the destination site which provide
information on specific subjects, products and services. Examples include travel
companies, manufacturer websites, and the like.
Advertising messages can be expressed through the following execution styles:

1. Lifestyle. This shows how a product fits a certain lifestyle. Sanitary napkins like
Modess, Whisper and Kotex usually execute their ads using lifestyle as a theme.
2. Slice of Life. This depicts scenarios where the product is used in normal, day-
to-day settings. Examples are detergent ads like Tide, Surf, Ariel, and Breeze.
Laundry detergents like Ariel choose ordinary people in its commercials which
often depicts a typical day for a housewife, washing clothes.
3. Fantasy. This style typically depicts idealized or even exaggerated effects of the
product/service in question, allowing the customer to fantasize about such as
scenario.
4. Mood. This style attempts to build a mood or thematic atmosphere (such as
love, beauty, extravagance, etc.) around a product or service. Perfume ads are
known to utilize this style.
5. Musical. This style expresses the message of the ad through music, which may
be an existing song adapted and licensed for use in the ad, or a jingle composed
specifically for the ad.
6. Technical/scientific evidence. This style uses the technical knowledge or
scientific evidence to assert a product’s superiority over its competitors. This is
most commonly used in ads for personal care products such as soaps,
toothpaste and medicine.
7. Testimonials. This style features an individual or group of people giving
positive feedback on the product, attesting to the product’s high quality. These
endorsers may or may not be celebrities.
Advertising can be used to build up a long-term image of a product (Coca-Cola ads)
or trigger quick sales (an SM ad for a weekend sale). Advertising can be efficiently reach
geographically dispersed buyers. Certain forms of advertising (TV advertising) can require
a large budget, whereas other forms (Web advertising) may not. Just the presence of
advertising might have an effect on sales: consumers might believe that a heavily
advertised brand must offer “good value.”
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Sales Promotion
Sales promotion consist of sales activities which help increase sales for a product or
service. Sales promotion often provides quick response. There are two types of sales
promotion: Consumer schemes and trade promotions.
Sales promotions intended for customers are called consumer schemes. A discount
coupon elicits response by giving an incentive to purchase the product within a specific
period. Customers take advantage of this opportunity to save a few pesos. However, sales
promotion is good only in the short run. A strong brand recall is more effectively achieves
through advertising. Furthermore, needs are still the biggest determining factor in making
a purchase, despite discounts, coupons and other types of sales promotions, if a product
is not in the customer’s priority list, they will not buy it.
Other types of consumer schemes include cash coupons and rebates, which are
common in supermarkets, and patronage rewards, which are popular in department
stores. One of the most popular patronage rewards is that used by SM and National
Bookstore. Frequent points for every purchase, and may avail of rebates on accumulated
points.
Contests and raffles are also popular. Supermarkets and car dealers use this type of
promotion. Free samples may be used to introduce a product to potential new users.
Products may also be bundles with freebies such as keychains, mugs, t-shirts, and the
like. Many paper products like bond paper or pad paper come with free eco-friendly bags
for customers who buy in bulk.
Trade promotions include freebies, incentives, commissions and discounts given to
wholesalers, retailers and distributors. They are given to add more stocks and increase
visibility to store shelves.
Common Communication Platforms: contests/games/lotteries, premiums and gifts,
sampling, fairs and trade shows, exhibits, demonstration, coupons, rebates, low-interest
financing, entertainment, trade-in allowances, continuity program, tie-ins.
Sales promotion tools – coupons, contests, premiums and the like – offer three
distinctive benefits: communication, incentive and invitation.
Companies use sales-promotion tools to draw a stronger and quicker buyer
response. Sales promotion can be used for short-run effects such as to dramatize product
offers and boost sagging sales.
Public Relation and Publicity
Public relations is the practice of communicating with the media and the general
public in order to establish a strong relationship between a target audience and an
organization, company, or individual, and create and maintain a positive image of that
organization, company, or individual. While public relations goes hand-in-hand with
advertising, it is different in that although it may indirectly result in increase in sales, its
primary goal is to ensure that public opinion of the organization, company, or individual in
question remain positive. Furthermore, while advertisements are usually paid for, public
relations activities generally are not. Practitioners engage in public relations through a
number of varied tools and techniques, including press releases, newsletters, social
media, attendance at public events, and participating in or even hosting charitable events.
Common Communication Platforms: press kits, speeches, seminars, annual reports,
charitable donations, sponsorships, publications, community relations, lobbying, identity
media, company magazine, events.
The appeal of public relations and publicity is based on three distinctive qualities:
high credibility, ability to catch buyers off guard and dramatization
Personal Selling
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Personal selling is a face-to-face technique wherein the salesperson uses his or her
persuasive skills to convince a customer to buy a particular good or service. Personal
selling is effective in many ways. Good salespersons can effectively boost sales by
building strong and binding relationships with customers who value the time and effort
they put into promoting a product. Many doctors rely on medical representatives who
build lasting friendship with them. They endorse the brands from medical representatives
who respond to their needs. Personal selling requires excellent communication skills and
flexibility from the salesforce because of the direct interaction between the buyer and the
seller. The salesforce represents the company and the products it offers to the customers,
thereby requiring the right approach to potential customers.
The salesforce should be knowledgeable about the product and should be able to
answer all pertinent questions that customers may ask about it. They should be more
than willing to clarify any objections during product demonstrations. Customers may
approach the salesforce or vice versa. Either way, sales personnel should handle their
customers well. The objective is to build lasting relationship with customers by offering
quality customer service.
Common Communication Platforms: sales presentation, sales meeting, incentive
programs, samples, fairs and trade shows.
Personal selling is the most effective tool at later stage of the buying process,
particularly in building up buyer preference, conviction, and action. Personal selling has
three distinctive qualities: personal confrontation, cultivation, response.
Direct Marketing
Direct marketing is a form of marketing and advertising in which a company
communicates and interacts with its target audience directly, without “middlemen” or
intermediary entities, such as retailers, distributors, or wholesalers. It may be done
through several methods, such as door-to-door marketing, physical mail, email,
telemarketing, coupons, direct-response TV, and kiosk marketing. It is often characterized
by a call to action, such as inviting potential customers to call a specific phone number, or
to click a link to subscribe. While it can be difficult to measure the effectiveness of general
marketing and advertising specifically and accurately, the call-to-action feature of direct
marketing gives marketers an immediate and easy way to measure the effectiveness of
their direct marketing campaign. However, since it is often unsolicited, if it is done
aggressively or in excess, it may backfire and negatively affect a company’s reputation.
Common Communication Platforms: catalogs, mailings, telemarketing, electronic
shopping, TV shopping, Fax mail, e-mail and Voice mail.
The many forms of direct marketing – direct mail, telemarketing, Internet
marketing – share four distinctive characteristics. Direct marketing is non-public,
customized, up-to-date and interactive
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Task
1st Semester
2020-2021 Date Topic Promotion
CASE 15: Online Advertisements

Google Adwords is a platform which allows companies to advertise via Google search results, as well as
on blogs, newspapers, Youtube, and other partner-websites. The companies then pay Google on a per-click basis
which means that the company pays a certain amount each time a potential user clicks on an ad. Redirecting
them to the company’s website. Ads supported by Adwords are divided into two networks: the Search Network
and the Display Network.
The Search Network functions as its name suggests – via the Google search engine itself. Advertisers bid
on keywords associated with the product or brand they want to promote. Google then evaluates the ads relevance
to a user’s search, and the landing page, or the website where the users will be directed upon clicking the ad.
These factors (the price of the bid, the relevance to the search, and the quality of the landing page) will help
determine the placing of the ad. When the user performs a Google search, Google may place sponsored ads at
the top of the list, above the “organic” search results, marking these ads accordingly. The Search Network is
restricted to running text-only ads.
This is not to be confused with search engine optimization, where a company optimizes the content of
their website (or pay an outside party to do so), such that when users search for keywords related to the
company’s products or brand, the company’s website will be among the top result.
The Display Network consist of broad network of publisher websites, including nlogs, news, media, and
Google subsidiaries such as YouTube. Advertisers still bid on keywords, but rather than this affecting search
results, it will determine the ad’s placement and visibility on relevant websites. The Display Network support ads
that contain rich media – images, and even video and audio – in addition to text. It is estimated that the combines
reach of the entire Google Display Network is 90% of all internet users worldwide.
Questions
1. How does Google Adwords assist companies to reach more customers?
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2. What do you think are the benefits of utilizing online schemes in reaching more customers? Cite
examples to support your answer?
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Media Selection and Strategy

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. What media vehicle will you
choose (select only one) and why? Create a mockup of message, and explain what reactions (communication
objectives) you want to elicit from your audience.
122
Criteria:
 Media Selection Rationale. How appropriate is the selected medium? (10 points)
 Communication Objectives. How strategic are the communication objectives? (10 points)
 Audience Engagement. How engaging is the message? (10 points)
Media Vehicle: ________________________________________________________________
Why:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Promotional Message
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Communication Objectives/Reactions from Audience
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Build a Social Media Campaign
Identify a small food place or diner that currently has no presence in social media. Propose a social
media strategy that this business can implement to its advantage (with clear objectives), making
sure that the strategy would entail just a minimal cost to implement.
Criteria:
 Clarity of objectives. How relevant are the objectives for the campaign? (10 points)
 Communication Strategy. How viable and usable is the suggested strategy? (10 points)
 Value of the Strategy. How much impact can it potentially have? (5 points)
Promotional Objective
________________________________________________________________________
________________________________________________________________________
123
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Social Media Strategy
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Promote Your School

Create strategies to promote your school. Consider the value of developing a public
relations program for the school to use within the community. Try to use all six elements
of the promotional mix to better accomplish your task. Can all six elements be used
effectively or not?
Promotional Tool: _______________________
Strategy
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

Strategy
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Strategy
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

Strategy
________________________________________________________________________
________________________________________________________________________
124
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Strategy
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Strategy
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
125

Principles of Marketing 1st Semester

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Principles of Marketing 1st Semester

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PRINCIPLES OF MARKETING

For Senior High School

Lesson 1: Marketing and It’s Scope

Procter & Gamble’s Tide: A Marketing Success Story

The Scope of Marketing

Core Marketing Concepts

 Marketplace, Marketspace and Metamarket

 Marketers and Prospects

 Needs, Wants and Demands

 Product, Offering and Brand

 Exchange and Transactions

Utility Concept of Marketing

The Marketing Organization

Performance Name Grade Level 12 Score

CASE 1: Fast Food Restaurants

The Growing Popularity of Fast Food Restaurants

Rising Cases of Health-Related Problems

Application and Advancement

Lesson 2: Goals of Marketing

1. How did Starbucks evolve from a coffee bean roaster to a café?

The Common Goals of Marketing

Establishing Thought Leadership

Increasing Brand Engagement

The popularity of Facebook increased brand engagement among various brands. In

Performance Name Grade Level 12 Score

CASE 2: Yellow Cab Pizza Co.

1. What does Yellow Cab do to maintain customer loyalty?

Lesson 3: Approaches in Marketing

Products and Services

Search Engine Marketing

1. What makes Google a highly successful company?

Traditional Approaches in Marketing

Societal Marketing Concept

This concept is defined as a marketing philosophy that emerges profitability and

Relationship Marketing Concept

This concept focuses on establishing lasting relationships with customers and

Performance Name Grade Level 12 Score

CASE 3 : JOHNSON & JOHNSON’S TYLENOL CRISIS

Application and Advancement

Lesson 4: Relationship Marketing

Nike + and the Active Lifestyle

1. How do Nike+ applications help customers maintain an active lifestyle?

Relationship marketing is the process of building and maintaining profitable

Customer Perceived Value

Levels of Customer Value

The levels of customer value indicate

Total Customer Satisfaction

Attracting and Retaining Customers

Levels of Relationship Marketing

Customer loyalty is found on excellent customer services. The five levels of

Relationship Development Strategies

There are three general retention-building approaches:

Customer Service in the Philippine Business Enterprise

Performance Name Grade Level 12 Score

CASE 4 : The Live in Levi’s Project

2. What other marketing strategies can be employed to improve the campaign?

Lesson 5: Service Marketing

Mobile Technology in the Hospitality Industry

3. Perishable. Because they are intangible, rendered services cannot be stored or

Types of Service Processes

Directed at People Directed at Possessions

Components of Service Marketing

recommending their services to others as well as promo flyers distributed in

Performance Name Grade Level 12 Score