Lesson 1: A FRAMEWORK FOR MARKETING THE MARKETING PROCESS COMPONENTS

MARKETING ➢ Strategic Marketing

o Customer segmentation
“Marketing is the activity, set of institutions,
o Target market selection
and process for creating, communicating,
o Value positioning
delivering, and exchanging offerings that have
➢ Tactical Marketing: Value Deployment
value for customers, clients, partners and
o Product design and
society at large”. (According to the definition
development
provided by the American Marketing
o Product portfolio management
Association)
o Service development
➢ is an organizational function because it o Pricing
is a core task that is expected of a o Distribution and logistics
modern organization, whether or not it ➢ Tactical Marketing: Value
operates for profit. Communication
➢ Is a set of processes because there are o Sales force strategies
essential tasks that have to be engaged o Sales promotion strategies
in order to produce a viable marketing o Advertising
strategy.
Lesson 2: Needs, Wants, and Demands
➢ Has the delivering of value to
customers. Need
➢ Has at its heart a give-and-take
- is a state of felt deprivation about something
relationship.
that is deemed to be necessary.
SOME OTHER EXAMPLE OF PRODUCTS Maslow’s Hierarchy of Needs Theory
• Amusement park
• Application on smartphones
• Banking services
• Coffee shop
• Hotel accommodation
• Legal advice
• Music bands
• Pet care
• Radio stations
• Social media sites
• Telecommunication services
• Television programs

THE MARKETING SYSTEM

- The theory states that the most basic needs
(represented as the lower levels of the pyramid
model) must first be met before the individual
can feel a strong desire for the higher level
needs.
Wants
-are the specific manifestations of needs.
Demands
-are wants that are backed by purchasing
power.
Lesson 3: Marketing Origins, Exchange, and
Value
Stages in a Market’s Maturity That Affect How
Businesses Can Best Sell to the Market
Stage 1. Supply < Demand
➢ Seller’s market – a situation wherein
the manufacturers generally have no
problems selling whatever they
produce.
➢ Production orientation – a mindset
characterized by taking advantage of
the demand for a particular product by
producing as much of the product as
possible in order to meet the demand.
Stage 2. Supply < Demand, Competition
Growing
➢ Product orientation – a mindset that
drives innovation; improvement in a
product, such as quality, features,
comfort, design, are undertaken in the
hope that the product will speak for
itself and that consumers will choose
the product based on its merits.
Stage 3. Supply > Demand
➢ Sales orientation – using sales
organizations to push a product directly
to the customers.
➢ When sales orientation works, it can
work for the benefit of all parties.
Insurance. On the other hand, when it
does not work, it can quickly turn into
hard selling.
Stage 4. Supply > Demand, Customer-
centric Strategies Emerge
Marketing orientation begins with
identifying and understanding a particular
target market; then products are designed
according to what could best fit the needs
of the target market, priced according to
their typical budgets, sold where it is most
convenient for them, and promoted in a
way that best catches their attention
The Concept of “Exchange”
➢ Marketing is all about fostering positive
exchanges. It is imperative that the
customers feel better off after a
transaction because otherwise they
may feel that they should have spent
their money elsewhere—a feeling
which will prevent them from becoming
loyal customers.
➢ For a marketing-oriented exchanges to
be successful, it is essential that
companies know what the market really
needs.
The Concept of “Value”
➢ In marketing sense, value is a very
personal thing, which means it can be
very subjective or a function of the
customer’s personal condition (such as
hunger), experiences, personal history,
social interactions, perceptions,
education, and so much more.
Five Kinds of Economic Utility That Can
Be Offered by Products and Services
1. Form Utility. A product, by its very
form, saves the consumer from the
effort of having to make the product
himself.
2. Place Utility. The convenience offered
by making a product available around
 the proximity of the customer is also
valued.
3. Time Utility. If a firm can offer a
product or service far quicker than
alternative providers, the customer will
also value this speed of service.
4. Possession Utility. For some products,
mere ownership is already valued by
the customer.
5. Information Utility. Knowing certain
things about the product can already
imbue it with value.
Chapter 2; Customer Relationship:
Customer Service
Customer-Driven Marketing
-A customer is a person or organization that
transacts businessperson or business
organization to buy a goods or services
from monetary or other valuable
consideration.
-Through customers’ purchases,
organization are able to cover
manufacturing cost, operating expenses,
and generate profits.
Customer Service
-Customer Service is the process of
ensuring customer satisfaction with a
product or service.
-Good customer service can cause
customers to perceive the value offered
superior over its competitors.
Managing Customer Service Quality
-Maintaining Customer service quality is
important. Disgruntled customers tend to
tell others about a bad service experience
more often than a pleasant one. This can
lead to deterioration of the organization
image. It shall be perceived as being unable
to deliver the level of service expected by
customers.
➢ Companies can best manage
customer service quality by:
o Establishing service objectives with
specific and measurable targets.
o Committing sufficient organizational
resources towards the achievement of
these targets
o Collecting customer feedback on service
quality regularly
o Reviewing target accomplishment
o Identifying customer service
weaknesses and connecting them.
➢ Customer-centered organization
can differentiate their customer
service through:
o the development and training of
competent customer contact personnel
and
o Designing and implementing a superior
service delivery environment and
process.
Customer Relationship Management
-Is a process of managing an organization’s
interactions with current future customers.
-The rationale for CRM is the recognition
that companies can sustain long-term
profitability by attracting and maintaining
their valuable customers. These are
customers that can directly or indirectly
generate the greatest revenues and
financial returns.
Customer Lifetime Value
-Customer lifetime value (CLV) is the
forecasted sale or profits that a company
can derive from the entire span of the
future relationship with a particular
customer.
A customer’s lifetime value can be based
upon the potential value and profitability of
their relationship with the company.
➢ The CLV perspective has several
distinct implications:
o It considered a longer-term perspective
of the company’s relationship with
customers in contrast to a short-term
view of “take the customer’s money
and run.”
o It calculated the compares costs of
acquiring new customers and keeping
the old ones.
o It highlights the importance of market
segmentation, with the recognition that
some customer groups are more
profitable than others.
The CLV can be measured using the
formula:
For example, an athlete who spend ₱2,000
for every visit to a spa and goes to the spa
twice a month for an expected time period
of five years would have a CLV of:
Successful Customer Relationship
Management Strategies
The following are effective guidelines in the
implementation
of customer relationship management:
• Adopt the right mindset towards
customer service
• Purchase or develop CRM software
• Quantity customer acquisition and
retention costs
• Develop and implement a customer
service training program.
• Empowerment salespersons to make
decisions
• Establish communication lines between
your customer and customer contact
staff
• Shop your competition
• Keep innovating customer service
• Promote genuine customer service with
a passion
Values Integration
-Exhibit good leadership when it comes to
group activities.
MARKETING ENVIRONMENT
MARKETING ENVIRONMENT – The actors
and forces outside marketing that affect
marketing management’s ability to build and
maintain successful relationships with target
customers.
THE COMPONENTS OF BUSINESS
ENVIRONMENT
MICRO ENVIRONMENT – Is defined as
the nearby environment, under which
the firm operates.
• INTERNAL ENVIRONMENT – It
refers to the business itself.
✓ What is being sold
✓ How the organization is set up,
✓ What the organization’s strengths
and weaknesses are
✓ What the resources happen to be
✓ What the company’s core values,
and mission are
IMPORTANT THINGS TO ASSESS
o Company Cash Flow
o Organizational Structure
o Assets and Other Resources
o Strategic Alliances
o Products and Services
• COMPETITIVE ENVIRONMENT –
Refers to the immediate industry in
which your company is doing
business.
✓ Competitors
✓ Competing products and services
✓ Substitutes
PORTER’S FIVE FORCES
FRAMEWORK OF COMPETITIVE
FORCES
➢ sums of money to steal market share
from the firm or even alter the
market’s perceptions about the firm’s
products.
➢ NEW ENTRANTS – New players
joining the industry, especially if the
industry offers attractive growth
prospects.
➢ SUBSTITUTES – They threaten to
steal market share from the industry.
➢ SUPPLIERS – The firm’s own
suppliers can pose a threat as well if
the firm is too dependent on them
and they know it. They can decide to
increase their prices or to even
become potential entrants to the
industry as well.
➢ BUYERS – If the firm is too
dependent on its buyers, the buyers
may sense this. They might band
together and threaten the firm
through additional demands. Buyers
may also become potential entrants
into the industry if they feel that
entering the industry is a simple
matter after all.
▪ MACRO ENVIRONMENT – This
environment is composed of
environmental variables that are
typically beyond the control of any
organization.
• PEST is an acronym for…
✓ Political
✓ Economic
✓ Social
✓ Technological
Going through the different elements
above is what is called a PEST
ANALYSIS.
• “Trend” and the PEST Analysis
– Environmental scanning is all
about identifying important trends
in the environment.
– Why trends? Because trends
become the reality of the near
future.
– Knowledge of relevant trends can
lead to insights into possible
opportunities and threats to a firm’s
operations.
VALUES INTEGRATION:
“Research is the key to understanding the
business environment”
MARKET RESEARCH METHODS AND
MARKET INFORMATION SYSTEM
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.
FRAMEWORK OF A COMPANY’S MIS
COMPONENTS OF AN MIS
▪ INTERNAL RECORDS
– Refers to documents in the
company’s Order-to-Payments cycle,
such as invoices, shipping orders, etc.
– 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.
▪ MARKETING INTELLIGENCE
– The set of procedures and sources
used by managers to obtain everyday
information about developments in the
marketing environment.
▪ MARKET RESEARCH
– Primarily concerned with
understanding the nature of a market.
– The systematic design, collection,
analysis, and reporting of data and
findings relevant to a specific
marketing situation facing the
company.
– Scientific in nature, utilizing the
scientific method in order to gain
insights on how to solve real world
problems.
QUESTIONS:
o Who are our typical buyers?
o Where do our buyers come from?
o How big is our market?
o What are our customers’
aspirations?
o How do our customers shop and
with whom?
o What do our customers buy?
o Why do customers refuse to buy
our products?
PROCESSES INVOLVED IN
CONDUCTING MARKET
RESEARCH
1. Define the problem and research
objectives.
2. Develop the Research Plan.
COMPONENTS:
➢ Data Sources
➢ Research Approaches
➢ Research Instruments
➢ Sampling Plan
➢ Contact Methods
3. Collect the information.
4. Analyze the data.
5. Present the findings.
RESEARCH METHODS
1. OBSERVATION
– This method is best to use when
trying to answer questions
involving how a market behaves.
– 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
– This method is best to use when
trying to determine a market’s
opinions, perceptions, and basic
demographic data.
– 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 GROUPS
 – Focus groups are useful for
gathering strong opinions and
beliefs from a given target market.
– These 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 placed
together in a closed, controlled
environment to discuss a product
or issue with a moderator.
4. EXPERIMENTAL RESEARCH
– This method answers
hypothesis using an experiment.
– Experiments are an under-
appreciated method for
validating issues of causality.
MARKET RESEARCH AND THE
CONCEPT OF “BIAS”
➢ BIAS – is the tendency of data to skew
toward a particular direction.
While it is normal for any research to have
certain amount of bias, it is the job of
researchers to minimize bias to the best of
their abilities.
DEMAND FORECASTING
MARKETING CATEGORIES
▪ POTENTIAL MARKET – This is made
up of those who express some level of
interest in a product.
▪ AVAILABLE MARKET – This is the
subset of the potential market who have
interest, income, and access to the
product.
▪ QUALIFIED AVAILABLE MARKET –
This is a further refinement of the
available market since it may be
possible that those who have interest,
income, and access, nevertheless
cannot get the product due to technical
issues such as laws (e.g., minimum age
requirements for liquor) or distribution
constraints (e.g., remoteness of their
location).
▪ SERVED MARKET – Also known as
the Serviceable Available Market, this
is the market that the company can
actually service with its current state of
logistics.
▪ PENETRATED MARKET – This is the
subset of the market that is already
actively using the product.
ILLUSTRATION
MARKET DEMAND – It is the total volume
of the sales that is generated by a defined
customer group in a defined geographical
area, time period, and marketing
environment under a defined marketing
program.
FACTORS TO ASSESS IN
FORECASTING DEMAND FOR AN
EXISTING PRODUCT
1. LISTENING TO WHAT PEOPLE SAY
– Includes salesforce opinion, expert
opinion, and buyers’ opinion.
2. ASSESSING WHAT PEOPLE HAVE
DONE – Generally involves the
statistical analysis of past-sales data or
related data.
SALESFORCE OPINION – It involves
getting a composite of what each
salesperson, sales team, or sales unit
estimates to be its possible sales volume for
the upcoming period based on past history.
EXPERT OPINION
➢ It can be taken from industry watchers
or people with experience in the
industry.
➢ It can include technical resource people
from the Department of Trade and
Industry, Industry veterans, observers,
and insiders.
➢ What makes an “expert” an expert in ADVANTAGE AND DISADVANTAGE OF
the first place? “INCREMENTAL GROWTH” STRATEGY
o He/she must truly understand the
ADVANTAGE: Financial risks are
potential market of a new product,
minimized since a failed product would
most likely due to years of
mean minimal capital exposure.
experience and exposure to the
DISADVANTAGE: If the product turns out
market.
to be a huge success, the firm may not be
o He/she has done extensive
quick enough to generate a capacity size
research on the potential market
that can maximize cost advantages or,
or has spent years selling related
worse, the firm may be crippled by an
products to the potential market.
innate inability to satisfy demand (which is
an opening for competitors to come in).
SOME QUANTITATIVE FORECASTING
METHODS
VALUES INTEGRATION:
▪ TIME SERIES ANALYSIS – Uses data “Show self-reliance in financial analysis /
from previous periods to forecast the computations and ratios in business
following period’s sales. application.”
▪ REGRESSION ANALYSIS – works by
using statistical models to determine
the correlation between a hypothetical
cause and the effect (in this case, level
of sales), again based on historical
data.

TECHNIQUES IN FORECASTING
DEMAND FOR A NEW PRODUCT
▪ CHAIN RATIO – A method whose
premise states that if you define your
target market well enough, then you
can calculate how big this market can
be.
▪ TEST MARKET – Launching the
product in a smaller location and
conducting an exact but smaller-scale
market strategy to assess the actual
sales that will occur.

OUTLINE OF THE PROCESS OF

“INCREMENTAL GROWTH” STRATEGY
1. Start small, producing small quantities
of the product at first.
2. Test the market’s reaction and if the
demand has the potential to grow.
3. If a favorable market response is
detected, scale fast by immediately
investing in additional production
capacity in incremental and
manageable steps.