Republic of The Philippines Ilocos Sur Polytechnic State College Main Campus, Sta. Maria, Ilocos Sur

ILOCOS SUR POLYTECHNIC STATE COLLEGE
Sta. Maria Campus
Republic of the Philippines

Ilocos Sur Polytechnic State College
Main Campus, Sta. Maria, Ilocos Sur
Instructional Material in
Business Marketing
Prepared by:
Reagan Louie C. Funtanilla, DBA
Course Code: ABM 4

Descriptive Title: Business Marketing Instructor: Dr. Reagan Louie C. Funtanilla
Sta. Maria Campus
COURSE OUTLINE
Chapter I: Marketing: An Introduction
a. Definition of Marketing
b. Core Concepts of Marketing
c. Elements of Marketing
d. Operational dimensions of Marketing
e. Marketing creates utility
f. Universal function of Marketing
Chapter II: Marketing Management Philosophies
i. Definition of Marketing Management
ii. Marketing Management Philosophies
iii. Flow Chart of the Steps on Marketing and Selling Concept
iv. Summary of Marketing / Selling Concept
v. Marketing environment
vi. Major actors in the Company’s Microenvironment
vii. Definition of publics
viii. Type of publics
ix. Major forces of Macro Environment
Chapter III: Market Segmentation
a. Definition of market segmentation
b. Bases for market segmentation
Chapter IV: Marketing Research and Information System
a. Definition of Terms
b. Uses of Marketing Research
c. Five P’s of the Research Process
d. Characteristics of an effective Marketing Research
Chapter V: Marketing mix: the 5 P’s of Marketing
a. Product classification
b. Product planning and development
Chapter VI: Elements that Make up a Product
a. Features
b. Branding
c. Packaging
d. Labelling
e. Product life cycle
Chapter VII: Price/Placement
a. Definition of price
b. Objectives of pricing
c. Pricing principles
d. Definition of placement
e. Role of marketing channel
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f. Types of marketing channel

g. Types of marketing intermediaries
h. Channels for consumer goods
i. Classification of a wholesaler
j. Types of merchant wholesaler
k. Types of limited wholesaler
l. Distribution channel functions
Chapter VIII: Promotion Mix and Communication Mix
a. Definition of terms
b. Five major tools in the communication mix
c. Four basic functions of advertising
d. Forms of direct marketing
e. Advantages of direct Marketing
f. Objectives of Sales Promotion
g. Introductory sales promotion devices for consumers
h. Public relations / publicity
i. Personal selling
j. People
k. Network marketing
PRODUCT PRESENTATION
MARKETING PLAN
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CHAPTER I
MARKETING: AN INTRODUCTION
Market – the general conditions under which buying and selling are conducted
- An organized interaction of buyers and sellers enabling them to trade or
exchange.
- A group of seller and buyers who are willing to exchange goods and/or
services for something of value
- It is not necessarily a specific location or store. It refers to exchanges
between buyers and sellers who communicate each other about:
a. The quantity and quality of a product
b. What the buyers are willing and able to pay for a product; and
c. What the sellers must receive in order to produce and sell a product.
MARKETING: AN INTRODUCTION
Marketing is a dynamic system and the most up-to-date activity, it being
present everywhere we go. It is always centered around the customer who is the
concern of anybody under marketing management responsibility.
Marketing is all around us. We tune into our radio and television sets; we read
the daily newspapers, consciously or knowingly, we are exposed to a number of
advertisements for goods and services from companies, groups of individuals to get
our utmost attention; and all vying for a bigger space in our subconscious mind for a
long lasting recall of products borne-out of creative communication techniques so that
sometimes in the immediate future our conscious minds will finally decide patronage,
trial and experience for the said products over other similar products in the market
place. This is marketing visibly demonstrated in practice.
In our workplace, typical in many private and government offices, is the
flourishing underground economy whereby employees sell products to co-employees
to augment their income on a “cry-cry or paiyakan” or “four gives or installment basis”.
This is marketing, a daily spectacle, at its highest peak levels only during coffee or
snacks or lunch breaks, dramatizing practical sales presentations to everyone,
“moonlighting” or doing work sidelines either to earn more money, maintain or
improve lifestyles, or for the pleasure of doing business at the least cost and effort
done during company work time schedules.
When we go to malls, do shopping in our favorite groceries and supermarkets,
department stores, or eat in fast-food centers or restaurants, we experience riding
high on marketing activities which are very much alive, entertaining our very eyes,
whetting our appetites, triggering impulse spending sprees, buying products whether
originally intending to buy or not, whether within our shopping list or not-and-all these
because the marketing system exists.
Marketing helps to bridge the gap between the process of production and
consumption. As an economic activity, the chief function of marketing is to find a need
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(supported by an effective demand) and then filling up the need and thus provide
consumer satisfaction.
Experience has shown that a firm’s ability to produce a good-quality product
does not guarantee and insure success in a healthy and dynamic business
environment. Rather, it calls for a sustained marketing effort.
Man has insatiable wants. Likewise, we have limited resources. Because of
scarce or limited resources that we have, the prime goal of marketing system is the
UTILIZATION OF THESE RESOURCES THAT NATURE HAS MADE AVAILABLE TO MAN
IN ORDER TO SATISFY MAN’S UNLIMITED WANTS.
In context, the marketing manager thus outlines strategies to generate
revenues by CREATING PRODUCTS AND SERVICES THAT ARE WANTED, NEEDED AND
THAT WILL SATISFY NEEDS AT A PROFIT.
Marketing must be understood not in the old sense of making a sale, selling,
but rather in the new sense of satisfying customer needs.
MARKETING (Bovee and Thill) – is the process of planning and executing the
conception, pricing, promotions and distribution of ideas, goods and services to create
exchanges that satisfy individual and organizational objectives.
MARKETING (Josiah Go) – is the process of continuously and profitablya
satisfying target customer’s needs, wants and expectations more superiorly than
competitors.
Our definition of marketing is linked to the core components of marketing which
are:
a. Company
b. Customer
c. Competition
Linking the definition of Marketing to 3C’s

Definition Focus
1. Marketing is the process of continuously Company (to ensure corporate
And profitably health and profit)
2. Satisfying customer’s needs, wants and Customer (to competently
Expectations satisfy the needs, wants and
expectations)
3. Superior to competition Competition (to outperform
Competitors at all
times)
Dissecting the Marketing definition we can find the following key sub-components and
their implications:
1. The word continuously is about attaining customer loyalty, a long-terminated
of a short-term goal.
2. The word profitably connotes the interplay of two things:
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a. Target Margin- difference between the money received when selling a

product and the money paid for it.
b. Target Return- relationship between profit and money invested.
3. The word satisfying is about the following:
a. Defining who the primary target market and secondary target market are.
b. Defining what their needs, wants and expectations are and monitoring any
changes.
c. Creating a program to fulfill them.
4. The phrase superior to competition is about the preferred brand status.
MARKETING (Philip Kotler) - a social and managerial process led by which individuals
and groups obtain what they need and want through creating and exchanging
products and value with others.
CORE CONCEPTS OF MARKETING

1. NEEDS – to be in want of, ought to have, be unable to do without; to be
necessary; something that has to be necessity, requirement; the lack of useful
desired thing.
- Are basic reasons or minimum requirements consumer look for in
a product or service.
- Are fundamental requirement for continuing our lives.
Human need is a state of felt deprivation of some basic satisfaction. According
to Maslow’s Heirarchy of Needs, they include the following 5 stages:
i. Physiological or body needs such as food, clothing and shelter
ii. Security needs and safety needs such as job security and tenure
iii. Social needs such as affection and belonging in marketing and
related fields (Membership in organization, attendance to
marketing conferences)
iv. Ego needs such as expertise in marketing and self-expression
(Expertise in sales and marketing operations)
v. Self-actualization such as achievement and fulfillment in business
or career in marketing. (President of organizations of associations,
Senator, Congressman or Cabinet Secretary, CEO of condominium,
restaurants or shopping malls)
2. WANTS – to require; to wish to see; speak to; something desired; lack; to feel
that one would like to have; wish for;
- Reflects a person’s desire or preference for specific ways of satisfying a
basic need.
- Human wants are desires or intentions or expectations of these deeper
needs. These are expressions of needs and are shaped and attributed by
one’s culture, individual personality, and such social and environmental
forces as schools, business firms and community, families, religion, socio-
civic organizations.
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- The needs of an individual or group may be the same but the extent to
which these are satisfied vary and are spelledout in specific wants
(desires/intentions). Kotler states that “although people’s needs are few,
their wants are many.”
- Thus a person wants particular products or services to satisfy an
unsatisfied need. Example: A person is thirsty and wanted to drink a coke.
- Remote control for colored TV was a want when it was newly introduced
in the market. But nowadays, it is a basic need or minimum requirement
in buying colored TV.
3. DEMAND –to ask for as a right; to ask for with authority; to ask to know or to
be told; a claim; the desire and ability to buy; the quantity of a commodity
wanted at a particular price.
- Refers to the quantities of a well-defined commodity that consumers are
willing and able to buy at each possible price during a given period of
time.
- Marketers influence demand by making the product appropriate,
attractive, affordable, and stylish, easily available, and visible to target
consumers.
4. VALUE AND COST
VALUE – an estimate of the capacity of each product (Goods and Services) to
satisfy a set of needs.
- Worth; utility; precise significance; to regard; to estimate.
- Proper price; (they bought the house for less than the value); usefulness
or significance (the value of education, the value of milk as a food); an
equivalent or adequate return; an estimated return; (he place a value on
his furniture)
COST – the equivalent amount to obtain the product. The intended buyer will
consider the product’s value and price before making a choice, i.e, the product
that will have the most value per amount spent.
- To be bought for; that which is paid for anything, expenditure; to require
to be laid out or borne.
- The price paid of other amount demanded; (the cost of this watch was
P5354)
5. EXCHANGE – is the act of obtaining a desired product from someone by offering
something in return.
Conditions necessary for exchange:
a. There must be at least 2 parties
b. Both parties must offer something of value (money, goods, services, ideas)
c. Both parties must be aware of the existence of the other, both must be
capable of communication and delivery.
d. Both parties must be free to accept or reject the other’s offer.
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6. TRANSACTION – when an agreement is arrived at, transaction takes place.

- A trade between two parties that involves at least two things of value,
agreed upon conditions, a time of agreement, and a place of agreement.
- Activities undertaken in the business.
7. RELATIONSHIP MARKETING / CUSTOMARY INTIMACY – the process of
creating, maintaining, and enhancing strong, value-laden relationships with
customers and other stakeholders.
Smart marketers try to build long-term, trusting, “win-win” relationship
with valued customers, distributors, dealers, and suppliers, accomplished by
promising and delivering high quality products, goods, services and fair prices
to the other parties over time.
8. PRODUCT – anything an organization offers for exchange that will satisfy
consumer needs.
- A set of tangible and intangible attributes, including packaging, color,
price, quality, and brand, plus the services and reputation of the seller;
consumers are buying more than a set of physical attributes they are
buying want-satisfaction in the form of product benefits.
- Anything that is potential valued by the target market for the benefit or
satisfaction it provides, including objects, services, organizations, places,
people and ideas.
- Anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a need or want.
- That which is produced, result of work or growth; factory products, farm
products.
- Any good, services, or idea that satisfies a need or want and can be
offered in an exchange.
- A product could be physical objects, persons, organizations, ideas or
places that can be marketed for sale or offered to valued clients.
- Is something we can touch, feel, experience, acquire, use or consume to
satisfy a particular need or want.
TYPES OF PRODUCTS:
To summarize thereof, a product could either be one or all of the
following:
1. Physical objects. These are tangible goods such as computers, fax
machines, cellular phones, refrigerators, cable TV, videoke, cameras and
other physical products that the benefits or features or which we enjoy.
Something we can hold, touch, feel, see, read, use or consume.
2. Places. These are vacation resorts or tourism spots such as Boracay
Island, pagsanjan Falls, Banaue Rice Terraces, Chocolate Hills and many
other marketable places to which we travel to enjoy the amenities.
3. Activities. These are what we enjoy doing relaxation such as ballroom
dancing, sing-along, embroidery, gardening, and sports related
activities.
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4. Persons. These could be political candidates, actors, actresses, or dance

instructors, singers, dances, magicians, radio/tv personalities, etc. Fidel
V. Ramos was a “product” when he ran for President of the Philippines
during elections, pitted against presidential rivals. You are a product
when you apply for a job or are a candidate for a promotion or for
nomination as officer in socio civic organization. You are a product when
one is looking for consultancy, resource speaker, lecturer, teacher, or
project manager.
5. Organizations. These are entities we join such as Slimmer’s World
international for health and physical program; Rotary Club, HRMAE, etc.
6. Ideas. These are socio-economic – technological-political philosophies
such as Family planning Program, expanded VAT, land reform and other
ideas that can be marketed, or a thesis, dissertation, or a paradigm or a
theoretical or conceptual model, or a project feasibility study or a term
paper.
7. Service. Something intangible such as travel services, medical and dental
services, hotel and restaurant services1, banking or financing services,
beauty parlor, massage services, memorial or funeral services,
teaching/educational services, consultancy and the like.
9. MARKETS – shall not mean palengke but people with needs to satisfy, money
to spend and willingness to buy.
MARKETING(Alminar) – a system concerned with the planning and development of

products and services, determination of prices, creation of promotional programs and
distribution system to present and prospective market for satisfaction of their existing
needs and wants, thus maximizing profit in the long-run. (production and distribution
complement the total marketing system)
- Is getting the right goods and services to the right people at the right
places at the right time at the right price with the right communications
and promotions.
ELEMENTS OF MARKETING:
1. SYSTEM. It is a set of interacting or interdependent groups coordinated to form
a unified whole and organized society to accomplish a set of goals. This is based
upon the understanding that activities are interdependent to other activities. As
a system, it requires planning to determine the products or services that shall
be produced.
2. PRODUCT OR SERVICE PLANNING AND DEVELOPMENT, PRICING,
PROMOTION AND PLACE OF DISTRIBUTION (THE 4 P’s OF MARKETING). As a
marketing manager, the first task is:
a. Determination of the right product to service to produce or sell,
evaluation of whether existing products or services require
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modification. This function is known as product planning and

development.
b. Setting the prices for your product. Whatever price you have set for,
your product always strike a balance between affordability and
profitability.
c. These products can be sold best with the help of promotional
programs which includes administration of personal selling,
advertising, public relations and sales promotion.
d. Finally, marketing can only be achieved if these products and services
will reach the hands of the consumers. Development of strategic
places of distribution or selling outlets should be planned, so that
consumers can avail of the goods or services when their needs arise.
3. CURRENT AND POTENTIAL MARKET. Market consists of the buyers or users of
the products or services. We undertake product planning and development for
fulfilling demand of current buyers and thereby perceiving or forecasting needs
of a future market which can be by features or benefits derived from the
products or services.
4. SATISFACTION OF EXISTING HUMAN NEEDS AND WANTS. It is said that based
on economic principle, the human needs and wants are insatiable. Within this
context, it can be seen that buyers continuously demand for new developed
goods for their satisfaction.
OPERATIONAL DIMENSIONS OF MARKETING:

1. Target Markets – are the buyers of the goods. They can be the present or
prospective buyers being targeted by the marketing organizations.
TYPES OF CUSTOMER MARKETS:
a. Consumer markets – individuals and households that buy goods and
services for personal consumption.
b. Industrial markets – organizations that buy goods and services for
further processing or for use in their production process.
c. Reseller markets – organization that buy goods and services in order
to resell them at a profit.
d. Government markets – government agencies that buy goods and
services in order to produce public services or transfer these goods
and services to others who need them. (military, schools, hospitals)
e. International markets – foreign buyers.
2. Things to be marketed – are the products, the services, the ideas, the
institutions or people. For example, we choose the author we like to read, the
school to study, the organization to belong, and the food to eat.
3. Marketing organizations – in layman’s language, marketers may mean the
buyers. But within the marketing context, marketers are the marketing
organizations, the product or service sellers. Specifically, they are:
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a. Producers – are those institutions who buy raw materials and

process these into final products
b. Manufacturers - are those buying intermediate or half finished
materials and process these into final products.
c. Wholesalers – are institutions who buy final-finished products
and resell them in bulk in the same original form.
d. Retailers – are those who buy finished products and resell
them in small quantities, the same goods to final users.
MARKETING CREATES UTILITY

The central focus of marketing is to create utility, which refers to a product’s
ability to satisfy human needs and wants.
KINDS OF UTILITY
1. Form utility – the value created by shaping raw materials and components into
products. Marketing’s role in this process is to provide critical information about
what people want, so that research and development and manufacturing can
create the form that is wanted. The product must be something that consumers
want.
2. Time utility – the value of providing products when customers want them.
Marketers plan carefully to ensure the availability of their products at the proper
time. Example, stores create utility by staying open all day, everyday or by
providing 24-hour service.
3. Place utility – the value of providing products where customer want them.
Marketers create place utility by making their products available in the places
customers prefer.
4. Possession utility – the value of owning the product and controlling its use.
FUNCTIONS OF MARKETING:
1. Buying – means looking for and evaluating goods and services.
2. Selling – involves promoting the products. It includes the use of personal
selling, advertising, and other mass selling methods.
3. Storing - involves holding goods until customers need them.
4. Transporting – means the movement of goods from one place to another.
5. Standardization and grading – involve sorting products according to size and
quality. This makes buying and selling easier because it reduces the need for
inspection and sampling.
6. Financing – provides the necessary cash and credit to produce, transport, store,
promote, sell and buy products.
7. Risk taking – involves bearing the uncertainties that are part of marketing
process. A firm can never be sure that customers will want buy its products.
Products can also be damaged, stolen or outdated. Developing a new product
creates a chance of loss if consumers do not like it enough to buy. Spending
money to hire sales force or to conduct marketing research also involves risk.
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8. Marketing research – involves the collection, analysis and distribution of all the
information needed to plan, carry out and control marketing activities.
End of chapter 1
Supplemental readings: 17 Digital Marketing Trends you need to know for 2O2O
ACTIVITY 1: TYPICAL NEEDS AND WANTS OF PEOPLE

Direction: Identify 10 needs and 10 wants of yours. Write in the box provided below.
NEEDS WANTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
ACTIVITY 2: LUXURY VERSUS NECESSITY

Direction: As a student, with the items listed below, identify whether it is a luxury or
necessity and write those item/s under each of the box provided for below.
Cellphone Television Laptop Branded shoes
Airconditioner Internet Connectivity Foods Clothing
Aerox Motor Money House Electricity

Water Bags Make up Jewelries
LUXURY NECESSITY
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
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POST TEST ASSESSMENT:

General Instruction:
1. On your browser, type socrative.com
2. Click login
3. After clicking the login, click student login
4. The room name will be MARKETING then click join.
5. Enter your name following this format year and section – Surname, Given
Name. (Example: 2D – Funtanilla,Reagan)
6. And finally, start now the post test assessment
7. Goodluck!
8. An information will be given to your GC when to conduct this Post Test
Assessment
For more Information, you may contact me at any of the following modes:
1. Email: reaganlouie_funtanilla@yahoo.com
2. Facebook: REAGAN LOUIE FUNTANILLA
3. CP#: 09177702393
Case Analysis
1. Starbucks’ Target Market Strategy
The success of Starbucks has not been based upon sleek advertising
campaigns promoting the business. Instead, Starbucks has chosen to focus its
marketing efforts on the customer’s in-store experience. The average Starbucks
customer visits the store six times a month. Starbucks’ top percent of customers
visit the store at least 16 times a month. Customers go to Starbucks not only
to order their favorite coffee drink but also to use the Internet, listen to music,
and hang out with friends.
The success of Starbucks has attracted the attention of an unlikely
competitor – McDonald’s. McDonald’s created a series of advertisements to
promote its new McCafe’ coffee drinks. The McDonald’s advertisements identify
Starbucks as a stuffy store overrun with brooding intellectuals. McDonald’s
has a website called unsnobbycoffee.com that describes its coffee as simple,
easy and unpretentious when compared to Starbucks. It encourages people to
kick the “snobbish habit”.
Starbucks insists that it is not losing coffee drinkers to McDonald’s as a
result of the head-to-head competition. The company emphasized that
customers were cutting back on espresso drinks in an attempt to save money
in a slow economy. Starbucks senior vice president of marketing, Terry
Davenport, believes that the competition is trying to genericize coffee by taking
it to a level where all coffee is the same. Starbucks does not buy into “the
coffee is coffee” concept.
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To stay in touch with Generation Y, Starbucks’ strongest customer base,

Starbucks has planned more communication through social media. Twitter is
used to answer questions and to promote open communication with the public.
Its facebook page contains videos, blog posts, photos and invitations to special
events. Thousands of people subscribe to Starbucks’ Youtube Channel.
Subscribers can upload informational videos about the origins of different coffee
blends. Starbucks’ blog, titled “Ideas in Action”, is written by Starbucks’
employees. Employees keep customer idea into the operation of business.
Starbucks incorporates customer ideas into the operation of the business.
Starbucks social media strategy is creating customer loyalty as well as a
competitive advantage.
Questions:
1. To help fight off competitors that want to enter the lucrative retail coffee
market, what do you think Starbucks should emphasize in its marketing
efforts?
2. Why is the use of social media a popular advertising strategy?
3. McDonalds advertisements compare McDonald’s Coffee to Starbucks
Coffee. For McDonald’s, what are the advantages and disadvantages of
using this strategy?
2. You are a marketer for a home security business that sells a variety of home
security devices, such as surveillance systems, alarms, and motion detector
lighting systems. The owner of the business would like you to develop a new
advertising campaign that targets senior citizens in affluent neighborhoods. He
wants the ads to suggest that the city’s crime rate is at an all-time high. The
business owner explains to you that fear tactics should be used to persuade
senior citizens that their only line of defense against rising crime rates is a
complete home security system. He even suggests creating an ad based on a
fictitious story about a senior citizen who was attacked in her home in a nearby
neighborhood. The ad’s tagline would be “Don’t let this happen to you!”.
As a marketer for this business, what would you do? Do you agree with
the business owner’s method for targeting senior citizen? Why or why not?
What marketing strategy do you think would be more appropriate?
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CHAPTER II
MARKETING MANAGEMENT PHILOSOPHIES
MARKETING MANAGEMENT PHILOSOPHIES

Marketing Management – is the analysis, planning, implementation and control of
programs designed to create, build, and maintain beneficial exchanges with target
buyers for the purpose of achieving organizational objectives.
1. PRODUCTION CONCEPT – the philosophy that consumers will favor products
that are available and highly affordable and that the management should
therefore focus on improving production and distribution efficiency. This
concept is one of the oldest philosophies that guides seller. The production
concept is still a useful philosophies in two types of situations:
a. The first occurs when the demand for a product exceeds the supply.
Here, management should look for ways to increase production.
b. The second situation occurs when the product cost is too high and
improved productivity. Example, Henry Ford’s whole philosophy was
to perfect the production of the Model T so that its cost could be
reduced and more people could afford it.
2. PRODUCT CONCEPT – the idea that consumers will favor products that offer
the most quality, performance and features and that the organization should
therefore devote its energy to making continuous product improvement.
3. SOCIETAL MARKETING CONCEPT – the idea that the organization should
determine the needs, wants and interests of target markets and delivered the
desired satisfactions more effectively and efficiently than competitors in a way
that maintains or improves the consumer’s and society’s well-being.
THREE CONSIDERATIONS UNDER SMC:
A. Society (human welfare)
B. Consumers (want satisfaction)
C. Company (profits)
4. MARKETING CONCEPT – is a management orientation which holds that the key
task of organization is to determine the needs and wants of the target markets
and to adapt the organization to delivering satisfaction more effectively and
efficiently that its competitors.
5. SELLING CONCEPT – is a management orientation which assumes that
consumers will either buy or not buy enough of the organization’s products
unless the organization makes a substantial efforts to stimulate their interest in
the products.
Marketing concept focused on the buyers needs while Selling Concept is focused on
the seller’s needs.
It can be deduced then that buyer’s interest is satisfaction of needs, while seller’s
concerns are maximization of profit and social service to enhance quality of human
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life and society. Both these goals can be achieved through the use of marketing
concept. But how is it achieved? By producing quality and reasonably priced goods
are needed will result to profitable sales level.
FLOWCHART OF THE STEPS ON THESE TWO CONCEPTS:

The Marketing Concept The Selling Concept
Discover market
need (Research) Product Planning and
dev’t (Production)
Discover market
need (Research)
Product Planning and
dev’t (Production) Promotional methods and
selling (persuasive
Discover market
need (Research)
techniques)
Distribution of products
and services Distribution of products
and services
Guaranteed sales volume

Unguaranteed sales
and profits at customer
volume and profits.
satisfaction
Unguaranteed customer
satisfaction
SUMMARY ON THE MARKETING CONCEPT:

1. The first step concerns marketing research to solicit the information wanted
about their demand for the possibility of introducing a product.
2. After appraisal of the information and proven feasible, 2 nd step concerns
production of these goods planned.
3. Marketing objective can only be achieved if these products will reach the hands
of the consumers.
4. Assures the business of sales and profits due to the presence of market
demand.
SUMMARY ON THE SELLING CONCEPT:

1. Wants to economize, so no research was made.
2. The philosophy wants immediate production without discovery. Is it wanted?
Are the products needed? Can there be sales or profits?
3. With the availability of the products, the businessmen wanted to immediately
dispose it again for a profit so they will be using means to convince people to
buy products. Promotional programs shall be resorted to.
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PRODUCT PLANNING –includes all activities which enables producers and middlemen
to determine what should constitute a company’s line of products.
PRODUCT DEVELOPMENT – is concerned with product innovation or improvement

including technical activities of product research, engineering and design.
PRODUCT PLANNING AND DEVELOPMENT – may involve developing an entirely new

product or improving an already existing product in the market. It also includes
selecting a good brand name, packaging and labelling effectively.
MARKETING ENVIRONMENT
The company must start with the marketing environment in searching for
opportunity and monitoring threats. This environment consists of all the actors and
forces that affect the company’s ability to transact effectively with its target market.
This environment can be divided into:
a. Microenvironment – the forces close to the company that affects its ability
to serve its customers.
b. Macroenvironment – the larger societal forces that affect the whole
microenvironment.
MAJOR ACTORS IN THE COMPANY’S MICROENVIRONMENT:

1. SUPPLIERS – are firms and individuals that provide the resources needed by
the company to produce goods and services. Marketing managers must watch
supply availability and supply shortages or delays, labor strikes and other
events can cost sales in the short run and damage customer satisfaction in the
long run.
2. COMPANY – the company must adopt its marketing mix to trends and
development. Higher levels of management sets the company objectives,
mission, strategies and policies. Marketing managers 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 work
closely with other department:
a. Finance department – is concerned with finding and using funds to carry
out the marketing plan.
b. Research and development – focuses on the problems and designing safe
and attractive products.
c. Manufacturing – responsible for producing the desired number of products.
d. Purchasing – worries about getting supplies and materials.
e. Accounting – has to measure costs and revenues to help marketing know
how well it is achieving its objectives.
Under the marketing concept, all of the functions must “think consumers” and
they should work in harmony to provide superior value and satisfaction.
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3. COMPETITORS – every company faces a wide ranges of competitors. The

marketing concept states that to be successful, the company must satisfy the
needs and wants of consumers better than competitors do. They must adapt
to the strategies of competitors who are serving the target markets.
4. MARKETING INTERMEDIARIES – are firms that help the company to promote,
sell and distribute its goods to final buyers. They include the following:
a. Middlemen – are business firms that help the company find
customers or make sales to them.
b. Physical distribution firms – help the company stock and move goods
from their origin to their destination. Example: Warehouse-store and
protect goods before they move to the next station. Transportation
firms - includes railroads, truckers, airline, barges, etc that specialize
in moving goods from one location to another.
c. Marketing services agencies – marketing research firms, advertising
agencies, media firms, and marketing consulting firms. They help the
company to target and promote its products to the right market,
d. Financial intermediaries –includes banks, credit companies,
insurance companies, and other companies that help finance
transactions or insure against the risks associated with the buying
and selling of goods.
5. Customer market – the company needs to study its customer markets.
PUBLIC – is any group that has an actual or potential interest or impact on an
organization’s ability to achieve its objectives.
TYPES OF PUBLICS:
a. Financial publics – influence the company’s ability to obtain funds, banks,
investment houses, and stockholders are the major financial public.
b. Media publics – are those that carry news, features and editorial opinion. They
include newspapers, magazines, radio and TV stations.
c. Government publics – marketers must consult the company’s lawyers on issues
of product safety, truth-in-advertising, dealers’ rights and others.
d. General publics – a company needs to be concerned about the general publics
attitude toward its product and activities. The public image of the company
affects its buying.
e. Internal publics – include its workers, managers, volunteers and the board of
directors. Large companies use newsletters and other means to inform and
motivates their internal publics. When employees feel good about their
company, this positive attitude spills over to external publics.
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THE COMPANY’S MACROENVIRONMENT:

1. Consists of the larger societal forces that affect the whole microenvironment.
2. The company and its suppliers, marketing intermediaries, customers,
competitors and publics all operate in a larger macroenvironment of forces that
shape opportunities and threats to the success of company.
3. The environment is made up of all the forces external to the organization that
influence the marketer’s ability to plan and implement ways of satisfying its
target market. Some environmental forces create opportunities; other
constitutes threats.
4. Opportunities arise when an environmental change results in an unsatisfied
need or want. They are attractive areas in which an organization can achieve a
competitive advantage.
5. A threat is created when the door to satisfying a want or need is closing. Or it
is an unfavorable trend or situation that could prevent the organization from
satisfying a want or need.
SIX MAJOR FORCES OF MACROENVIRONMENT

1. DEMOGRAPHIC ENVIRONMENT – the demographic environment is of major
interest to marketers because people make up markets. It is important because
the characteristics of population will affect the consumer market. A large
population will ultimately increases the demand for consumption of goods. The
explosive world population growth has major implications for business. A
growing population means growing human needs to satisfy. It implies an
expanding market not only for the basic necessities for new and better products
as well. Demography is the study of human population in terms of size, density,
location, age, sex, race, occupation and other statistics.
2. ECONOMIC ENVIROMENT – consists of factors that affect consumer purchasing
power and spending patterns. The state of economy affects the demands for
different types of products and services. Example, Higher wages and benefits
increase consumer’s willingness to spend. Willingness to spend and buying
power are greatly affected by the business cycle – a pattern of economic
fluctuation that includes 4 scenarios:
a. Prosperity – the stage of business cycle in which consumers enjoy
high income, willingness to spend, and low employment. During
prosperity, consumers are confident about the economy, relatively
insensitive to high prices and more willing to buy luxury items. In
response to that consumer mentality. Marketers expand their product
lines.
b. Recession – the stage of the business cycle in which unemployment
rises and consumer buying power drops. As consumers grow fearful
of future economic conditions, they become less willing to make large
purchases. During this phase, consumers have limited buying power
and tend to base purchasing decision on price and value.
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c. Depression – a more intense form of recession in which

unemployment peaks, buying power drops dramatically and
consumers lose faith in the economy.
d. Recovery – the stage of the business cycle in which the economy
moves from depression or recession toward prosperity. During
recovery, several things happen like unemployment goes down,
willingness to spend returns, and business and consumer become
more confident about the future.
3. NATURAL ENVIRONMENT – involves natural resources that are needed as
inputs by marketers or that are affected by marketing activities. A lack of
natural resources can hurt a company or it can open opportunity. Example, a
shortage of land in urban graveyard in the US spurred the popularity of
cremation, the result was a market for crematoria and crematory supplies.
Marketers should be aware of four trends in the natural environment:
a. Shortages of raw materials – air and water may seem to be infinite
resources, but some groups see long-run dangers. Water shortage is
already a problem. Food supply can be a major problem because
more and more of the world’s limited farmable land is being
developed for urban areas.
b. Increased cost of energy – oil created the most serious problems for
future economic growth. The major industrial economics of the world
depend heavily on oil.
c. Increased pollution – industry almost always damage the quality of
the natural environment. Consider the disposal of chemical and
nuclear waste, the dangerous mercury levels in the ocean, the
quantity of chemical pollutants in the soil and food supply, and the
littering of the environment with nonbiodegradable bottles, plastics
and other packaging materials.
4. TECHNOLOGICAL ENVIROMENT – consists of forces that affect new
technology, creating new products and market opportunities. Every new
technology is a force for “creative destruction”. Every technology replaces an
older technology. Example, xerography hurt the carbon paper business,
television hurt the theaters, computers hurt typewriters. Marketers need to
understand the changing technological environment and the ways that new
technologies can serve human needs. They need to work closely with R & D
people to encourage more market-oriented research.
POLITICAL ENVIRONMENT – marketing decisions are strongly affected by
developments in the political environment. It is made up of laws, government agencies
and pressure groups that influence and limit various organizations and individuals in
a given society. Well-conceived regulation can encourage competition and ensure fair
markets for goods and services. Thus, government must develop public policy to guide
commerce - sets of laws and regulations that limit business for the good of the society
as a whole. Almost every marketing activity is subject to a wide range of laws and
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regulations. Purposes on legislation laws regulating business: (a.) to protect

companies form each other (b.) to protect consumers from unfair business practices,
example, telling lies in their advertising; deceive consumers through their packaging
and pricing (c.) to protect the interest of society against unrestrained business
behavior, example, selling more and bigger cars can be profitable to the auto industry
but can also lead to more gas consumption, air pollution, traffic jams, etc.
5. CULTURAL ENVIRONMENT – is made up of institutions and other forces that
affect society’s basic values, beliefs, perceptions, preferences and behaviors.
End of chapter 2
Supplemental Reading:
Challenges of the micro and macro environment in the 21 st century.
Activity 1
Choose one of the major forces of macroenvironment and cite a situation where it
describes and explains the environment.

2. Click login
7. Goodluck!
Assessment
For more information, email, pm me in messenger or call/txt me at my personal

number listed at the end of chapter 1.
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CHAPTER III
MARKET SEGMENTATION
Segmentation – division of a market or buyers into certain categories according to

their buying habits. It is a clustering together with similar needs into a
“market segment”. A market segment is a subgroup of a particular market
which is composed of units with more or less similar characteristics.
Market consist of buyers and buyers differ in one or more ways. Buyers differ in their
wants, resources, locations, buying attitudes and buying practices. Any of
these variables can be used to segment a market. Each buyer is potentially
a separate market because of unique needs and wants. Each group of
buyers that can be identified as having different buying needs and interests
is a separate market segment. Ideally, a seller might design a separate
marketing program for each buyer.
Market segmentation – is a strategy of identifying customers with similar needs and

meeting those needs with product offerings. It requires developing a new
product or targeting an existing product more accurately.
Market segmentation – is the process of breaking up a large, heterogeneous market

into segments or smaller markets that exhibit similar buying needs and
characteristics.
For example: film making companies like regal, viva, Seiko and others can use
segmentation in the movies they make. They can use at least 7
segmentation variables according to the type of movie viewers would like
to watch as follows:
a. Drama
b. Comedy
c. Cartoons
d. Action
e. Suspense
f. Sex/bold
g. Fantasy
Another example: proctor and gamble Philippines has 3 types of soaps:

a. Camay – which addresses the beauty and skin needs of teenage
segments.
b. Safeguard – the family health soap and skin germ protection
c. Ivory – the mild soap/ sensitive skin category
NOTE: NOT ALL OLD MEN – OR YOUNG WOMEN – BUY THE SAME PRODUCTS OR
BRANDS. In serving the target market, the company may opt to adapt any of the
following SEGMENTATION STRATEGIES:
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1. CONCENTRATION OR SINGLE-SEGMENT STRATEGY – refers to that long-

run decision of the company to deal only with a particular segment of the
market. For example, a book publisher may consider only college students
and consequently, publish only college textbooks.
2. MULTI-SEGMENT STRATEGY – calls for providing products or services to 2
or more segments of the target market. The company may even serve the
entire target market. For instance, Rexbook store, Inc is a multi-segment
marketer in the sense that it publishes and sells college, high school and
elementary books. In addition, they also handle books for adults who no
longer go to the school.
BASES FOR MARKET SEGMENTATION:

There are many ways of segmenting a market. The best way is that which shall
suit the purpose of the company or the marketers. Markets may be segmented through
any of the four categories:
1. GEOGRAPHIC SEGMENTATION – requires dividing the market into different

geographical units such as nations, regions, provinces, cities, towns or
barangays.
Example:
A Filipino firm may serve only Metro Manila and the adjacent areas of
Regions 3 and 4 because of PROXIMITY to its factory in Manila.
Liwayway Publishing company chose to serve its clienteles by bringing

out into circulation such as Liwayway magazine for the Tagalog, Bannawag for
the Ilocanos and Bisaya magazine for the Bisayas.
2. DEMOGRAPHIC SEGMENTATION – refers to dividing the market into segments

on the basis of demographic variables like age, sex, family size, income,
occupation, education, race and nationality.
Example:
Milk can be principally segmentize by age:
S26 for infants up to 6 months
Promil – 6 months up to 4 years old
Enfapro – 6 months to 2 years old
Neslac – 1 year and onward.
Note: Consumer needs and wants change with age or wants change as we go
through life.
Personal care products can segment market by sex.
Axe deo cologne are for men while Avon has a whole line of cosmetics
for women.
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Family size is determine by the number of family members.

Example:
The needs of a two-member family is different from those of a six-
member family.
This variable was recognized by car manufacturers when two-seaters
cars, and light-seater vans were simultaneously sold in the market.
In terms of income, a market may be subdivided into the following:

a. High income group
b. Middle income group
c. Low income group
The basic for this type of segmentation rests on the premise that people
with more or less similar income and consequently have the same ability to
purchase will tend to have more or less similar needs.
Segmenting the market according to occupation maybe useful to some

types of companies. Occupations may be classified to the following:
a. Professional
b. Technical
c. Manager
d. Proprietor
e. Farmer
f. Teacher
g. Housewife
h. Students and others
People with similar occupations tend to have more or less similar needs.
Example:
Household appliances, for instance, are the identified needs of
housewives.
3. PSYCHOGRAPHIC SEGMENTATION – refers to the classification of buyers or

consumers by some psychological characteristics they possess in common.
They may be grouped according to social class, lifestyle or personality
characteristics.
Lifestyle – refers to a person’s pattern of living in the world as expressed in his

activities, interests and opinions.
Example:
A person who has very modest means, for instance may choose to live
an easy life and spend his money as they come.
Segmenting the market according to lifestyle is usually adapted by

manufacturers of shies and dresses.
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Segmentation by social class (upper class, upper-middle class, lower-middle,

lower class) rest on the assumption that the human components of one social
class share more or less values, interest, behavior and economic positions.
Another way of segmenting the market is through groupings by personality

characteristics.
This is based on the theory that each person has a distinct personality
that will influence his or her buying behavior.
A recent study on personality traits and which centers on food habits of
Filipinos indicates some findings that are useful to the marketers. The study
provided information that most Filipino consumers make it a point to take
snacks, 64% of which take mid-morning snacks, 87% mid-afternoon snacks
and 39% after dinner snacks. For sure this kind of consumer groupings helps
marketers in planning and implementing marketing strategies.
Another example: introverts do not buy same things as outgoing people.
4. BEHAVIORISTIC SEGMENTATION – refers to the grouping of buyers on the

basis of their knowledge, attitude, use or response to product.
Buyer behavior may be segmented according to various categories:

a. Purchase frequency (regular or occasional)
b. Benefits sought – buyers can also be segmented according to the
benefits they seek from a particular product.
c. User status (non-user, regular, ex-user, first time user)
d. User rate (heavy user, medium user, light user)
Example:
San Miguel has the macho size for the heavy user
Pale pilsen regular for average user, and
Miguelito for the light user segment
e. Loyalty status
Occasion segmentation calls for grouping of buyers, according to
occasions where they get the idea, make a purchase, or use a
product. The purchase of books, notebooks and pencils for instance
is made heavily before and during enrollment periods in school.
Another example is the purchase of valentine cars, roses and
chocolates is made heavily during valentine’s day.
Buyers can also be grouped according to their loyalty to particular

brands. They may be classified into the following:
1. Those who buy only one brand of a product
2. Those who buys 2 or 3 brands
3. Those who shift one brand to another
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4. Those who have no brand preference
Loyalty to a particular brand provides insights to the marketers.

End of chapter III
Activity: Segmentize the following Palmolive Shampoo:

1. White
2. Yellow
3. Orange
4. Green
5. Pink
6. Violet

2. Click login
7. Goodluck!
Assessment
For more information, email, pm me in messenger or call/txt me at my personal

number listed at the end of chapter 1.
Course Code: ABM 4

Sta. Maria Campus
CHAPTER IV
MARKETING RESEARCH AND INFORMATION SYSTEM
MARKETING RESEARCH AND INFORMATION SYSTEM

Marketing research – is the systematic gathering, recording and analyzing of data
about problems relating to the marketing of goods and services. It consists of all the
activities that enable an organization to obtain the information it needs to make
decisions about its environment, its marketing mix and its present or potential
customers. It is also a systematic, objectives and exhaustive gathering, recording and
analyzing of data relevant to a specific marketing situation or problem in order to
facilitate decision-making. Systematic – because it is well planned and well-organized
process. Scientific because it is used to obtain relevant information. Objective because
logical reasoning is used not bias and prejudices to obtain data and to draw
conclusions on the basis of evidence presented. Exhaustive because only through a
comprehensive study and efforts can the research be successful. Put in the broad
terms, MARKETING RESEARCH is the process of investigating a market in order to:
1. Find out the sales prospects for a particular product or group of products
and
2. Determine how to achieve success with that product or group of products
Marketing research should not be confined merely to the gatherings and compilation
of a mass of statistics about a market. This is of little value. Facts must be weighed
and interpreted, and conclusions drawn. These must be clear and specific enough for
management to make basic decisions about committing itself to a market and tod raw
up marketing plans. In other words, such research should be a practical exercise
leading to specific decisions and actions.
Uses of marketing research:

1. To assist management in making sound decisions
2. To conceive and develop new products.
3. To discover new uses of products already in the market
4. To improve the operations for existing product.
5. To help the appraisal evaluation and improvement of the effectiveness of its
sales management.
FIVE P’s OF THE RESEARCH PROCESS

1. PURPOSE OF THE RESEARCH – the first step in the research process is to
determine explicitly the purpose of the research. Thus an investigation is
required to clarify the problem or situation. At the end of this stage, the
researcher should know the following:
a. The current situation
b. The nature of the problem
c. The specific questions that research is to find answers to, that is,
why the research being conducted.
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2. PLAN OF THE RESEARCH – it is very important to lay out the sequencing of

tasks and responsibilities for accomplishing the research. At this stage, it must
be clear as to what type of data that will be used. The two major types of data
are primary and secondary data.
Primary data – are facts collected from original sources designed to address a
particular problem. They are the new data gathered specifically for the project
at hand.
PRIMARY DATA-GATHERING METHOD

1. Observation method – data is collected by observing relevant
people, actions and situations. There is no direct interactions with
the subjects being studied. No interview is involved, although an
interview may be used as a follow-up in order to get additional
information. As an example of this method, a customer in a
grocery store may be buying softdrinks in cans rather than in
bottles the consumer may be unaware that his actions are being
observed. As a follow-up, he may be asked why he prefers
softdrinks in cans rather than in bottles.
2. Survey method – is the approach best suited for gathering
descriptive information in the form of a questionnaire. It consists
of gathering data by interviewing people.
3 kinds of surveys:
a. Telephone survey – the respondent is approached by
telephone. Its advanatege is that it is inexpensive and
moreover, fast in obtaining small quantities of relative
impersonal information. A telephone interview is timely.
However, such interview is necessarily short.
b. Mail interview – involves sending questionnaire to
respondents with a request to return them by mail after
completing the answer. To facilitate its return, the researcher
encloses a sefl-stamped and self-addressed envelope.
c. Personal interview – appears to be the best means of
obtaining detailed information since the interviewer has the
opportunity ro establish rapport with the respondents.
3. Experimental method - is the best suited for gathering causal
information. Experiments involve selecting matched group of
subjects, giving them different treatments, controlling factors and
checking for differences in groups responses. Thus, experimental
research tries to explain cause-and-effect relationship.
Example:
 Would a 11% decrease in tuition at a private college result
in an enrolment increase sufficient the reduced tuition?
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
In the market-testing of a new product, it may involved
selling a new product in a selected small town. If the
experiment is found successful, the new product, will then,
be launched on nationwide basis.
Secondary data – are information which has been previously collected
for some other purposes but can be used for the purpose of study. It
consist of information that already exists somewhere having been
collected for another purpose. These are information that have been
collected or published already.
3. PERFORMANCE OF THE RESEARCH – the research plan is put into action at this
stage. The preparations obviously depend on the type of data desired and
method of data collection. Questions and questionnaire items must be pre-
tested and validated. Ethical and privacy must be considered.
4. PROCESSING RESEARCH DATA – includes preparation, editing and structuring,
of data and the actual analysis of the data. Data is analyzed according to the
procedure specified in the research plan and is interpreted according to the
standard norms of the analysis.
5. PREPARATION OF RESEARCH REPORT – the research report is a complete
statement of everything accomplished relative to the research project and
includes a write-up of each of the previous stages. The report should be clear
and specific.
STEPS IN THE MARKETING RESEARCH PROCESS

1. Defining the problem and research objectives. The first step toward solving a
problem is the recognition that such problem exists.
2. Developing the research plan for collecting data from primary and secondary
sources.
3. Implementing the research plan by collecting, processing and analyzing the
information.
4. Interpreting the finding and presenting the findings. These findings are then
distributed to the right managers at the right time to help them make informed
marketing decisions.
MARKETING INFORMATION SYSTEM

Marketing research and information system provide the insight for carrying out
the marketing concept. Without adequate information and research, the marketing
concept cannot be effectively implemented. With the intense competition in today’s
marketplace, it is not wise to develop a product and then look for a market where it
can be profitably sold. Marketing research and information systems that provide
objective information help firms avoid the assumptions and misunderstanding that
could lead to poor marketing performance.
Marketing research should be considered as just one part of an ongoing,
integrated information process. It is essential that a firm develop and utilize a system
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for scanning the environment in a continuous manner and for storing data, so that the
system may be reviewed in the future.
MARKETING INFORMATION SYSTEM – consists of a set of procedures and
methods designed to generate, store, analyze, and disseminate anticipated marketing
decision information on a regular, continuous basis.
- It is an organized way of continually gathering and analyzing data to
provide marketing managers with information they need to make
decisions.
- Consists of people, equipment and procedures to gather, sort, analyze,
evaluate and distribute needed, timely and accurate information to
marketing decision makers.
- Provides a continuous flow of information about prices, advertising
expenditures, sales, competition and distribution expense. Today,
managers have available special computer programs, better data banks,
direct communication with the computer.
Characteristics of an effective MIS
1. Collect needed information
2. Processes, analyses data accurately, quickly and reduced it to useful
information
3. Stores information
4. Provides for quick and easy retrieval
5. Monitors automatically key events
6. Operates continuously
In conclusion, most experts see the importance of having a marketing
information department in the organization. As the saying goes, “information is
power”. Marketing information has never been that easy to acquire. Thanks to the
world wide web. Almost every information is already available in the internet.
End of chapter 4
Activity: Cite a situation where marketing research is being used as a tool in creating
products. (If copied from the internet, rewrite what you have copied by giving
synthesis of what you have done. This is not a copy-paste class.)
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CHAPTER V
MARKETING MIX: THE 5P’s OF MARKETING
THE MARKETING MIX: THE 5P’s OF MARKETING

Marketing Mix – is the set of controllable marketing variables that the firm blends to
produce the response it wants in the target market. It consists of everything the firm
can do to influence the demand for its products.
THE 5P’s OF MARKETING

1. PRODUCT – anything that can be offered to a market for attention, acquisition,
sue or consumption that might satisfy a need or want. It includes physical
objects, services, persons, places, organizations and ideas.
Product classifications: consumer and industrial products
a. Consumer products – are those bought by final consumers for personal
consumption. Marketers usually classify these goods further based on how
consumers go about buying them. Consumer products include convenience
products, shopping products, specialty products and unsought products.
Convenience products – are consumer products that the customer buys
frequently, immediately and with minimum of comparison and buying effort.
They are bought usually on the basis of habit, hence, buying decision is
made quickly and easily. Consumer know what, how, when and where to
buy those goods because they are pruchsed in accessible outlets like sari-
sari stores.
Convenience goods are divided into 3 types:
1. Staples – are goods that consumers buy on a regular basis such as
ketchup, toothpastes, soap, etc.
2. Impulse goods – are purchased with little planning or effort.
Sometimes unplanned purchases, that is, the customer decides to
buy at the spur of the moment. The customer decides to buy on a
sight.
3. Emergency goods – are purchases less frequently and only when the
need is urgent. Example: umbrella during rainy season.
Shopping products – are goods brough only after comparison shopping,
during which the consumer evaluates alternative products on the basis of
suitability, quality style and price.
Products that are more costly and involve more risk than convenience
products, thereby causing buyers and users to invest more time and effort
when making the selection.
Generally, consumers “shop around” before buying. They compare
prices, style or other product features deciding the best to buy. Example:
your don’t buy the first jacket or blouse you see in a store, you spend some
time examining various brands or styles.
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Markets may not have full products knowledge so product information is

solicited as they shop around.
Service goods have high unit value, bulky and require servicing delivery,
installation, repair and maintenance.
Specialty products – are consumer goods with unique characteristics or
brand identification for which a significant group of buyers is willing to make
a special effort.
Buyers normally don’t compare specialty products. They invest only the
time needed to reach dealers carrying the wanted products.
Consumers are after the brand prestige irrespective of its high price. Any
branded product that consumers insist on by name is a specialty product.
Consumer may not, in some case, accept substitute brands.
Unsought products –are consumer goods that the consumer does not
know about but does not normally think of buying.
Are those goods that are not yet wanted by or still unknown to the
consumer. Or a new product that the consumer is not yet aware of a product
or the consumer is aware of but does not want right now.
Consumers have no intention of buying the product in the first place.
Unsought products are unknown to consumers, they are simply not
wanted and not sought unless a need is aroused.
INDUSTRIAL PRODUCTS - are products bought by individuals and

organizations for further processing or for use in conducting a business. The
distinction between a consumer product and an industrial product is based
on the purpose for which the product is bought.
Categories of Industrial Products:

1. Raw Materials – are goods that become part of the product but have not
undergone anymore processing than what is needed for safe,
convenient, economical, transport and handling. It includes:
a. Farm products – are those grown by farmers. Products that
are supplied by many small producers who turn them over to
marketing intermediaries who process and sell them.
b. Natural products – are those which occur by nature. Products
that are highly limited in supply. They usually have great bulk
and low unit value and require lots of transportation to move
them from producer to user.
2. Installation – are large and expensive items that do not become part of
the final product but are expended, depleted, worn out during the years
of use. They are those with long life and generally and they form part of
the capital equipment of the industrial firm. Examples are building, land
rights, generators, computers, elevators, factories, power plants, etc.
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3. Accessory Equipment – like installations, does not become part of the

final product but it is less expensive, more standardized and shorter
lived. Goods that are used as aids in the production process. It includes
portable factory equipment and tools (hand tools, lift trucks) and office
equipment (typewritters, desks, calculators for auditing firms, cash
registers for food chains and groceries)
4. Component parts and materials – like raw materials become part of the
finished products. These are processed industrial goods that will be used
and become an actual part of the finished product. Component parts
enter the finished product completely with no further change as when
small motors are put into vacuum cleaners and tires are added on
automobiles. Spark plugs and fan belts in automobiles. Buttons and
zippers on dresses and pants.
5. Supplies and services – industrial products that do not enter the finished
product at all. They have low unit price, short-lived which facilitates
business operations. Examples are pens, typewriting papers, clips,
fasteners, etc. Items that are used as aids in the operating process but
do not become part of the finished products. Business services include
maintenance and repair services (window cleaning, typewriter repair)
and business advisory services (legal, management consulting, and
advertising) these services are usually supplied under contract.
Products can be classified into 3 groups according to their durability or tangibility:

1. Non-durable goods – goods that are used or consumed over a short period of
time or after one or few uses. Examples: salt, sugar, vinegar, cooking oils, soap,
detergents, rice, cheese, etc.
2. Durable goods – goods that are consumed or used over a long period of time,
usually at east several years. Examples: houses, automobiles, appliances, etc.
3. Services – these are activities, benefits, or satisfactions that are intangible and
perishable. Examples: haircuts, manicures, pedicures, massage, hairstyling,
facelift, auto repairs, spare parts installations, change oil, car wash, etc.
Product Planning and Development New Products – are simply those that are basically
different from the goods, services, and bundles of benefits already in the market.
Product Planning – includes all activities which enables producers and middlemen to
determine what should constitute a company’s line of products.
Product Development – is concerned with product innovation or improvement

including technical activities of product research engineering and design. This is
distribution of new or improved products for present market. Product features and
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modification like introduction of new sizes, colors, shapes, flavors, etc. to better satisfy
the present market.
Product Planning and Development – is a systematic process for originating,

developing and evaluating new product ideas.
End of chapter V
Activity:
Cut and Submit clippings on Durable, Non-durable and services types of products.
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CHAPTER VI
ELEMENTS THAT MAKE UP A PRODUCT
The elements that make up a product include:

1. Features – are product attributes offered by a company. They are proof of a
benefit. This are attractive physical appearance or the beauty of the product.
Aspects:
a. Product’s physical form or designs (sizes, colors, materials to be
used, etc.)
b.
c. Level of quality
d. Durability
e. Environmental impact (nonpolluting, safety)
f. Ease of use
2. Branding – the use of a term, symbol, or design. It is an organization’s most
valuable asset because it provides customers with a way of recognizing and
specifying a particular products. The only element of a product competitors
can’t copy and it involves much more than simply choosing a product name.
Brand – a name, term, phrase, symbol, or any combination of these chosen by
an individual or organization to distinguish a product from competing products
and it provides identification.
Brand Name – the portion of a brand new that can be expressed verbally
including letters, words, or numbers.
Brandmark/Trademark – a portion of a brand that cannot be expressed verbally
such as graphic design or symbol. It is sometimes referred to as LOGO. Logo
is a unique symbol that represents a specific firm or organization or a
brandname written in distinctive style.
Uses of Brand:
a. Make it easy to identify goods/services
b. Aid shoppers in making purchase decisions
c. Help assure consumers that they will get consistent quality when they
reorder
d. The reputation of a brand also influences customer loyalty
e. Can differentiate commodity
Types of Brand:
1. Manufacturer brands (national brand) – a brand created and owned by
the producer of a product or service. It is sometimes called “national
brand” because the brand is promoted all across the country. Example:
Goodyear, Nike, Ralp Lauren, Jockey, Nido, Best Food, etc.
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2. Private brand (or middleman, distributor or store brand) – a brand

created and owned by a reseller of a product or services. Example:
Abenson – the leading company in appliances
3. Generic Brand – is actually a nonbranded product that is identified only
its product category such as paper towels, etc. Products which do not
carry official brandnames. Generic products are usually offered in plain
packages at lower prices. Examples: sipper, cellophane, kerosene,
linoleum, nails, lumber, nylon, straw, yoyo, hanger, etc.
Criteria for Choosing a Brandname:
1. Distinctive – symbols, colors must be easily recognized and not too
confusing for consumers.
2. Word association – does it have a pleasant meaning? Ex. Great Taste
3. Legal requirements – can it be registered? This is to protect from
imitating such kind of product.
4. Memorability – can your name be remembered easily? It is advisable
to create one to three syllable brandnames. Examples: Coke, Beer,
Tide, Surf, breeze, camay, etc.
5. Pronounciability – can it be pronounced easily?
Brand Loyalty – the level of commitment that customers feel toward a given
brand, as represented by their continuing purchase of that brand.
3. Packaging – the activities of designing and producing the container or wrapper
for a product.
Types of packaging:
a. Primary Package – the product’s immediate container. Example: The bottle
containing Amoxicillin suspension.
b. Secondary package – the packaging material that protects the primary and
that is thrown away when the product is about to be used by the target
clientele. Example: The Cardboard box containing Colgate toothpaste.
c. Shipping Package – used primarily to store, identify, and ship the product
to target markets. Example: The plastic crate containing 24 bottles of San
Miguel Beer; the corrugated box containing 42 cans of Century Tuna.
d. Labelling – part of product packaging and consists of printed information
appearing on or within the package in accordance to the labelling guidelines.
Purpose of Packaging:
1. To protect the product
2. To enhance the product’s value to the consumer (convenience)
3. To stimulate sales especially when customers buy the product primarily
because of the package.
Criteria for Choosing Packaging Materials:
1. Protection – can the package give ample protection to the product?
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2. Display value – can it attract consumers? Example: a comparison of

a 4-color print versus black and white package.
3. Cost – will it be cost efficient? For instance, can a weight of a plastic

container be reduced without sacrificing quality to reduce cost? Will
the package be too heavy?
4. Size – what about average purchase price? Example: Plastic crates
can be more convenient than wooden crates for softdrinks.
5. Convenience – it is easy to carry? Example: the introduction of
budget packs have eventually created a market expansion by
attracting those who have never purchased to try due to its more
affordable pricing. Shampoo is sachet packs have increased
distribution to the smaller sari-sari stores.
4. Labelling – encompasses any printed information on the packaging that
describes the product.
TWO KINDS OF LABEL:
1. Persuasive Label – is promotional content. Example: words like “new”, “easy
to use”, are too familiar to most consumers but they can influence buyers
positively. Example: The label on a tube of close-up toothpaste describes
the product as a “super whitening” toothpaste and “mouthwash” in one plus
fluoride to fight cavities. And at the back of the tube adds informative label
that tells the consumers the active ingredient is sodium
monoflourophosphate, etc. (Informative Label)
2. Informative Label – tell the consumers about the product’s ingredients, use,
dating, duration, direction for use, and so on.
TO HELP ENSURE THAT LABELS ARE APPEALING AND EYE CATCHING,
REMEMBER THE FOLLOWING (WHICH MAY APPLY TO PACKAGING AS WELL
AS LABELLING)
1. Avoid trying to look trendy. Fads fade, but a good design never looks
outdated. Fads- are fashion that come quickly into the public eyes, peak
early and decline very fast.
2. State the product’s benefit in simple terms. Stress the product’s 2 or 3
major selling points in no more than one or two sentences.
3. Keep it clean. Simplicity reflects confidence.
4. Be consistent. Repeat the design in advertisements, on letterhead, on
business cards, on truck-everywhere.
5. Supporting goods and services

Supporting Elements included related products such as:
a. Warrantee or guarantee
Warrantee- a statement specifying what the producer of a product
will do to compensate the buyer if the product is defective or if it is
malfunction.
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Guarantee – an assurance written or implied that a product is as

represented and will perform satisfactorily.
Example: Purchase price will be refunded or replaced if it fails to
perform as represented.
b. Maintenance and repair services – a way to increase customer
satisfaction
c. Installation
d. Training
e. Consultancy services
PRODUCT LIFE CYCLE
Products. Like people, have life cycles. From its birth or initial appearance to its
death, a product undergoes stages. The task of managing it as it passes from one
stage to another is one of the many responsibilities of product management in
particular and of marketing management in general.
The concept of the product life cycle is important to the marketer in the sense
that it provides him with a guide in adapting marketing strategies.
It is a model that describes the stages that a product passes through from its
introduction to its removal from the market.
STAGES OF PRODUCT LIFE CYCLE

1. PRODUCT DEVELOPMENT – begins when the company finds and develops a
new idea. A strategy for company growth by offering modified or new products
to current market segments. Developing the product concept into a physical
product in order to assure that the product idea can be turned into a workable
product. During product development, sales are zero and the company’s
investment cost mount
2. INTRODUCTION STAGE – as the name connotes, is like a new born baby. The
stage when the product is launched in the market. The stage when the new
product is first distributed and made available for purchase. Profits are
negative or low because of the low sales and high distribution and promotion
expenses such as offering lower introductory price upon entering the market.
Some companies find this stage to be a major financially challenge as they try
to come up with enough money to effectively launch their products. These
companies are trying to stimulate demand through heavy promotion. Limited
product offerings, like limited variation in sizes, color, etc. Competition is
negligible or inexistent. Consumer sales promotion at this stage is vigorous
usually takes the form of samples and coupons which encourage users to try
the product. Distribution tends to be selective since outlets and channel
members are still gradually being developed.
IF THE NEW PEODUCT SATISFIES THE MARKET, IT WILL ENTER THE
GROWTH STAGE
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3. GROWTH STAGE – this is like a teenager enjoying the most of life. This is
called the market acceptance period. Product “tryers” are now repeat buyers.
Sales start climbing rapidly as distribution increases. The ratio of promotional

expenditures to sales decreases. This is due to the rapid increase in sales but
without a corresponding increase in promotional expenses. Competitors enter
the market attracted by the opportunities for profit. New forms of the product
appear, like new colors , new models, new sizes and others.
WHEN THE GROWTH IN SALES SLOWS DOWN, THE MATURITY STAGE
BEGINS TO TAKE OVER.
4. MATURITY STAGE – this is like a middle-aged person being more stable in his
life.
Characteristics:
a. Sales to continue to increase but a declining rate.
b. Price reduction are used as a tool of competition.
c. Competition is intensified. More competitors enter the market with more
advanced product development and some competitors attempt to undercut
prices.
5. DECLINING STAGE – is like the period when an old patient is sickly and soon
to die. A stage when both sales and profits decline as new technologies appear
or market trends change/ shifts in consumer tastes. A period when sales drop
as a result of product obsolescence or the firm inability to meet strong
competition. New product or brands eventually enters the industry.
NOTE: UNDERSTAND AT WHICH STAGE UN ITS LIFE CYCLE YOUR PRODUCT

LIES. THIS WILL GIVE YOU THE IDEA OF THE LEVEL OF MARKET ACCEPTANCE
IT HAS.
THIS WILL ALSO SHOW WHETHER ALL-OUT PROMOTIONS WILL HELP
INCREASE EARNINGS (AS IN THE INTRODUCTION STAGE) OR NOT ANYMORE
(AS IN THE DECLINING STAGE)
REASONS WHY NEW PRODUCTS FAIL:

1. Inadequate market analysis - inability to determine market demand
2. Product deficiency – poor quality
3. Lack of effective marketing effort – insufficient marketing strategy
4. Poor timing of introduction – premature or post mature product introduction
5. Technical or production problems – inability to supply the quantity
demanded.
POSSIBLE SOLUTIONS TO AVOID PRODUCT FAILURE

1. Strengthening new product planning – coming up of what product is really
needed and wanted.
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2. Better marketing research to evaluate market need and prospect -

customers are interviewed and are asked to name problems or deficiencies
they found in an existing product.
3. Using number of distribution outlets – intensive distribution

4. Greater number of mass media usage or effective advertising structure.
End of chapter 6
Activity:
Cut and Submit an example of a label showing the informative and persuasive label
of a product.
Case analysis
“Just for the Taste of It”
Diet coke was launched in 1982. After only one year on the market, it grew to
become the largest-selling, low calorie soft drink in the United States. Diet coke was
introduced in may other countries as Coca-cola Light. By 1986, Diet coke was the most
popular low-calorie beverage in the world. Almost 30 years later, Diet Coke is still
going strong.
By 1980, research indicated that nearly twenty percent of the population was
drinking diet soft drinks. At the same time, fitness and diet fads were on the rise.
Coca-Cola recognized an opportunity to break into the sugar-free soft drink market.
Diet Coke was introduced with $100 million advertising campaign and a launch party
at Radio City Music Hall in New York.
Since its inception, Ddiet Coke has expanded its product line by introduncing
many other flavors, including Diet Cherry Coke, Diet Vanilla Coke, Diet Coke with
Lemon, and Diet Black Cherry Coke. After learning that consumers liked the taste like
sugar, Diet Coke with SPLENDA Brand sweeter was launched in 2005. Costumers were
offered another alternative in 2007 when Diet Coke Plus hit the market. It contains
vitamins B3, B6 and B12 and the minerals zinc and magnesium. Coca-Cola continues
to offer diet colas to satisfy consumers’ refreshment needs.
Diet Coke advertising campaigns have been associated with memorable themes
and celebrities. In 1987, Diet Coke ads encouraged people around the world to drink
Diet Coke “just for the taste of it.” Paula Abdul and Elton John teamed up in popular
television commercials in the 90s to sing about their love of Diet Coke.
More recently, Diet Coke has partnered with Heidi Klum and the National Heart,
Lung, and Blood Institute (NHLBI) in a national heart health awareness campaign
called The Heart Truth. The Heart Truth campaign has helped raise awareness about
heart disease in women. The Heart Truth campaign celebrates healthy lifestyle
choices, which have become increasingly important to Diet Coke consumers. One of
the tips from NHLBI is to maintain a healthy weight. Since Diet Coke has zero calories
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and tastes great, Coca-cola believes that it is an excellent choice for managing calorie
intake. The Heart Truth’s Red Dress logo appears on more than 6 billion packages of
Diet Coke throughout the year.
Coca-cola continues to develop advertising strategies that differentiate Diet

Coke from all of the other diet soft drinks on the market. By doing so, it aspires to
remain the leader in the diet soft drink industry.
Questions:
1. What has contributed to the success of Diet Coke?
2. Why do you think Coca-cola continues to invest heavily in advertising when Diet
Coke is already ranked as the number one diet soft drinks?
3. How does it benefit Diet Coke to be involved with a major awareness campaign?
Spotlight on Success
Case 2: Facebook
Mark Zuckerberg was a 19 year old sophomore at Harvard when he started a
Web service from his dorm in 2004. The Zuckerberg invention was called
Thefacebook.com, and it was described as “an online directory that connects people
through social networks at colleges.” Today facebook has over 550 million members.
One out of every 12 people in the world has a Facebook account, and Facebook’s
membership currently is growing at a rate of about 700,000 people a day. The
facebook age has arrived.
With facebook, Zuckerberg has created a social entity almost twice as large as
the United States. Social media websites like facebook have played significant role on
the product launches and reviews. The volume of comments posted on Facebook and
other social media websites is growing. These comments prove to be valuable
resources for businesses who are trying to launch or revamp their products. Today
the fastest growing market for facebook is th 25-44 year old segment, a demographic
that is often targeted by businesses. Not only has Facebook changed the way people
relate to one another, it has also affected many other aspects of life. There are many
Facebook pages dedicated to social and political issues around the world. A posting
on Facebook can quickly travel to millions of members and influence social and political
changes worldwide.
What started out as a diversion for Mark Zuckerberg has turned him into a
multibillionaire. He believes that eventually all businesses will recognize the
importance of the social aspects of doing business.
Think critically:
How has Facebook changed the way people communicate? Why do you think people
and businesses are embracing this technology?
Make Academic Connections
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1. LANGUAGE ARTS. Many business get new product ideas from customers.
Think about you purchased with which you were dissatisfied. Write a letter to
the manufacturer of the product describing your reasons for dissatisfaction.
Explain why the product did not meet your needs. Then provide suggestions
for improving the product.
2. HISTORY. There have been many innovative products throughout history.
Select one and conduct research to learn more about the planning and
development processes for the product. Give a presentation about the product.
Describe how it changed the lives of the consumers.
3. LAW. Businesses trademark their products so that no other company can use
their brand name, symbol, or design without their permission. Even so,
trademark violations still occur. Conduct research to find a case on trademark
violation. Write one-page report describing the case. Explain how the trademark
violator was penalized.
4. MANAGEMENT. You own a pizza restaurant that has been in business for
several years. It has reached the maturity stage of the product life cycle, so
sales are slowing as competition increases. Outline a plan for increasing sale.
Describe what changes you will make to your marketing mix. (product, price,
place, promotion) to boost sales.
5. GOVERNMENT. Pricing is a major factor among competitors. Competition
helps keep prices lower for consumers. The government tracks merger and
acquisition between companies that could result in reduced competition.
Conduct research to learn about merger in which the government intervened.
Write a one-page report describing the merger and why it caused concern.
6. CONSUMER ECONOMICS. Select three different brands from the same
product category that have a wide range of prices (for example, three brands
of gym shoes). Create a table listing each brand and its price. List the unique
characteristics of each product. Do you think these characteristics justify the
price differences? Why or why not.
7. FINANCE. Select a credit card that you would like to have, gather information
about the credit card and credit card company, such as the credit application
process, credit policies and procedures, credit terms, interests rate, rewards
and bonuses, and penalties. Report your findings to the class and state whether
you would recommend the credit card to others. Explain why or why not.
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CHAPTER VII
PRICE/PLACEMENT
PRICE – is the amount of money charged for a product goods or services

- Sum of the values consumers exchange for the benefits of having or using
the product or services
- The value placed on goods and services
- The amount of money and/or goods needed to acquire some combination
of another good and its accompanying services
- The value expressed in terms of pesos or any other monetary medium of
exchange
- What you pay for the value of a product, or the tag price in supermarkets
and department stores
- Cost to the buyer, the amount for which a thing is sold or can be bought,
value, worth, the amount asked on paid for any result; what must be
given, done or undergone to obtain a thing.
- The amount of money that customers have to pay for the product,
commensurate with the perceived value of the offer.
- The amount of money, goods and services that must be given to acquire
ownership or use of product.
- It what you pay for transportation fares, school tuition fees, apartment
rentals, goods bought in department stores and supermarkets, bills in
hotels, restaurants and hospital services, amount to pay for haircuts,
hairstyling, manicure, and other personal hygiene or grooming services.
The many names of Price
Particulars Price by many names

a. School Tuition fees
b. transportation Fares
c. apartment Rentals
d. Hotels Bills
e. Banks Rates or charges, interests on trust,
bond or debentures
f. Insurance Premiums
g. Government purchases Bids or quotations
h. Restaurants Costs or chits
i. Movie Houses Tickets
j. Groceries / Supermarkets Tags or markers
k. Consultancy firms Charges or honorarium
l. Government assistance Subsidy or allowance
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Objectives of Pricing
1. To maximize current profits. A company makes a forecast of market demand
and costs at different prices and chooses the price that will generate optimum
profitability, cash flow, return on investment per product, per format, per size
basis in both units and absolute amounts. This is annually broken down by
specific periods.
2. To maintain or improve target share of market. This can be achieved by setting
lower prices and implementing well-balanced goals. Direct prices match-up with
competing brands or even lower may be initiated to grab the market share.
3. To preempt or minimize entry of competition in the specified market segment
by setting prices at very low levels, or even below cost to ultimately outflank
and kill competition
4. To trigger increased customer traffic into a relatively new store by way of a
price rollback or bigger discounts vis-à-vis competition for all or selected
product lines.
5. To survive in business due to increase overheat costs, excess capacity, stiff
competition, and changing customer needs and wants. This can be done by
ensuring that prices cover variable costs and some fixed costs; or by reducing
prices to pick up demand or at least survive at the expense of profit.
6. To attain the highest quality product in the market by setting a high price to
justify the perceived high-quality product and high cost of R and D and
promotions.
7. To help in the stabilization of price in order to prevent the onset of price wars
by setting prices at competitors levels.
8. To keep the loyalty and support of resellers or to avoid government intervention
through price controls.
9. To keep augment the sales of other products in the company’s line.
10. To determine what product features would be offered and what product costs
could be incurred with price as a key product positioning factor that defines the
product’s market, competition and design.
Pricing Strategies
1. Selling below cost. This is not normally desirable but it sometimes becomes
necessary for the following reasons:
a. The product is not selling as expected resulting to an over-stocked
situation or excess inventory;
b. The product is expiring within six months to one year;
c. Loss leader in retailing;
d. To preempt or dislodge competing brands in specified outlets.
2. Stopping entry of competition. This is done by setting a price at very low
levels relative to competition or even below cost by means of higher
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discounts; product deals (such as Buy 1 Plus 1 Free); allowances and

subsidies; rebates, gift certificates, etc.
3. Psychological pricing strategy

a. Fixed Price Policy. In-store retailers adopt one-price system where goods
are sold to customers at the same price. This gives advantage such as
building customer confidence in the store it saves time and can be used
for self-service stores.
b. Variable Price Policy. Price paid by customer at a given time for a certain
item is determined by the buyers bargaining power. This gives the seller
flexibility in dealing with customers like by lowering prices to some
buyers.
c. Odd Price Policy. Prices are set at odd amounts such as P 19.95, P 99.95,
P 39.95. this pricing is based on the belief that buyers feel, for example,
P 19.95 is much lower than P 20.00 or P 99.95 lower than P 100.00
because they give more attention to peso figure than the centavos. Small
differences in price will more likely be seen as a bargain price and the P
0.05 psychological difference can be much greater.
4. Promotional pricing strategy.

Large wholesaler and chainstore outlets temporarily price some products
below the list price and sometimes below cost to dramatically increase sales.
This strategy is normally done during store anniversaries, opening sales,
Valentine’s day, summer specials, school openings, father and mother’s day,
Halloween, special occasion worth celebrating during the year which are
colored with promotional price offers in mass merchandise outlets, hotels,
restaurants, discos and night clubs, vacation resorts, and recreational
centers. The promotional pricing strategy is also practiced by many
companies when launching a new product or during house-to-house selling
drives. Promotional rollbacks on some products may be done through offers
of FREE GOODS on top regular discounts such as BUY 10 PLUS 1 FREE
(equivalent to a 10% discount) for a 15-30 days’ period to encourage the
trade outlets to stock up and increase their inventories for 3-6 months
supply depending on the promotional items being offered by the supplier.
5. Geographical Pricing Strategy

Companies charge higher prices to far-away customers to defray higher
shipping, freight, handling and transportation costs. Other companies
charge the same to all customers regardless of location from Aparri to Jolo,
or even in remotest islands and this is true for United Laboratories, Inc.
which adopts a UNIFORM PRICING SCHEME inclusive of VAT.
6. Freight Absorption Strategy.
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Companies absorb all or part of actual freight charges in order to get the
business away from competition or for market penetration purposes due to
increasingly competitive markets. This holds true for provincial buyers,
Luzon-Visayas-Mindanao regions. This pricing strategy may not hold true

for small-scale businesses with provincial operations.
7. Market Skimming Strategy

New products are initially set a higher prices to “skim” maximum revenue
from the segments willing to pay the higher price. When the new product
becomes established or widely accepted already, or after the initial sales
low down, companies lower the price to attract the next price-sensitive layer
of customers. In the price strategy, the product’s quality and image, a
strong competitive advantage, should support the higher price and there
are indeed adequate value-added benefits for those who want to buy the
product at that price. For example, Connie Island Ice Cream when
introduced followed the skimming strategy, prices higher than market
leader, Magnolia Ice Cream, and whatever savings gained from higher
pricing were diverted to additional promotional/marketing efforts. Some
firms seek to take advantage of the fact that some buyers always stand
ready to pay a much higher price than other because the product, for one
reason or another, has high present value to them.
8. Market Penetration Pricing Strategy

Companies set a low price on their new or innovative product introduced
into the market in hope of attracting more buyers and gaining a large market
share. The low pricing scheme is designed to attract a high volume of sales
in the belief that a low price generates a bigger market growth and helps in
keeping out competition. For example, Asia Brewery’s beer was launched in
the market P1 lower than San Miguel beer, the undisputed market leader
since 1890 up to the present.
Low-initial pricing may do 2 things:
a. It may discourage other firms from entering the field because of the
anticipated low profit margin.
b. Low initial pricing may give the innovator such a strong hold on its
market share that future competitors cannot cut into it.
9. Product-Bundle pricing Strategy

Companies combine several of their products and offer the set at reduced
/discounted price, for the purpose of encouraging outlets and end users to
buy product lines they might not buy, however, the combined price must
be attractively low enough to get them to buy the bundle or the set of goods
and services.
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For example: Many 5-star hotels in the Philippines offers the prospective
bride and groom countless amenities inclusive of the following: Free use of
the chapel, including a priest’s services and all the physical arrangements
(sound system, flowers, carpet, etc). free use of the bridal car, video and
photography coverage; free wedding cake, free doves and cage, free
bouquet of flowers, free bottles of champagne, free wedding reception
decors, and other physical arrangements, etc.
10. Discount Pricing and Allowance Strategy

These are price adjustments done by many companies of varied businesses
and an array of product lines catering to a host of market segments for the
purpose of incentives or rewards or positive stokes to deserving outlets for
prompt payments of invoices, for volume purchases higher than the
previous periods. (example: cash discount, trade discount, etc.)
11. Discriminatory Pricing Strategy.

The firms sells a product at two or more prices, where the difference in
prices is not based on differences in costs. For example: lower price to big
wholesalers and distributors compared to small retailers, for the same set
of products purchased.
Customer-segment pricing-is where different types of customers pay
different prices for the same product, goods or services; one pays higher or
lower. Example; Senior citizens, 60 years old and above, when able to
present the proper ID card of proof of age to any business establishment,
enjoy a 20% discount, for the same product bought by younger generations,
the latter at no discount.
12. One-price Formula Strategy

This means the same pricing structure for the same type of customers
regardless of volume of purchases and capacity to pay. The catalogue or
List Price with or without VAT applies to wholesalers, retailers and
distributors and varies only in the extent of discounts and other amenities.
The same pricing structure is followed in any geographic location
nationwide.
13. Piggyback pricing Strategy.

Another product is attached to the main product to represent savings;
example: free toothbrush to a family-size toothpaste.
14. “EARLY BIRD” Pricing Strategy

The target clientele enjoys substantial discounts for early registrants during
seminars, conference, and workshops. Advance subscription of TIME,
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NEWSWEEK, ASIAWEEK magazines, ASIAWEEK: 60% off plus 3-in-1 sports

bag free.
15. The Cola War Pricing

This continues to benefit the rich and the poor. Pepsi Cola Bottling Co.
introduced a one-liter bottle (Pepsi Mega) at the price equivalent to Coca-
Cola’s family size (less than a liter). This significantly influenced the growth
of Pepsi which was late neutralized by Coca-Cola, which launched their 1.5
liter Coke at the price of Pepsi Mega.
16. The ice cream war pricing

The major players are Nestle Magnolia, Hershey’s Selecta and ARCE Dairy
Ice Cream. Nestle Magnolia phased out their regular one-gallon packing and
introduced their 1 ¼ gallon packing at the price of their regular one-gallon
ice cream. Their objective is to neutralize the increasing market share of
SELECTA.
17. Double Pricing Strategy

A fixed fee is charge plus variable usage free. Example: some disco houses
charge minimum entrance fees and customers pay Dance Instructor (DI) at
P 300 per hour and the order drinks for the night.
18. Speculative pricing

Prices are raised in anticipation of devaluation, oil price increases, further
inflation, raw materials shortages, government price controls.
PLACEMENT (DISTRIBUTION)
Place – means distribution/market channels and physical distribution
Channel marketing – a system designed to move goods and services from
producers to customers which consists of people and organizations supported
by various facilities, equipment and information resources. It also involves the
physical flow of the products.
The entire goal of distribution activities is to get the right goods, to the
right place, at the right time at the least possible cost.
The market channels are also known as middlemen who deliver
products, goods or services to the final consumers or end users. Examples of
market channels are groceries and supermarkets, trading and sari-sari stores,
department stores and factory outlets, drugstores and hospital pharmacies, etc.
These middlemen may be categorized into dealers, wholesalers and
retailers.
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Sta. Maria Campus
ROLE OF MARKETING CHANNELS

1. Takes care of the transaction aspects of marketing including the selling,
financing and the risk taking associated with storing products in anticipation
of future sales.
2. They perform the logistical function of moving products from the point of
production to the point of purchase or consumption.
3. They help producers promote goods and services.
TYPES OF MARKETING CHANNEL

1. Direct Channels – the simplest channel type. The people who produce the
goods and services interact directly with customers.
2. Indirect Channels – rely on one or more intermediaries between producers
and customers.
TYPES OF MARKETING INTERMEDIARIES

1. Middlemen – anybody acting as an intermediary between producer and
consumer.
2. Agent/broker – intermediaries with legal authority to market goods and
services and to perform other functions on behalf of producers.
3. Wholesalers – are organizations that buy from producers and sell to retailers
and organizational customers.
4. Retailers – are the last link in many marketing channels; sells directly to
final consumers.
CHANNELS FOR CONSUMER GOODS:

1. Producer to consumer – when there are no intermediaries between the
producer and the consumer.
2. Producer to retailer to consumer – this channel is common when the retail
establishments involved are relatively large. This channel make use of only
one middlemen - the retailer.
3. Producer to wholesaler to retailer to consumer – the traditional channel of
distribution for consumer goods. It employs a wholesaler to take care of the
shipping and transportation needs. The producer uses this channel for the
fast turnover of goods and to regain immediately a part of his capital as well
as obtain a fair profit.
4. Producer to agent to wholesaler to retailer to consumer – in some cases, a
producer chooses to use agents’ to help market its goods to wholesalers.
Agents are used primarily when producers lack the expertise or resources
to sell their products to wholesalers.
CLASSIFICATION OF WHOLESALERS:
1. Merchant Wholesalers – the largest group. They assume ownership of
goods, accept delivery, store the goods, and then reship them from their
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Sta. Maria Campus
warehouses to their customers. They are independently owned and take

title to the goods they handle.
2. Agent Middlemen – those who do not own the goods they sell. Agents
generally specialize in the goods they carry and they earn commission for
every sale closed.
TYPES OF MERCHANT WHOLESALERS

a. Full-Service Wholesalers – provide a full set of services such as carrying
stocks using a Salesforce offering credit, making deliveries and providing
management assistance. Examples: hardware wholesalers, drug and
clothing wholesalers.
b. Limited-Service Wholesalers – offer fewer services to their suppliers and
customers. They provide only some wholesaling functions, like order
taking and processing.
TYPES OF LIMITED-SERVICE WHOLESALERS:

a. Full-service wholesalers – provide a full set of services such as carrying
stock using a Salesforce offering credit, making deliveries and providing
management assistance.
b. Limited-Service Wholesalers – offer fewer services to their suppliers and
customers. They provide only some wholesaling function, like order
taking and processing.
TYPES OF LIMITED-SERVICE WHOLESALERS

a. Cash-and-carry wholesalers – have limited line of fast-moving goods, sell
to small retailers for cash, and normally do not deliver. They provide no
credit and delivery services. The most common items carried are
groceries and construction materials.
b. Drop Shippers – operate in bulk industries such as coal, lumber and
heavy equipment. They do not inventory or handle the product. They
serve as intermediaries by buying the products from the manufacturers
and selling them to the retailers. Once an order is received, they find a
producer who ships the goods directly to the customers. The drop
shippers takes title and risk from the time the order is accepted to the
time it is delivered to the customer.
c. Rack Jobbers – are those that maintain their won racks within a retail
establishment. They fill up the racks assigned to them with products,
which in turn are sold by the retailer to consumer. Unsold products are
taken back and the retailer remits payment for items sold. This practice
is common in supermarkets. They offer supermarkets special
merchandising assistance in selling nonfood items such as book records,
drugs, toilet articles, housewares, etc.
d. Mail order wholesaler – use catalogs for large scale transactions by mail
such as offering jewelry, cosmetics, special foods and other small items.
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Sta. Maria Campus
These are wholesalers who sell through the mail, send catalogs to retail,
industrial and institutional customers. Example: Books and magazines
publisher.
e. Truck or Wagon Wholesalers – drive around and sell merchandise to
retailers directly from the truck. They fill up their trucks with
merchandise and sell on a wholesaler basis to retailers located in various
parts of a selected area. They carry a limited line of goods (such as milk,
bread, snacks foods, softdrinks, fruits, etc.) which they sell for cash as
they make their rounds of supermarkets, small groceries, hospitals,
restaurants, cafeterias and hotels.
DISTRIBUTION CHANNEL FUNCTIONS

1. Research – gathering information needed for planning
2. Promotion – developing and spreading persuasive communications about
the offer
3. Contact – finding and communicating with prospective buyers
4. Matching – shaping and fitting the offer to the buyer’s needs. Matching
includes such activities as manufacturing, grading, assembling and
packaging. Production and sale must complement with time.
5. Negotiation – reaching an agreement on price or terms of the offer so that
ownership can be transferred.
6. Physical distribution – transporting and storing of goods
7. Financing – acquiring and using funds to cover the cost of channel work.
Wholesalers provide financing services to their customers. A 30-day billing
period after the delivery of products is very common.
8. Risk taking – assuming the risks in connection with carrying out the channel
work. The wholesaler assumes the risk of not selling the goods and losing
the goods due to theft, fire, obsolescence and other hazards.
End of chapter 7
Activity:
Site and Identify some business establishments in our locality using the different
pricing strategies.
Case analysis:
1. Tom Johnson owns and operates Stop-n-Go Oil Change, which offers oil
changes and other minor auto maintenance services such as tire rotations and
air filter replacements. Lately, because of higher operation costs, Tom is having
difficulty competing with two other local oil change companies in the same
neighborhood. Tom decides to cut his prices below cost with the intention of
luring in more customers and driving the other oil change companies out of
business. Then, when there is less competition, Tom will raise his prices to
Course Code: ABM 4

Sta. Maria Campus
increase profits. You are the assistant manager of Shop-n-Go, and Tom recently
shared his pricing strategies with you.
Question: What problems do you see with Tom’s plan? What would you do
to try to convince him to use another strategy, such as nonprice competition?
2. The first attempt at online sales simply mimicked the traditional retail shopping
experience. Some individuals assumed that the online environment would never
be a legitimate alternative or addition to traditional retailing. In the beginning,
the Web was used mostly to conduct product research. Time changed
dramatically and now online advertising and e-commerce outperform the offline
alternatives. According to studies conducted by Forester Research, online sales
totaled $172.9 billion in 2010 and are projected to grow to $248.7 billion in
2014, growing an average of 7-7 percent each year.
Retailers are using more innovative strategies to coax people to shop online.
Online video technology is being used on many retail websites to create a new
customer experience. For example, Netflix has added movie trailers to entertain
and entice its members to rent movies. Netflix uses personalization techniques
to determine which movie trailers would be of interest to each individual.
American Eagle teamed up with the CW network to sponsor some of its shows
targeting teens. It launched a website that showed clips of the TV shows with
characters wearing American Eagle’s clothing. Build-A-Bear’s website has many
videos and games to entice its target market of 8-12 years old girls. Website
visitors can become a member and earn rewards for free merchandise. J&R
Electronics offers products and seminar videos to promote and demonstrate
various products. The website also has event videos, which feature live
performances by well-known recording artists sponsored by J&R Electronics.
Another approach taken by many online retailers is the addition of customer
reviews on their websites. On the PETCO.com website, visitors can click on the
Ratings & Reviews link, choose a pet product to review, give it a rating between
1 and 5 paws, and write a review. Research has shown that 60% of online
shoppers find customer product review helpful in making buying decisions.
Some online retailers have formed partnership with other branches of the media
to help promote their products. JCPenny has teamed up with People Magazine.
JCPenny’s website showcases fashion items hand-picked by People StyleWatch
editors. Website visitors can click on the item to order it. Online retailers
continue to add features to encourage customers to shop at their sites.
Questions:
1. Why do you think more consumers are now shopping online?
2. Do you think special features such as online videos make a website more
appealing? Why or why not?
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3. Are your friend’s opinions about products important to you? Why do you
think some websites include customer reviews of their products?
Make an Academic Connections
1. SOCIAL STUDIES. Today, there are many educational options for K-12
(Kindergarten to 12th Grade) students. An increasing number of channels of
distribution exist to provide education for students. Conduct research and list
the educational options available for students. Describe the channels of
distribution for each option. Write two-page report discussing the various
alternatives and describing the advantage and disadvantages of each one.
2. RESEARCH. Conduct research to determine the distribution channels used for
designer clothing. List the various channel members. Can any retailer sell a
designer brand or does the retailer need to meet specific requirements to do
so? If so, describe them.
3. MARKETING. Select a business that uses a direct channel of distribution.
Design a flyer or newspaper advertisement that emphasizes the benefits that
the direct channel of distribution provides to the consumer.
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Sta. Maria Campus
CHAPTER VIII
PROMOTIONS MIX AND COMMUNICATION MIX
PROMOTION – any technique that persuasively communicates favorable information

about a seller’s product to potential buyers.
PROMOTION MIX / MARKETING COMMUNICATION MIX – the set of promotion tools

that the company uses to reach the distribution channels and the target consumers to
pursue its marketing objectives for the period better and faster than competition. It is
the combination of personal selling, advertising, sales promotion, publicity and public
relations that helps an organization achieve its marketing objectives.
FIVE MAJOR TOOLS IN THE MARKETING COMMUNICATIONS MIX

1. ADVERTISING – any paid form of nonpersonal presentation and promotion of
ideas, goods or services by an identified sponsor. It informs and persuades
through paid media (television, radio, magazine, newspaper, outdoor and direct
mail).
FOUR BASIC FUNCTIONS OF ADVERTISING:
a. To make consumer aware of the product
b. To inform customers about product or service benefits.
c. To influence consumers to buy – either by informing them about
product benefits or by suggesting these benefits through the use of
symbolism and imagery.
d. To maintain product visibility over time.
2. DIRECT MARKETING - means selling products directly to consumers using
door-to-door sales, company-owned retail stores and catalogs. It is the use of
nonpersonal media to contact consumers who in turn purchase products
without visiting a store.
FORMS OF DIRECT MARKETING
a. Direct Mail – companies mail consumers letters, brochures, and even
product samples, and ask that orders be placed by mail or
telephone.(Readers Digest)
b. Catalog Retailing – companies mail catalogs to consumers or make them
available at retail stores.
c. Televised shopping – TV channels and shows such as home shopping
network that sells consumer electronics, jewelry and other products at
relatively low prices.
Advantages of Direct Marketing
i. Provides consumers with shopping convenience
ii. Low operating expense because marketers do not have the overhead
of retail stores.
iii. Liberal return policies
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Sta. Maria Campus
3. SALES PROMOTION – short-term incentives to encourage trial or purchase of

a product or service. It offers consumers, salespersons, and resellers direct
inducements for purchasing a product; used by producers to encourage
wholesalers and retailers to stock and promote their products.
Objectives of Sales Promotion
i. To motivate consumers to try a new product
ii. To attract new customers
iii. To encourage present customers to use the product.
iv. To increase the amount of impulse buying by consumers.
INTRODUCTORY SALES PROMOTION DEVICES FOR CONSUMERS
a. Samples. Sampling is the actual offering of a free product trial to consumer.
b. Coupons. Coupon is a certificate that, when presented for redemption at a
retail store entitles the bearer to a stated saving on the purchase of a
specific product.
c. Consumer contests and sweepstakes. A contest is a sales promotion device
in which participants compete for a prize on the basis of the skill in fulfilling
a certain requirement usually analytical or creative. In sweepstakes, the
participants submit their names by dropping-in product labels with name,
address and signature to have them included in drawing of prize winners.
4. PUBLIC RELATIONS – is an organized, planned and continued effort to establish
or promote public goodwill and maintain mutual understanding between an
organization and its various publics. The objective of it is to offer a positive
image of the company and the brand.
PUBLICITY – is the dissemination of news and information about a person,
product, service, idea or institution through mass media in order to create
impressions to the public. It uses mass media in the dissemination about the
product or service without openly paying for them (nonpaid media
communications which helps build target market awareness and positively
affects attitudes for your product or firm).
8 pointers for successful publicity
1. Plan your publicity effort, review your target market and their needs.
2. Be willing to persevere and be persistent with key media people in
order to achieve results.
3. Provide media with a meaningful benefit for featuring your firm
product or event.
4. Work through or with another organization such as a charity or
service group to provide credibility with the media and assistance in
staging and publicizing the event.
5. Include a photograph or illustration with your news release.
6. Provide a contact name and phone number to media representatives
for further questions.
7. Record and evaluate the publicity received to determine if the
objectives were met and to improve your future publicity program.
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Sta. Maria Campus
8. Do it right or not at all.
5. PERSONAL SELLING – means “face-to-face” interaction with one or more

prospective purchases for the purpose of making sale.
PEOPLE (the 5th P) – takes center stage as the dominant driving force, the heart of
all major undertakings, the key factor to the company’s success.
MULTI-LEVEL MARKETING MIX

1. This is a method of distributing products through independent distributors,
practiced for years in selling cosmetics, skin care lines, household gadgets,
vitamins and materials, food supplements and other health care products in
countries like the USA and Malaysia and now in the Philippines.
2. Multi-level Marketing is also known as network marketing whereby a person
applies to become a distributor of some products and through contacts, the
person sponsors others to become distributors as well; thus the former earns
the right to a small commission on the latter’s sales.
3. In multi-level marketing, a distributor is in business for himself/herself, buying
the products at wholesale basis from the company he is representing; these
products are either for his own consumption or he sells these products at retail
and makes a profit.
4. In multi-level marketing, the distributor builds an organization, a network
through which to channel the products, sharing with relatives or friends or
neighbors or business associates
5. Multi-level marketing is a revolutionary approach of distributing products sold
directly to the final end-users through networks of independent distributors
rather than through the traditional retail outlets such as supermarkets,
groceries, trading and department stores.
6. In network marketing, individuals or groups of people can become distributors
of a marketing company, the latter granting them the right to recruit and to
sponsor others as members, therefore giving the authority to set up and
develop their own distribution network to sell its products, in exchange for
commissions or bonuses in terms of percentage of sales volume from money
that would have been channeled to all agents of the traditional marketing and
advertising activities.
7. Network marketing practically permits a distributor to immediately start and
develop a business without necessarily working full time. The earning of a
distributor is perpetually a continuing basis from his very initial effort even when
he is no longer involved in the day-to-day activities of the business. His network
of members will grow in size, in terms of number and sales volume that will be
generated from them, and the distributor’s income will correspondingly grow
because of the overriding commissions, a percentage of the sales generated by
members also known as downlines.
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Sta. Maria Campus
8. In network marketing, companies like AMWAY, HERBALIFE, MAVI, Forever

Living, jockey Philippines and many others ask their distributors to try and use
the products top personally experience the value-added benefits of the
products. The distributor then pass on his valuable experiences about the
products to other circle of influence.
9. Multi-level marketing is the alternative to the traditional marketing and
promotions efforts used by many companies, and is the vehicle for direct selling
through independent distributors selling the products to the final consumers,
deviating from the traditional marketing channels as the mass merchandise
outlets.
10. Multi-level marketing, indeed is likened to a distribution system of goods and
services, whereby a person registers to personally become a distributor of some
product lines and through this influence in socio-civic-religious-cultural or
professional contacts, directly sponsors other individuals to become distributors
like him, and his recruits likewise sponsors other individuals to become
distributors and son on to the succeeding recruits up to the fourth level. His
recruits earn commissions form these new recruits sales. This network is called
downlines.
11. In network marketing, all transactions are done purely on cash basis, therefore,
there are no such problems as account receivables and bad debts. The
overhead cost in terms of manpower is relatively lesser because the distributors
recruited are not employees of the company.
12. Multilevel marketing allows the company to generate substantial sales volume
and a wider base of distributors at the least time, money and effort. There is
tremendous opportunity for the company to create a wider base of users and
distributors, bigger market shares and market growth, higher profitability and
unlimited opportunities to immediately sell a variety of products at the shortest
possible time.
The primary strategy in multilevel marketing is recruitment, building a

substantial network of members who will personally use and sell the products
on a commission basis. Indeed, network marketing enables people to
immediately start their own business with very little resources or meager capital
and with the least of risk involved. Multilevel marketing is advantageous to both
companies and distributors, who earn substantial profit out of the sales
generated by the network members. In multilevel marketing, a person or
individual must have a sponsor to be able to actively participate and enjoy the
benefits of a network company. The earnings of distributors are based on the
absolute peso sales of distributors’ personal and group sales volume for the
period.
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Sta. Maria Campus
Advantages of Multilevel Marketing Vs. Traditional Marketing

1. Manpower labor cost is nil and significant, because the distributors recruited
are not employees of the network company, earn no salaries but purely
commissions and bonuses commensurate to the marketing efforts they
invested in selling the company’s product lines.
2. The distributors are free from the usual business risk, because the capital
involves is very minimal and yet the returns are high in selling the products/
3. Network marketing has eradicated advertising cost because it relies heavily
on word-of-mouth communication that easily spreads like wildfire.
4. Network marketing does not require higher educational attainment, because
even elementary or high school graduates who are enthusiastic and eager
to join as distributors can easily understand and implement the simple
mechanics and guidelines of network marketing to friends, neighbors,
associates, and relatives.
5. The distributor in network marketing is not limited to one geographical area
or territory because his area of responsibility is anywhere in the country,
and practically any part of the world.
6. Distributors are not required to work full time because the mechanism of
network marketing allows distributors to work anytime at his, leisure and
whenever he has the opportunity in any place to recruit distributors who will
likewise recruit other distributors.
7. Network marketing provides unlimited income to distributors who are
energetic in orchestrating a network of members highly motivated in
recruitment and selling of company’s products.
8. Transactions in network marketing is done purely on cash basis; therefore,
no such problems as accounts receivable, bad debts, and other problems
commonly encounters in traditional marketing.
9. In network marketing, there is fast turnover of products because of several
layers of network members simultaneously selling the products and
periodically recruiting distributors.
10. The distributors and the downlines are self-motivated to sell the products,
thereby generating overriding commissions with the least of effort and time.
11. Network marketing triggers high loyalty from users (including distributors)
who have proven to themselves that the network product indeed are
premium quality deserving of repeat purchase at frequent intervals and
readily endorsing the same to others in the community or circle of influence.
12. Distributors in network marketing derive first hand information and
feedbacks on specific customer preferences and perceptions of networks
products thereby enabling the company to make adjustments in the total
marketing effort.
Course Code: ABM 4

Sta. Maria Campus
End of Chapter 8
Activity:
Prepare your product own product and present it to the class during the online
discussion.
References:
Kaser, Ken. Advertising and Sales Promotion Philippine Edition 2016. Cengage
Learning Asia Pte. Ltd. Lorong Chuan New Tech Park, Singapore.
Hawks, Richard. Principles of Marketing. New York City, USA 2015
Balbin, Nellie. Principles of Marketing and Business Marketing. 2015
Course Code: ABM 4


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