SUPPLY CHAIN MANAGEMENT

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MARKETING
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MARKETING

Has defined as the process of planning and executing the various

activities that are involved in the selling of goods, services or ideas
that lead to an exchange between buyer and a seller.

This involve determining what the customer need and want, by

involving them in the development of a product that will eventually
satisfy their needs and wants, by communicating the product value-
the usefulness and desirability of the product.
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Value

 It means importance.

 Marketers must therefore show the products value to the buyer

in order to facilitate the exchange.

 Exchange happens when the buyer and the seller agree to the
transaction, which a buyer gives something of the value to a
seller in return for goods, services or ideas.
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Market

 is where the exchange occurs

 Others would refer to the market as people or organizations who

need or want a particular product and who are willing and able to
buy it.

 The two requirements(willing and able) are necessary in order to

complete a transaction.
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TYPES OF MARKETS

 Consumer market- where products/services are bought for

personal use.

 Industrial market- where firms buy products to be used for

production of their products in their business.

 Reseller market- where buy and sell happens, and these types f
markets are also referred to as middlemen or intermediaries.

 Institutional market- where buyers buy large quantities of

products/service for the organizations like hospitals, schools, &
government agencies.
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Target Market

 Demographic- who our are and this involves age, gender,

income, and occupation

 Geographic-where our customers are and this involve national,

regional, municipal, barangay, or sitio.

 Psychographic-how and why our customer buy our products and

service, which involves the behavior of the customers as they
buy a particular product.
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MARKET SEGMENTATION

 Geographic Segmentation- calls for dividing the market into

different geographical units such as nations, states, regions,
countries, cities, or neighborhood.

 Demographic segmentation- consists of dividing the market into

groups on the basis of demographic variables such as age, sex,
family size, income, occupation, education, religion, race, and
nationality.

 Psychographic segmentation- buyers are divided into different

groups basis of their social class, lifestyle, and or personality
characteristics.
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MARKETING MIX
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Product

 Refers to what producers produce,

marketers sell and buyers
purchase.
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Product forms

 There are various forms of

products.
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Product mix

 Is commonly refers to as combination of products that a seller

can offer to the buyers.

 Product mix decisions are made by the top management of the

company. Preferably, this decisions is based on market search
and surveys. The data gathered from the customers are very
important in making product mix decisions since this plays a
very important role in selling effort of each individual product
later in the market.
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Objectives of product mix

 Capitalize on strength

 Survive seasonal fluctuations

 Utilize brand name

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Product lines

 Are usually termed as a product grouped together with

similarities in target market, formula, and production.

 Product line width (lapad ug kapilian)

 Product line depth (lawom ug kapilian)

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Product design

 Designing a product is the most challenging part in the business

process

 This includes:
 Product function

 Cost

 Aesthetics

 Product liability

 Product quality
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 Product life cycle- refers to time line of product.

 Brand- is the name, sign, symbol, or design or any combination of these elements,
that is intended to identify the goods or services of a seller. Brand name comes in
two components, Brand Name and Brand Mark.

 Packaging-this term can refer to materials that are used to wrap or contain the
product, or this can refer to how a product is presented to the buyer. Below are the
several reasons why we package product.
 Information about the product

 Protect the contents

 Easily transported

 Ease of use
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PLACE

 Refers to the location where to sell the

product.

 In marketing, the PLACE is therefore a

good factor to consider in marketing the
products.
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TWO MAJOR ENVIRONMENTS OF THE COMPANY

 MICRO ENVIRONMENT
 Suppliers
 Market intermediaries
 Customers and the public
 Competitors

 MACRO ENVIRONMENT
 Demographic
 Economic
 Technological
 Political/legal
 socio/cultural influences
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Suppliers

 Are other businesses or individuals that provide resources need by

the company in order to produce its products.

 Labor is part of the supply for production. Laborers are supplier of

labor.

 We can therefore see the importance of suppliers, and if the

suppliers encounter problems, the company will also have a
problem.

 It is important that we know how to choose suppliers, the quality of

their materials, the price and terms offered, and of course the
relationship we build with them.
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Marketing Intermediaries

 Refers to the companies that help in marketing efforts of the company.

 This involves promotion, selling, and physical distribution. In simple terms these
are the middlemen of the buyer and seller in the transactions.

 Physical distribution firm help the company in stocking or warehousing and

moving the products. It includes transportation and forwarding firms.

 Marketing service agencies help in research and development of the product/s,

advertise, and promote the products. These companies are usually contracted
by the producing company focus on the marketing of its product/s.
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Competitors

 Are the companies that sell products

that affect the salability of the products
or services
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Customers and the public

 Refers to the people that purchase

your products and or services.

 Business must locate at the area near

to the target market (proximity to the
market)
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Other factors to consider

 Visibility and accessibility of the establishment to the people

 Availability of transportation facility in the area

 Availability of the space, and nature

 Rent expense/ cost of land

 Availability of utilities

 Safety and security

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PRICE

 The price is one of the components of the

marketing mix which contribute to a large
extent in the attainment of the firm’s sales
and profit goals.

 Price is the amount of money that is paid

exchanged for the purchase of a product .

 Price plays a vital role in selling the

product.

 Price reflects the value of a product to

both seller and a buyers.
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PRICING

 Is defined as those activities involved in the determination of the

price at which product will be offered for sale considering the
various objectives of the firm.
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PRICING PROCEDURES

 The determination of the realistic range of choice;

 The selection of pricing strategy;

 The evaluation of economic feasibility;

 The setting up the price

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PRICING STRATEGY

 Market skimming strategy- requires the setting of price at the

upper limit of the realistic range of choice. The purpose of
skimming is to maximize profits as the product is being
introduced.

 Penetration strategy- calls for setting the price at the bottom of

the realistic price range. The purpose is to penetrate the market
as rapidly possible.
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PRICING OBJECTIVES

 Before prices are set, the pricing objectives must first be

determined. Pricing objectives may consist of any of the
following:
 Profit-oriented objectives;

 Sales-oriented objectives; or

 Status quo-oriented objectives

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Profit-oriented objectives

 Profit-oriented objectives call for profit generation. This may

either be:
 To achieve the target return on investment or on net sales, or

 To maximize profit
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Profit-oriented Objectives

 Target return objective- this refers to the pricing objective

requiring a certain level of profit.

 Profit maximization objective- this refers to the pricing objective

of seeking as much as possible. This maybe attained by
increasing the quantity sold or increasing the profit margin.
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Sales-oriented objectives

 Sales-oriented pricing objectives refer to those that will provide

higher sales volume. This may be attained by any of the
following:
 Increasing sales volume, or

 Maintaining or increasing market share.

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Sales-oriented objectives

 Increasing sales volume- this objective requires an increase in

sales volume for given period.

 Maintaining or increasing market share- this objective requires

either maintaining or increasing the company’s market share.
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Status Quo-Oriented Objectives

 Status quo pricing requires maintaining the same prices for the
company’s products. This happens when the firm is satisfied
with its firm is satisfied with its current market share and profits.
The reason for the status quo pricing may fall under any of the
following:
 To stabilize prices

 To meet competition, or

 To avoid competition.
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PRICING APPROACHES

 Prices of products and services may be set based on any of the

various pricing approaches. They are the following:
 Cost based-approach

 Buyer based approach

 Competition based approach

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COST BASED APPROACH

 The cost based approach in pricing refers to the setting of prices

on the basis of costs. Under this approach, the total costs are
calculated and a margin of profit is added.

 There are two types of cost based approach. They are the
following:
 The cost plus pricing,

 The target rate of return pricing

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Cost plus pricing
 This method calls for adding a percentage of cost on top of the total cost. The
added percentage constitutes the profit margin ( a fair amount of returns),
while, while the total costs represents the direct costs and the overhead costs.
The formula adapted is as follows:

 Price= total costs + profit margin

 Where total costs=direct costs + overhead costs

 direct costs=material + labor

Example: if direct costs is P75, overhead costs is P25, and profit margin is 25% of the total
cost, the following will be derived:

P= DC+OC+25%(DC+OC)

P=75+25+25%(75+25)

P=125
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Target rate of return pricing
This approach enables a company to establish the level of profits that if feels will yield a satisfactory return. The
procedure will be:

 1. to identify what percent is a satisfactory return, and

 2. to use the standard return in determining whether a particular price and marketing mix combination is
feasible.

To determine the selling price using this method, a standard volume is listed first, then the per unit variable costs
(labor and materials) and the per unit fixed costs are computed. The costs are then added to the per unit return
desired on the capital employed in producing the product or service. The formula is as follows:

P=DVC + F/X + RK/X

Where P = selling price;

DVC=direct unit variable costs;

F =fixed costs;

X =standard unit volume;

R = rate of return desired;

K = capital (total operating assets) employed

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Target rate of return pricing

 Example: If a company’s direct unit variable cost is P75, fixed

costs are estimated to be P 2, 500, 000 on a standard volume of
100, 000 units, a 25% return on a capital of P10, 000,000 is
required, the unit selling price is P125. this derived as follows:

 P= 75 + 2, 500, 000/100, 000 + 25% (10, 000, 000/100, 000)

 P=75+25+25

 P=125
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BUYER BASED APPROACH

 The buyer based approach of pricing deals with consumer

perceptions or behavior as bases for determining the selling price of
product or services. This approach is composed of the ff methods:

 1. perceived value pricing

 2. price-quality relationship pricing

 3. loss-leader pricing

 4. odd-number pricing, and

 5. price lining pricing

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Perceived value pricing

 This method establishes the price for a product based on the

buyer’s perception of the value of the product or service. Most of
art like paintings and sculptures, are sold at prices based on the
buyer’s own analysis. Costs has little to do with selling price.
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Price-quality relationship

 This approach hinges on the observation that consumers

associate high price with high quality and low quality with low
price.
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Loss-leader pricing

 This refers to the practice of setting low prices on selected

products which will result in the generation of less profits, but
with the objective of increasing the sales volume of other
products sold by the company.
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Odd-numbered pricing

 This refers to the practice of setting price even below peso

amounts. An example is selling at P99.50 rather than 100.
There are good reasons for this method:

 1. At only a 50 centavo difference, P99.50 appears to be more

attractive to the prospective buyer than the P100 price;

 2. The salesclerk will be forced to give a 50 centavo change

prompting him to enter the sales transaction in the cash register.
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Price lining pricing

 This refers to the practice of selling merchandise at a limited

number of predetermined price levels. The different price levels
are intended to represent various levels of quality. The buyer is
then provided with various buying options increasing his chance
of making a purchase.
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Competition based approach

 The competition based pricing approach refers to the setting of

prices based on what prices are being charged by competitors.
There are two kinds of pricing under this approach. They are the
following:

 1. going-rate pricing- under this pricing method, the firm adapts a

price based on the competitor’s prices. The price adapted maybe a
little higher or lower than the competitor’s . Less attention on costs
and demand.

 2. sealed bid pricing- the firm sets its price which is thought to be
little lower than the competitor’s. Less attention on costs and
demand.
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PROMOTION

Refers to communication designed and

implemented to persuade buyers to
accept ideas, concepts, or things; or to
motivate customers and consumers to
take action which is preferable the act of
buying.
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FOUR (4) BASIC PURPOSE OF
PROMOTION (DRIP)
 DIFFERENTIATE- marketing communications must act as a
differentiator of products, especially in markets where there are
many similar products.

 REMIND- promotional messages are also aimed at reminding

current buyers (suki) of the reasons why they should continue by
the product/s as well as quality.

 INFORM- promotion provides a great deal of factual information

about products and places of business such as location of the store

 PERSUADE- persuasion is the most important goal of promotion

and encourages purchases or changes in attitude of the target
buyer.
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Other promotional model (AIDA)

 According to this model, potential buyers go through a

psychological or behavioral process before purchasing a
product.

 AIDA stands for Attention, Interest, Desire, & Action.

 This model incorporates various psychological processes.

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 ATTENTION or awareness- it is a cognitive process that relates to how and

what we think and believe.

 INTEREST and desire- the relate to our emotions, how we feel about
something. After attention has been gained, the next step is the interest
must be aroused. This is done by creating an understanding of the benefits
of the product in relation to the personal need(s) & want (s) of customers.
This has to focus the message o n how the product or service being an
actually meet the needs/wants.

 DESIRE- at this stage, a company tries to appeal to the target customer’s

wish to fill some need.

 ACTION- as the name suggests, the action stage aims to get individuals to
do something such as purchase the product or service.
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ADVERTISING
 Refers to as any paid form of non-
personal presentation and promotion of
ideas, goods, or services by an identified
sponsor.

 The fundamental purpose of advertising is

to sell something- a good, service, idea,
person, or place.

 Mass communication is needed to reach

mass markets at a responsible cost.
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OBJECTIVES OF ADVERTISING
 Support personal selling- advertising may be used to acquaint with the seller’s company and
products, easing the way for the sales force.

 Reach people inaccessible to sales force-sales people may be unable to reach to executives
or may be uncertain who in the company makes the buying decisions.

 Improve dealer relations- wholesalers and retailers like to see a manufacturer support its
products.

 Enter a new geographic market or attract a new market segment- selling to a new area or new
set of customers require intensive advertising.

 Introduce a new product- the company is expected to incur a high cost of advertising when
introducing a new product.

 Expand the use of a product- advertising may be used to lengthen the season for a season for
a product; increase the frequency of replacement; or the increase the variety of product uses.
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DEVELOPING AN ADVERTISING CAMPAIGN

 AUDIENCE- the marketers must identified the audience

 MESSAGE- when the audience have been identified and

established, we can now construct the message appropriate to
the audience.
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DEVELOPING AN ADVERTISING CAMPAIGN

 MEDIA- delivers the message.

 It carries the message from the sender to the receiver. Examples

of media are; Athena TV, cable TV, radio, internet, magazines,
newspapers, posters, cinema, cell phones, &
buses/jeepneys/taxis/ships/ planes.

 The right choice of media is also very important with the

consideration of the target audience & the message. If your
target audience does not read newspapers, then it would be
useless to print your advertising in the newspaper.
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DEVELOPING AN ADVERTISING CAMPAIGN

 CREATIVE EXECUTION- this topic involves the creative execution of the
message in the chosen media. You now know the audience, have already
constructed the message, and now will execute the communication
creatively.

 Creativity includes pictures, colors, designs, musics, actors, et

 Creative execution has to connect with the audience’s emotional

side(feelings) or rational side(mind).

 This is to guarantee that the attention of the audience will be focused on the
advertisement.

 Creative execution of advertisement are; animation, testimonial,

demonstration, celebrity endorsement and guarantees.
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“Don’t push people to where you want to

be, meet them where they are.”