Principles of Marketing Chapter 5-6 - Ms. Stephanie O. Dela Cruz - Grade 11-12

MONTESSORI PROFESSIONAL COLLEGES OF ASIA
HEAD OFFICE: 2305 A, East Tower, PSE Bldg. Ortigas, Pasig City
Telephone No: 470-1025
Email Add:mpca.edugroup@gmail.com
Principles of Marketing
Quarter 2 : Module 1
CHAPTER 5
Product Strategies
What I Know
“The brand is the repository of a product’s market value. It is the marketer’s
primary duty to protect the brand”
There are traditionally 4 P’s that are used for communicating the essence of a product and
its brand – product, price, place and promotion. Together these form what is known the
marketing mix that makes up the communication strategy.
Do you have an idea of starting a business?
Describe the idea of your business here.
What would make your product different from the existing business?
What are the advantages of your product?

What’s In
THE BUSINESS PLAN
The business plan serves as the road map for bringing the product idea to life and it
specifies the details that would help to make the business model works. There are no single
standard for preparing a business plan.
A business plan would best contain the following:
 Statement of opportunity. This refers to the identified market opportunity that the
business seeks to address. It could be an untapped market, growing demand for an
existing product or untried product offering.
 Environmental analysis. Key issues in the environment that should be noted when
assessing business proposals.
 Market estimates and market segments. Estimated size of the total potential market
along with the descriptions of the different possible market segment and their
estimated size.
 Competitive analysis. A roundup of existing competitors along with existing
substitutes together with their strength and weakness analysis.
 Business strategy. Details of the proposed business including the product concept,
the logistics required for its mobilization, the organization structure needed and the
methods of product distribution.
 Risk analysis. List of things that could go wrong along with the corresponding list of
safeguard and contingencies to address the risk.
 Financial forecast. Estimates of financing required for initial capitalization, asset
acquisition, working capital, overhead and inventory.
BRING THE BUSINESS INTO LIFE

Answer the following questions:
1. What product or service you will offer?
2. Describe the business opportunity that you seek to address.
3. Describe your target market/consumers.

What’s New
COMPETITIVE STRATEGIES
Much of your business development plan will center around the question of “How can I
compete effectively in the market”? There are generic competitive strategies that you can
consider when developing your business plan:
Least Cost. This strategy involves producing goods or services at the least possible cost
and passing these to consumers through low affordable prices of products. Finding the
cheapest way to produce and investing in a most economical production methods and
technologies.
Differentiation. This strategy involves a lot of brand building, to get the market to
associate the brand with a particular benefit.
Niche. A niche strategist is one that focuses on the needs of a very specific target market,
usually the market is small enough that requires particular expertise.
Web Reading: http://goo.gl/2edu95

Read 6 Cool Examples of a Successful Niche Businesses. Write at least one story of a
successful Niche business.
Write at least one story of a Niche business.

How small and specialized can a Niche needs be?
What’s More
Why business fail?

1. Give some examples of great ideas (product/service) that nevertheless failed in the
market.
Product/brand/ Why do you think it failed?

business
Beer na Beer
Sarsi
Liberty Condensada
What I Have Learned
FILL IN THE BLANKS:
1. There are traditionally 4 P’s; ____________. ______________, ___________

And _______________.
2. The _____________________ serves as a road map from bringing the product idea
to life.
3. There are generic competitive strategies that you can consider when developing a
business plan. These are: ____________________,
_____________________ and _____________________.
4. _______________________ is an analysis that considers the environmental issues
of the proposed business.
5. _____________ is a market that is small enough or specialized enough that it

requires particular expertise.
6. This strategy involves producing goods or services at a least possible cost is called
__________________.
7. _____________ is an analysis that list the things that could go wrong.
8. _____________ is an analysis rounding up existing competitors and potentials

substitutes.
9. ____________ refers to the identified market opportunities that the business seeks
to address.
10. ___________________ is the strategy that involves a lot of brand building with an
effort to get the market associated with the brand.
What I Can Do
“A business plan serves as a road map for bringing the product idea to life”
1. Is it possible to launch a successful product without having a business plan?
( Yes ) (No)
Explain why.
2. Do you now understand how to make a viable business plan?
( yes ) ( no )
Explain how.
Assessment
IDENTIFICATION:
There are no standard required for preparing a business plan. Explain briefly in your own words
the elements of a Business Plan.
Statement of Opportunity.
Environmental Analysis.
Market Estimates and Segments
Competitive Analysis
Business Strategy
Risk analysis
Financial Forecast
C
CHAPTER 6
Pricing Strategies
What I Know
“Price should never be just about cost plus markup. It should also be the
tool for communication and for strategy”
The Primary takeaway that you should have after going through this chapter is that
price is not just a means for gathering profit. In fact, perhaps arguably even greater
importance is how price can be used to help communicate the nature of your product to
the market.
Give two examples of a brand or product that you find it very expensive.
Brand A name: _______________
What makes you believe that it is expensive?
Brand B name: _______________
What makes you believe that it is expensive?

An inferior/cheap goods are the products you buy if you have limited budget.
Give two examples of inferior/cheap products.
Brand A name: ______________
What makes you believe they are cheap?
Brand B name: ______________
What makes you believe they are inferior?
What’s In
Chances are, you have already heard of the term “SRP” or suggested retail price. It
denotes the price that the consumer product is expected to be sold. Prices were always
subject for negotiations. It is a sociocultural phenomenon that both parties are
expected to respect and abide by. Because the seller knows that the buyer is going to
ask for discounts (tawad) a generous level of amount is added to the original price.
How can you know if the product is cheap or expensive? Answer: by comparing the
prices of the same products in the stores around the supermarket. Price negotiations
between buyers and sellers or the “haggling process” has been the norm which accepted
in the society.
ACTIVITY.
You are operating a sari-sari store in your neighbourhood. Compute the suggested retail price
(SRP) of the items/products you are selling.
Items Original Marku Suggested Retail

Price p Price
( 25% )
555 sardines P 14.75 P 3.70 P 18.45 / P 18.50
Complete the table of 20 items. Set your original price based on the
actual market price. Markup is uniform at 25 %.
What’s New
PRICING METHODS
There is a widespread misconception that prices of your products should be made low as
possible because pegging a high markup on your products would lead to low sales.
 In highly competitive markets, higher prices could indeed lead to lower sales,
thereby putting your business at risk as you have probably over priced your
products.
 On the other hand, if your product have no substitutes and no competition,
then high mark ups can be sustained and the market may learn to accept the
set prices.
PRICING OBJECTIVES
 Prices should be set in order to enable profitable operation.
 Prices can be set low enough so as to discourage potential competitor from entering
the market.
 Prices can be discounted for limited time in order to encourage immediate
purchases.
 Prices can be set high in order to communicate a premium feel for the product.
Other methods of Pricing:

1. Current Profit Maximization. Firms tend to price their products especially if the
management is being evaluated on an annual sales basis.
2. Market Share Leadership. Prices are set in such a way to appeal to the mass market.
3. Product Quality Leadership. A Premium price is set to best communicate the
attribute of the market.
SETTING THE PRICE

* A typical approach in determining price is by using markup. Here the cost of producing
the products is first estimated, with cost often called the variable cost then the standard
markup is added to the cost to arrive to the original price of the product.
* Perceived Value Pricing is a proactive and and marketing based pricing methods whereby
the value of the product in the market becomes the basis of the price.
* Going-rate Pricing is another relatively simple pricing method, this time basing price on
the industry rate rather that cost and market percent.
What’s More
You are about to set the price of your product in a market where you have a lot of
competitors. Zee Corporation, the market leader set its price at P20 per bottle. Because Nee
Corporation is the market leader, its price becomes the reference price by which all other
products were compared.
You are selling a challenger product, what will be your price?
Below are prices which you will be choosing. Explain why you choose the price or why you
do not choose the price.
Suggested Price Explain why or why not?
Price slightly lower that Zee Corp

@ P 19.95
Price much lower than Zee Corp

@ P 17
Price at a very low price point

@ P 14
Price slightly higher than Zee Corp

@ P 21
Price much higher than Zee Corp

@ P 24
Price at a very high price point

@ P 28
If none of the above, then set your

price here....
What I have Learned

FILL IN THE BLANKS:
1. “____________ should never be just about cost plus markup. It should also be a tool
for _______________ and strategy.”
2. “SRP” is the short term for _______________ _____________ ____________.
3. You can tell whether a product is cheap or expensive by _______________ it with
other products in the market.
4. Prices are set in order to enable ______________ operation.
5. _____________ where most firms tend to price if the management is being
evaluated on an annual basis.
6. Prices can be set low enough so as to _____________ potential competitors from
entering the market.
7. __________________ is an objective where price is set in such a way as to appeal to
the mass market.
8. Prices can be set high in order to ______________ a premium feel for the product.
9. ________________ is determined by adding markup to the estimated cost of
production of a particular product.
10. _______________ is a proactive and marketing based pricing method where the
value of the product in the market is the basis for the price.
11. Prices can be discounted for a limited time in order to encourage ___________
purchases.
12. Variable cost is the estimated cost of ____________ the product.
13. _______________ is a relatively simple pricing method where the price is based on
the industry rates rather that market perceptions.
14. ________________ is a pricing objective by setting a premium price in order to best
communicate the attributes of the product.
15. Pricing is not just recovering your investment. It is also about ____________.
ESSAY:
Cite some observations you have during the “lockdown days” regarding the pricing
system in the community. Did the prices of products and other essential goods increase?
Did the cost of services (personal/transportation) increase?
What I Can Do
Suppose you operate a “sari-sari” store in your community, how will you
address the following market situations given below:
1. As a retailer, who do you think is entitled to decide and set the “suggested retail
price” of the products you are selling. You or your supplier.
2. Can a supplier dictate the “SRP” of the products sold by his retailers?
3. How will you explain to your customers the difference in prices for the same product
from one store to another?
Assessment
IDENTIFICATION:
1. ___________ is often referred to as the cost of producing a product.
2. ___________ is the cost added to the cost of production to arrive to the selling price.
3. ___________ is a pricing method based in the industry rates rather than the market
perceptions.
4. ___________ is a pricing objective where price is set in such a way to appeal the
mass market.
5. ___________ is a pricing objective where a premium price is set to best
communicate the attributes of the product.
6. ___________ is a pricing method whereby the value of the product to the market is
the basis of the selling price of the product.
TRUE OR FALSE:
_________ 1. To discourage potential competitors from entering the market, prices should
be set high enough.
__________2. Profit is just one possible objective in pricing.
__________3. Prices can be use as a tool for communication.
WEB WATCH
How to Price Your Product

http://goo.gl/KYOHpb
A guide to business owners on what to look out for when setting prices for their
products. Give your reactions.

Principles of Marketing Chapter 5-6 - Ms. Stephanie O. Dela Cruz - Grade 11-12

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Principles of Marketing Chapter 5-6 - Ms. Stephanie O. Dela Cruz - Grade 11-12

Uploaded by

Copyright:

Available Formats

MONTESSORI PROFESSIONAL COLLEGES OF ASIA

Describe the idea of your business here.

What are the advantages of your product?

BRING THE BUSINESS INTO LIFE

2. Describe the business opportunity that you seek to address.

3. Describe your target market/consumers.

Web Reading: http://goo.gl/2edu95

Write at least one story of a Niche business.

Why business fail?

Product/brand/ Why do you think it failed?

What I Have Learned

FILL IN THE BLANKS:

1. There are traditionally 4 P’s; ____________. ______________, ___________

5. _____________ is a market that is small enough or specialized enough that it

7. _____________ is an analysis that list the things that could go wrong.

8. _____________ is an analysis rounding up existing competitors and potentials

1. Is it possible to launch a successful product without having a business plan?

2. Do you now understand how to make a viable business plan?

Market Estimates and Segments

Brand A name: _______________

What makes you believe that it is expensive?

Brand B name: _______________

What makes you believe that it is expensive?

Brand A name: ______________

What makes you believe they are cheap?

Brand B name: ______________

What makes you believe they are inferior?

Items Original Marku Suggested Retail

Other methods of Pricing:

SETTING THE PRICE

You are selling a challenger product, what will be your price?

Suggested Price Explain why or why not?

Price slightly lower that Zee Corp

Price much lower than Zee Corp

Price at a very low price point

Price slightly higher than Zee Corp

Price much higher than Zee Corp

Price at a very high price point

If none of the above, then set your

What I have Learned

How to Price Your Product

You might also like

1. There are traditionally 4 P’s; . , _