Topic 1

Marketing: An Introduction

Introduction:

Marketing is an everyday phenomenon. People encounter it through the various

products they use, the advertisement they see in the newspapers, billboards, internet
and supermarket, the radio jingles that come to their favourite newscast, the
commercial that interrupts in their television shows, the good morning of the sales
ladies in the department stores, free samples of magazines, tooth paste, juice, ice
cream that they receive and many other ways by which a seller communicates with his
potential buyers. Marketing in its generic context, however, goes beyond its business
aspects. It compasses a wide range of activities. Its evolution has progressed with the
society that it serves and it role in the economy has become apparent.
Marketing is oftentimes misunderstood or underestimated especially when
compared to other major business activities like finance and production. However true
blooded entrepreneurs know the power of marketing once properly used and utilized.
There are a lot of misconception about marketing, one of these is that marketing is
selling which is baloney since selling and marketing are two different function. Selling
however is a part of marketing. Another one is that marketing equals advertising, this
is very true cause one way of executing marketing skills and knowledge is to create a
brilliant advertising campaign.

At the end of the topic, the students are expected to:

▪ Define marketing in its true context and form;
▪ Compare the different function of marketing;
▪ Discover ways to answer marketing case let;
▪ Rate the importance of understanding marketing; and
▪ Modify ways is solving marketing cases.

PINOY MARKETING
WHY IS MARKETING IN THE Philippines Hot?
Unlike other countries, the Philippines is unique in practicing marketing not just
in business but also in their daily lives. Though many multi company reign supreme in
the fastfood industry, a Filipino company is able to survive and even beat the
competition. Jollibee a Filipino company is now penetrating the global market with
unexpected result. Today, Jollibee owns Chowking, Red Ribbon and Greenwhich, each
are leaders of their respective segments.
In sports, Manny Pacquiao now a senator won many boxing match from boxers
that seemed unbeatable. In Fashion and furniture industry the Philippines have
Monique Lhuillier and Kenneth Cobonpue respectively who have made the Philippines
known and famous in their fields for their state of the art world class design.

THE EXCHANGE PROCESS

In a broad sense, Marketing encompasses all activities involving an exchange
between two or more parties intended to satisfy human needs and wants. The
activities are initiated by one party who is seeking a specific response from another
party by offering something of value. The parties maybe individuals, organizations or
business establishments; the offering may be a product, idea or service and the desired
response is not limited to purchase.
The following examples illustrate the scope of marketing:
▪ When a political candidate campaigns in an election, he seeks votes by
offering promises of a better government.
▪ A job applicant seeks employment by offering his expertise and
commitment to his prospective employers.
▪ A suitor seeks a wife by offering his love and affection.
▪ A university or college offers education to students in exchange to tuition
fees.
However, focus the attention to the exchange processes between a business firm and
its customers or buyers, notwithstanding the fact that the basic concepts of principles of
marketing have their equivalent applications in other transactions involving a different
type of offering response or market.

THE EVOLUTION OF MARKETING SYSTEM

Marketing is an everyday phenomenon and it occurs everywhere but the degree
of sophistication at which it is carried out depends largely of the environment in which it
occurs. The value structure and social organization of a society, the level of technology
and the relative importance attached to economic, intellectual, and religious or leisure
activities are factors which affect the marketing processes and institutions of a people.
The character that marketing takes on as an economy develops from the agrarian to
the post – industrial stages, for instance, is shown in the table below.
 Stages Descriptive Characteristic of Marketing

Pre - industrial Most people are engaged in hunting, Marketing is trading goods for other
herding, or farming; capital is scarce, and goods or money.
most human effort is devoted to meeting
basic needs for food, clothing, and shelter.

Industrializing Producers attempt to increase productivity Marketing is bringing goods to

by increasing the amount of physical capital concentrated urban populations
available and by improving work processes through a distribution system
through products standardization and consisting of countless small
assembly – line production. merchants who seeks desired
assortments for their local
customers.

Industrial Producers have achieved a high level of Marketing is generating sufficient

output; the main problem is to generate demand at given prices for the
sufficient demand. Increases in growth, output of a high – geared production
continued employment and income depend system through the use of marketing
on expansion of consumer demand. research, product design, packaging,
promotion, customer service and
sales analysis.

Post - industrial Most citizens have lost their preoccupation Marketing is identifying advanced
with getting and spending and are personal and social needs more
searching for more freedom and time to precisely and developing offerings,
develop as persons rather than as information, and supply systems that
consumers. People grow less interested in will more efficiently satisfy these
the quantity of their goods and more needs.
interested in the quality of their lives.

MARKETING AND THE ECONOMY

Marketing plays many important roles in the economy. These include the following:
1. Marketing guides production;
2. Marketing bridges the gap between production and consumptions; and
3. Marketing induces economic activities that contribute to development.
The role of marketing in an economy is an established one. Those who dispute its
importance are really disputing the manner by which it is undertaken. Critism such as
the misuse of advertising, building into a product the element of planned obsolescence,
branding marketers as waste makers and hidden persuaders are directed at marketing
practices rather than marketing itself.

WHAT MARKETING IS NOT

 Marketing has often been misunderstood. One of the most common
misconceptions is associating marketing with sales. While selling is an important
activity of marketing and is a central function in daily business operations, marketing is
not selling.
Another common misconception – “marketing equals advertising” is often
reinforced when some companies spend huge amounts in advertising. A related pitfall
is for a misinformed executive to jump into mass media advertising thinking he is
“doing marketing” without an understanding of the prerequisite as well as the
constraints of both marketing and advertising.
While the importance of marketing of advertising is not to be underestimated,
advertising like selling is merely a part of the many functions of marketing. The other
functions are marketing research, product planning, pricing, distribution, customer
service, and promotion which include advertising, public relations, sales and sales
promotions.
Some of the more popular statements that people might ascribe to as “bad
marketing” but really generalized statements in the conduct of business are quoted
below. Have you personally encountered some of them?
Company to customer – “we can’t do it, it’s company policy!”
Telephone operator to customer – “it’s lunch break. Please call back!”
Camera technician to client – “of course we can repair it. You just have to come
back in two to three weeks! Give us a call first, okay?”
Politician to people – “ I don’t care what you feel now about what I do, but I
have been elected with a fixed term, so you can’t replace me!”
Dry cleaner to customer – “sori po, na destroy ko anf barong nyo, pasensya na
lang po! Anyway, may ibang barong pa siguro naman kayo!”

MARKETING: THE STRATEGIC 3C’S CONCEPT

To understand marketing, one must remember that there are two inter acting
components: the company and its target market.

Exhibit 1 -1 two interacting components of marketing

Company ------------------------- Market

The above equation shows that both the company and its market are equally
important. Satisfying one without the other is not marketing. A marketer should
always consider the strength and weaknesses of his company in serving the needs and
wants of his market. He must therefore choose the market segment or segments
where he can have potential leadership or at least have a strong and profitable
challenger role. Marketers should balance between the company’s requirements for
profit and his desired market share.
Exhibit 1-2 two interacting components of a market

Customer --------------------- Competition

The market, on the other hand, is composed of two other interacting

components: customer and competition. Customers, which may either be trade
intermediaries or end users, are people or organization buying from the company while
competitors are those with products or services that can offer similar benefits to the
customers.
The overriding objective of the company is first to have customer bonding to
develop a relationship that is customer-centric, then to think of a competitive advantage
that addresses gaps in the customer’s world. This means the firms must satisfy the
needs and wants of their customer and then do so profitably BETTER THAN
COMPETITION.
Combining the three interacting and equally important components of marketing
will produce the strategic 3Cs of marketing.

3Cs Key Objectives Output/key

result area

Customer To satisfy the needs, wants and expectations of Sales

the target customer.

Competition To outperform the competitors Market Share

Company To ensure corporate health and profit Profit

Nothing can be more convincing to customer than the fact that many other
consumers also want the same product or services. To increase sales revenue, a firm
can increase either the PRICE or the SALES VOLUME. The former can only be increased
up to a certain threshold as it will negatively affect demand if not done within the
affordability range of its target market.
Sales volume of the other hand, can be increased through what is known as the
4Us of marketing:
 1. New users – who uses the product or service? Or serviced used?
▪ Red Bull Energy Drink was formulated for blue collar workers as well as
those who work on the midnight shift.
2. Extended users – Who can still use the product or service?
▪ Infant milk companies like Wyeth have different varieties of follow on milk
products designed for young children to continue to provide specific
nutritional requirement for different age groups.
▪ Doctors can provide extra wellness packages such as weekly detoxification
for maintenance or prevention for patients who are already cured of their
health complaints.
3. New usage – for what purpose is the product or serviced used?
▪ Arm and Hammer reposition its baking soda as a new way to deodorized
refrigerators.
▪ Glutathione was originally intended to boost liver function until its
whitening side effects was discovered. The same was true for Viagra
which was originally intended for angina pectoris or chest pain due to lack
of blood and oxygen supply before it was used for treating erectile
dysfunction.
4. More usage – when and in what occasion is the product used?
▪ Del Monte regularly comes out with recipes to encourage more usage of
Del Mont Products.
▪ BPI credit cards offer free meals and waive payment of annual fees in
exchange for attaining a minimum – spending limit.
▪ A Conzace soft gel vitamin is not just being used as multivitamins but to
promote healing and improve skin problems like acne.

Market share is the ratio of your brand sales versus the total sales in your market.
✔ MSG maker Ajinomoto and nescafe coffee are examples of brands with dominant
market share in the Philippines food and beverage market.
✔ Honda and Toyota are almost neck to neck in the passenger car market.
While companies would naturally define its target competitors, it is actually the
consumers who ultimately decide the competitive frame, or the list of related product or
services that consumers consider when exercising their purchasing power. For
instance,
✔ Jollibee may define McDonald’s and Burger King as key competitors but
consumer may simply go to a Pancake House or Teriyaki Boy or even Starbucks
when the lines are too long in Jollibee.
 ✔ Cebu Pacific grabbed shares not from the Philippine Airlines but from land and
sea transport.

Marketers must therefore understand and consider the competitive frame of their
Target consumers, and strive to have more attractive product value compared to their
direct competition as well as those providing strong substitute. Firms must endeavour
to improve their market shares profitably in both good and bad times.
✔ Sales of GlaxoSmithKline’s cervical cancer vaccines grew at least eight – fold
after a 60% socialized price decrease in November 2008.
Instead of directly attacking a strong leader in the market, companies usually enter
UNDERDEVELOPED market segments or assume strong challenger position within a
particular niche. For instance:
❖ Close up the preference of the cosmetic segment of the market which looks for
fresh breath with the added benefit of a mouthwash while Colgate is better
known in the bigger therapeutic segment which promises stronger, bacteria –
free – teeth.
❖ Mang Inasal chose to focus on the fast food barbeque segment using live coals
instead of electric grillers found in other fast food joints.
When they use the product or service.
Profit is an indispensable component of a firm to continuously satisfy its customers.
Profit however, must always go hand-in-hand with honor. For instance,
● In October 1991, a flash flood killed some 8,000 men, women and children in
Ormoc City, a tragedy caused by years of illegal logging in the province.
● In 1996, 162 persons, mostly teenagers, died in the Quezon City “Ozone
Tragedy” when fire broke out due to faulty electrical wiring. The Tragedy was
exacerbated by the lack of safety measures or enough fire exit. The doors of the
establishment could only be opened by pulling inwards instead of pushing
outwards causing a bottleneck as panicked and rushed out unable to open both
doors.
One cannot justify any profit from business if the consequence is the destruction
of lives. Those proven responsible for illegal logging, peddling prohibited drugs, child
trafficking, prostitution, and even gross negligence leading to death must therefore be
penalized to the fullest extent of the law. Big suppliers must be force of good and
require their suppliers to be aligned with them.

● SM theatres banned the showing of X-rated movies as part of the overall

wholesome family image they would like to maintain and project. It won Sensei
 Award from the Association of Marketing Educators (AME) of the Philippines using
its strength to instill discipline among less scrupulous movie producers.

One of the leading industrialists of the 20 th century, the late KONOSOKE

MATSUSHITA, founder of Matsushita – National Panasonic group in Japan said it best.
He believed that profit is a tangible manifestation of consumer confidence towards your
company, your product and your services. When a company makes profit, it is because
the customers allow it to, so it should not be taken against any company if it makes a
handsome profit when customers patronize them. Exceptions to this are inefficient
government companies operating in a monopolistic environment where the customers
have no other choice.

Needs, wants, and expectations

What are the consumer’s needs and wants, and why is it important for marketers
to appreciate the indispensable requirement of consumer motivation?

Needs – are the basic reason or the minimum requirements consumers look for
in a product or service. They called the qualifying or the “gatekeeper” dimension in the
purchase.
Wants – are the determining dimensions among many choices.
Expectations are values or intangibles associated with a product or services. It is
actually part of “wants” but they become extremely important when products or
services are not differentiated. Sales people and other service providers are most
common parts of these expectations of the consumer.
Marketing is not the satisfaction of wants alone. Needs must be addressed first
or else the satisfaction of motivating wants becomes irrelevant. A bank can offer much
higher interest rates on deposits, which is a motivating want. However, existing
depositors will not stay and potential depositors will not be attracted to open accounts
unless they are assured of their basic needs – the stability of the bank, and the safety
and security of the deposit.

Features, Advantages and Benefits

Features are simply product attributes offered by a company. They are proof of a
benefit. Advertising agencies call these “reasons why”.
Advantages are what these features can do.
 Benefits are advantages that meet the explicit needs and wants of the
customers. They are the favourable results that customers will get when they use the
product/service. Benefits answer the question: “What’s in it for me?”
Benefits must be emphasized more than the features, especially when the prices
are higher to justify the premium price. Exceptions are when a technical person such as
an engineer is talking to a fellow technical person regarding technical specifications they
both understand or when the consumer is paying a much, much lower price for the
usual features included in a consumer product.

STANDARDS OF JUDGING MARKETING EFFECTIVENESS

To add standards for judging marketing effectiveness, the following are

recommended:
“BETTER THAN BEFORE” must be the norm of the company in evaluating sales
vis-à-vis the industry’s growth rate.
“BETTER THAN OTHERS” must be demanded by the company in improving
market share performance which reflects how they fare against competition and
substitutes. The key is in the formulation of sources of competitive advantages.
“BETTER THAN EXPECTED” must be practiced in evaluating profit performance,
especially when a corporate budget is prepared. The key is maximizing revenues while
avoiding non-strategic expenses that do not contribute to business building.

MARKETING DEFINED
Based on our introductory explanation, marketing can be defined based on
strategic 3C’s of marketing:
MARKETING is the process of continuously and profitably satisfying the target
customer’s needs, wants and expectations superior to competition.

MARKETING: HOW IT WORKS

There are three levels on which a firm does its marketing activities. The levels
and their respective focus are shown in the next page.
Marketing triangle
Customers

1
 2 3
Company Competition

3 LEVELS FOCUS

1. Strategic Vision and Mission, Industry and Competition Analysis, Key

Marketing Factors for Success, Strengths and Weaknesses Analysis,
Management Opportunities and Threat Analysis

2. Marketing Market Segmentation, Target Market Positioning

Strategy

3. Marketing Tactics Product, Placement (Distribution), Promotions, Pricing

Vision explains the company’s future and what it intends to be. Fulfilling one’s
vision is the purpose of undertaking and expanding business enterprises. A shared
vision binds people within a company. For instance:
● Penshoppe, a Cebu-based company, set up in 1986, envisioned
penetrating the metro Manila market within five years to become the
link through which Filipino teens can express themselves as one.
Penshoppe has successfully established over 400 Penshoppe retail stores
nationwide and has emerged as a leading garment brand for the teen
market.

Mission answers the question “What is our business?” as it defines the needs
and wants of the market.
Key Factors for Success (KFS) identifies the limited number of controllable as
well as uncontrollable functions, activities, factors or even bottlenecks that must be
managed well to outperform competition in the present market.
The content of key factors for success is a double-edged sword. While it
guides the company into what has worked or not worked in the past, it can also make a
company a prisoner of convention and be afraid of innovation as the focus is limited to
outperforming competition.
After key factors for success are identified, the company’s strengths and
weaknesses are then measured. Strengths are positive factors, which will help the
company achieve its key results areas (i.e. objectives such as sales, market shares and
profit). Weaknesses, on the other hand, are negative factors, which may hinder the
attainment of the firm’s key result areas.
 Identifying strengths and weaknesses is not enough unless the marketer
identifies active steps to take advantage of the strength or resolve a weakness.

Thinking Application

1. Choose two competing companies in the same industry (example: Globe and
Smart). One satisfied your needs, the others did not.
a. Describe the typical consumer of this product or service category.
b. Explain what needs and wants were satisfied and exactly how they were
satisfied.
c. In areas where not satisfied, what should the company do in order to
make you satisfied?
Exercises
1. Propose some hypotheses explaining how marketing may have begun in the
Philippines.
2. Give some illustrations on how marketing adds value to a product.

Caselet
World Tourism is estimated to be a 3.7 trillion dollar industry with over
45,000 hotels and over 800 airlines. In the Philippines, other than Metro Manila, the
country’s top foreign tourist destinations are Boracay, Baguio, Tagaytay and Palawan.
Despite the Asian financial crisis of 1997 which made traveling and shopping
in the Asian region very cheap, the Philippines’ market shares in the regional tourism
industry have not been impressive. Malaysia and Thailand were able to attract at least
5 times more international tourists than the Philippines. If the proper steps are taken,
the Philippines can gain significant revenues from the tourism, which is a major
worldwide industry.
a. Identify the needs and wants of the following foreign customers:
a.1 Leisure Tourists – which can be clustered into sub – groups like people who
come to
● Play golf
● Shopping trips of families and ladies
● Beach holidays
● Marine sports enthusiast
● Historical sight seeing
 ● Arts and culture tourists
● Special entertainment group
● Eco-tourism
● Special interest groups (cavers, trekkers, hikers)
● Cuisine Lovers
a.2 Business Travellers
a.3 Convention Delegates
b. Investigate how good is the Philippines in satisfying these needs and wants.
c. You have just been appointed as the secretary of tourism of the Philippines,
how can you increase the share of tourist arrival to the Philippines relative to
other countries.