TT S > 2 eS he) OS Y Gay PRINCIPLES OF MARKETING for SENIOR HIGH SCHOOL Cynthia A. ZaratePREFACE This textbook is written for Principles of Marketing, a specialized subject in the Accountancy, Business, and Management (ABM) track of the Senior High School K t6 12 Curriculum, It aims fo introduce students to basic marketing concepts, the elements of the marketing mix, and the steps in making a marketing plan. The book is divided into iples, concepts, and practices five units consisting of 16 lessons which discuss the pr of marketing. = To ensure students’ knowledge and comprehension of concepts and to provide means for further learning and analysis, each lesson features the following learning components: * Marketing Vocabulory which checks students’ knowledge of key concepts discussed in the lesson. * Marketer in Action which provides questions that test students’ comprehension. * Marketing Experience which provides opportunities for actual application of concepts through group activities. * Self Reflection which is a reflective exercise that allows students to apply marketing concepts in their personal lives. : * Marketer ot the Forefront which presents case studies and selections that allow students to analyze and discuss management concepts as they are applied in real-life scenarios. The lessons also feature an additional learning aid, Marketing Terms, which hig features unit tests for summative evaluations of the to = I is hoped that the students will gain valuable insights from the discussions which will prepare them in engaging in effective marketing planning and decision-making. light and clarify significant terms related to the discussion. The textbook also discussed in the units. The Author| MARKETING Bare g a) AND STRATEGIES This unit introduces the students to the world of marketing. Marketing has. become synonymous with advertising, promotion, and. selling. Some people mistake marketing for the selling of goods, a piece of material needed for a campaign or promotion, or even the buying and selling of. goods in the marketplace or polengke. Contrary to these misconceptions, marketing encompasses the whole process of exchanging goods and services to satisfy customers’ needs and wants — from the conception Gf an idea until the delivery of the final output to the consumers. This unit begins with the defin ‘of a marketing organization. To better understand the characteristics, they in of marketing and the characteristics ‘are discussed through the Cs of marketing. Lesson 2 delves into the goals of marketing. The traditional and contemporary approaches to marketing are discussed in Lesson 3.1h ed of hs oon, dens Marketing and wae Bete core eeeteneey 2 Reros tomy cunt its Traditional : Sa 3. identify the characteristics of @ Approaches ite tate 2 ‘approaches to marketing. LET'S DISCOVER Procter & Gamble’s Tid A Marketing Success Story Procter & Gamble (P&G) is one of the leading manufacturing companies which has developed over 100 product brands that are among the most recognized in the world. Some of P&G's products are Crest toothpaste, Gillette razors, Ivory soap, and Tide detergent. In particular, Tide detergent is recognized as a top brand and an important household name in many countries. The Origins of Procter & Gamble Procter & Gamble was established in 1837 when William Procter, a candle maker, and his brother-in-law William Gamble, who was a soap maker, decided to become business partners and combined their professions to establish a family-run business. During the first half of the 20th century, Procter & Gamble became one of several manufacturing companies that were recognized as leaders in the industry. At that time P&G strove to increase the ompany’s lead over its competitors by developing new and more effective household products. Introducing Tide: The Washday Miracle Inthe 1930s, the company’s scientists worked on developing a heavy-duty laundry detergent that would clean heavy stains without leaving clothes hard and stiff. Their efforts, however, were unsuccessful and the company shifted its focus to other projects. Despite the setback, one of the company's researchers, David Byerly, continued with developing the detergent as a side-project called Project X. In 1944, Byerly finally succeeded in creating a prototype cleaning agent and in 1946, Procter & Gamble launched the product with the brand name Tide. Tide was launched with the slogan “Oceans of Suds” and was marketed as “The Wash Day Miracle.”Marketing Efforts Procter & Gamble put miich effort in building the Tide brand as an effective cleaning agent. At that time, consumers were looking for a detergent that easily dissolves in water and can wash well. Tide was developed as acleaning agent which dissolved well in water compared to soaps; it also made a lot of suds, which aided the cleaning process. These characteristics were used by the company as the main selling points of the product. One significant factor which aided marketing efforts was the Tide logo. which was developed to be eye-catching and memorable. The logo used the bright yellow and orange colors for the concentric circles that formed the target on the Tide logo. The brand name was colored blue to symbolize calmness, and was a perfect complement to the bright colors of the logo, The logo is so effective that through the years, the company has not made any significant changes toit; itretains the color combination and the concentric ring design. With the advent of washing machines in the'1950s, Procter & Gamble made sure that a box of Tide was provided free with every purchase of a washing machine: This partnership continued until the 1970s, and resulted in Americans becoming accustomed to using Tide detergent with their washing machines. This paved the way for Tide to gain dominance in the detergent market in the United States. Over the years, Procter & Gamble continued to innovate the Tide product to meet the various needs ofits customers. In 1968, Tide XK was launched, which was designed to remove tough stains such as blood and food stains. In 1984, Liquid Tide was introduced. Four years later the company launched Tide with Bleach which was effective for both white and colored clothes. In 2005, a variant of Tide which can be used in cold water was introduced, along with a compact Tide stain remover which came as a pen. The company also effectively utilized advertising through multiple platforms such as television, radio, print, billboard ads, and the internet. Marketing Dominance ‘The marketing efforts of Procter & Gamble eventually established Tide as a leading detergent product in many countries throughout the world. Tide has become a household name in the United States. In 2009 a US consumer survey included Tide as one of three products that consumers would be unwilling to give up despite difficult economic conditions brought about by the recession in 2007. Tide is also one of the strongest brands in terms of consumer recall. As of 2013, it is estimated that Tide has captured around 30 to 40 percent of the worldwide detergent market and has sold twice as much as the next leading detergent brand. This is despite the fact that Tide costs twice as much as other competing products in the market.Discussion Questions 1. What consumer need was addressed with the introduction of Tide detergent in the market? 2. Describe the marketing efforts implemented by Procter & Gamble with regard to Tide. Which of them, in your view, had the most significant impact on the popularity of Tide? 3. How does P&G maintain Tide's “staying power" in the market? 4. What proof can you cite regarding the effective marketing for Tide? LET’S LEARN The goal of marketing should not be confined to just making a sale; it should also be about satisfying costumers’ needs and wants. According to Theodore Levitt, the ultimate purpose of a business is to “find and keep customers.” Marketing plays an important role in achieving this purpose. Itis the dream of any business owner to maintain loyal customers. However, this will not be possible if the business does not have a marketing program that helps in identifying, satisfying, and retaining customers who will avail of its products or services no matter whatis being offered in the market. Marketing Defined InJuly2013, the American Marketing Association approved its’latest definition of marketing as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” Dc aca ‘Through the years, the definition of marketing has included non-profit institutions like education and health care providers. It has also’ emphasized that the business’ responsibility goes beyond the survival of the firm; the betterment of society should also be taken into account. Marketing activities apply not only to profit-oriented businesses (eg, Jollibee, Mercury Drug, SM) but also to non-profit organizations (e.g,, Philippine Red Cross, Philippine Tuberculosis Society, Inc.). The production and selling of goods and services are the main functions in most organizations. These functions take on the supply and demand function which are essential in thediscipline of economics. Asa core function, selling is one aspect of marketing. With this, marketing takes its roots from economics. i Marketing is now being supported by other disciplines, namely psychology and sociology, to further explain how consumers make purchase decisions. Marketing also uses mathematics for marketing research and information technology for the promotion and distribution of goods and services. More often than not, marketing is.critical to any business’ success. However, its importance and extent depend on the perspective of the owner, the size of the business, and the kind of products or services being offered. Large organizations such as San Miguel Corporation, Globe, Procter & Gamble, and Unilever allot a large slice of their budget for marketing expenditures and use multimedia ads and extensive sales efforts to achieve their sales targets. Companies like real estate property developers and travel agencies utilize brochures and websites to market their services. Small businesses, meanwhile, mainly rely on word-of-mouth advertising. Utility Concept of Marketing - Marketing has also used the concept of utiljty, which is the power of a good or service to satisfy a particular need or want of a consumer. It is also the term for the benefit that consumers derive from acquiring and using a particular good or service. In marketing, a firm creates and distributes a good to create a particular value for the consumers. Marketing uses four kinds of utility, 1. Form Utility. It refers to the conversion of raw materials into products that suit the preferences of consumers so that they do not have to create their desired products themselves. For example, a clothing company like Bench or Levi's uses fabric, buttons, zippers, and other accessories to produce garments so thé consumers need notassemble the materials together. ‘To make sure it can cater to different types of customers, clothes in different colors, designs, shapes, and sizes are offered: A similar utility called task utility refers to offering services which consumers may not be capable of doing or may not like to do themselves. A woman may go to a salon to geta haircut because she does not want to do it herself. A man may contact a professional plumber to fix the faucet because he lacks the skill to do it’ A mother may not have time to do the laundry so she brings the clothes to a’nearby laundry shop. ‘The marketer should be able to communicate well with the consumers so he or she can identify and consolidate their preferences and ensure that the product or service meets their expectations. 2. Place Utility, It refers to the availability of the product or service at accessible locations. Marketers devise ways to provide value through availability, ensuring that consumers can easily have the goods or use the service. Delivery service is popular in restaurants.Online shopping gives consumers the convenience to shop and receive their purchases at the comfort of their houses. Automated teller machines (ATMs) revolutionized the way people deposit and withdraw money. Paying for utilities such as electricity, water, and telephone can now be done online. Government agencies such as the National Statistics Office has allowed the issuance of birth certificates, marriage contracts, and other documents through customer service centers in malls or through delivery. 3. Time Utility. It refers to the satisfaction derived by customers in availing of products or services on time. Restaurants promise prompt delivery, sometimes with a guarantee of giving the orders free of charge if they are delivered late. They also offer free appetizers to dine-in customers $6 they will not feel impatient while waiting for their order's. Banks have also improved the processing of loans and cut the waiting time for clients. 4. Possession Utility. It refers to ensuring that consumers have full possession of the product or service atthe right time, so this overlaps with time and place utilities. Marketers facilitate this utility through fast payment processing and delivery. They can also offer credit facilities for products that customers cannot afford to buy in.cash at the moment. Easy transfer of ownership such as transfer of title for a house and lot is another way of creating value for the customer. * The Marketing Organization Marketing ‘organization refers to the department in a corporation that ensures the smooth flow of marketing plans, policies, and programs that monitor all sales activities, customer services, and distribution and. promotion efforts. The marketing ‘organization can. be best described with the Cs of marketing which describe six aspects of the organization: consumer content, company capabilities, communication, competition, cross-functional contact, and community content. Consumer content. ‘The exchange process has changed dramatically in recent years as consumers are now able to study a wide array of choices before they make the actual purchase. Consumers access the Internet to obtain information about products and services they would like to avail’of. Therefore, businesses rely on their marketing organizations to keep customers loyal to the products and services they offer. ‘Any organization that employs marketing should keep customers informed about what they offer and should always be in constant contact with them. Marketers should be updated on their customers’ behaviors, values, interests, and other factors that influence their purchases.Aconsumer-oriented firm works toward satisfying customers’ needs before creating products or offering services. Texas Instruments, a global semiconductor design and manufacturing company, is known for its calculators, microcontrollers, power products, and the like. In June 1979, it launched its home computer called 99/4. The product was dubbed as one of the worst machines ever introduced in the market at that time. There was nothing spectacular about the computer as it could only be used for playing games. The keyboard did not even have the question mark, arrow, backspace, and tab keys. In short, the computer was produced first and marketers tried to sell it without identifying what consumers needed and wanted. No prototype was shown to the public so the company missed the opportunity to let others point out the flaws of the productbefore its actual production and launching. This is a classic example of consumer negligence. Company Capabi To be on a par with competitors, marketing organizations need to strengthen their capabilities in production and operations to develop and produce goods that will meet consumer needs. In order for Toyota to reach and satisfy the generation of consumers aged 25 and below, it introduced the Toyota Celica in 1970. Itis a small vehicle that can carry up to four people and was. noted for its speed. Toyota evidently considered young consumers’ preference for small sports cars as well as their personality in creating the Celica. The sports car became popular especially in the United States and the United Kingdom. Toyota reached unprecedented sales for Celica, selling 4,129,626 units from 1970 to 2006. However, Toyota, even with its strong production capability, was aware ofa downtrend among sports car buyers. It discontinued production of the sports car in the summer of 2004 in the US. Also, the tougher new emission regulations in the United Kingdom proved to be uneconomical for the company. In 2006, production of the Celica ceased officially in Japan. Communication. A marketing organization must have a positive, long-lasting relationship with its customers because they constantly look for cues provided by the organization as they make their purchase decisions. A negative brand image results in low sales. Around 2009, Domino's Pizza gained notoriety for the quality of its pizza. Consumers found their pizzas subpar with regard to taste and ingredients. This resulted in poor sales and negative brand image and recall among consumers, becoming the least preferred brand among pizzalovers. The cotnpany resolved to solve this problem and launched the Pizza Turnaround Campaign. The company released a documentary which showed how they acknowledged their weaknesses and made improvements to their recipes and choice of ingredients. This campaign was a success and the company recovered, posting a 16% profit increase in 2014 with the company value rising about 30%.Competition. ‘The real challenge for any organization is to face its strongest competitor head on. It should know the competitor's strengths and weaknesses and determine the best way to respond. = Jollibee faced and eventually beat its stiffest competitor, McDonald's, which entered the Philippine market in'1981, One reason for Jollibee taking the léad in the fastfood market is its ‘menu which is tailored for Filipinos. It has captured the Filipino taste with its langhap-sarap (smells good, tastes good) quality. The distinct Filipino flavor of Jollibee meals is likened to home- cooked meals and is appealing to children. Many marketing organizations fail to distinguish the real meaning of competition when they watch out only for similar companies. For example, if Jollibee competed only against McDonald's and other fast-food restaurants offering burgers (e.g,, Burger King, Wendy's), it would limit its scope of competitive strategies. Fortunately, Jollibee looked beyond’ burgers, It also acknowledged restaurants that offered other types of food to the same target market who might look for alternatives to burgers and fries. The company saw formidable competitors in the likes of Chowking, Greenwich, and Mang Inasal, as they ate up a substantial portion of Jollivee’s market. And so, Jollibee bought Greenwich in 1984 and Chowking in 2000. Eventually, it acquired 70% of Mang Inasal in 2008 and later on, the remaining 30% in 2016. Jollibee also acquired Red Ribbon in 2005, making the company a complete package for special occasions. Today, Jollibee is also the leading venue for birthday parties, beating McDonald's. Cross-Functional Contact. A marketing organization’ cannot ‘work alone without the support and assistance of other departments. For instance, an effective and creative advertising team cannot assure good sales without an equally reliable and dependable sales force. The composition of the sales team is made possible through the efforts of the recruitment personnel in the human resource department. A creative advertisement idea will not be realized without a budget, which is managed and approved by the finance department. Of course, the production unit takes care of making products. All\departments of an organization must work together to ‘successfully meet its target and objectives. : Community Contact. A marketing organization is updated with local, international, and community news. It has constant contact with different agencies and organizations within its surroundings. It also personifies corporate social responsibility by integrating sustainability and ethics in conducting business. The organization also acknowledges the contributions of its stakeholders.Traditional Approaches in Marketing There are three, traditional approaches in | @ s soho emtniess ony marketing, which focus less on the customers’ oat oc pci «condo needs and wants and more on other factors such as production, product, and sales. "build © personel relationship with @ customer. Production Concept. It starts with the production process and ensures that the firm produces high quality goods. Then the next task is to find people who will buy the products. The philosophy of this approach is that consumers favor companies that produce high-quality and affordable goods, so itis necessary to maintain efficiency in production and distribution. This was the prevailing practice in Western Europe and North America during the early 20th century, and ‘was exemplified by Ford’s production process. Henry Ford’s motor company pioneered in the mass production of cars. At that time, automobiles were new in the market and many people were wary of riding in and even operating these vehicles. Many did not see a need to purchase an automobile. However, through improved production and an extensive marketing campaign, the Ford motor company was able to convince consumers to buy automobiles. Soon, more types of vehicles such as trucks and sports cars were also developed. Product Concept. In this approach, it is believed that a product should be of high quality, of excellent performance, and with innovative features. Manufacturers who use this approach emphasize the importance of innovation as the key to business success. Cell phone and clothing companies use product concept to continuously create and develop the features of their products to attract customers. Car manufacturers also develop new car makes and features from time to time. Sales Concept. Production techniques became more elaborate and sophisticated in the 1950s. High-quality products and services continued to be provided but companies had difficulty selling them to customers. Buyers were unwilling to purchase goods and avail of services that they thought were not essential, especially when companies were not exerting extra effort to promote or inform them about what they were selling. This convinced companies to employ a sales force to persuade customers to buy. Personal selling became the name of the game. The sales force had to entice consumers to purchase goods and services. Sales personnel use the art of persuasion to influence consumers’ purchase decisions. In this approach, marketing becomes synonymous with selling. People do not recognize all the other activities of marketing except selling. Insurance agents, for example, have to provide potential customers all the information they can give to persuade them to get an insurance plan.