Republic of the Philippines

Department of Education

LEARNING ACTIVITY SHEET

PRINCIPLES OF MARKETING
Directions/ Instructions
After going through with this Learning activity sheet, you are expected to:
1. Read and follow each direction carefully.
2. Accomplish each activity for the mastery of the competency.
3. Use the Learning Activity Sheets with care.
4. Write your answers on the answer sheets provided.
5. Always aim to get at least 80% of the total number of given items.
6. If you have any questions, contact, or see your teacher through messenger or text.

Define Marketing Research, Its importance to a Business Enterprise and Identify the Steps
in Marketing Research (ABM_PM11-le-1-11)
INTRODUCTORY MESSAGE
Marketing research is the function responsible for acquiring and evaluating market and consumer-based
information for decision making and the determination of marketing strategic direction. It is primarily responsible for
the gathering, analysis, and timely distribution of information for the use of marketing decision makers.

General Objectives: After going through, you are expected to:

1. Define marketing research and its importance to a business enterprise;
2. Identify the steps in marketing research (ABM_PM11-le-1-11)

PRE-TEST
Activity 1:
Check your understanding about the Marketing Research:
1. Caroline started doing her marketing research process by Identifying the problem of poor marketing
message penetration. What does Caroline need to articulate next? Choose your answer below and Explain
briefly
a. Develop the research plan
b. Objectives for the research
c. Conduct research
DISCUSSION
MARKETING RESEARCH

Marketing research is a function under a business organization’s Marketing Information System (MIS). MIS is
primarily responsible for the gathering, analysis, and timely distribution of information for the use of marketing
decision makers.

Definition

Market research is the process of determining the viability of a new service or product through research
conducted directly with potential customers. Market research allows a company to discover the target market and get
opinions and other feedback from consumers about their interest in the product or service.

The Purpose and Importance of Marketing Research

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 Companies have complete information about their products from production to distribution.
However, it is a challenge for the companies to know what happens to the product after it was
purchased. Who uses the product, how it is used, how much or how little of it used, and the
general attitudes of the consumer toward the product are not known explicitly. Thus, for new
products or new markets, the company may not be completely certain whether the product will
be accepted by the market. The value of the product to the consumer is difficult to measure
because perceptions of the value are subjective.
Although marketing research can be costly, it is indispensable. The following are some of
the issues that can be addressed by marketing research:

• Identify viable new products and services

• Enable risk reduction
• Identify market opportunities and threats
• Determine the level of customer satisfaction
• Pinpoint and anticipate market trends or changes
• Decide on the best advertising medium
• Pre-test and post-test advertising and promotional campaigns
• Evaluate the results of test marketing
• Evaluate the results of packaging, brand name, and label testing
• Determine consumer price awareness and sensitivity
• Undertake location studies

Steps in the Marketing Research Process

Marketing research can and should be used for various reasons. Marketing research can
be used to identify marketing opportunities and problems generated and evaluate potential
marketing actions or plans, monitor marketing performance and improve marketing as a
process. But, how does one carry out marketing research? I delved into the Marketing Research
textbook by Alvin C. Burns and Ronald F. Bush for the answers.

Here are the 11 steps to conducting marketing research, but note that not all marketing
research follows these steps.

1. Establishing the need for marketing research

This could seem basic but is in fact fundamental to conducting marketing research.
Research takes time and money. Marketing research is not needed when information is readily
available (this could be through secondary data), when there is not enough time to conduct a
proper research study and answers are needed immediately, when you can afford the research
or when the costs outweigh the value. It could also simply be that the answer is obvious.
2. Defining the problem
According to the authors, this is by far the most important step. If the problem is incorrectly
defined, all is wasted effort. Marketing research should only be conducted to answer a problem.
There are also needs to be alternatives. If there are no alternatives, no decision is necessary.
3. Establishing research objectives
Objectives tell a researcher exactly what he or she should be looking for and what he or
she must do to obtain the information necessary to allow the manager to choose between the
decision and the alternatives.

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 4. Determining research design
• Exploratory research: informal search to learn more about the research problem, learn terms and
definitions or identify opportunities
• Descriptive research: most basic; used to describe the marketing phenomena
• Causal research: uncover factors that cause on event
5. Identifying information types and sources
• Primary: information collected specifically for the problem at hand
• Secondary: information already collected
6. Determining methods of accessing data This can be done through observing consumers, surveys, online etc.
7. Designing data collection forms
Designing the form in which data will be collected. It can be a questionnaire or an observation form.
8. Determining sample plan and size
Sample plan: describes how each sample element is to be drawn from the total population Sample size: how
many elements of the population should be used to make up the sample
9. Collecting data
Non-sampling errors in data are likely to occur and researchers need to know the sources of these errors to
implement controls to minimize them.
10. Analyzing data
Data analysis involves entering data into computer files, inspecting data for errors, and running tabulations
and various statistical tests.
11. Preparing and presenting the final report
It is important that it is not overstated as it is the report that properly communicates the results to the
client.

Making Marketing Research-based Decisions

Marketing research reports include a lot of information that can aid organizations in making effective marketing
decisions, rather than resorting to unsupported “gut feel” decisions.
Some examples of reports and the marketing decisions they can support are:
• External factors research- The information from these researches helps marketers identify macro-
environmental shifts. These are bases in pinpointing opportunities and anticipating threats
• Observation research - This is an invaluable aid in determining consumer behavior. It assists
marketers in determining the retail shelf placement strategy to use. It also reveals the effectiveness
of point-of-purchase collateral materials.
• Test marketing- Based on test marketing results, the company shall gauge the acceptability of a
proposed product/service. The company can, have the opportunity to re-calibrate elements in the
marketing mix and to measure their effects on consumer demand and overall satisfaction. Its finding
can result in the discontinuance of a proposed product/service if results indicate a general lack of
interest
• Target market studies- These help identify, quantify, and understand the target market better.
Companies may decide to redefine its target market by including characteristics the market should
possess
• Concept, product development, and product studies- Using the results generated by concept,
product development, and product studies, marketing organizations shall select the proposed
product/service concepts that have the highest level of market acceptance. It can also be used to
decide on the packaging, to determine the market acceptance. It can also be used to decide on the
packaging, to determine the market reaction, and to justify brand positioning.
• Pricing tests- Pricing tests can be utilized by marketers to calculate a product’s or service’s optimal
price, to determine price elasticity, or to determine how price adjustment can effect total demand
for the product or service.
• Location studies- Location studies determine ideal retail store locations and is a valuable tool in site
selection.
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 • Advertising pre- and post-testing- These tests can determine advertising copy effectiveness,
advertising recall, sales promotion response rates, outdoor advertising traffic results, and the
effectiveness of public relations media placement. A product’s/service’s advertising theme or
message and the mechanics of consumer sales promotions can be adjusted based on these results.
• Usage, attitude, and image studies- These studies can provide cost- effective ways on how to
increase a product’s/ service’s awareness level and brand trial. In addition, the results can reveal
product usage and allow the company to develop strategies to increase usage frequency. The
effectiveness of current distribution outlets can be ascertained. This can help in determining if
distribution outlets can be ascertained. This can help in determining if distribution should be
expanded or alternate distribution outlets should be developed. Finally, product/service purchase
drivers can be quantified to calibrate its value offer effective

What I have Learned

Activity 2. Answer the following questions:
1. Why is marketing research important for business owners?
2. In what ways can marketing research help you as a consumer? Explain

What Can I do
Activity 3: Newspaper Research
Directions: You may look for a newspaper articles pertaining to an actual marketing research done in the Philippines.
Paste the articles.

Differentiate the buying Behavior and Decision Making of individual/household

customer versus the Business (organizational) (ABM_PM11-le-i-13)

At the end of the lesson, you are expected to:

1. Describe consumer and business markets; and
2. Differentiate the buying behavior and decision making of individual/household customer versus the
business (organizational) customer.

Consumer and Organizational Markets

Business offer products and services to both consumer and organizational markets.

Consumer Markets
Consumer markets include individuals and/or households that purchase products and services for personal
consumption. Consumers normally make purchase in smaller quantities, due to their tendency to consume products
gradually over a period of time. Moreover, consumers tend to be more emotional about their purchases. The
purchases are at times impulsive or spontaneous.

Differentiate the buying Behavior and Decision Making of individual/household customer versus the Business
(organizational) customer
The customer buying process (also called a buying decision process) describes the journey your customer
goes through before they buy your product. Understanding your customer’s buying process is not only very important
for your salespeople, it will also enable you to align your sales strategy accordingly
The five stages framework remains a good way to evaluate the customer’s buying process. John Dewey first
introduced the following five stages in 1910:
1. Problem/need recognition

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 This is often identified as the first and most important step in the customer’s decision process. A
purchase cannot take place without the recognition of the need. The need may have been triggered by
internal stimuli (such as hunger or thirst) or external stimuli (such as advertising or word of mouth).
2. Information search
Having recognized a problem or need, the next step a customer may take is the information search
stage, in order to find out what they feel is the best solution. This is the buyer’s effort to search internal
and external business environments, in order to identify and evaluate information sources related to the
central buying decision. Your customer may rely on print, visual, online media or word of mouth for
obtaining information.
3. Evaluation of alternatives
As you might expect, individuals will evaluate different products or brands at this stage on the basis
of alternative product attributes – those which have the ability to deliver the benefits the customer is
seeking. A factor that heavily influences this stage is the customer’s attitude. Involvement is another factor
that influences the evaluation process. For example, if the customer’s attitude is positive and involvement
is high, then they will evaluate a number of companies or brands; but if it is low, only one company or brand
will be evaluated.
4. Purchase decision
The penultimate stage is where the purchase takes place. Philip Kotler (2009) states that the final
purchase decision may be ‘disrupted’ by two factors: negative feedback from other customers and the level
of motivation to accept the feedback. For example, having gone through the previous three stages, a
customer chooses to buy a new telescope. However, because his very good friend, a keen astronomer, gives
him negative feedback, he will then be bound to change his preference. Furthermore, the decision may be
disrupted due to unforeseen situations such as a sudden job loss or relocation.
5. Post-purchase behaviour
In brief, customers will compare products with their previous expectations and will be either
satisfied or dissatisfied. Therefore, these stages are critical in retaining customers. This can greatly affect
the decision process for similar purchases from the same company in the future, having a knock-on effect
at the information search stage and evaluation of alternatives stage. If your customer is satisfied, this will
result in brand loyalty, and the Information search and Evaluation of alternative stages will often be fast-
tracked or skipped altogether.
On the basis of being either satisfied or dissatisfied, it is common for customers to distribute their
positive or negative feedback about the product. This may be through reviews on website, social media
networks or word of mouth. Companies should be very careful to create positive post-purchase
communication, in order to engage customers and make the process as efficient as possible.

Consumer Buying Roles

There are five roles individuals may portray in a consumer buying decision:
• Initiator- person who initially suggests buying a particular product or service.
• Influencer- person who tries to convince others of the need for the product/service and influences
the purchase decision.
• Decider- the person who makes the final decision to purchase or makes the final decision on any
product/service components such as what to buy, how to buy, where you buy, etc.
• Buyer- the person who makes the actual purchase.
• User- the person who actually uses the products/service whether or not he/she was involved in the
buying decision.
As an example, the wife in a family may suggest to her husband that since their eldest son is about to start
working, it may be time for him to have his own car. In this case, the wife is the initiator. The younger son agrees with
the suggestion and informs his parents of make, model, and color. Both the younger son and elder sister are
influencers. The father may visit several car showrooms, until he eventually decides on the purchase and pays for the

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car. The father is the both the decider and the buyer. The eldest son receives the car and uses it as his personal vehicle.
He is the user.

Consumer Markets and Buying Behavior

Consumers are of different genders and ages. They have varying income levels, live in different regions of the
country, and have various personalities and psychological profiles. This makes developing a single way to sell to
consumers. Difficult as they are influenced by different factors when buying goods and services.
Consumers’ purchases are initiated by marketing stimuli. Marketing stimuli refer to the elements of the
marketing mix, oftentimes referred to as the 4P’s: Product, Price, Place, and Promotion. Consumers are influenced by
the products/services that they see, hear from mass media, the Internet, and through word of mouth. Marketing
organizations organize these four elements so marketing stimuli can result in expected sales and brand loyalty

Buyer characteristics comprise of cultural, social, personal, and psychological factors. Cultural characteristics,
particularly, play a large role in consumer interest and eventual purchase. Products and services must “fit” the cultural
background of the potential buyer and not run contrary to it. An individual’s personal culture is developed overtime.
This includes his manner of upbringing, his educational background, and the collective culture consciousness” or
“keeping up with the Joneses” will favorably influence an individual’s attraction toward products and services with
prestigious brand reputations. A consumer, therefore, may be drawn to an advertisement of a high-end model but
may selectively ignore advertisements of a high-end model but may selectively ignore advertisements of other lesser
known brands that he perceives are relatively inferior or does not promote his culture of brand consciousness.
Sub-cultural factors are minute parts of one’s culture that provide specific identification of its members. This can
include one’s nationality mix (e.g. Tsinoy, Mestizo, Fil-Am) or regional origins (e.g. Ilocano, Batangueño, Ilonggo, or
Manileño). These factors play a critical role in one’s buying behavior. For example, Chinese-Filipinos are supposedly
very practical in their spending habits, and Ilocanos have been known to be thrifty.
This behavior may likewise be influenced by one’s social class. Social class is a status heirarchy in which
individuals and groups are classified through economic success and accumulation of wealth. The four most common
social classes are upper class, middle class, working class, and lower class.
Commonly, consumers belonging to a particular economic class (such as class A, the highest economic class),
purchase products and services consistent with their economic status. An income class A senior corporate executive
may therefore drive or be driven in an expensive car, wear branded clothes, own a high-end smart phone, dine in the
finest restaurants, and speak and act in a restrained, measured, and socially eloquent manner. In cases of this nature,
this person’s income classification is consistent with his/her social class (income class A= upper social class).
Consumers usually purchase products and services befitting what they perceive as “acceptable” by their own
social class. Purchases made outside this “acceptable” classification can lead to one being openly or silently ostracized
by other members of their social class.
Therefore, if this senior executive suddenly decides to purchase a 15-year old obviously dilapidated car and
decides to begin driving it personally to and from work, he may raise many of this office mates and acquaintances
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eyebrows as “acting outside his social class” or may even be suspected of having lost his previously enviable economic
status.
Conversely, if one of this senior executive’s lowest ranking employees belonging to the lowest income classes
(classes D and E), invests all his pay, maximizes his credit, purchasing and coming to work consistently in branded
clothes, communicates with others higher ranking, substantially wealthier office-mates and otherwise exhibits the
purchasing his true economic standing will frown upon this behavior as spending beyond one’s means, and may even
brand him as a “social climber.”
Reference groups, likewise, exert a strong influence on buyer behavior. Reference groups include individuals
or groups that influence consumer opinions, beliefs, attitude, and behaviors. They often serve as role models and
inspiration. Many consumers belong to reference groups such as families, friends, schoolmates, and co-workers. These
are people whom they have extended and intimate contact with. These groups exert continuous influence on an
individual’s choice of products/services or brands to purchase.
On the other hand, aspirational groups are groups that a person currently does not belong to but wishes to
belong to or to be associated with. What aspirational groups purchase also influences and individual considerably, as
he may feel that buying products/services and brands make him feel some degree of belongingness to the aspirational
group:
The challenge to marketers with reference and aspirational groups is to identify the leaders of these groups
and to shape their opinions that influence their followers in favor of a product or service. Sometimes, product or
service. Sometimes, products advertisers produce aspirational ads to appeal to customers’ desire to be affiliated with
a particular group.
An even stronger influence on buyer behavior is the family. This phenomenon is particularly true among
Filipinos. Because of the length of time one spends with his family, an individual adopts the values, habits, and
philosophical orientation of his family, i.e. self-worth, spending habits, and general perspective and outlook towards
life. This continues even after he has married. Spouses exert varying levels of influence in the purchase of
goods/services so marketers must be able to identify the decisionmaker in the relationship. In the Philippines, the wife
is often the decision-maker in the purchase of daily household items, while the husband exerts a greater influence in
the purchase of large ticket items such as durable and specialty goods.
Each individual performs a particular role in relation to his environment. This role is related to his occupation
or profession. His buying decisions shall befit the image or status that he projects. For example, a vice-president of a
company is expected to drive a luxury car and wear high-end clothing, and to be seen frequenting prestigious
commercial establishments.

An individual’s personal factors also play a sizeable influence in his buying behavior. People’s need and wants
change as one ages-- from toys in early childhood, to denim pants as teenager, to suits and dress clothes as one joins
the workforce. A very useful guide to buying prospensity was developed by William D. Wells and George Gubar-- the
nine stages of a family’s life cycle. The authors have modified it to fit to the Philippine context.

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 Stage 1: Bachelor/bachelorette stage- They are highly dependent on their parents for finances in the form of
allowances. Some may be employed part-time in fast food chains or business out sourcing companies. They spend
primarily on entertainment, eating out, fashion, dating, and activities with friends.
Stage 2: Young, newly married couple with no children- Most have dual income as both spouses may be
working. They may be renting a house or temporarily staying with parent/in-law. They buy household appliances and
audio and video equipment, and spend to make their living space comfortable. If living with parent/in-law, they may
share in household expenses.
Stage 3: Married couple, with eldest child below elementary school age- They may be renting their living facility
or still staying with parent/in-law. They spend their income on nursery and kindergarten education, food, children’s
clothes, juvenile furniture, toys, and trips to amusement parks.
Stage 4: Married couple, with youngest child six years old or over- They spend primarily on school tuition,
uniforms, books, and allowances. They usually live independently in an apartment or condominium. They may join
social and civic clubs and begin investing in insurance. They purchase groceries and food items frequently and in larger
quantities.
Stage 5: Older married couple, family head still working, all children living on their own- They have increased
savings as a result of reduced financial requirements. Their expenditures include vacations, some luxury items, health
and fitness, vitamins and supplements. They initiate retirement fund investments.
Stage 6: Widow/widower, in labor force - They have substantial savings. They may move out from a
conventional home to live in a small condominium unit. They spend on eating out, movies, other forms of
entertainment, health and fitness, and dietary supplement. Also, they spend a lot of free time with friends who share
similar lifestyles.
Stage 7: Widow/widower, retired - Pensioner. They may be asked to move in by one of their adult children for
better care. Substantial expenses are for ambulatory and healthcare, usually with host child’s family.

An individual’s occupation also plays an important indicator in the products and services he/she purchases.
Lawyers are expected to buy a lot of dress shirts, neckties, suits or barong tagalogs. Blue collar workers purchase work
purchase work boots and denims, while students regularly buy school supplies such as pens, paper, and notebooks.

Buyer behavior is also dictated by economic capability. It is evident that individuals need money to purchase
goods and services. The more money available, the greater the amount and quantity of purchase.
Lifestyle is defined as a manner of living that reflects a person’s values and attitudes. One’s lifestyle is
independent of his/her occupation, social class, or status. Therefore, a person may occupy a high position in a bank,
and yet prefer to maintain a frugal lifestyle. In contrast, an entry-level teller in the same bank may live an extravagant
lifestyle: always eating out, buying branded clothes, and using the latest communication gadget.
Personality refers to individual differences in characteristics patterns of thinking, feeling, and behaving. Typical
personality traits are dominance, deference, defensiveness, adaptability, autonomy, sociability, and self-confidence.
The individual personalities of consumers likewise influence their buying behavior. Marketers can use personality as a
means of enhancing product. For example, a car manufacturer may discover that most buyers of its brand are self-
confident and highly sociable. The car company can then proceed to compose advertising copy or advertising messages
that appeal to these personality types in marketing its cars.
Similar to psychological factors, motivation addresses the issue of why a consumer buys a product or what needs
he is trying to satisfy. Most individuals purchase products and services in order to satisfy one or more of the five need
levels identified by Abraham Maslow.

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 For example, three friends decide to meet and dine in a restaurant. One of the three may look forward to
the event because it will strengthen her relationship with her friends. She is satisfying her social needs. Another may
anticipate the event as she wants to take advantage of the occasion to make an emergency loan from one of her
friends. In this case, she is satisfying her safety or security needs. The third may actually just want to attend the
occasion because she has heard the food in the restaurant is particularly good. She is attending the affair to satisfy her
physiological needs.
Perception is the process by which people translate sensory impression into a coherent and unified view of the
world around them. Because of perception, consumers may view marketing stimuli in different ways. Although a
housewife may have been motivated to buy a pair of shoes for an important occasion, she may have a negative
perception of the level of service in a shoe store. She may judge the efforts of an extremely motivated salesperson as
being “too pushy.” She may just prefer to just ask for assistance when necessary. Another consumer in another shoe
store that gives shoppers “space” to browse may perceive the store as totally lacking in customer service and concern.

Three perceptual processes guide an individual’s perception:

• Selective attention - because consumers are exposed to hundreds of commercial messages
each day, they tend to pay attention to only those that address a current need. This is the
reason why therefore meal time, consumers are selectively attracted to food commercials, but
almost totally ignore them when their hunger has been satisfied. This is also why companies
develop advertisements that’s stand out and are different from other firms. They may, for
example, use black and white as their medium to set their advertisement apart, or use extreme
dramatization in their messages.
• Selective distortion - pertains to the tendency of individuals to twist or “distort” information
to fit their existing mindset toward a brand. A first time customer in a restaurant with excellent
market reputation may, for example, “twist” or rationalize the unreasonably long time it takes
for his order to arrive. He may convince himself that the chef is taking extra care in selecting
the ingredients and preparing his order. In reality, however, the delay could simply have been
caused by the order being overlooked by the kitchen staff.
• Selective retention - means that consumers tend to remember only the positive things that
reinforce their attitudes and beliefs. Therefore, a shopper in a supermarket may only
remember the wide product selection, affordable prices, and relaxing shopping atmosphere
and totally “forget” the spill he had seen at the meat section, or the delay he encountered at
the checkout counter.

Learning is a relatively lasting change in behavior that is the result of experience. When a consumer purchases
a particular brand of product and is completely satisfied with it, his/her positive experience with the brand is
reinforced. This learning can easily be applied to another product of the same brand. If a consumer purchases a
particular brand of mayonnaise and is completely satisfied with it, he may project the same positive experience to

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tomato sauce with the same brand. This is a strong argument for building brand equity, so that consumers will view
several, if not all, the products under the brand favorably.
A belief is defined as confidence in the truth or existence of something not immediately susceptible to
rigorous proof. On the other hand, an attitude is a settled way of feeling about someone or something, typically one
that is reflected in a person’s behavior.
Consumers acquire both beliefs and attitudes through learning. Sometimes, consumers hold strong beliefs
about specific products or their qualities and attributes. Some of these beliefs may be correct, some may be wrong.
Correcting an erroneous belief can be expensive. This is also true with attitudes.
For these reasons, organizations must study and understand various consumer beliefs and attitudes regarding
their product. One way of discovering consumer attitudes is through the conduct of marketing research, particularly
a usage, attitude, and image survey.
What role do beliefs and attitudes play in consumer marketing? Many of those who are regularly do their own
laundry believe that detergents that produce a lot of suds clean clothes better. This has caused many households to
reject new detergents in the market that do not produce a lot of suds. A new detergent manufacturer, therefore, must
either tailor his product to fit this belief or engage in a massive campaign to correct or alter consumer attitudes.
The study of consumer buyer behavior is already complex. Cultural, social, personal, and psychological
characteristics all come into play. Some of these factors are largely uncontrollable.

What’s More
Activity 4: Reflection
As a student; Answer the following questions

1. What do you think is a good way to improve your buying behavior?

2. Does impulse buying consider a negative consumer behavior? Give some instances and explain

Identify and Segment Market for Product or Service (ABM_PM11-le-14) Select the
appropriate target market segment and its positioning (ABM_PM11-le-I-15)
The learners are expected to:

1. Identify and segment market for a product or service; and

2. Select the appropriate target market segment and its positioning
Market Segmentation

Market segmentation is the process of dividing a market of potential customers into groups, or segments,
based on different characteristics. The segments created are composed of consumers who will respond similarly to
marketing strategies and who share traits such as similar interests, needs, or locations.

Why is market segmentation important for marketers?

Market segmentation makes it easier for marketers to personalize their marketing campaigns.

By arranging their company’s target market into segmented groups, rather than targeting each potential
customer individually, marketers can be more efficient with their time, money, and other resources than if they were
targeting consumers on an individual level. Grouping similar consumers together allows marketers to target specific
audiences in a cost effective manner.

Market segmentation also reduces the risk of an unsuccessful or ineffective marketing campaign. When
marketers divide a market based on key characteristics and personalize their strategies based on that information,
there is a much higher chance of success than if they were to create a generic campaign and try to implement it across
all segments.

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 Marketers can also us segmentation to prioritize their target audiences. If segmentation shows that some
consumers would be more likely to buy a product than others, marketers can better allocate their attention and
resources.

Consumer Segmentation Variables

These are four major variables used in market segmentation:

1. Geographic- pertains to where the population is located. Geographic segmentation divides the market by
regions, cities, urban and rural area, coastal and central land masses, by density or areas with low,
medium or heavy concentration of population, or by areas of the country with either relatively temperate
or hot temperature, among others.

Some examples of geographic segmentation sub-variables are:

• Region
• Density
• Climate

2. Demographic - refers to the general characteristics of the population. Using demographic segmentation,
males may be grouped together in one segment, and females in another. Those belonging to the higher
income (income class A and B) may form a segment, the middle income class (income class C) another
segment, and the lower income (D and E) yet another. Age can also be an effective segmentation variable.
Teenagers may compose a segment, young adults another, and mature individuals and senior citizens
may form two more individual segments. Educational attainment can be an effective segmentation sub-
variable as well, such as those with higher education (holders) of master’s degree, or doctorate degrees),
individuals who have completed their college education, graduated from high school, completed
elementary education, and those with little or no education.

Some examples of common demographic segmentation sub-variables are:

• Gender
• Age
• Income
• Occupation
• Education
• Civil status
• Religion
• Nationality
• Race
• Family size

3. Psychographic - these are variables that represent the psychological profile of consumers. This is one of
the most effective segmentation variables in predicting purchase behavior. However, the psycho-graphic
profiles of different segments of the population are difficult to measure as no government agency
undertakes regular studies and release data to identify and quantify these segments. This is in contrast
with geographic and demographic population data, which is collected every five years by the Philippine
Statistics Authority. Another is through Expectation Surveys undertaken by several government agencies
as the Bangko Sentral ng Pilipinas.

Examples of psycho-graphic segmentation sub-variables are:

• Lifestyle
• Personality

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 • Social Class
• User status
• Usage rate
• Loyalty status
• Benefits sought

4. Behavior-graphic - is the segmentation variable most indicative of purchase behavior. Unfortunately, it is

not available to all organizations as it depends on the meticulous maintenance and conversation of
internal databases. Retailer databases, for example, can provide information such as customer listings,
their home and email addresses, and contact numbers. When customer database is organized and
synchronized with point-of-sales system, retailers can pinpoint individual customer purchases, by item,
transaction size, time of day, and frequency. When the database of a particular female customer, for
example, indicates a preference for capri pants, the retailer can send an email to this customer to advise
her of the arrival of new capri pants. Without the database, the email will be sent to all of the retailer’s
customers. Behavior-graphic segmentation not only enhances the likelihood of sales, but dramatically
reduces direct marketing costs.

The organization has to decide which segmentation sub-variables are relevant to the successful and cost-
efficient marketing of its product or service. For example, a fruit juices company may decide to
concentrate the marketing of its products to teenagers from the middle class income bracket. It may also
decide not to segment its potential consumers by education, as educational attainment may be irrelevant
in fruit juices purchase and consumption.

Target Market vs. Consuming Market

How does a product’s target market differ from its consuming market? A company’s target market is the
group of individuals with specific characteristic to whom the company has decided to focus its marketing efforts. For
example, a fruit juices brand may have identified its target market to be “males and females residing in major urban
centers nationwide, who are between the ages of 12 and 25, belonging to income classes A,B and C who are looking
for a carbonated beverage with a high caffeine content that can reinvigorate them and keep them active enough to
perform their daily activities.” Individuals who fit this description is the brand’s target market.
On the other hand, the consuming market comprise of actual consumers of the product/service. The great
majority of its consuming market would naturally come from their selected target market. However, some individuals
outside the product’s target market description (above the age of 25, for example) may also buy the fruit juices brand
and may also find its value proposition applicable to them (although to a lesser extent). A product’s or service’s
consuming market, therefore, is larger than its target market, because it includes individuals that are not target market
of the product/service.

Positioning
Positioning is the process of communicating the image of a brand into the minds of consumers. The objective is
to make the brand stand out in comparison to its competitors.
Why should a brand have an image or a brand position? The first reason is to recall. Customers have difficulty
remembering brand position? The first reason is to recall. Customers have difficulty remembering brands that have
no distinct image. This can be illustrated using a typical high school student attending a reunion of his elementary
graduating class. Upon seeing his former schoolmates, he may remember some schoolmates immediately, some even
by name. These schoolmates are memorable because of some distinct image they had when they were together in
primary school: the most intelligent, the neatest, the cutest, the tallest, the darkest, the funniest, etc. He may struggle
to remember the names of the majority of his schoolmates because they were just “faces in the class,” little known
for anything in particular.
The same holds true with customers. When a customer needs a particular product or service, he will only
include in his/her mental list of possible brands to purchase. Those brands that he remembers and recalls. The
customer will exclude other brands that have not established their position in his memory.
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Elements of Good Brands Position
What is a good brand position? These are three requirements:

• Unique - A brand must select a position that is not currently occupied by another brand. For example, it would
not be good for a new bank to position itself as a full service financial institution that is willing to go out of its
way to satisfy customer needs and adopt other bank’s tagline. The new bank must identify its own distinctive
features and communicate them to its customers using a different tagline
• Beneficial - The selected position must be perceived by its customers as beneficial Customers always ask
when considering a product or service, “what in it for me?” They are willing to patronize market offerings that
they perceive as capable of satisfying their needs and/or wants. Hence, if a commercial bank that is slow in
processing transactions.
• Credible - Once a brand position is selected, it must ensure that it performs and fulfills the promise of its
position. If a retailer positions itself as customer-friendly and communicates this through the tagline “service
with a smile,” the organization must ensure that this positioning is implemented 100% of the time for it to be
credible, perhaps requiring employees to smile all the time when dealing with customers.

Selecting a Good Brand Position

There are several tools available that can be used in the selection of a good brand position. One of the most
powerful of these tools is perceptual mapping.
Perceptual Mapping
Perceptual mapping involves the identification of a competitive brand’s position using two variables or axes
(for example, price and quality). Each variable represents a factor relevant and important to customers. Using
perceptual maps, new products launched into the market can select the position they wish to occupy. This is after a
comprehensive assessment of the number, size, and intensity of competition in each quadrant of the map.

Communicating Brand Position

The brand position of a product/service must be consistent and communicated effectively to its target
market. It is pointless to adopt a brand position if it is known only to the company’s executives and employees. The
continuous and consistent communication of the brand’s positioning to its target market is important to create impact
in the market. All elements of the product must be consistent to the brand’s selected positioning.
For example, products intended for the female market are packaged in relatively small containers (for
comfortable handling by a woman’s hand), in soft shapes, and labeled in colors, e.g. pink, lavender, etc.. For products
intended for the upper income classes, they would be priced relatively higher.
Some of the elements to be considered in communicating brand positioning are:
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 • Packaging
• Labeling
• Selling Price
• Advertising
• Brand endorser
• Tagline

Examine this caselet: (Note: the following was established through the authors’observation)
In 2015, kopiko launched 78°C, a ready-to-drink coffee latte. As lattes are mixtures of espresso coffee and
milk, Kopiko positioned itself as the “best tasting latte,” extracted a temperature of 78°C. It claims that 78°C degrees
in the optimum extraction temperature for coffee. The result is a latte that has “rich taste and tempting aroma. “It
comes in a “shapely” PET bottle. The 30-second video advertisement casts European-looking endorsers. It used the
University Athletic Association of the Philippines (UAAP) as its major advertising vehicle. This is particularly effective
since the primary target market are students of the UAAP member schools and viewers of the athletic games. In
addition, the campaign also focuses on the 78th year of UAAP. The product or brand is placed prominently in all
advertisements announcing UAAP game schedules.

Identifying and Selecting Competitive Advantage

Competitive advantage is defined as the superiority of an organization over competitor. It typically answers
the question “Why should the customer purchase from this company instead of its competitors?”
• Cost advantage - results when firm has the ability to produce a product or service at a lower cost
compared to its competitors
This cost superiority will result in the company either being able to sell its products or services at a lower
price than its competitors, or generate a larger margin from its sales.

• Differential advantage - when a company’s product or service differs from its competitors and are
perceived by consumers to be better or of greater value.
• Focus advantage - When a company knows its target market very well, and can service its needs
better than any of its competitors.

Competitive advantage can be achieved through external or internal means. Companies can take advantage
of opportunities that arise from changes in macro-environmental factors, and being responsive to these changes.
Internally, a company can achieve cost advantage or differentiation through improvements in the production process,
cost efficiency measures, branding, or product innovation. Focus advantage, on the other hand, can be attained by
studying and predicting the needs and preferences of the target market.
Sources of competitive advantage include the company’s cost structure, products/service offerings, and
distribution networks, among others. In selecting its competitive advantage, the company must know what
operational attributes (such as products/service offerings, and distribution network, among others. In selecting its
competitive advantage, the company must know what operational attributes (such as product quality, technology,
price, availability, service, etc.) are important to its target market. Selecting an operational aspect with low importance
to a company’s target market will result to incremental competitive advantage.

What Can I do
Activity 5:Reflection
Research for an advertisement of a famous Philippine company. Then let them answer the following questions:

1. Who do you think is the target market of this company? Why?

2. Do you think their company’s target market is appropriate with the products / services they are offering? Why?
3. For you, why is it important for companies to have a particular target market?

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 REFERENCES
Armstrong, Gary (2013). Marketing: An introduction 11th, Global ed. Harlow, England: Pearson
Attar, Asiyeh, (2019) CONTEMPORARY TYPES OF MARKETING, Retrieved from https://blog.ubrik.com/types-of-
marketing
Garrovillas, Eduardo P (2007), Out of the Box Marketing Principles, that work and make sense. Books Atbp.
Publishing Corp
Gilaninia, Sharam & Almani et al (2011) Relationship Marketing: A New Approach to Marketing in the Third
Millennium. Australian Journal of Basic and Applied Science.
Go, Josiah (1996). Contemporary Marketing Strategy in the Philippine Setting, Manila: National Bookstore
MEDINA, ROBERTOs G. (2008), Principles of marketing revised edition REX Bookstore.
Williamson, Will (2020), Traditional Vs Contemporary Marketing Strategies, Retrieved from
https://blog.jdrgroup.co.uk/digital-prosperity-blog/traditional-vscontemporary-marketing-strategies

Prepared by: Evaluated by: Checked by:

Anna Marie A. Reyes Myra M. Absin Jennilyn V. Sison

Teacher II Master Teacher II Teacher II

Approved by:

Eleazar C. Magsino
Principal II

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