MARKETING PRINCIPLES AND PRACTICES

MODULE 1: AN OVERVIEW OF MARKETING

LESSON 1: MARKETING, ITS IMPORTANCE AND CONCEEPTS

Marketing- exchange activities conducted by individuals or organization for the purpose of satisfying
human wants with the view of accomplishing the individual or organizational objectives

(Converse and Huegy) the transportation of the goods from the point of production to the
consumers and all the transactions involved in getting goods from the producers to the
consumers
(Hansen) the process of discovering and translating consumer wants into product and service
specifications, and then in turn helping to make it possible for more and more consumers to
enjoy more and more of these products and services
(McCarthy) performance of business activities which directs the flow of goods and services from
producer to consumers or user in order to satisfy customers and accomplish the company’s
objective
(Cundiff) managerial process by which products are matched with markets and through which
transfer of ownership are affected
(Pride and Ferrell) individual and organizational activities aimed at facilitating and expediting
exchanges within a set of dynamic environments force
(Kottler) human activity directed at satisfying needs and wants through exchange processes
(Stanton) macro-societal dimension- any exchange intended to satisfy human wants or needs
Micro-organizational definition- the total system of activities designed to plan,
price, promote, and distribute want satisfying goods and services to markets

What is marketing?

Exchange
Human need
Human want
Objective

THREE MAJOR OBJECTIVES

1. to fill the needs

2. to satisfy the needs
3. to create new desires

A market is people with

1. needs to satisfy
2. money to spend
3. willingness to buy
Basic Terms

1. Exchange- the act of obtaining a desired product or service from an individual or a group by offering
something in return
2. Human Need- something that is required by a human being for the health and well-being of his body
and mind
3. Human want- exist when a person is in a state of unfulfilled need, and is aware at the same time, of a
particular object that will best satisfy the need, but still has to possess the object
4. Objective- the desired result of an activity

MAJOR MARKETING FUNCTIONS

1. Exchange Functions
a) buying
b) selling
2. Distribution Functions
a) transporting
b) storing
3. Facilitating Functions
a) Financing
b) Standardizing
c) Risk-taking
d) Marketing Information

THREE (3) MARKETING CONCEPT BY KOTLER

1. The Product Concept- the firm decides to produce a product or service first, and then looks for
interested buyers later
2. The Selling Concept- the firm decides to produce a product or service first, and then
concentrates on selling the same to a group of perceived customers
3. The Marketing Concept- the firm first determines the needs, wants and values of a target
market, then adapts the firm to satisfy these needs and wants more efficiently and effectively
than its competitors

TIME FRAMES (McCarthy and Perreault)

1. The Production Era- Industrial Revolution up to 1920s; focused on the production of a few
specific products
2. The Sales Era (1930-1950)- company emphasized selling because of increased competition
3. The Marketing Department Era (1950-1960)- all marketing activities were brought under the
control of one department
4. The Marketing Company Era (1960)- all marketing people develop long-range plans, and the
whole company, not just the marketing department, is guided by the marketing concept

IMPORTANCE OF MARKETING
Multiplier effect
Provides satisfaction to the growing wants and needs of the people
Touches the lives of the people around the world
 Responsible for mass production and rising standard of living of the people

ROLE OF MARKETING
1. As a career, a profession- advertising, marketing research, personal selling, wholesaling
2. Standard of living- creating and delivering goods and services
3. Economic Stability- marketing today has emerged as a sophisticated set of activities to stimulate
demand
4. Employment- providing millions of jobs to the people

Marketing System- totality of all necessary activities and institutions which help facilitate the movement
as well as the transfer of goods from the producer to the consumer or user

CHARACTERISITCS OF A GOOD MARKETING SYSTEM

1. The channel of distribution must be tailored-fit to the particular product offered for sale
2. Unnecessary duplication of activities must be reduced to the barest minimum, if not eliminated
together.
3. There must be present adequate number of cheap, fast transportation facilities that will move
goods from places of production or abundance to places of scarcity or consumption.
4. The goods must be placed in receptacles or containers that provide maximum protection against
injury, damage, deterioration or spoilage as economical as possible.
5. Efficient tools of communication must disseminate useful information about new products, uses
and benefits that users or consumer will obtain from their consumption
6. There must be present individuals as well as organization who are willing to take risks in the
marketing of goods as well as provide the necessary funds for such undertaking,

SELF-LEARNING ACTIVITY
1. Marketing
2. Satisfying human wants
3. Exchange
4. Human need
5. Human want
6. Objective
7. macro-societal dimension
8. Micro-organizational definition
9. Marketing System
10. The Marketing Concept

LESSON 2: THE MARKETING VARIABLES

1. THE MARKETING MIX

a) The Product- refers to the tangible commodity or the intangible service that the company offers
for sale to customers
b) The Price- refers to the amount of money the customer must part with to avail of the use of the
product
 c) The Promotion- refer to the provision of required information to the prospective customers so
that they are persuaded to buy
Personal Selling
Mass Selling
d) The Place- making the company’s products available in the right location, quantity, and time is
the concern of the place variable in marketing

2. THE MARKETING ENVIRONMENT VARIABLES

1. Political Forces- the fate of companies depends on the political conditions in the areas
where they are situated
2. Legal and Regulatory Forces- laws passed by congress and regulations formulated by the
government agencies constitute the legal basis for implementing the various marketing
activities of the firm
3. Societal forces- society in general, is characterized by the presence of forces which
contributes to changing demands for a particular product
4. Consumer Movement Forces- responsible for a number of legislations designed to protect
users of various products and services
5. Economic Forces- the economic environment is a factor in the marketing success of a firm
6. Technological Forces- advances in technology have provided opportunities to new products,
new ways of selling, and new ways of influencing the prospective buyer

SELF LEARNING ACTIVITY

1. The four marketing variables.

a) The Marketing Mix
b) The Marketing Environment Variables
2. Components of marketing mix
a) Product
b) Price
c) Promotion
d) Place
3. Methods of promoting products
a) Personal selling
b) Mass Selling
c) Sales Promotion

II. Fill in the blank with the correct answer

1. Product
2. Price
3. Promotion
4. Personal Selling
5. Mass selling
LESSON 3: MARKETS AND MARKETING SEGMENTATION

MARKET
(Musselman and Hughs)- Place where sellers and buyers exchange goods for an agreed-upon
price
(Ivancevich)- a group of people or organizations that buy a particular good, service or concept
(Byrns and Stone)- any mechanism that enables buyers and sellers to strike bargains to transact
(Stanton)- a market is composed of people with needs to satisfy, the money to spend, and the
willingness to spend
TYPES OF MARKET
1. Consumer Markets- buyers who intend to directly consume a product or service
2. Industrial Markets- organizations (business or nonbusiness) that require goods and services
which are used in the production of goods or services that they later sell or distribute at a profit
or to satisfy an objective
3. Reseller Markets- refer to organizations that buy goods and services which they later sell at a
profit
4. Government Markets- refers to government agencies that buy products and services for use in
the production of public goods and services
5. International Markets- refers to all types of buyers found abroad including consumers,
producers, resellers and governments

MARKET SEGMENTATION

Market Segment- subgroup of a particular market which is composed of units with more or less
similar characteristics
Market segmentation- the process of identifying the various segments of a company’s particular
market

SEGMENTATION STRATEGIES
1. Concentration or Single-Segment Strategy- refers to that long-run decision of the company to
deal only with s particular segment of the market
Example: a book publisher for college students publishes only college textbooks
2. The Multi-Segment Strategy- calls for providing products or services to two or more segments
of the target market
Example: a book publisher who publishes and sells books for college, high school and
elementary students

BASES FOR MARKET SEGMENTATION

1. Geographic Segmentation- requires dividing the market into different geographical units like
nations, regions, provinces, cities, towns, or barangays
2. Demographic Segmentation- refers to dividing the market segments on the basis of
demographic variables like
Age
 Sex
Family size
Family life cycle- refers to that at which a family is presently situated

In terms of income:
a) High income group
b) Middle income group
c) Low-income group

In terms of occupation
a) Professional
b) Technical
c) Manager
d) Proprietor
e) Farmer
f) Teacher
g) Housewife
h) Students
i) Others

3. Psychographic Segmentation- refers to the classification of buyers or consumers by some

psychological characteristics they possess in common

Filipino Social Classes

1) Upper Class (1% of the total population)- composed of large landowners, highly
successful professionals, big business people, and top government officials
2) Upper Middle Class (10%) - composed of owners of farms over 20 hectares,
most professionals, operators of medium sized business…
3) Lower-Middles Class (20%)- composed of lower-echelon government workers,
most professors, teachers, owners of farms 3 to 19 hectares, nurses and some
small business people
4) Upper-lower class (32% of total population)- composed of unskilled laborers,
farmers with less than 11/2 hectares, most household servants, landless farm
labor, most tenant farmers, most physically handicapped people, peddlers, and
scavengers
Life style- refers to a person’s pattern of living in the world as expressed in his or her
activities, interests, and opinions
4. Behavior Segmentation- refers to the grouping of buyers on the basis of their knowledge, attitude,
use of response to a product
a) Occasion segmentation calls for grouping of buyers according to occasions when they
get the idea, make a purchase, or use a product
b) Buyers can also be segmented according to the benefits they seek from a particular
product
 c) User status may be classified into the following: nonusers, ex-users, potential users, first
time users and regular users.
d) Segmentation by usage rate is also a way of market segmentation. It is done by
classifying buyers into light users, medium users and heavy users.

Buyers can also be grouped according to their loyalty to particular brands. They may be
classified into the following:
1) Those who buy only one brand of a product
2) Those who buy two or three brands
3) Those who shift from a brand to another; and
4) Those who have no brand preference
5. Loyalty to a particular brand provides a better insight to the marketer

6. Another way of segmenting the market is to classify buyers according to their readiness to buy. In
this regard they may be categorized into the following stages:
1) People who are unaware of the product
2) People who are aware of the product
3) People who are informed of the product
4) People who are interested in the product
5) People who are desirous of having the product
6) People who intend to buy the product

SELF-LEARNING ACTIVITY

I. MATCHING TYPE

1) A
2) B
3) C
4) D
5) E
6) F
7) G
8) H
9) I
10) J

LESSON 4: MARKETING RESEARCH AND INFORMATION SYSTEMS

Marketing Information System

An interacting structure of people, equipment, methods, and controls which is designed
to create an information flow that is capable of providing an acceptable base for
management decision in marketing
GENERAL ACTIVITY OF MIS
1. ASSESSING INFORMATION NEEDS
An MIS activity begins with the assessment of information needs of the marketing
decision makers

FOUR AREAS OF CONCERN

1) A marketing decision-maker who is aware of his information needs and forward his
query to the MIS department;
2) A marketing decision-maker who is aware of his information needs, but for some
reason does not forward a query to the MIS department;
3) A marketing decision-maker who is aware of some information requirements, and
forwards a wrong query to the MIS department; and
4) A marketing decision-maker who makes no query because he is not aware of the
existence of useful information
2. DEVELOPING INFORMATION
The information required by marketing decision-makers come from two sources:
internal (within the company) and external (outside the company) and external (outside
the company).

Fig. 1 The Marketing Information System and Its Activities

Assessment of Development of Distribution of

information Information Information
needs

Involving through to

1. marketing planning .1. internal records decision-makers in marketing

2. marketing execution 2. Marketing intelligence
3. marketing control 3. Marketing research
4. information analysis

INTERAL RECORDS

Internal records are highly useful to the marketing decision-makers.

1) Accounting records- like financial statements, sales and orders, costs, accounts receivables and
cash flows
 2) Manufacturing Records- like production schedules, shipments, and inventories
3) Sales Department Records- like salesforce call reports
4) Customer Service Department Records- like reports on customer satisfaction and warranty
problems; and
5) Information gathered by other departments

Marketing Intelligence
Refers to the gathering of everyday information about developments in the marketing
environment
External and internal intelligence
Marketing Research
The systematic gathering, recording, and analyzing of data about problems relating to the
marketing of goods and services

Marketing Research Process

Undertaken by using the scientific method which is a decision-making approach that focuses on
being the objective and orderly in testing ideas before accepting them

Five Steps in Marketing Research Process

1) Definition of the Problem
2) Situation Analysis
3) Obtaining problem specific data
4) Interpretation of data and
5) Problem Solution

1. Definition of the Problem

Problem- an identifiable situation which Is perceived by the decision-maker as a potential source
of dissatisfaction, and for which preferable alternative exist
Symptom- an outward sign that a problem exists
2. Situation Analysis
Informal investigation of available information which may further define the problem and
indicate what additional information is required
3. Obtaining Primary Data
a) Observation
b) Survey
c) Experiment
4. Interpretation of Data
Bringing out the meaning of data or converting mere data into information
1) Test of significance, and if still required
2) Explaining observed differences with the use if cross-tabulation, correlation or
regression analysis
5. Problem Solution
 Workable solution must be derived from the research findings

3. DISTRIBUTING INFORMATION
The last activity required of an MIS is the actual distribution of information to managers

SELF LEARNING ACTIVITY

1) Marketing Information System
2) Information
3) Data
4) Function of the marketing information system
5) Internal records
6) Marketing intelligence
7) Marketing research
8) Problem
9) Situation analysis
10) Experimental method

SUMMATIVE TEST

1. Define marketing and identify its importance.

Marketing is the strategic process of identifying, creating, promoting, and delivering value to
customers in order to satisfy their needs and wants while achieving organizational goals. It
encompasses a wide range of activities, including market research, product development,
pricing, promotion, and distribution, all aimed at connecting products or services with target
audiences. Marketing is crucial because it plays a pivotal role in driving sales, building brand
awareness, fostering customer loyalty, and ultimately, ensuring the long-term success and
growth of businesses in a competitive marketplace. Effective marketing helps businesses
understand their customers better, tailor offerings to their preferences, and communicate the
unique benefits of their products or services, leading to increased customer satisfaction and
sustainable profitability.
2. Identify the marketing variables and discuss each.

Marketing Mix Variables (4Ps):

1. Product: This variable pertains to the product or service a company offers. It

encompasses product design, features, quality, branding, packaging, and positioning.
Understanding customer needs and preferences is crucial when developing and
modifying products.

2. Price: Price refers to the amount customers must pay to acquire a product or service.
Pricing decisions involve setting the right price point to maximize revenue and profit,
considering factors like production costs, competitors' pricing, and perceived value.
 3. Place (Distribution): Place relates to how and where customers can access the product
or service. Distribution channels, such as direct sales, retail stores, e-commerce, or
wholesalers, are essential considerations. Efficient distribution ensures the product is
available when and where customers need it.

4. Promotion: Promotion includes all activities and communication methods used to make
customers aware of a product or service and persuade them to purchase it. This
encompasses advertising, public relations, sales promotions, personal selling, and digital
marketing.

Marketing Environment Variables

1. Political Forces: Political forces encompass the impact of government and political decisions
on marketing. This can include government policies, regulations, and political stability. For
example, changes in trade policies or tariffs can affect a company's supply chain and pricing
strategies. Political instability in a region can disrupt business operations and market entry.

2. Legal and Regulatory Forces: Legal and regulatory forces involve laws and regulations that
affect marketing activities. This includes consumer protection laws, advertising standards,
intellectual property rights, and industry-specific regulations. Non-compliance with these
laws can lead to legal issues, fines, and damage to a company's reputation.

3. Social Forces: Social forces relate to cultural norms, values, demographics, and social trends
that influence consumer behavior and preferences. Marketers need to understand societal
shifts and adapt their strategies accordingly. For instance, changing demographics can lead
to shifts in product demand, and cultural trends can impact advertising messages.

4. Consumer Movement Forces: Consumer movement forces are related to advocacy groups
and consumer activism. With the rise of social media and online platforms, consumers have
a louder voice in shaping a company's image and practices. Negative publicity from
consumer advocacy campaigns can significantly impact a brand's reputation and sales.

5. Economic Forces: Economic forces involve factors like inflation rates, exchange rates,
unemployment levels, and overall economic health. These factors can influence consumers'
purchasing power and willingness to spend. Economic downturns can lead to reduced
consumer spending, affecting sales and pricing strategies.

6. Technological Forces: Technological forces encompass advancements in technology that can

create opportunities or threats for businesses. Rapid technological changes can disrupt
industries and lead to new marketing channels and strategies. Companies must stay up-to-
date with technology trends to remain competitive.
3. Define market segmentation.
Market segmentation is the process of dividing a larger, heterogeneous market into smaller,
more homogeneous segments or groups based on shared characteristics or needs. The goal of
segmentation is to identify distinct subsets of consumers who have similar preferences,
behaviors, or demographics. By understanding these segments, businesses can tailor their
marketing strategies, products, and services to better meet the specific demands and
preferences of each group, ultimately increasing the effectiveness of their marketing efforts and
enhancing customer satisfaction. Market segmentation helps companies reach their target
audience more precisely and efficiently, leading to improved customer engagement and higher
chances of success in the competitive marketplace.

4. Give the definition of marketing research.

Marketing research is the systematic process of collecting, analyzing, and interpreting data and
information related to a company's target market, customers, competitors, and the overall
business environment. Its primary purpose is to provide valuable insights that aid in making
informed marketing decisions. Marketing research involves gathering data through various
methods, such as surveys, interviews, focus groups, observations, and data analysis tools. These
insights help businesses understand consumer needs, preferences, and behavior, assess market
trends, evaluate the effectiveness of marketing strategies, and identify opportunities and
challenges in the marketplace. By leveraging the findings from marketing research, companies
can refine their marketing efforts, develop more effective campaigns, and make data-driven
decisions to achieve their marketing objectives and gain a competitive edge.

MODULE 2: THE PRODUCT, CHANNELS OF DISTRIBUTION AND THE PROMOTIONAL METHODS

LESSON 1: THE PRODUCT

Product (Busch and Houston)

Anything capable of satisfying a consumer want or need

Forms of the variety of products

1) Physical Object- like ballpen or an airplane
2) Service- taxi ride or haircut
3) Place- Paris or Rome
4) Organization- Night of Columbus
5) Idea- pro life or the conservation of nature and natural resources
6) Personality- Olivia Newton-John or Fernando Poe, Jr.

Certain Benefits Accompanied to Physical Products

1) Quality
2) Reputation of manufacturers
3) Packaging
4) Credit
 5) Information about the Product
6) Warranty
7) After sales service
8) Delivery

Classification of Products

1. Consumer Goods- those intended for final consumption by consumers

Classifications
1. Rate of Consumption and Tangibility
a. Durable goods- tangible goods which normally survive many uses (Cars, TVs)
b. Nondurable goods- tangible products which are consumed in one or a few users (food)
c. Services- intangible goods like activities, benefits or satisfactions which are offered for
sale

2. Consumer Shopping Habits

a) Convenience goods- product which are purchased with a minimum of effort (soap)
b) Shopping goods- those that are bought only after an effort to compare with other goods
has been made (shoes, clothes)
c) Specialty goods- those where the consumers are not willing or are not able to accept
substitutes
d) Unsought goods- those goods that are not yet wanted by or are still unknown to the
consumer
Two Types of Unsought Goods
1. New Unsought Goods- really new ideas or products that the consumers
still have to know to be motivated to buy
2. Regular Unsought Goods- those that stay unsought but not unbought
forever (encyclopedia, memorial plans, life insurance)
2. Industrial Goods
Those goods used in the production of other goods

Categories of Industrial Goods

1. Installations- refers to industrial products with long-life, are generally expensive, and
they form part of the major capital equipment of an industrial firm (buildings,
generators, computers, elevators)
2. Accessory Equipment- used as aids in the production process, they have a shorter
unstable life than installations (hand tools, typewriters)
3. Component Parts and Materials- processed industrial goods that will still be used and
become an actual part of the finished products (papers)
4. Supplies- used as aids in the operating process but do not become part of the finished
product (pens, inks, clips)
 5. Services- here are expensive items that assist in the operations (security and
consultancy services)
Branding- refers to the familiar method of making products recognizable as unique and different and
which makes it easy to buyers to identify they purchase routinely

Brand- a name, term, sign, symbol, or design or a combination of these elements, that is intended to
identify goods or services of one seller or a group of sellers (brand name or brand mark)
a) Legally registered
b) Not legally registered

Brand name- refers to that part of a brand consisting of words, letters and/or numbers that can be
vocalized (Honda, UST)

Brand Mark- refers to that part of a brand that appears in the form of a brand that appears in the form
of a symbol, design, or distinctive coloring or lettering, and which can not be vocalized

KINDS OF BRANDS
1) Manufacturer’s brand- one owned and controlled by a manufacturer (Rado, Salem, Coffee
Mate, and Ajax
2) Distributors Brand- one owned and controlled by a firm whose primary activity is distribution
(Quality Bake Shop)

CRITERIA FOR A GOOD BRAND

1) It should suggest something, about the product’s benefits and qualities
2) It should be easy to pronounce, recognize, spell, and remember.
3) It should be distinctive.
4) It must be able to adapt to additional product lines.
5) It must be capable of being legally registered.

PACKAGING
Refers to all activities involved in designing and producing the container or wrapper for a
product

Three Levels of Materials on a Package (Kotler)

1) Primary Package- product’s immediate container
2) Secondary Package- protects the primary package
3) Shipping Package- contains the secondary package (storage, identification, shipping)

REASONS FOR PACKAGING

1) It provides protection to products before and after they are in the possession of the intended
users.
2) It provides convenience to the user.
3) It provides safety.
4) It provides economy to both the seller and user.
 5) It allows sellers to effectively promote the product

PRPDUCTS LIFE CYCLES

refers to a product’s sale growth from the beginning to its peak, followed by a decline and its
eventual withdrawal from the market

Distinct Stages of PLC (to read)

1. Introduction Stage- product is introduced to the public
2. Growth Stage- follows a successful introduction stage
3. Maturity Stage- takes over when the growth in sales slows down
4. Decline Stage- begin with a permanent drop of sales

Importance of PLC
it provides the marketer with a guide in adapting appropriate marketing strategies
used as a basis for harvesting reasonable earnings from weak products

SELF-LEARNING ACTIVITY
I. Identification

1) Product
2) Consumer goods
3) Durable goods
4) Nondurable goods
5) Convenience Goods
6) Shopping goods
7) Specialty goods
8) Unsought goods
9) Installations
10) Accessory equipment
II. Enumeration

1) Categories of Industrial Goods

1. Installations
2. Accessory Equipment
3. Raw Materials
4. Component parts and materials
5. Supplies
6. Services
2) The desirable qualities of a good brand
1. It should suggest something, about the product’s benefits and qualities
2. It should be easy to pronounce, recognize, spell, and remember.
3. It should be distinctive.
4. It must be able to adapt to additional product lines.
5. It must be capable of being legally registered
LESSON 2: THE PRICE

PRICE
Total amount of money that must be handed over in exchange for an article or service that is
being purchased
PRICING
Those activities involved in the determination of the price at which products will be offered for
sales considering the various objectives of the firm

THE PRICING PROCEDURE

1. The determination of the realistic range of choice
2. The selection of pricing strategy
3. The evaluation of economic feasibility
4. The setting of the price

SELECTION OF PRICING STRATEGY

1. The Market Skimming Strategy- requires the setting of price at the upper limit of the realistic
range of choice
Purpose- to maximize profits as the product is first introduced
2. The Penetration Strategy- call for setting the price at the bottom of the realistic price range
Purpose- to penetrate the market as rapidly as possible

PRICING OBJECTIVES

1. Profit Oriented Objectives

To achieve the target, return on investment or on net sales
To maximize profit
1) Target Return Objective- refers to the pricing objective requiring a certain level of profit
2) Profit Maximization objective- refers to the pricing objective of seeking as much as profit as
possible
Sales-Oriented Objectives- refers to those that will provide higher sales volume
1) Increasing Sales Volume- this objective requires an increase in sales volume for a given
period
2) Maintaining or Increasing Market Share- this objective requires either maintaining or
increasing the company’s market share
3) Status Quo-Oriented Objectives- requires maintaining the same prices for the company’s
product
Reasons for the Status Quo Pricing
1) To stabilize prices
2) To meet competition
3) To avoid competition
PRICING APPROACHES
1) Cost Based Approach- refers to the setting of prices on the basis of the costs (cost plus margin
profit)
a) The Cost-Plus Pricing- this method calls for adding a percentage of cost on top of the
total cost
b) The Target Rate of Return Pricing- this approach enables a company to establish the
level of profits that it feels will yield a satisfactory return

BUYER BASED APPROACH

1. Perceived Value Pricing- this method establishes the price for a product based on the buyer’s
perception of the value of the product or service Example: paintings nd sculptures
2. Price-Quality Relationship Pricing- this approach hinges on the observation that consumers
associate high price with high quality and low quality with low price
3. Loss-Leader Pricing- this refers to the practice of setting low prices on selected products which
will result, in the generation of less profits. But with the objective of increasing the sales volume
of other products sold by the company.
4. Odd Numbered Pricing- this refers to the practice of setting price even below peso amounts
(99.50 rather than 100)
5. Price Lining Pricing- this method refers to the practice of selling merchandise at a limited
number of predetermined price levels.

COMPETITIION BASED APPROACH

Refers to the setting of prices based on what prices are being charged by competition

Two Kinds of Pricing

1. Going-Rate Pricing- the firm adapts a price based on the competitor’s price (higher or lower)
2. Sealed Bid Pricing- the firm sets its price which is though to be a little lower than the
competitor’s price

KINDS OF COMPETITIVE SITUATIONS

Competitive Number of Sellers Number of Buyers Degree of Control Over Prices

Situation Seller Buyer
Pure Monopoly One Many Very high None
Oligopoly Few Many High Very Slight
Pure Competition Many Many None None
Oligopsony Many Few Very Slight High
Monopsony Many One None Very High

1. Pure Monopoly- there is only one seller in a market

2. Oligopoly- only a few firms compete in the sale of a commodity (Petroleum)
3. Pure Competition- refers to the market where there are great number of sellers and buyers
4. Oligopsony- only a few buyers compete in the purchase of commodity
5. Monopsony- competitive situation characterized by the presence of only one buyer.
SELF-LEARNING ACTIVITY
1) Price
2) Pricing
3) Selection of Pricing Strategy
4) Target Return Objective
5) Profit Maximization Objective
6) Sales-Oriented Objectives
7) Increasing Sales Volume
8) Price-Quality Relationship Pricing
9) Buyer
10) Oligopoly

LESSON 3: CHANNELS OF DISTRIBUTION

Distribution Channel-
Movement of goods and services
Set of institutions which participates in the marketing activities undertaken in the
movement of goods and services from the point of production to the point of
consumption
Set of interdependent organizations involved in the process of making a product or
service available for use or consumption

Functions of the Distribution Channels

1. They routinize decisions and work
2. They finance the process for moving goods from the production to the consumers
3. They are active participants in the pricing process
4. They serve as a channel of communication between the producers and the consumers
5. They assist in the promotional aspects of marketing
6. They minimize the number of transactions in the system

Routinization of Decisions

A. Financing- the manufacturer may not be in a financial position to finance these activities especially if
it undertaken on a nationwide scale
Financing of the following:
1) Sales calls to customers
2) Purchase of selling equipment
3) Construction of display stores
4) Extension of credit for customers
5) Training of retail salesperson

B. Pricing- the difficulty of pricing one’s product is aggravated by lack of contact with users
C. Channels of Communication- the changing requirements of users are oftentimes relayed to the
distribution
D. Assistance in Promotional Activities- when the distributor attempts to increase his sales by
promoting his products
E. Minimization of Number of Transaction- the distributor plays an important role in minimizing the
number of transactions within the system

TYPE OF DISTRIBUTION CHANNELS

1. Consumer channels- those that are used in the distribution of consumer goods

a) Channel A- direct distribution channel

b) Channel B- one middleman interposes between the producer and the consumer
c) Channel C-the wholesaler and retailer provide linkage between the producer and the
consumer
d) Channel D- where an agent, apart from the wholesaler and the retailer provides linkage
between the producer and the consumer
 Industrial Channels- those which are used in the distribution of industrial goods

TYPES OF INDUSTRIAL CHANNELS

1) The manufacturer selling directly to the industrial users

2) The manufacturer assigning industrial distributors which sells directly to industrial buyers
3) The manufacturer dealing with agents who call on industrial users.

The Channel Selection Process

1) Identification of target customers

2) Determination of consumers buying habits for the goods under consideration
3) Determination of the location of the potential customers
4) Evaluation of channel alternatives
5) Selection of channel members

FACTORS THAT INFLUENCE CHANNEL SELECTION

1) The nature of the product will determine which channel of distribution is best suited.
2) The nature of the market is also an important consideration.
3) The size of the company and its organizational set up will also be a factor in selecting a channel.

SELF-LEARNING ACTIVITY

1) Distribution channel
2) Services
3) Financing
4) Consumer channels
5) Industrial channels

II. The Channel Selection Process

1) Identification of target customers

2) Determination of consumers buying habits for the goods under consideration
3) Determination of the location of the potential customers
4) Evaluation of channel alternatives
5) Selection of channel members

Factors That Influence Channel Selection

1) The nature of the product will determine which channel of distribution is best suited.
2) The nature of the market is also an important consideration.
3) The size of the company and its organizational set up will also be a factor in selecting a channel.
LESSON 4: PERSONAL SELLING, ADVERTISING, PUBLICITY AND SALES PROMOTION

Personal Selling

Refers to the direct face-to-face communication between sellers and prospective buyers

Purposes of Personal Selling

1) Finding Projects- potential buyers are ever present in the multitude of people in the streets
2) Convincing the Prospects to Buy- once the prospects are identified, the next job is to convince
them to buy
3) Keeping Customers Satisfied- maximizing sales is one of the objectives of the firm
a) Convincing new products to buy
b) Convincing customers to continue patronizing the firm

Duties and Responsibilities of Salespeople

1. Direct Selling- includes prospecting for new customers, increasing sales to existing customers,
making sales presentations. Demonstrating products, quoting price and sales terms, and writing
orders.
2. Indirect Selling- the promotion of company goodwill is an activity that will help generate sales
a) Advising and counselling- this activity involves providing assistance to customers
through information dissemination
b) Handling complaints from customers- assistance from salesperson
c) Attending Sales Meetings- improve the salesperson’s knowledge about new products
and new product users
3. Nonselling Activities- those that the company may require to improve the overall management
of the firm and the performance of salesperson.
a) Reporting sales activities
b) Collecting payments for merchandise sold
c) Assisting the credit department in collecting
d) Organizing is sales efforts
e) Working with management
f) Travelling to cover sales area assignment
g) Studying to acquire new knowledge about the company, its products, and its customer’s
problem

Types of Salespersons

1. Order Getters- salespersons whose jobs are to increase the firm’s sales by convincing prospects
to buy and convince present customers to buy some more
2. Order Takers- those that serve the purchase orders of present customers with the objective of
satisfying the customer to motivate him to buy again
a) Inside order takers- those who man the sales oared received orders by mail, telephone,
or upon personal representation of the customer
 b) Field order takers- those who take orders from where the customers are located

Prospecting- refers to the step in the personal selling process that involves developing a list of potential
customers

Preapproach- consists of the time and effort spent in determining which approach will best the prospect

Approach

refers to that stage in the selling process where the salesperson makes a contact with the
prospect

Methods of getting customer’s attention

1) The introduction approach

2) The referral approach
3) The question approach
4) The benefit approach
5) The Product approach
6) The free-gift or sample approach
7) The curiosity approach
8) The compliment approach
9) The survey approach
10) The gimmick approach

Kinds of Approaches

1. Introduction Approach- makes an introduction by stating his name and the name of his
company. This approach is the simplest but the least effective because it does not generate
much interest.
2. Referral Approach- the salesperson uses the name of a satisfied customer or a friend at the
beginning of a sales call
3. Question Approach- this approach requires the salesperson to state an interesting fact in the
form of a question
4. Benefit Approach- the salesperson tries to catch the attention of the prospect by mentioning
the product benefit
5. Product Approach- this method appeals directly to the senses and offers instant reaction from
the prospect
6. Free Gift or Sample Approach- free gifts and samples appeal strongly to some types of people
7. Curiosity Approach- this approach makes use of items of curiosity designed to catch the
attention of the prospects
8. Compliment Approach- sincerely complimenting a person on some accomplishment most often
opens the door for further conversation and possibly even a consummated sale
9. Survey Approach- this approach requires that a salesperson surveys the operation of a certain
business prospect
 10. Gimmick Approach- calls for the execution of a certain gimmick to catch the attention of a
prospect.

Objections- psychological defense mechanism

Objections may signal any of the two possibilities:

1. that the prospect is not interested to buy the product

2. that the prospect is interested o buy the product but wants some clarification or assurance on
some matters

Close- that stage in the selling process where the salesperson asks the prospect to buy the product

The Follow-Up- requires that a salesperson must find out whether actual delivery has been made on the
date and specifications agreed upon

Sales Force- consist of individuals of various characters and inclinations and with tendencies to veer
away from achieving the sales objectives of the firm

Decision areas of sales management

1. Sale force objectives
2. Form of sales force organization
3. Size of the sales force
4. Compensations of the sales force
5. Recruitment, selection, and retention
6. Sales training
7. Supervision and motivation of the sales force
8. Evaluation of sales performance

Objectives- must be set for every department and unit of the firm
1) It must be measurable
2) It must be consistent with each other and the firm’s overall strategy
3) It must be reasonable
4) It must be prioritized
5) It must be achievable within a specified period of time

Form of Sales Organization

1. Geographic territories (North Manila District, Central Luzon District)
2. Product type (handle bee and dairy products)
3. Class of customers
4. Combination of two or all of the above

WAYS OF FINDING THE SIZE OF THE SALE FORCE

1) The break down method- where the estimated productivity of one salesperson is divided into
the company’s total forecasted sales
 2) The workload method- where the management determines the amount of work it takes to
cover the target market
3) The incremental method- where estimates are based on the belief that here will be diminishing
returns on sales as more salespeople are added.

COMPENSATION OF THE SALES FORCE

Attracting competent salespersons is a function of attractive compensation plans

Compensation may be stated in the following terms:

1. straight salary- which consists of a fixed sum of money paid regularly
2. straight commission- which is a pay based on performance
3. combination of salary and commission

RECRUITMENT, SELECTION AND RETENTION

1. Recruitment- concerned with finding and motivating qualified candidates to apply for
employment
2. Selection- personal interviews and the filling of application blanks

SALES TRAINING
Must be knowledgeable in answering questions posed by the prospects and customers
Well-informed about the qualities of the product he is selling
Equipped with a variety of skills to be able to close a deal

Supervision of Sales Person

have someone who will perform the job of bringing them to achieve certain sales objectives

Evaluation of Sales Performance

this is important so that what is achieved will be compared with what was planned

The types of evaluation are the following:

1) Salespersons-to-salesperson comparison
2) Current-to-past sales comparison
3) Sales-cost ratio
4) Actual Sales to Quota

Advertising
Defined as any paid form of nonpersonal presentation and promotion of ideas, goods, or
services, by an identified sponsor

Factors To Determine Advertisability

1. Primary Demand- refers to the total demand for a commodity, such as the aggregate demand
for all cars
2. Buying Motives- significant factors in advertising
 3. Hidden Qualities- some products have certain qualities that will not be apparent during
inspection
4. Differential Advantage- some products have little difference from others
5. Money- Advertising is definitely helpful, but it is also costly

Types of Advertisers
1. Producers of consumers goods, industrial goods, and services
2. Middlemen like retailer
3. Nonprofit organizations like the Social Security System, the Philippine Air Lines, and the
Development Bank of the Philippines

Types of Advertisements
1. Product Advertisement- one which presents information and/or persuasive appeals about
products and services
2. Pioner Advertisement- one which present messages about a product class to stimulate primary
demands
3. Competitive Advertisements- one which presents brand oriented messages designed t
stimulate selective demand
4. Comparative advertisement- one which makes direct comparisons between advertised and
competing brands
5. Institutional Advertisement- one which seeks to enhance the overall image of and build
goodwill for an organization
6. Trade advertisement- one which seeks to stimulate reseller-demand through messages in trade
media
7. Cooperative Advertisement- one where more than one party shares on the cost of advertising

Types of Advertising Media

Refers to the vehicles that carry messages to large group prospects and thereby aid in closing
the gap between producer and consumer

1. Newspaper
2. Consumer Magazines
3. Radio
4. Television
5. Outdoor
6. Direct Mail
7. Cable TV
8. Yellow Pages
9. Transit
10. Point of Purchase

Newspapers
Fifty-eight newspapers circulating in the Philippines constitute one of the most viable media for
advertising if one would like to reach great number of urban dwellers and a wide variety of
audience

Disadvantage- it has a limited reach

Consumer Magazines
Purchase by certain types of buyers depending on the nature of the magazine
Example: The World Executives

Advantages:
1. It can be passed on to other readers
2. Its low cost of advertising per thousand of prospects reached
3. It reaches a specialized audience

Radio
The presence of 325 radio stations in the Philippines assures coverage of every Island

Disadvantage:
1. The prospects have limited listening time
2. It is a weak communication tool because it appeals on to the ear
Television
There are 70 TV stations in the Philippines providing a powerful combination of visual and audio
effects to the audience
50% of the total expenditure for advertisement are paid to television advertisements

Disadvantage:
1. High cost involved and the limited information format

Outdoor
Consists of poster, painted bulletins and spectaculars

Direct Mail
The most selective of all media forms
It reaches only to individuals and organizations the advertiser wishes to contact

Disadvantage: cost is high per prospect reached

Cable TV
Those which are attached to subscribers’ homes to the exclusion of all others

Yellow Pages
Widely used by national and local advertisers.
Useful to buyers who have already made a decision to buy products or services but do not know
where to buy them

Transit
Consist of those that appear inside and outside of buses
It is less costly but it is also less discriminating

Point-or-Purchase
Refers to those appearing in outlets where goods are sold
 Most often used by national advertisers for the purpose of selling their goods through retail
outlet

PUBLICITY
A form promotion, not paid for, and whose sponsor is not identified
Usually achieved by planting commercially significant news about the product or service, in a
published, medium or obtaining favorable presentation of the product or service upon radio,
television, or stage

The Uses of Publicity

1. To make people aware of a firm’s products, brands, or activities
2. To maintain a certain level of positive, public, visibility
3. To protect a particular image
4. To overcome negative images

SALES PROMOTION
Special incentives or other activities directed towards consumers, the trade or the sales force,
designed to stimulate action by one of these groups, excluding advertising, packaging, publicity,
and normal pricing

Examples of Sales Promotion are the following:

1. Cinderella Fashion Specialty Store giving a 30% to 50% discount storewide
2. Solid Corporation giving a free 4 in 1 Pen and Marker set for every unit of Black Trinitron Color
TV purchased from them
3. Country Bankers Insurance Corporation giving all expenses paid trip to Singapore to the highest
performing agent.
4. Arson Emporium giving its customers a chance to win over 100 major and minor prizes
consisting of appliances and furniture.

Sales Promotion Objectives

1. To identify and attract new customers
2. To introduce a new product
3. To increase the total number of users for an established brand
4. To encourage greater usage among users
5. To educate consumers regarding product improvement
6. To bring more customers into retails stores
7. To stabilize a fluctuating sales pattern
8. To increase reseller inventories
9. To combat or offset competitor’s marketing effort
10. To obtain more and better shelf space and displays

SALES PROMOTIONS METHOD (CLASSIFICATION)

1. Consumer Sales Promotion- techniques encourage or stimulate consumers to patronize a

specific retailer or to try a new product
 2. Trade Sales Promotion- stimulates wholesales and retailers to carry a firm’s product and to sell
aggressively

Sales Promotion Method

a) Retailer coupons
b) Demonstration
c) Trading stamps
d) Point of purchase displays

Sales Promotion Techniques (To Get Customers to Try New Product)

1. Free samples
2. Price-off coupon
3. Money refunds

Sales Promotion Devices Used to Established Products

1. Premiums
2. Cents-off offers
3. Consumer contests
4. Consumer sweepstakes

The Sales Promotion Methods Aimed at Resellers Are:

1. Buying allowance
2. Buy-back Allowances
3. Count and Recount
4. Free Merchandise
5. Merchandise allowances
6. Cooperative advertising
7. Dealer listings
8. Premiums or push money
9. Sales contests
10. Dealer loaders

SELF-LEARNING ACTIVITY
1. A
2. B
3. C
4. D
5. E
6. F
7. G
8. H
9. I
10. J

SUMMATIVE TEST
1. What is product? Define and identify the forms of the variety of products
 A product is a tangible or intangible item or service that is created to fulfill a specific need or
want of a customer or consumer. In business and marketing, a product can be anything that can
be offered to a market to satisfy a demand, including physical goods, services, or even ideas.
Products are at the core of any business's offerings and are a crucial component of the
marketing mix.

2. Differentiate between price and pricing

"price" is the actual monetary amount a customer pays for a product or service, while "pricing"
is the broader and more strategic process of deciding how to set and adjust prices to achieve
business objectives. Pricing encompasses considerations like cost analysis, market research,
competitive positioning, and the creation of pricing strategies, while the price is the outcome of
this process.

3. Define distribution channel and identify its functions

A distribution channel, also known as a marketing channel, refers to the network of individuals,
organizations, and processes involved in getting a product or service from the manufacturer or
producer to the end consumer or business customer. It represents the path that a product
follows as it moves through various intermediaries or entities before reaching its final
destination in the hands of consumers.

Functions of the Distribution Channels

1. They routinize decisions and work
2. They finance the process for moving goods from the production to the consumers
3. They are active participants in the pricing process
4. They serve as a channel of communication between the producers and the consumers
5. They assist in the promotional aspects of marketing
6. They minimize the number of transactions in the system

4. What is personal selling? Define and give the different purposes

Personal selling is a marketing strategy in which a salesperson or representative engages
directly with potential customers or clients to influence their purchase decisions and provide
information about a product or service. Unlike mass advertising or other forms of marketing,
personal selling involves one-on-one or face-to-face interactions between the seller and the
buyer. This approach is highly interpersonal and often focuses on building relationships to
facilitate the sales process.

Purposes of Personal Selling

4) Finding Projects- potential buyers are ever present in the multitude of people in the streets
5) Convincing the Prospects to Buy- once the prospects are identified, the next job is to convince
them to buy
6) Keeping Customers Satisfied- maximizing sales is one of the objectives of the firm
c) Convincing new products to buy
d) Convincing customers to continue patronizing the firm