03 Handout 1

BMSH2301
MARKETING ASPECTS OF NEW VENTURES

Today's consumers have significantly more power than ever before. Social media and online reviews allow
people to freely share their opinions and evaluate products or services based on recommendations from their
network. These reviews can significantly influence the success or failure of a brand or product. Moreover, the
power shift has forced companies to become more transparent and responsive to the needs and preferences
of their customers. As a result, entrepreneurs adjust their marketing tactics to effectively match the habits of
modern consumers (Guillebeau, 2023).
Market Research and Development

Market research is crucial to understanding the potential success of a new product or service. It involves
conducting research with potential customers to determine its viability. This process helps businesses decide
whether to launch a product or service and how to market it to potential customers best (Twin, 2023).
Two (2) types of market research (David, 2022):

1. Primary Research. Primary research is essential for businesses as it involves direct interaction with
consumers or third-party entities to conduct pertinent studies and gather valuable data. This research
allows businesses to gather direct insights and information from their target audience, helping them
better understand consumer preferences and needs. Primary research can be conducted in various ways,
such as:
A. Quantitative research is a systematic research approach that focuses on analyzing numerical data. It
uses statistical methods, enables researchers to make objective, data-driven decisions, and provides
insights into cause-and-effect relationships. Below are the most common quantitative research
methods:
• Customer Surveys. Conducting surveys through various channels such as in-person, smartphones,
online forms, polls, and survey software can provide valuable insights. The list of questions is
designed to provide valuable insight that can be used to improve and provide a better overall
customer experience. The quantitative surveys come in different formats, such as yes/no
questions or rating scales ranging from 1 to 5.
• Binary or Rating Scale Questionnaires. A questionnaire is an effective research tool that
comprises carefully constructed questions created to gather valuable information from
participants. Quantitative questionnaires usually consist of options that are either binary choices
or rating scales.
• Sampling. This method affects the reliability and validity of research results by helping researchers
conclude the larger population based on the sample's characteristics. Random or probability
sampling minimizes bias and increases the likelihood of unbiased estimates while ensuring
diversity in the sample.
B. Qualitative research aims to provide insight into the underlying reasons or motivations behind a
particular phenomenon, correlation, or behavior. By exploring the "why" behind these aspects,
qualitative research helps uncover human experiences' complexities and meanings. Below are the
most common qualitative research methods:
• Focus Group Discussion. It involves gathering a small group of individuals who respond to online
surveys sent to them. This study stands out for its impressive capability to remotely gather data
03 Handout 1 *Property of STI

 student.feedback@sti.edu Page 1 of 23
BMSH2301
from groups of 6 to 10 individuals, thereby eliminating the need for in-person interaction with the
participants.
• Individual interviews. This process consists of an interview, during which the researcher interacts
personally with the respondent by asking a series of questions to collect data. The interviewer
must rely on their skills to ask the right questions to elicit informative responses, as the questions
are specific and open.
• Ethnographic Research. This method involves conducting thorough research in the actual
environments where the respondents are situated. This approach entails observing consumers in
their own homes. Observing individuals using products can provide a more comfortable and
honest environment for researchers, although it requires a significant amount of time.
• Case Study Research. This approach helps explain, describe, or explore a specific issue, event, or
phenomenon in detail within its everyday real-life context.
• Open-ended Quetionnaires. An open-ended question cannot be answered with a yes or no
response. Instead, questions are phrased as a statement that requires a more extended response.
2. Secondary Research. Secondary market research uses data and insights from other sources rather than
collected directly. This information can be utilized to guide product positioning and decision-making
processes effectively. The following are numerous sources available for obtaining secondary research
data:
A. Public Sources. Using public sources is the most convenient and cost-effective approach to collecting
a vast amount of valuable information. These include government departments and public libraries,
providing the researcher free information.
B. Commercial Sources. Newspapers, magazines, television media, and journals are excellent
commercial information sources for secondary research.
C. Company Websites. Numerous companies make their business data and information accessible
through their websites or share this valuable information with dedicated business platforms. The
information is readily available for anyone to access and use for research.
D. Other Sources. There are numerous alternative sources available to gather information for research.
These are published market studies, analyst reports, customer emails, customer feedback, recorded
meetings, public interviews, and published blogs.
Market Research Development

The company can conduct market research itself. Alternatively, a third-party company with expertise in market
research can also be hired to conduct the research. Both options depend on the company's resources,
expertise, and research objectives. Market research can be carried out by following this process (McCreanor,
2023):
• Step 1: Define the Problem. The first step of the market research process is to identify and define a
specific problem or objective that needs to be addressed. It involves thoroughly understanding the
issue and clearly outlining what needs to be researched or investigated. A clearly defined problem is
essential for researchers to formulate relevant questions effectively.
• Step 2: Define Buyer Persona. The buyer persona concept involves creating a fictional representation
of an ideal customer. These profiles retain the distinctive attributes of the model customer and
provide insight into potential recurring behaviors. Collecting data from the right population is essential
for any organization to avoid wasting valuable resources.
• Step 3: Prepare Questions and Conduct Research. Ensure the interview is structured to build a
comprehensive understanding, with prioritized questions and time managed effectively to cover all

BMSH2301
vital areas. It is important to remember that when formulating the questions, using simple language
and avoiding ambiguous or confusing terms is crucial.
• Step 4: List Major Competitors. A comprehensive list of major competitors is recommended based on
the information gathered from primary and secondary research sources. This list should include their
strengths, weaknesses, financial situations, and reputations. By thoroughly analyzing these factors, it
will be possible to identify critical areas of opportunity and challenges.
• Step 5: Analyze the Results. Once all the steps mentioned above have been completed, conducting a
thorough analysis will be highly effective in finding solutions. The information gathered through the
interviews will be limited to age, profession, gender, and the number of interviewees. Qualitative data,
such as experiences and emotions gathered by the interviewers, will not be part of the quantitative
data collected.
• Step 6: Develop a Research Report. After analyzing the results, create a market research report and
share the insights with the team, marketing managers, and executives.
• Step 7: Make Decisions. Considering the market's current status, making informed decisions is crucial
because they are based on carefully considering relevant information and factors. Once a decision has
been made, carrying it out per the planned course of action is crucial. It ensures the attainment of
desired results and helps mitigate possible risks or setbacks.
Product and Service Development
Market research is essential for businesses looking to develop new products or services. By conducting
research, businesses can better understand customer requirements, increasing their chances of success and
maximizing their impact and reach.
According to Guillebeau (2023), there are two (2) types of customer requirements:
1. Service Requirement (Service): An intangible thing or product cannot be physically touched but still
provides a sense of fulfillment to the customer. Several vital elements should be considered when
considering service requirements, such as timely delivery, friendly customer service, and convenient
payment options. It includes every aspect of how customers anticipate being treated when purchasing a
product and how effortless the buying process will be.
2. Output Requirements (Output/Goods): Physical objects or visible entities. Consumers expect products to
have specific characteristics like features, performance, quality, reliability, and durability. Consumers also
look for attributes such as size, weight, speed, compatibility, and user-friendliness. Additionally, they
expect the product to meet industry standards, have good value for money, and offer a warranty or after-
sales support.
Product and Service Development (PSD) Process encompasses much more than just the production of a
product or the creation of procedures for delivering a service. It involves a holistic approach that includes
research, design, testing, and improving the product and the service. It goes beyond the manufacturing
process and focuses on understanding customer needs, market trends, and technological advancements to
create innovative and compelling offerings (David, 2022).
Using PSD with market research data, entrepreneurs can understand the competition, customer demands,
and market changes. This strategic advantage empowers businesses to continually outperform the
competition, foster a robust and lucrative customer base, and tailor their products and services to meet
customer needs precisely. These phases serve to validate their potential (Bibs, 2023):

BMSH2301
Figure 1. Product and Service Development Process

Source: https://www.metasite.net/wp-content/product-development-process.png
• Step 1: Trend analysis and real-world observations. The first step requires identifying product or service
opportunity gaps and combining them with emerging trends.
• Step 2: Consumer and market research. Conduct market research to identify the needs and desires of the
target market correctly and what features or benefits will satisfy that.
• Step 3: Actionable insights. Generating new ideas and improving existing products or services requires
brainstorming and creative thinking.
• Step 4: Concept development and refinement.
o Ideation - Evaluate the ideas with the most promising potential for success in the market.
o Prototyping - Once an idea has been selected, the company must prototype its proposed product
or service.
o Testing - Determine if the product functions as intended or if the desired service offering appeals
to the target audience.
o Refinement - Once the prototype has been enriched with the analysis feedback, the final product
or service can be crafted and delivered to the market.
• Step 5: Implementation and launch. After conducting market testing and making necessary adjustments,
the final product or service is ready for its official release to the general market.
• Step 6: Result Assessment. It may include gathering customer input, analyzing sales data, and considering
various achievement indicators. A post-launch analysis aims to identify areas that can be improved for
future launches.
Product and Service Development (PSD) Flowchart

A flowchart is a visual representation of a process or system. It uses symbols connected by arrows to show the
steps, decisions, and flow of information. Flowcharts improve understanding and communication as they help
identify bottlenecks and areas for improvement. They aim to provide a clear visual representation of a process
or system.
The importance of using correct flowchart symbols cannot be overstated. These symbols are crucial in
facilitating clear communication and comprehension among various stakeholders. It not only enhances its
readability but also minimizes the likelihood of misinterpretation. Additionally, correct symbols make it easier
for individuals to follow the flow of the processes illustrated in the flowchart.

BMSH2301
Flowchart Symbols and Meanings
Figure 2. Flowchart Symbols and Meanings

Source: https://www.slideteam.net/complex-process-flowchart-symbols.html
Figure 3: Sample Flowchart

Source: https://www.visual-paradigm.com/tutorials/flowchart-tutorial

BMSH2301
Pricing Strategies and Costing

What is cost?
Cost is all the money spent to manufacture a product or provide a service. (Tuovila, 2023).
What is Costing?
Costing is the process of allocating costs to various aspects of a business. It includes allocating variable costs,
which change according to a particular activity, like sales or the number of employees. However, many people
often need clarification on product costing and service costing each other, even though they are distinct
concepts (Tuovila, 2023).
Product Costing
Product cost is the cost associated with making a product to be sold. Product costs consist of three (3) main
components: direct material, direct labor, and manufacturing overhead. These costs are essential in
determining the total expenses of producing a product.
A. Direct materials are the raw materials or components used directly in the production process of the
final product. Examples of direct materials include wood, metal, plastic, fabric, and chemicals.
B. Direct labor refers to the cost of labor involved in producing a product. It includes wages, salaries, and
benefits of employees.
C. Overhead costs are the expenses related to the production of a product. These costs include the cost
of machinery and the cost of operating the machinery. Manufacturing overhead costs include indirect
costs like:
• Indirect materials refer to supplies and materials used in the production process but are not a
visible part of the final product. Examples are items like glue, oil, tape, and cleaning supplies.
• Indirect labor refers to the work performed by individuals not directly engaged in producing
goods, such as security guards, drivers, and legal advisers. The wages and benefits they receive
would fall under indirect labor costs.
• Other Overheads. Other overhead costs include any additional factory overhead costs that do not
fit the abovementioned categories. Electricity expenses cannot be categorized as either material
or labor costs. There are many costs to consider, like factory and equipment depreciation,
insurance expenses, property taxes on factory premises, rent or lease expenses, and utility costs.
The formula for Calculating the Product Cost:

• Product Cost = Direct Materials + Direct Labor + Overhead Costs
The formula for Calculating the Product Cost per Unit:

• Product Cost per Unit = Total Product Cost / Number of Units Produced
Steps in Calculating the Product Cost:

1. Organize the production expenses according to the particular product.
2. Calculate the total cost of the direct materials used in the production.
3. Calculate the total cost of direct labor.
4. Calculate the total overhead costs.
5. Add all the costs together to determine the total product cost.
6. Calculate the cost per unit by dividing the total product cost by the total number of units.

BMSH2301
➢ Example #1: Mira Furniture Inc. has manufactured 1,000 tables and sells them for P350.00 per piece.
The business incurred costs of:
a) P34,000 on wood
b) P53,590.75 on wages for carpenters
c) P8,000 on wages for security guards to overlook the manufacturing facility
d) P6,500 for a bag of nails
e) P9,410 for a drum of paint
f) P15,000 for factory rent
List of Particulars:
Direct Materials
Woods P34,000.00
Bag of Nails P6,500.00
Drum of paint + P9,410.00
Total Direct Materials P49,910.00
Direct Labor
Wage of carpenters P53,590.75
Total Direct Labor P53,590.75
Overhead Cost
Wage for security P8,000.00
Factory Rent + P15,000.00
Total Overhead Cost P23,000.00
Total Product Cost P126,500.75
Product Cost per Unit = Total Product Cost / Number of Units Produced
= P126,500.75 / 1,000 pieces of table
Product Cost per Unit = P126.50 per piece
➢ Example #2. Edward, a new entrepreneur, wants to calculate the right price for 7,000 ice cream
pieces. To determine the appropriate selling price of his product, he needs to calculate its cost
accurately:
a) Milk P4,000
b) Preservatives, P3,000
c) Freezer, P12,000
d) Electricity, P900 monthly
e) Labor Fee for one employee, P500 for every 250 pieces produced
f) Store Rental Fee, P9,000
Direct Materials
Milk P4,000.00
Preservatives P3,000.00
Freezer + P12,000.00

BMSH2301
Direct Labor
Labor fee P14,000.00
Total Direct Labor P14,000.00 P500 x (7,000 pcs. Produced /
250 pcs. Required)
Overhead Cost
Electricity Fee P900.00
= P42,900 / 7,000 pieces of ice cream
Service Costing
Service costing, or operating costing, is a method used to determine the cost of providing a specific service. It
involves identifying all the costs related to the resources used in delivering the service. Service costing is
commonly used in service businesses such as:
• Hotels and Lodging Facilities • Law Firms
• IT Services • Consultation Services
• Accounting firms • Beauty and lifestyle services
• Healthcare facilities • Restaurants and Fast-food chains
• Advertising agencies • Logistics
• Banking Services • Private transport services
• Educational Institutions • Electricity supply services
• Engineering Companies • Water supply services
Computing the service cost involves the determining the following expenses:
A. Fixed Costs are those expenses that do not change regardless of how much activity the business is
doing. Fixed costs include rent and lease payments, salaries, utility bills, insurance, and loan
repayments. These are essential costs that businesses need to cover consistently.
B. Semi-variable costs consist of both fixed costs and variable costs. Labor costs are usually divided into
semi-variable expenses, such as fixed costs for monthly salaried employees and variable costs for
hourly employees.
C. Variable Costs are subject to change depending on the number of units produced. The costs
mentioned here are materials, labor based on productivity, production supplies, commissions,
delivery charges, packaging materials, and credit card fees.
D. Unit of Measurement refers to the standard method used to measure the quantity or volume of a
particular service provided. The unit of measurement can vary depending on the nature of the service
being offered. It could be based on time, such as hours or minutes, where the service is billed per hour
or minute. It could also be based on a specific activity or task, such as water or electricity consumption,
per kilometer for logistics and public transport, per patient for healthcare services or transaction for
banking services.

BMSH2301
Nature of Service Service Unit Used for Services Provided

Water Supply Services Kiloliter
Canteen / Restaurants Per Meal / Per Person / Per Staff
Public Transport Passenger-Kilometer
Hotels / Lodging House Per Guest Days / Room Days
Electricity Supply Service Kilowatt-hour
Logistics Tons-Kilometer / Quintal-Kilometer
Hospital Per Room Day / Per Operation / Per Patient
Table 1: Unit of Measurement for Service Business
The formula for Calculating Total Service Cost:

• Total Service Cost = Total Fixed Cost + Total Semi-Variable Cost + Total Variable Cost
The formula for Calculating Total Service Unit (Number of variables may vary):
• Total Service Unit = (Variables 1) x (Variable 2) x (Variable 3) x (Variable 4)
The formula for Calculating Cost per Service Unit:

• Service Cost per Unit = Total Costs for the Period / Total Service Unit
Steps in Calculating the Service Cost:

1. Identify the total service unit by multiplying all the variables.
2. Calculate the total fixed cost related to the service.
3. Calculate the total variable cost related to the service.
4. Calculate the total semi-variable cost related to the service.
5. Calculate the total service cost by adding all the costs together.
6. Divide the total service cost by the total service unit to determine the cost per service unit.
➢ Example #1: La MiraBella Hotel wants to determine the unit cost for cleaning hours for the entire
month. The hotel spends a fixed monthly salary of P30,000 for the cleaning team, P3,250 pesos on
equipment, and P2,375 on supplies. The cleaning team works daily and takes 12 hours to clean the
entire hotel.
List of Particulars Cost per month

Fixed Costs:
Cleaning Team Salary P30,000.00
Equipment P3,250.00
Total Fixed Costs: P33,250.00
Variable Cost:
Supplies P2,375.00
Total Variable Costs: P2,375.00
Total Service Cost P35,625.00
Total Service Unit = (Number of Days) x (Number of Hours)

Total Service Unit = 30 days (in a month) x 12 hours (daily)
Total Service Unit = 360 hours

BMSH2301
Service Cost per Unit = Total Service Cost / Total Service Unit
Service Cost per Unit = P35,625.00 / 360 hours
Service Cost per Unit = P98.96 per hour
➢ Example #2: Maya Transport Company operates five (5) buses with a seating capacity of 40 passengers
each. Throughout the month of April, all the buses travel two (2) times a day, 40 kilometers daily.
Determine the cost per service unit for April.
The following details are available from their books for April 2022:
a) Drivers and Conductors Salary, P24,000
b) Supervisor’s Salary, P10,000
c) Gasoline, P40,000 monthly
d) Insurance, P16,000
e) Repairs and Maintenance, P8,000
List of Particulars
Fixed Costs:
Drivers and Conductors' Salary P24,000.00
Supervisor’s Salary P10,000.00
Insurance P16,000.00
Variable Cost:
Gasoline P40,000.00
Semi-variable Cost:
Repairs and Maintenance P8,000.00
Total Semi-variable Costs: P8,000.00
Total Service Unit = (Number of buses) x (Seating Capacity) x (Kilometers) x (Days) x (Number of trips)
Total Service Unit = 5 buses x 40 passenger seats x 40 km x 30 days x 2 trips
Total Service Unit = 480,000 passenger-km.
Service Cost per Unit = P98,000 / 480,000 passenger-km
Service Cost per Unit = P0.20 per passenger-km
What is Pricing?
Price is a crucial factor in influencing consumer choice. Thoroughly analyzing various variables is crucial for
making effective pricing decisions. Factors such as the business's nature, market competition, brand
positioning, and target market must all be carefully considered. A meticulous assessment of these factors
ensures that the pricing strategy is well-informed and successful in maximizing profitability (Tamplin, 2023).

BMSH2301
Objectives of Pricing
Identifying the pricing objective is the primary step toward selecting the right and appropriate price for the
product or service (David, 2022).
• Competition-Based Objective. The level of competition within the industry determines the pricing
strategy.
• Cost-Based Objective. The price of a product or service is determined by considering the total cost
involved in its production.
• Customer-Value Objective. The value determines the price of a product or service or its benefits
to customers.
• Market Share Objective. The pricing strategy is centered around two primary goals: expanding
the market share and cultivating strong customer awareness and loyalty.
• Sales Orientation Objective. The price is strategically designed to boost sales volume and
maximize profits within a specific timeframe.
• Customer-Driven Objective. The price is established depending on how much the customer is
willing to pay.
Combining Costing with Pricing

Cost-Plus Pricing (Markup). This method involves calculating all the costs associated with manufacturing a
product or delivering a service and then incorporating a predetermined markup to determine the appropriate
selling price. Cost-plus pricing ensures that all costs are covered and allows for a good profit margin.
Formula: Selling Price = Cost per unit x (1 + Predetermined markup percentage)
A predetermined markup percentage is a percentage added to a product or service's cost to determine its
selling price. In contrast, a desired profit refers to the profit level that a business aims to achieve over time. It
is typically an assumption or estimated amount based on factors such as cost of production, market
competition, and inflation. The formula for computing markup percentage is:
Formula: Predetermined markup percentage = (Desired profit / Total Cost of the product or service) * 100
Formula: Desired profit = (Desired Revenue – Total Cost of the product or service)
➢ Continuing Example #1: Edward, a new entrepreneur, wants to determine the selling price for the
7,000 ice cream pieces he made. He wants to earn P58,000.00, a 35% higher revenue from his total
product costs. To determine the appropriate selling price of his product, he needs to calculate costs
accurately.
Direct Materials
Milk P4,000.00
Preservatives P3,000.00
Freezer + P12,000.00

BMSH2301
Direct Labor P14,000.00

Labor fee
Total Direct Labor P14,000.00 P500 x (7,000 pcs. Produced /
250 pcs. Required)
Overhead Cost
Electricity Fee P900.00
Desired profit = (Desired Revenue – Total Cost of the product or service)

= (P58,000.00 – P42,900.00)
Desired profit = P15,100.00
Predetermined markup percentage = (Desired profit / Total Cost of the product or service) * 100
= (P15,100.00 / P42,900.00) *100
= 0.35 x 100
Predetermined markup percentage = 35%
= P42,900 / 7,000 pieces of ice cream
Selling Price = Cost per unit x (1 + Predetermined markup percentage)

= P6.19 x (1 + 0.35)
Selling Price = P8.36 per piece
➢ Example #2: John, the owner of a barber shop, is considering raising the price of haircuts to
compensate for the increasing utility costs. He has projected an estimated revenue of P40,000 for this
month. The barber shop operates eight (8) hours a day, 20 days a month, with an average of six (6)
customers daily. To determine the appropriate price, use the following information:
a) Electricity, P4,000
b) Rent fee, P10,000
c) Supplies, P4,500 monthly
d) Repairs and Maintenance, P2,000 monthly
List of Particulars
Fixed Costs:
Electricity P4,000.00
Rent Fee P10,000.00
Variable Cost:
Supplies P4,500.00

BMSH2301
Semi-variable Cost:
Repairs and Maintenance P2,000.00
Total Semi-variable Costs: P2,000.00
Total Service Unit = (Number of hours) x (Number of Days) x (Number of customers)

= 8 hours x 20 days x 6 customers
Total Service Unit = 960 customers
Desired profit = (Desired Revenue – Total Cost of the product or service)

= (P40,000.00 – P20,500.00)
Desired profit = P19,500.00
Predetermined markup percentage = (Desired profit / Total Cost of the product or service) * 100
= (P19,500.00 / P20,500.00) *100
= 0.95 x 100
Predetermined markup percentage = 46%
= P20,500 / 960 customers
Service Cost per Unit = P21.35 per customer
Selling Price = Cost per unit x (1 + Markup percentage)

= P21.35 x (1 + 0.95)
Selling Price = P41.63 per customer
Most Common Pricing Strategies

The pricing strategy is crucial in marketing as it dramatically impacts the success or failure of a product or
service. It directly impacts how consumers perceive the product, considers the analysis of competitors, and
ultimately contributes to maximizing revenue and profitability. It is also essential to consider the variable and
fixed costs when deciding the pricing strategies.
The following are the most common pricing strategies by start-up businesses (Kotler, 2019):
1. Premium Pricing. The price of a product or service is set to a high price point to create a perception
of higher quality. Premium pricing is often used on luxury brands or unique products.
➢ Example: Luxury brands like Gucci, Louis Vuitton, and Chanel charge high prices to make their
products appear exclusive and prestigious, targeting only wealthy customers.
2. Economy Pricing. The price of a product or service is relatively low and affordable, targeting
customers who want to save as much money as possible on whatever good or service they
purchase.
➢ Example: Businesses like Puregold, Alfamart, Cebu Pacific, and AirAsia utilize economic pricing
to maximize profits. These companies can generate higher sales volumes and increase
profitability by reducing costs.

BMSH2301
3. Price Skimming. The initial price of the product or service is deliberately set high to generate
maximum consumer interest. As more competitors enter the market, the prices are lowered,
creating even greater appeal.
➢ Example: Apple typically introduces a new iPhone model at a premium price, gradually
reducing it as the product ages and newer models hit the market.
4. Penetration Pricing. The initial price of the product or service is intentionally set at a low level to
swiftly enter a competitive market, gain a loyal customer base, and generate rapid sales, with the
plan of increasing the price later.
➢ Example: Netflix started by offering its streaming service at a low price to attract customers
and become a significant player in the streaming industry. After gaining a large customer base,
they slowly raised their subscription prices to make more money.
5. Psychological Pricing. The price of a product or service aims to influence consumer perception
and behavior by using specific price points.
➢ Beauty Salons and Barber Shops often use numbers like "P99" or "P19.99" instead of rounded
numbers like "P100" or "P20." This strategy makes consumers perceive the product as
cheaper.
6. Bundle Pricing. This pricing strategy is where multiple products or services are offered together
at a discounted price. This technique is commonly used to create the illusion of a good deal and
increase sales.
➢ Grocery, department, and online stores trick customers into thinking they are getting a better
deal by purchasing a bundled product instead of just one item, especially during the holiday
season.
7. Dynamic Pricing. The price of a product or service adjusts in response to changing market
conditions. It uses algorithms and real-time data to set prices based on various factors such as
demand, competition, and customer behavior.
➢ Grab, Foodpanda, Joyride, and Angkas are prime examples of businesses that use dynamic
pricing during peak hours or high-demand periods.
Facility Management and Layout

Facilities Management coordinates people, places, and processes to care for a business's structures, buildings,
equipment, and other physical needs to improve productivity. As a business expands, its assets will also
increase. Assets are valuable properties owned by a business that can be utilized to bolster the production of
goods and services. The assets may comprise machinery, equipment, tools, and structures under the facilities
category. Regular inspections and maintenance are necessary for these assets to avoid interruptions that may
result in costly repairs (Christiansen, 2019).
Facilities management is segregated into two (2) categories:
1. Hard services refer to physical modifications and adaptations to a building or its structure. Fire safety
is a typical example of hard service. It involves installing water sprinklers, fire alarm systems, fire
extinguishers, CCTV cameras, theft alarms, electrical systems, air-conditioning systems, and other
mechanical services.
2. Soft services play a vital role in enhancing the overall environment of the workplace, making it more
enjoyable for all. These services include landscaping, event support, cleaning, canteen and pantry
management, pest control, and others that improve employee morale.

BMSH2301
Business Location
The process of selecting a business location involves identifying multiple factors. According to Wisdom IT
Services (2018), the following are the things to consider when deciding where to set up the business:
A. Controllable factors
• Proximity to the market – For a business to thrive, it must ensure that its goods and services are
delivered to customers promptly and efficiently. Positioning a business near its target markets can be
advantageous (Payne, 2022).
• Supply of materials – To maintain a continuous production process, it is advantageous for the
enterprise to procure raw materials of the correct quality, quantity, and timely manner. This factor is
essential when transporting perishable materials with high transportation costs.
• Transportation facilities – Efficient transportation services guarantee the prompt delivery of raw
materials to the company and finished products to the customers. Having a reliable transportation
system is an absolute necessity for the site of the factory. The transportation facility consists of five
modes for moving raw materials: air, rail, water (seas and rivers), roads, and pipelines (water supply,
gas supply, and fuel supply).
• Infrastructure available – For businesses that heavily rely on energy, it is essential to be located near
power stations to ensure a seamless and consistent power supply.
• Labor wages and the laws that govern it – It is imperative for any enterprise to prioritize the
awareness of both its workers' rights and the tax laws applicable in its operational jurisdiction. The
provinces' salaries in the Philippines are commonly lower than in the cities. It is also valid for taxes.
B. Non-controllable factors
• Government policies – Government and local bodies have policies regarding labor laws, building
codes, safety, taxes, social security, data privacy, and other vital factors. All enterprises must be aware
of these laws to prevent administrative and criminal liability.
• Climate and environmental conditions – It is vital for businesses to have a profound understanding
of the geology, climate, and environmental conditions prevailing at their specific location. These
factors can considerably impact the delivery of services and products to customers.
• Supporting industries – Maintaining a strong and mutually beneficial partnership with suppliers is
paramount for businesses. These suppliers can make or break an enterprise. A supplier's proximity is
critical to ensure that quality raw materials are delivered on time, avoiding inconvenience for the
customer.
Workplace Structure
Workplace structure is vital for the success of an organization. It helps clarify roles and responsibilities and
promotes efficient communication and collaboration. A structured workplace also helps in decision-making
and problem-solving. It fosters accountability and helps manage resources efficiently. Workplace structure is
crucial for organizational success (Brady, 2021).
A. Virtual Office. Start-up entrepreneurs widely utilize virtual workspaces due to their ability to enhance
efficiency, reduce commuting costs, and provide increased flexibility. Virtual workplaces also significantly
reduce overhead and technology expenses, providing a more cost-effective solution for modern work
environments. Furthermore, it streamlines the accessibility, sharing, backup, and recovery processes for
data. Its added functionality improves collaboration and productivity and ensures seamless business
continuity.

BMSH2301
B. Physical Office. Office layouts have changed from cubicles to open, spacious areas that promote
collaboration and increase employee visibility. Office layout plans are instrumental in defining the
architecture of collaboration, cross-functional operations, and elements that prioritize productivity,
learning, and employee satisfaction.
• Open Office Design. A workplace layout that is characterized by minimal walls or barriers between
employees. It promotes a collaborative and open environment for communication and teamwork.
Figure 4: Open Office Design

Source: https://fpg.roomsketcher.com/image/Office-3D.jpg
• Cellular Office Design. A workplace layout that incorporates private, individual workspaces known as
“cells” or offices. The design typically features enclosed rooms or cubicles for each regular employee.
Figure 5: Cellular Office Design

• Co-Working Space Design. A workplace layout consists of open work areas with shared desks. It
promotes collaboration, flexibility, and a productive environment among employees.
Figure 6: Co-Working Office Design


BMSH2301
• Combination Office Design. A workplace layout tailored to the organization's specific needs and
preferences. This combination can create a dynamic and versatile office environment that supports
productivity and collaboration.
Figure 7: Combination Office Design

C. Manufacturing / Plant. Manufacturing businesses like Apple, Samsung, Panasonic, and Sony, among
others, have a range of selections to choose from when it comes to designing their production layouts;
this, of course, depends on the total size of the equipment, products, and employees they have to work
with. (Ingram, 2016).
Product or line layout. In this layout, only one (1) product type is made in each area. The product is
standardized and produced in large quantities. Raw materials are supplied and processed through one
line to the finished product. It is commonly used if there is a need to produce more product quantity.
Figure 8. Product or line layout

Source: https://slidetodoc.com/presentation_image/image-25.jpg
• Process or functional layout. This layout is helpful if there is a low production need. In this type
of layout, machinery and equipment are positioned according to the nature or type of operations.
Figure 9. Process or functional layout

Source: https://s3-us-west-2.amazonaws.com/ 11211202/ProcessLayout-1024x404.png

BMSH2301
• Fixed position layout. In this type of layout, the products are built in a fixed location, with all the
necessary materials and equipment brought to that place. It is because the products are too heavy or
the equipment needs to be permanently installed.
Figure 10. Process or functional layout

Source: http://www.egyankosh.ac.in
• Combination type of layout. It is a layout that utilizes a combination or a mix of other layouts. This
type is possible if an item being made has different types and sizes. In such cases, machinery and
equipment are positioned in a process layout.
Figure 11. Combination layout

Source: https://i.imgur.com/ZrmPs1V.png
Marketing Strategies For New Ventures

Primary Goals of Marketing
1. Differentiate products from competitors by focusing on customer desires and requirements.
2. Integrating all activities in the business to meet customer needs and desires.
3. Satisfy customer wants and needs to achieve long-term goals.
What is a Target Market?

A target market is a specific group of consumers or organizations a business wants to sell to. It is a clearly
defined part of the larger market based on demographics, psychographics, behaviors, and needs. By
understanding the characteristics and preferences of the target market, businesses can create better
marketing strategies, customize their products or services, and improve their chances of success.

BMSH2301
Target Market
Market targeting is essential in the market identification process to determine buyers’ everyday needs and
characteristics. Prospect customers are a market segment that the entrepreneurial venture intends to serve.
In targeting a specific market, a business divides customers based on common characteristics, such as
demographics or behaviors, so entrepreneurs can make better decisions, provide individualized customer
support, and increase customer loyalty (Anderson, 2022).
There are a variety of customer segmentation models to consider (Baker, 2022):

• Demographic Segmentation – Age, gender, income, education, marital status
• Geographic Segmentation – Country, state, city, municipality, town
• Psychographic Segmentation – Personality, values, attitude, interest
• Technographic Segmentation – Mobile used, desktop used, apps and software used
• Behavioral Segmentation – Tendencies and frequent actions, habits, features, or product use
• Needs-based Segmentation – Products or service must-haves, needs of specific groups
• Value-based Segmentation – Economic value of a particular customer group
• Firmographic Segmentation – Group customers based on shared organization attributes
The Marketing Mix

According to an article published by The Economic Times (2023), a company's strategy for promoting its brand
or product in the market is referred to as the marketing mix. A typical marketing mix includes price, product,
promotion, and place. However, additional Ps like packaging, positioning, people, and process are becoming
increasingly important in today's marketing mix.
The marketing mix's various components interact with one another. They can make a company's business plan
successful if done correctly. However, the business's recovery could take years if mishandled. Understanding
the marketing mix, conducting market research, and consulting with various stakeholders are all necessary.
The Eight (8) Ps of Marketing (Hill, 2022):

1. Product refers to the item the business offers to the customers, whether tangible (like physical
goods) or intangible (like digital goods or services).
2. Price – It refers to the amount that customers are willing to pay for a product or service.
3. Place – The location of the product or service's purchase, sale, and experience. It varies from
business to business because retail and direct online sales place products differently.
4. Promotion – It refers to the entire set of activities used to promote a product, brand, or service.
The goal is to make people aware of the product, entice them to buy it, and get them to do so
over other options. The promotion strategies utilized to generate demand for a product or service
are called the promotions mix. It focuses on specific methods for promoting a product or service.
Each of these promotion methods contributes to a company's revenue generation uniquely
(Indeed, 2021).
Types of Promotions (Promotions Mix)

A. Advertising - It is a method of mass communication that is used to get people to do
something, usually about a commercial product or service. Four types of advertising
(Shopify, 2022):

BMSH2301
• Print Advertising – Newspaper, magazines, catalog mail

• Broadcast Advertising – Television, radio, podcast
• Public/Outdoor Advertising – Billboards, transit advertising, street walk ads
• Digital Advertising – Online display ads, search engine marketing, social media ad
placement
B. Selling – Also known as personal selling, is a face-to-face selling technique by which a
salesperson uses interpersonal skills to persuade a customer to purchase a particular
product by highlighting various features. Examples: Salesperson at Retail Stores, Real
Estate Agents, Insurance Agents, Medical Representative
C. Direct Marketing - Any marketing that communicates or distributes directly to individual
customers rather than through a third party like the mass media. Examples: Email, Direct
Mail, Telemarketing, Text blast, Leaflet Distribution, Social Media Marketing
D. Sales Promotion - A sales promotion is a marketing strategy in which a company uses
short-term campaigns to get people interested in a product, service, or other offer and
make people want it (Kelwig, 2022). Examples: Product bundles, flash sales, free trials,
free shipping, Buy-1-Take-1, Coupons, Vouchers
E. Public Relations - The set of techniques and strategies for managing how information
about an individual or company is disseminated to the public, especially the media. Public
Relations tries to portray a person or brand naturally, like getting positive press from
outside sources and recommending business decisions that will get support from the
public (Hayes, 2022). Examples: Product placement, sponsorship, consumer education,
brand ambassadors, corporate social responsibilities, social media advocacy and
campaigns
Figure 12. The Media Framework

Source: r4cloud.com
The Media Framework

A. Paid media is when companies use public relations, marketing, and promotional activities
they create and pay for themselves.
B. Earned media consists of news articles, blogs, and social network discussions that
mention a brand. This media type provides word-of-mouth and PR benefits to a business
without needing direct payment.

BMSH2301
C. Owned media refers to any online platform a business possesses and has complete
control over, such as a blog, website, or social media channels.
5. People – It is all about the people involved in the launch or campaign, including the company's
key executives, endorsers, and the marketing team. These people will be accountable for
delivering marketing promises and must possess the skills to implement the marketing strategy.
6. Physical Evidence – It refers to anything that helps the target audience trust the business. It could
be the item itself, its packaging, the setting in which it is sold (like a physical store), or how it is
delivered (like by courier). It could be testimonials, reviews, or even digital products like e-books
and online courses in the digital business. An ideal packaging should be visually appealing,
affordable for customers, and fulfill multiple functions. These include offering excellent product
protection, efficiently containing the product, providing helpful information, and enabling
convenient use and effective promotion (Coleman, 2022).
7. Process – A set of steps that help businesses figure out customer problems, look at market
opportunities, and make marketing materials to reach the people they want to see.
8. Positioning – It refers to the capacity to alter how consumers perceive a brand or product in
comparison to competitors. Establishing a brand's image or identity so that consumers perceive it
in a certain way is the goal of market positioning.
A. Value Proposition (VP) captures why a consumer should purchase a company's product
or utilize its service. There are numerous competitors in the market striving to assert their
dominance. Entrepreneurs should actively seek out alternative solutions and carefully
assess their potential for enhancing effectiveness. Establishing credibility with consumers
is an essential aspect of a Value Proposition, and it must be built on truthful foundations.
Value Proposition as a Function:

➢ Example #1: The most common form of potential value proposition can be observed
in small businesses within the local area. Donna's Food Store is open from 6:00 a.m.
to 8:00 p.m. only. Donna observed that many employees from the Call Center Office
near her store take breaks between 10:00 p.m. and 6:00 a.m. During this time, no
other food stores are open except for the 7/11 convenience store, which offers pre-
packed foods. Donna believes this is an excellent chance for her store to operate
continuously (24 hours a day, 7 days a week), offering delicious custom-made meals
daily. In this example, the value proposition: "Donna's Food Store: Open 24/7." The
store effectively conveys its unique value proposition to potential buyers, highlighting
compelling reasons why they should choose it over other options. The business
addresses customers' problems and successfully fulfills their needs, providing
exceptional solutions.
➢ Example #2: Jollibee has noticed that several fast food competitors, such as
McDonald's and Kentucky Fried Chicken (KFC), offer a similar selection of fried
chicken, hamburgers, french fries, and pasta. Jollibee has expanded its menu with
many delicious options to cater to various customer preferences. In addition to their
already mouthwatering dishes, they now proudly offer the aromatic Garlic Bangus,
succulent Beef Tapa, crispy Lumpiang Shanghai, and two enticing new flavors of their
renowned chicken: Barbeque and Sweet Chili.
Value Proposition as a Statement:

BMSH2301
➢ Twitter: See what’s happening in the world right now.

➢ Spotify: Music for everyone.
➢ Netflix: See what’s next.
➢ AirBnB: Book unique homes and experiences.
➢ Bitly: Short links, Big results.
B. Unique Selling Proposition (USP) refers to a distinctive quality that sets the business apart
from the competition. The business differentiates itself from competitors by highlighting
its product or service's unique qualities and advantages. Conducting marketing research
is essential to identify the distinct selling proposition. When promoting products or
services, it is vital to be specific and highlight details that make them stand out from the
competition. Create a concise and straightforward tagline that will effortlessly stick in
people's minds.
➢ Example #1: Jollibee is famous for its uniquely Filipino-flavored foods. The brand
distinguishes itself with its captivating tagline, "Langhap Sarap." When customers
enter the store, they are quickly attracted by the enticing smell of the food, which
gives them an incredible feeling of satisfaction even before they taste it.
➢ Example #2: Domino's Pizza is known for its catchy slogan: "We promise to deliver
fresh, hot pizza in 30 minutes or less, or you get it for free!". Customers can form clear
expectations about their service thanks to their unique selling proposition, presented
as a guarantee (Riddle, n.d.).
C. Branding. The process of branding involves the creation of a unique brand identity for a
company. This process also creates essential elements for a company's brand, like a logo,
tagline, attractive design, firm tone of voice, social media captions, billboard colors, and
packaging materials. These elements contribute to the overall branding of the company.
Businesses that understand the power of solid brands recognize the importance of
establishing their brand identity across every platform and channel. Entrepreneurs know
that their business names have a strong appeal and can attract customers to choose their
products among many options.
➢ Example #1: Ferrari presents itself as a luxurious status symbol. While Eveready, a
battery manufacturer, claims their batteries are the most reliable and durable. Mang
Inasal is a go-to fast-food chain offering delicious, budget-friendly, barbecue-flavored
chicken meals.
➢ Example #2: The Coca-Cola brand is well-known worldwide due to its recognizable
logo. The iconic red and white design, including its vibrant artwork and unique font,
has captivated buyers for over a hundred years.
References
Anderson, A. (2022). Customer Segmentation. https://www.edrawmax.com/templates/1021311/
Bibs (2023). The Role Of Big Data Analytics In Business Decision-Making. https://www.bibs.co.in/blog/the-role-of-big-data-analytics-in-business-
decision-making
Brady, M. (2021). How to Choose the Best Office Layout for Your Business. https://www.newdayoffice.com/blog/how-to-choose-the-best-office-
layout-for-your-business
Christiansen, B. (2019). What is facility management and when should business start thinking about it?
https://www.entrepreneur.com/article/332480
Coleman, B. (2022). How to Build a Market Development Strategy. https://blog.hubspot.com/marketing/market-development-strategy
Creatly (2022). The Easy Guide to the Business model Canvas. https://creately.com/guides/business-model-canvas-explained
David, R. (2022) Entrepreneurship 101. Florida. R. Davids & Associates LLC.

BMSH2301
IBISWorld (2023). Research & Development Industry Research & Market Reports. https://www.marketresearch.com/Service-Industries-
c1598/Business-Services-Administration-c44/Research-Development-c1097/
Ingram, D. (2016). About process selection & facility layout in operations management. https://smallbusiness.chron.com/process-selection-facility-
layout-operations-management-13824.html
Kotler, P., Keller, K.L., Brady M., Goodman, M., Hansen T. (2019). Marketing Management 4th European Edition. New York.
Pearson Education Limited.
Martin, L (n.d.) 7 Simple Steps to Create a Successful Virtual Office Setup. https://www.timedoctor.com/blog/virtual-office-setup/
McCreanor, N. (2023). Brilliant Business – Entrepreneurship. Notthingham. Dagda Publishing.
Payne, Y. (2022). How AI Is Impacting Supply Chain Management. https://www.iienstitu.com/en/blog/how-ai-is-impacting-supply-chain-management
Pineda, A. (2019). The best co-working spaces in the Philippines. https://grit.ph/coworking-spaces
Riddle, P. (n.d.). 1 Easy Credibility Getter with Private Lenders. http://www.privatemoneyblueprint.com/1-easy-credibility-getter/
Tamplin, T. (2023). Costing. https://www.financestrategists.com/accounting/cost-accounting/costing/
The Economic Times (2023). What is 'Marketing Mix' https://economictimes.indiatimes.com/definition/marketing-mix
Tuovila, A. (2023). Cost Accounting: Definition and Types With Examples. https://www.investopedia.com/terms/c/cost-accounting.asp
Twin, A. (2023). How to Do Market Research, Types, and Example. https://www.investopedia.com/terms/m/market-research.asp
Wisdom IT Services India Pvt. Ltd. (2018). Factors influencing plant location in operation management in production and operations management.
https://www.wisdomjobs.com/e- university/production-and-operations-management-tutorial-295/factors-influencing-plant- location-
facility-location-9458.html


03 Handout 1

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

03 Handout 1

Uploaded by

Copyright:

Available Formats

BMSH2301

MARKETING ASPECTS OF NEW VENTURES

Market Research and Development

Two (2) types of market research (David, 2022):

03 Handout 1 *Property of STI

Market Research Development

03 Handout 1 *Property of STI

03 Handout 1 *Property of STI

Figure 1. Product and Service Development Process

Product and Service Development (PSD) Flowchart

03 Handout 1 *Property of STI

Flowchart Symbols and Meanings

Figure 2. Flowchart Symbols and Meanings

Figure 3: Sample Flowchart

03 Handout 1 *Property of STI

Pricing Strategies and Costing

The formula for Calculating the Product Cost:

The formula for Calculating the Product Cost per Unit:

Steps in Calculating the Product Cost:

03 Handout 1 *Property of STI

03 Handout 1 *Property of STI

03 Handout 1 *Property of STI

Nature of Service Service Unit Used for Services Provided

The formula for Calculating Total Service Cost:

The formula for Calculating Cost per Service Unit:

Steps in Calculating the Service Cost:

List of Particulars Cost per month

Total Service Unit = (Number of Days) x (Number of Hours)

03 Handout 1 *Property of STI

03 Handout 1 *Property of STI

Combining Costing with Pricing

Formula: Selling Price = Cost per unit x (1 + Predetermined markup percentage)

03 Handout 1 *Property of STI

Direct Labor P14,000.00

Desired profit = (Desired Revenue – Total Cost of the product or service)

Selling Price = Cost per unit x (1 + Predetermined markup percentage)

03 Handout 1 *Property of STI

Total Service Unit = (Number of hours) x (Number of Days) x (Number of customers)

Desired profit = (Desired Revenue – Total Cost of the product or service)

Selling Price = Cost per unit x (1 + Markup percentage)

Most Common Pricing Strategies

03 Handout 1 *Property of STI

Facility Management and Layout

03 Handout 1 *Property of STI

03 Handout 1 *Property of STI

Figure 4: Open Office Design

Figure 5: Cellular Office Design

Figure 6: Co-Working Office Design

03 Handout 1 *Property of STI

Figure 7: Combination Office Design

Figure 8. Product or line layout

Figure 9. Process or functional layout

03 Handout 1 *Property of STI

Figure 10. Process or functional layout

Figure 11. Combination layout

Marketing Strategies For New Ventures

What is a Target Market?

03 Handout 1 *Property of STI

There are a variety of customer segmentation models to consider (Baker, 2022):

The Marketing Mix

The Eight (8) Ps of Marketing (Hill, 2022):

Types of Promotions (Promotions Mix)

03 Handout 1 *Property of STI