Principles of Marketing

PRINCIPLES OF
MARKETING
WHAT IS MARKETING?
Marketing creates value by Facilitating Exchange
Relationships (among people, organizations and
nations).
Marketing plays an important role in the broader

context of the global economy
Is a social process involving the activities necessary

to enable individuals and organizations to obtain
what they need and want through and want
through exchanges with others and to develop
ongoing exchange relationships.
Facilitating Exchange Relationships
Facilitating Services
allow benefits of the good’s intended use
Facilitating Goods
transfer of a service’s value to customer
Through PRODUCT BUNDLE

Other Definition:
The process of continuously and profitably
satisfying target customers’ needs, wants
and expectations superior to competition.
A human activity directed at satisfying needs
and wants through an exchange process
A total system of business activities
designed to plan, price, promote, and
distribute want-satisfying products to
target markets to achieve organizational
objectives
Other Definition:
The idea that an organization should aim all
its efforts at satisfying its customer – at a
profit.
The process of planning and executing the
conception, pricing, promotion, distribution
of ideas, goods and services to create
exchanges that satisfy individual and
organizational goals. (American Marketing
Association)
MARKETING PROCESS
Four main steps of the marketing process:
1. Identify market opportunities
It is imperative to find out the unfulfilled needs
and wants of consumers that are still there to
fill, the segment of population they come
from, and how these needs should be
satisfied. (environmental scanning)
2. Classify and define target markets
There should always be careful analysis of consumer. In
relation to this, marketers should be able to divide
the markets into different segments. This means
segmenting the market into unique groups with
distinct needs and characteristics.
MARKETING PROCESS
Four main steps of the marketing process:
3. Develop marketing mix efforts
Once the target is identified, the next task of the
marketer is to develop strategies that would
elicit positive response for the product from
the target market.
4. Implement the planned marketing efforts
Translating marketing strategies into action
plans require extensive market analysis.
Before its actual implementation, an action
plan is first translated into marketing plan.
TRADITIONAL APPROACHES
The traditional marketing is defined by the
4Ps (Product, Place, Promotion and
Price).
Traditional marketing techniques typically
focus on identifying the right audience
segment, understanding their behavior,
and providing the proper incentive to get
them to buy a product or service, and in
addition, there is the location or channel
consideration.
CONTEMPORARY APPROACHES or
NONTRADITIONAL MARKETING
Categories of Nontraditional Marketing
1. Person Marketing
Marketing efforts designed to cultivate the
attention and preference of a target market
toward a person. e.g. candidates for
President (Election)
2. Place Marketing
Marketing efforts designed to attract visitors a
particular area; improve consumer images of a
city, state, or nation; and/or attract new
business. e.g. Batangas City: “Eto Batangueño
Displinado”; Naga City: “Smiles to the World”
3. Cause Marketing
Identification and marketing of a social issue,
cause, or idea to selected target markets.
e.g. ABS-CBN Foundation: “Kapit Bisig
para sa Ilog Pasig”
4. Event Marketing
Marketing of sporting, cultural, and charitable
activities to selected target markets. e.g.
DZMM: “Takbo para sa Kalikasan”
5. Organization Marketing
Marketing efforts of mutual-benefit
organizations, service organizations, and
government organizations that seek
influence others to accept their goals,
receive their service, or contribute to them in
some way. e.g.
Other Types:
Relationship Marketing
is a philosophy of doing business, a strategic
orientation that focuses on keeping and improving
current customer rather than on acquiring new
customer.
Business Marketing
as the implies, is applicable to the B2B (business to
business) domain. In this context the marketing
takes place between businesses or organizations.
The marketing efforts have to be altered in a way to
suit corporate customer needs as compared to end
customer needs.
Other Types:
Social Marketing
is the same as the basic marketing orientation
except that more emphasis is put on complying
with the existing social norms and abstaining
from any activities that might be detrimental to
society at large.
Goals of Marketing
1. Connotes the creation of what is valuable to a
customer in the form of goods and services.
2. Process of creating, producing, promoting,
distributing, and selling a product/service at a
particular price.
3. Differentiate the product to other/similar
competitors’ product
4. Persuade the customers to buy.
5. Continuously satisfying the customers’ needs and
wants (ultimate goal)
CUSTOMER SERVICE: THE
PURPOSE OF
ORGANIZATIONS
 Many businesses are nonprofit
 Profit is a reward for satisfying customer
needs
 Long-term profitability comes from
sustained competitive advantage
 Competitive advantage is derived from
consistently satisfying customers
IDENTIFYING THE
CUSTOMER
A customer is any individual or group who
uses the output of a process
 external customers
 paying customers
 stakeholders
 internal customers
 customer-supplier relationships
 ultimate customer
 value chain
Identifying the customer
a. Ultimate customers (consumer goods and services)
Buy goods and services for their own personal use or
the use of others in their immediate household.
Value Chain
b. Organizational customers (industrial goods and
services)
Buy goods and services (a) for resale; (b) as inputs to
the production of other goods or services or (c) for
use of the day-to-day operations of the organization.
Can be called as internal customers – customer-
supplier relationships
Identifying the customer
c. External Customers
Paying customers
Stakeholders
Customer Needs and Wants

Needs
Are the basic forces that drive customers to take action
and engage in exchanges.
Wants
Reflect a person’s desire or preferences for specific
ways of satisfying a basic need.
Do Customers Always know what they want?

Customers buy benefits, not products…
A customer’s estimate of a product’s or service’s benefits

and capacity to satisfy specific needs and wants
determines the value he or she will attach to it.
Value is a function of intrinsic product features, service,
and price, and it means different things to different people.
Lifetime customer value – building a continuing long-term
relationship between the organization and the
customer as the ultimate objective of a successful
marketing strategy.
Brand Equity – the assets – including customers’
perceptions of a product’s benefits and value, their
positive past experiences, and their loyalty over time –
linked to a brand’s name and symbol constitute the
brand’s equity.
WHAT IS RELATIONSHIP MARKETING?
It is all about building healthy and long lasting
relationships between the firm and its customers and
then to efficiently leverage this customer base using
suitable marketing techniques.
It is a philosophy of doing business, a strategic
orientation that focuses on keeping and improving
current customer rather than on acquiring new
customer.
Focuses on maintaining a continuous relationship with

customers. Its distinguishing characteristic is its focus
on building long-term rather than short-term
relationships with customers.
WHAT IS RELATIONSHIP MARKETING?
It consists of initiating, enhancing and maintaining
relationships with one’s “customers”
The purpose is to establish, maintain, and enhance

relationships rather than satisfying customer needs at
a profit, then the focus is relationships rather than the
marketing mix. (Product-Service Bundle)
WHAT IS CUSTOMER SERVICE?
It is the process of ensuring customer satisfaction with the a
product or services. Often take place while performing a
transaction for the customer, such as making a sale or
returning an item. It can take the form of an in-person
interaction, a phone call, self-service systems, or by other
means. It is an extremely important part of maintaining
ongoing client relationship, which are key to continuing
revenue.
MARKETING PLAN
The marketing plan is a summary of what company or firm
wants and plans to do before launching a new product, or
before re-launching a product/service.
Is a written document detailing the current situation with
respect to customers, competitors, and the external
environment and providing guidelines for objectives,
marketing actions, and resource allocations over the
planning period for either an existing or a proposed product
or service.
Elements or Parts of a Marketing Plan
1. Executive Summary. It is a run down of the programs
and recommendations particular to a product/service
under study.
MARKETING PLAN
2. Present Market Situation. It is an account of the firm’s
present standing in the market and current or potential
competitors. It also identifies the other competitors’
products are offering and what the firm’s product intends to
offer to be competitive in the market.
5. SWOT Analysis. These includes the company’s

Strengths, Weaknesses, Opportunities and Threats.
#2 and #3 – Situational Analysis. Examine the macro

forces(economic, political-legal, social-cultural,
technological) and the actors(company, competitors,
distributors, and suppliers) in its environment.
MARKETING PLAN
4. Marketing Objectives should be SMART. Meaning
Specific, Measurable, Attainable, Realistic and Time-
bound. Based on identifying its best opportunities from its
situational analysis, the company ranks them and sets
goals and a timetable for achieving them.
5. Marketing Strategies. These strategies are based on the
4P’s of marketing: product, price, promotion and place.
Any goal can be pursued in a variety of ways. It is the job
of strategy to choose the most effective course of
action for attaining objectives.
6. Marketing Programs in the Marketing Mix/Tactics.
These action plans are based on the 4P’s of marketing.
The strategy must be spelled out in great detail regarding
the 4P’s and the actions that will be taken.
MARKETING PLAN
7. Budget. This refers to the financial aspects of the
marketing plan, which include the following: sales
forecasts for a specific period of time, costs projections,
income statements, balance sheets, and cash flow
statements. The company’s planned actions and activities
involve costs that add up to the budget that it needs to
achieve its objectives.
8. Controls. These are mechanism that evaluate the
marketing plan and check the firm’s current performance.
Controls provide measures to be undertaken when certain
strategies or programs of the marketing plan do not work
as expected.
MARKET OPPORTUNITY ANALYSIS
AND CONSUMER ANALYSIS
Strategic Marketing vs Tactical Marketing
Strategic Marketing
The strategic marketing plan is the engine room and
outlines exactly what you are trying to achieve - big
picture. It is developed based on your current market
situation, lifecycle, competitor landscape and identified
opportunities. A marketing strategy that/can focus on
business opportunities, such as customer retention,
diversifying the customer base, market share growth,
market value growth, becoming the market leader or
increasing purchase frequency. (A method or plan
chosen to bring about a desired future)
Strategic Marketing vs Tactical Marketing
Tactical Marketing
The tactical marketing plan on the other hand, outlines
how you intend to reach the overall strategic goals and
objectives you have set, and is dealt with quite simply
via the marketing mix. (strategy is carried out)
The Marketing Environment

Environmental Scanning is the process of collecting
information about the external marketing environment to
identify and interpret potential trends.
Goal is to analyze the information and decide whether those
trends represent significant opportunities or pose major
threats to the company.
Environmental Management involves marketers’ efforts to
achieve organizational objectives by predicting and
influencing the competitive, political-legal, economic,
technological and socio-cultural environments.
1. Competitive Environment
Marketers must continually monitor their competitors’
marketing activities: their products, distribution
channels, prices and promotional efforts.
Types of Competition
a. Direct – occurs among marketers of similar
products.
a. Indirect – involving products that are easily
substituted.
1. Competitive Environment
Types of Competition
c. Compete for consumers’ purchases – compete
for a limited money that consumers can or will
spend.
2. Political-Legal Environment
The laws and their interpretations that require firms to
operate under competitive conditions and to protect
consumer rights.
3. Economic Environment
Consists of factors that influence consumer buying
power and marketing strategies. Include the stage of
the business cycle, inflation and deflation,
unemployment, income, and resource availability.
4. Technological Environment
Represents the application to marketing of knowledge
based on discoveries in science, inventions, and
innovations.
Leads to new goods and services for consumers; it also
improves existing products, offers better customer
service, and often reduces prices through new, cost-
efficient production and distribution methods.
5. Socio-cultural Environment
Marketers track trends, such as growing concern for the
natural environment, to stay in tune with consumers’ needs
and desires. (cultural diversity)
Marketers also need to learn about cultural and societal
differences among countries abroad, particularly as business
becomes more and more global
Marketing Research
Scientific discovery methods applied to marketing decision
making. Identification of a specific market and
measurement of its size and other characteristics.
Importance of Marketing Research
1. To make effective decision
2. Indentify the problem and opportunities in the market
3. Determining consumer needs and wants
4. For effective communication mix
5. Improving selling activities
6. For sales forecasting
Marketing Research
The Marketing Research Process
1. Define the Problem
A well-defined problem permits the researcher to focus
on securing the exact information needed for the
solution.
2. Conduct Exploratory Research
Seeks to discover the cause of specific problem by
discussing the problem with informed sources both
within and outside the firm and by examining data from
other information sources.
3. Formulate a Hypothesis
A statement about the relationship among variables
that carries clear implications for testing this
relationship.
Marketing Research
4. Create a Research Design
A master plan or model for conducting marketing
research.
5. Collect Data
Two Kinds of Data:
Secondary Data refers to information from
previously published or compiled sources. e.g.
Census data
Primary Data refers to information collected for the
first time specifically for a marketing research study.
e.g. Statistics collected from a survey that asks
current customers about their preferences for
product improvements
Marketing Research
6. Interpret and Present Research Data
Interpretation of findings and present them to decision
makers in a format that allows managers to make
effective judgements.
Consumer Behavior
Often called the psychology of marketing because it analyzes
how consumers select brands, products, and services based
on how they think or feel their environment influences them.
Consumer Behavior
Factors that Influences Consumer Behavior
1. Culture
Refers to consumers’ beliefs, traditions, mores, norms
and values acquired from the family and other
institutions in the society. Culture has a great influence
on consumers’ preferences.
2. Social Aspects
Refer to the status and roles of people in the society.
e.g. the buying patterns of housewives are different
from those of working mothers.
3. Personal Factors
These include age, lifestyle, occupation, civil status,
religion, economic status and the personality of the
consumers.
Consumer Behavior
Factors that Influences Consumer Behavior
4. Psychological Factors
Consumers’ buying patterns are largely influenced by
the following psychological factors: motivation,
perception, learning, beliefs and attitudes.
Types of Consumer Buying Behavior
1. Multifaceted or Complex Buying Behavior
Categorized as either with high involvement (have to
learn first about the product before they purchase it) or
low involvement (product that is readily available in the
market).
Consumer Behavior
Types of Consumer Buying Behavior
2. Brand-switching Buying Behavior
Consumer tries new brand only out of curiosity.
Marketers try to entice consumers to trial-purchase
new products through discounts, relatively lower
prices, and free samples.
3. Habitual Buying Behavior
This is something marketers like to cultivate in
consumers. When consumer trust the brands they
develop a certain sense of loyalty to them. (Repetitive
Advertisement)
Consumer Behavior
Consumer Purchase Decision Process
1. Recognition of Needs
2. Search of Information
3. Evaluation of Choices for Products/Services
4. Actual Purchase Decision
5. Post-Purchase Evaluation and Behavior
Business Buying Behavior

Firms in the business market buy goods and services in
order to produce products or service themselves. There are
also trading firms who buy manufactured goods in bulk and
resell them to small wholesalers and retailers. All these firms
determine which products or services should be purchased
according to the needs or to consumer demands.
Characteristics of the Business Markets
1. Structure of the Market
Firms in the business market only deal with few buyers,
yet the business market is larger than the consumer
markets. The demand for products in the business
market is called a derived demand.
2. Professional Purchasing Agents
Because of the complexity of processes involved in
buying products, firms usually hire professionals trained
to deal with different suppliers and make buying
decisions.
Characteristics of the Business Markets
3. Complexity of Buying Decisions
Because business purchase decisions involve large
amounts of money, they are carefully made and
analyzed to the last detail. Moreover, purchases such
as heavy equipment and machinery are projected by
firms for long-term use. In the same way, the repeat
purchase of certain raw materials are crucial to a firm
which regularly produces its own products.
Types of Buying Situations
1. Straight Purchase
This is done by the purchasing agents on a routine
level. In this scenario, a product that has satisfied the
company in the past, will certainly be up for a repeat
purchase. (same product/service specification)
2. Modified Purchase
This usually involves a firm making modifications on the
following purchasing aspects: suppliers, terms and
conditions, and prices. This means that the past
purchases encountered some problems which have
prompted the firm to make adjustments.
Types of Buying Situations
3. New Purchase
Firm will do extensive research to determine which
supplier will best meet its specification and
expectations to suit its business plans and interest.
Participants in Purchase Decisions
There are people who play important roles in business
buying decisions. These are the people who determine and
make the purchase decisions of firms.
1. Users. These are people who determine the firm’s
purchase or availment of services. (product
specifications)
Participants in Purchase Decisions
2. Influencers. They help detail and describe a
particular product in terms of its specifications,
warranty, and quality.
3. Buyers. They are usually the purchasing agents of
the firms. They are the people who negotiate
purchasing terms with the suppliers and marketers.
4. Deciders. Make the final or last say on the purchase
decisions (top management). They rely on purchasing
agent’s input before the final purchase decision.
Major Influences in the Business Markets
1. Economic Environment
Present economic situations determine the business
firms’ buying decision.
2. Participants in the Buying Decision
The participants actually influence each other
throughout the whole decision-making process.
3. Environment or Setting
There are instances when the purchase decision is
heavily influenced by the physical environment where
it occurs.
Business Buying Decision Process
1. Recognition of Needs
2. Product Specifications
3.Search of Supplier/s
4. Selection of Supplier/s
5. Review of Performance
Market Segmentation, Target Marketing and Market Positioning
Market Segmentation
The total market for a given product category thus is often
fragmented into several distinct.
The process of dividing a market into smaller groups, with
needs and characteristics distinct form each other.
Market Segmentation, Target Marketing and
Market Positioning
Market Targeting
Choosing the specific target market for a certain product
or services.
Market Positioning
The process by which the benefits of a product/service
are impressed upon the minds of consumers. An effective
positioning can unconsciously make consumers associate
a particular brand with generic or similar kind of products.
Positioning is a tool for competitive advantage. By putting
emphasis the brand’s unique features, marketers will be
able to convince consumers of its value.
Market Positioning
Types of Market Segmentation
1. Mass Marketing
Companies initially employ mass marketing when no
specific market has been determined. This particular
strategy rests on the idea that a product can cater to
everyone, and thus generate higher profits with lesser
costs.
2. Segment Marketing
Companies practice segment marketing to address
the specific needs of target segments. e.g.
conditioner or dishwashing liquid
Market Positioning
Types of Market Segmentation
3. Niche Marketing
Narrowing down the large groups of market segments
into smaller groups.
2. Micro Marketing
Companies patterns their marketing programs to suit
a particular group of people in a specific location. e.g.
ice cream flavors
Types of Consumer Market Segments
1. Demographic segmentation
Consumers can be segmented according to age,
gender, and economic status.
Market Positioning
Types of Consumer Market Segments
2. Geographic segmentation
The market can be also divided according to location.
3. Psychographic segmentation
Classified the market population under these
categories: personality, value, hobbies and interests,
opinion and lifestyle.
4. Behavioral segmentation
Refers to the consumers’ attitude towards a
product/service.
Market Positioning
Characteristics of Effective Segmentation
1. Measurable
The chosen market segment can be measured in terms of
size, location, and income, among others.
2. Accessible
The target market can access the product/service.
3. Differentiated
The chosen market segment is different and distinct enough.
4. Implementable
The marketers are able to utilize the different marketing
programs available in the 4P’s of marketing mix.
5. Acceptable
The product generates revenue for the firm.
PRODUCT
(Product
Design/Desicion)
Product
Is the heart of the marketing mix
WHY???
If the product fail satisfy the end-user or the consumer in his/her
needs, no additional efforts on any of the other ingredients of
the marketing mix will improve the product performance in the
market place (accdg. to the book - International Marketing
and Export Management 5th edition, by Gerald Albaum, et al.,
Prentice Hall, 2005 )
Two Types of Product
1. Goods or Tangible Products
2. Services or Intangible Products
Characteristics of Goods
 Tangible product
 Consistent product definition
 Production usually separate from
consumption
 Can be inventoried
 Low customer interaction
Characteristics of Service
 Intangible product
 Produced and consumed at same time
 Often unique
 High customer interaction
 Inconsistent product definition
 Often knowledge-based
 Frequently dispersed
Goods Versus Services
Attributes of Goods Attributes of Services
(Tangible Product) (Intangible Product)
Can be resold Reselling unusual
Can be inventoried Difficult to inventory
Some aspects of quality Quality difficult to measure
measurable
Selling is distinct from Selling is part of service
production
Product is transportable Provider, not product, is
often transportable
Site of facility important for cost Site of facility important for
customer contact
Often easy to automate Often difficult to automate
Revenue generated primarily Revenue generated primarily
from tangible product from the intangible service
Goods and Services
Automobile
Computer
Installed carpeting
Fast-food meal
Restaurant meal/auto repair
Hospital care
Advertising agency/
investment management
Consulting service/
teaching
Counseling
100% 75 50 25 0 25 50 75 100%
| | | | | | | | |
f Product that is a Good Percent of Product that is a Service

DEFINE A PRODUCT
BUNDLE
 Good
 a tangible object or product
 Service
 intangible and perishable
 Facilitating services
 allow benefits of the good’s intended use
 Facilitating goods
 transfer of a service’s value to customer
Product Policy
Product policy for international/export marketing has two major
interrelated dimensions:
1. Product planning and development and
2. Product strategy
The two are applicable to the both a single product itself and
the total product mix.
Terms:
Product mix refers to the set (or assortment) of products that
a company offers to customers.
Assortment may consist of one or more product lines as well
as individual products not part of a product line.
Product lines are groups of products that are similar or have
something in common – used together, sold to the same
customer, handled through the same distribution
channels; or are different version (models) of the same
thing
Product Design
Humor
in Product Design
As the customer As Marketing
wanted it. interpreted it.
As Operations As Engineering
made it. designed it.
What’s a Product?
 Need-satisfying offering of an
organization
 Example
P&G does not sell laundry detergent
P&G sells the benefit of clean clothes
 Customers buy satisfaction, not parts

 May be a good and/or service: a product
service bundle
Product
Components
P ro d u c t
B ra n d P ro d u c t
Package
(N a m e ) Id e a
P h y s ic a l Q u a lity S e rv ic e
F e a tu re s
G ood L evel (W a rra n ty )
Product Life Cycle
Sales
Intro-
duction
Time
© 1995 Corel Corp.
Product Life Cycle
Sales
Intro- Growth
duction
Time © 1995 Corel Corp.

Product Life Cycle
Sales
Intro- Growth Maturity
duction
Time
© 1995 Corel Corp.
Product Life Cycle
Sales
Intro- Growth Maturity Decline
duction
© 1995 Corel Corp.

Time
Product Life Cycle
Sales
Intro- Growth Maturity Decline
duction
Time
Product Development
Designing The Product Bundle
Importance of
Product Design
 When a product is designed
 Its detailed characteristics are established
 Determining how the product can be produced
 Influencing the design of the production system
 Also, Product Design directly affects
 Product Quality
 Production Costs
 Customer Satisfaction
Importance of
Product Design
THEREFORE
THE DESIGN OF GOODS AND

SERVICES ARE CRUCIAL TO
SUCCESS IN TODAY’S GLOBAL
COMPETITION
INTRODUCTION
 Designing product bundles is facilitated
by managing white spaces
 Development of a product bundle
requires completion of a defined set of
tasks
 Customers are less likely to accept
partial satisfaction of requirements
 Product bundle design is an ongoing
process
Product Decisions
 Involve selecting products to offer,
defining products, & designing products
 Objective
 Meet marketplace demand with a product
having a competitive advantage
 Affect entire organization
 Example: equipment, layout, skills etc.
Product Decisions
 ENTAILS
EVALUATION OF
COMPETING PRODUCT CONCEPTS
AND/OR MAJOR MODIFICATION OF
CURRENT PRODUCTS
Product Decisions
 INVOLVES TRADE-OFFS AMONG
 Product Performance - meeting customer
needs
 Development Speed - getting the product to
market soonest
 Product Cost - total cost to the customer
 Development Program Expense - the one
time costs to develop the product
TASKS IN THE DESIGN OF
PRODUCT BUNDLES
 Doing market research
 Performing basic scientific research
 Choosing or developing a technology
 Developing specific applications,
systems, and/or products
 Testing performance of new systems
and/or products
TASKS IN THE DESIGN
OF PRODUCT BUNDLES
 Creating a value-adding system:

 product creation processes
 delivery systems
 maintenance and support services
 allied service and product delivery systems
 supplier capabilities
 distribution system
TASKS IN THE DESIGN
OF PRODUCT BUNDLES
 Ensuring legal and regulatory compliance
of new applications, systems, and/or
products and services
 Obtaining patents, trademarks, and
copyrights
 Develop marketing plan:
 place, price, promotion
 customer education
PLACE
(CHANNEL
DECISIONS)
Introduction
to Location
Strategies
Industrial Location
Strategies
 Cost focus
 Revenue varies little between locations
 Location is a major cost factor
 Affects shipping & production costs (e.g.,
labor)
 Costs vary greatly between locations
Service Location
Strategies
 Revenue focus
 Costs vary little between market areas
 Location is a major revenue factor
 Affects amount of customer contact
 Affects volume of business
Location Decisions
 Long-term decisions
 Difficult to reverse
 Affect fixed & variable costs
 Transportation cost
 As much as 25% of product price
 Other costs: Taxes, wages, rent etc.

 Objective: Maximize benefit of location
to firm
Factors Affecting
Site
 Site size
 Site cost
 Transportation in/out
 Proximity of
services
 Environmental
impact
© 1995 Corel Corp.

LOCATION DECISIONS: SUPPLY CHAIN
MANAGEMENT AND COLOCATION
 Colocationhelps firms manage across
functions and improve customer service
 Business locates inside a customer’s facility
 Business places personnel in customer’s
facility
design personnel
 quality personnel
 logistical personnel
 inventory planning personnel

CHANNEL
DESIGN
Channel design
Decisions concerned with developing a channel
structure that links the firm’s marketing strategy
with the needs of its target market.
Focus on questions such as how many levels of

middlemen should be included in the distribution
system and what types of institutions, how many of
each, should be included at each level.
Channel Management
Decisions involve the development of policies and procedures to
gain and maintain the cooperation of—and often form mutually
beneficial long-term relationship with—the various institutions
within the channel.
Objectives to be Accomplished
in Designing Distribution
Channels
1. increase the availability of good or service to potential
customers,
2. satisfy customer requirements by providing high
levels of service,
3. ensure promotional effort,
4. obtain timely and detailed market information,
5. increase cost-effectiveness, and
6. maintain flexibility.
1. Product Availability
Most important objective of any distribution channel is to make the
product conveniently available for customer who want to buy it.
Two aspects of availability must be considered for Consumer

Goods:
a. to attain the desired level of coverage in terms of
appropriate retail outlets [because retailers differ in their
sales volume, manufacturers need to weight the relative
importance of each retailer on the basis of its percent of
sales within the product category question-all
commodity volume (ACV)]
b. item’s positioning within the store.
For industrial products, assessing channel at the wholesale
level for consumer goods, the relevant issue of availability is
whether the industrial customer or retailer has the opportunity to
place an order and obtain product when it is needed.
2. Meeting Customers’ Service
Requirements
Achieving and maintaining some target level of satisfaction in
meeting the service requirements of the target customers
Some service requirements are:
a. Order cycle time, which refers to how long it takes the
manufacturer to receive, process, and deliver an order.
b. Dependability, which relates to the consistency / reliability
of delivery.
c. Communication between buyer and seller, which enables
both parties to resolve problems at an early stage.
d. Convenience, meaning that the system is sufficiently
flexible to accommodate the special needs of different
customers.
e. Postsale services, which help the customer attain full
benefits over the life of the product.
3. Promotional Effort
To obtain promotional support from channel members for the firm’s product, including
the use of local media, in-store displays, and cooperation in special promotion
events.
4. Market Information
Proximity to the marketplace, middlemen are often relied on
for fast and accurate feedback of information about such as
sales trends, inventory levels and competitor’s action.
A high level of channel feedback is particularly important for
firms in high competitive industries characterized by rapid
changes in product technology or customer preferences,
such as the computer and fashion industries.
5. Cost-Effectiveness
Channels must be designed to minimize the cost necessary to attain the firm’s
channel objectives. It is important for business pursuing low-cost analyzer or
defender strategies.
6. Flexibility
A flexible channel is one where it is relatively easy to switch
channel structures or add new types of middlemen without
generating costly economic or legal conflict with existing
channel members.
Institution Found in Marketing Channels
1. Merchant wholesalers
Take title to the goods they sell and sell primarily to other
resellers (retailers), industrial and, commercial customers,
rather than to individual consumers.
2. Agent middlemen
Such as manufacturers’ representatives and brokers,
also sell to other resellers and industrial or commercial
customers, but they do not take the title of goods they
sell. They usually specialize in the selling function and
represent client manufacturers on a commission basis.
3. Retailers
Sell goods and services directly to final consumers for
their personal, nonbusiness use.
4. Facilitating agencies
Such as advertising agencies, marketing research firms,
collection agencies, and Web portals, specialize in one
or more marketing functions on a fee-for-service basis to
help their clients perform those functions more
effectively and efficiently.
Marketing Channels for Consumer Goods

and Services
1. Producer to Consumer
2. Producer to Retailer to Consumer
3. Producer to Wholesaler to Retailer to Consumer
4. Producer to agent to Wholesaler to Retailer to Consumer
5. Producer to Agent to Retailer to Consumer
4. Facilitating agencies
Such as advertising agencies, marketing research firms,
collection agencies, and Web portals, specialize in one
or more marketing functions on a fee-for-service basis to
help their clients perform those functions more
effectively and efficiently.
Marketing Channels for Consumer Goods

and Services
1. Producer to Consumer
2. Producer to Retailer to Consumer
3. Producer to Wholesaler to Retailer to Consumer
4. Producer to agent to Wholesaler to Retailer to Consumer
5. Producer to Agent to Retailer to Consumer
Marketing Channels for Industrial
Goods and Services
1. Producer to industrial buyer
2. Producer to wholesaler to industrial buyer
3. Producer to agent to industrial buyer
4. Producer to agent to wholesaler to industrial buyer
Multichannel Distribution
A variation of multichannel system is the hybrid system, some
analyst expect that this will be the most common channel
design in the future, largely because internet is making it
easier to effectively coordinate a large number of functional
specialists.
Also, by outsourcing or offshoring some of those specialized
functions, firms can often provide a given level of customer
service more efficiently.
Channel Design for Global Market
Market Entry Strategies
1. Exporting is the simplest way to enter a foreign market
2. Contractual entry modes (licensing, a firm offers the right to
use its intangible assets and franchising, grants the right to
use the company’s name, trademarks, and technology.)
3. Overseas direct investment (joint ventures, joint ownership
agreement and sole ownership, investment entry strategy
involves setting up a production facility in a foreign country.)
PROMOTION AND
MARKETING
COMMUNICATION
Communication
Is a major part of marketing activities.
Because it is enough to produce and make the product or
service available; it is necessary to provide information that
buyers need to make purchasing decisions.
Marketing communication is cross-cultural communication; that
is, communication between a person in one culture and a
person or persons in another culture.
Communication barriers
1. Language differences
2. Government regulations
3. Media availability
4. Economic differences
5. Tastes and attitude
6. Buying Process
Communication
Promotion and communication by exporters is tied intimately to
consumers and buyer behavior.
Not all cultures will necessarily respond to marketing promotion
in the same way, following the same sequence with respect
to hierarchy of effects in the dimensions of attitude and
behavior:
1. cognitive (learn),
2. affective (feel) and
3. connative (do).
Four basic sequences by which advertising influences consumers:
Hierarchy Sequence
Traditional learning Learn – Feel – Do
Low Involvement Learn – Do – Feel
Dissonance attribution Do – Feel - Learn
Dependency Feel – Do - Learn
Marketing promotion and communication decisions
Promotion decisions faced by marketing management:
1. What messages?
2. What communication media?
3. How much effort or money to spend?
Various forms of export marketing promotions:
1. Personal selling: sales people are used to communicating
primarily face to face with prospective customers.
2. Advertising: a nonpersonal presentation of sales
messages through various “mass” media, paid for by the
advertiser.
3. Sales promotion: all sales activities, which supplement and
strengthen personal selling and advertising. Activities
usually are nonrecurrent and have relatively short-run life.
4. Publicity: any kind of news about a company or its products that
is reported by some media, and is not paid for by the company.
Marketing promotion as communication
Reasons wherein company send messages to the target
market:
1. To inform prospective buyers (including intermediaries)
about a product.
2. To persuade people to become buyers.
3. To develop positive attitudes.
4. To cause other changes in people’s thinking and behavior
that will be beneficial to the exporter.
Symbols
The successful communicator depends upon symbols as a means
of establishing empathy with another person.
Reasons communication with buyers in market may not be
effective:
1. The message may not get through to intended recipient.
2. The message may not be understood in the way intended
by the sender.
3. The message may not induce the recipient to take the
action by the sender.
Alternative techniques of promotion
1. Personal selling
2. Sales Promotion
a. Foreign Catalog – is the ever-present, silent, accurate, all-
knowing sales tool.
Purposes of foreign catalog are:
a.1. create interest and attract readership,
a.2. mirror the personality of the manufacturer or exporter,
2. Sales Promotion
Purposes of catalog are:
a.3. carry the reputation of the manufacturer or exporter
into world of markets,
a.4. make buying easy,
a.5. supply the desire ownership and
a.6. supply all the facts that a salesperson would present
in person.
b. Samples
c. House organ and company-published magazines
d. Films, slides and personal computers
e. Trade fairs and exhibitions
f. Point-of-purchase materials
3. Publicity
4. Advertising
a. Climate for advertising – a large extent the potential
viability and effectiveness of advertising is depends the
climate for that advertising in the markets of concern.
b. International media – is often used in reference to

business and consumer magazines and newspapers that
circulate in many countries.
c. Foreign media – the availability and suitability of local

advertising media vary considerably from country to
country.
d. Online advertising
e. Media mix
Promotional programs and strategy
Geared either
a. Prototype standardization – which minor modification are
made to some basic strategy or
b. Pattern standardization – whereby a strategy is designed
from the start to accept modification to fit local conditions,
yet still keeping sufficient common elements to minimize
the drain on resources and management time.
Planning promotional strategy involves the following
1. setting promotional objectives,

2. deciding on the types of advertising and promotional
messages,
3. selecting media and
4. determining how much time, effort, and money to spend.
Standardization or adaptation?
Opportunities having a standardized advertising:
1. Present a company/product/brand image.
2. Lower costs of preparing advertisements and implementing
an advertising program.
3. Reduce message confusion in areas where there is media
overlap
Different aspects of marketing are subject to standardizing
1. Target market
2. Product positioning
3. Campaign objectives, campaign themes
4. Media objectives,
5. Basic media mix, media schedules
6. Creative execution
Standardization or adaptation?
Appeals
Must be in accordance with tastes, wants, values, and
attitudes, in short, in harmony with the prevailing mentality
of the market.
Illustrations and layout
Perhaps more likely to be universal that other features of
advertisement.
Copy
Considerable diversity of opinion with regard to the translation
of copy form one language to another.
Generally speaking most advertising people would agree that it is

unlikely that standardization can be successful for all products, for
all countries, and in all markets.
PRICING
DECISIONS
Pricing a value that will purchase a finite quantity, weight,
or other measure of a good or service.
Price decisions must be made for different classes of purchaser,

that is, prices must be set for sales to the following:
1. consumers or industrial users,
2. wholesalers, distributors, or other importing agencies,
3. partners in strategic alliances,
4. licensees (when parts or components are exported)
5. one’s own subsidiaries or joint ventures, whether minority
or majority interest or wholly owned subsidiaries.
Factors a Marketing Manager should consider in
making decisions when it comes to a Feasible
Prices
1. The business strategy, and the other components of the
marketing mix with which it must be compatible.
2. The extent to which the product is perceived to differ from
competitive offerings in quality or level of customer service.
3. Competitors’ costs and prices.
4. The availability and prices of possible substitutes.
Determinants of price
1. Costs
Are often a major factor in price determination and there
are a number of reasons to have detailed information
on costs.
Are useful in setting a price floor.
In short run, when a company has excess capacity, the
price floor may be out-of-pocket costs, that is costs of
labor, raw materials, and shipping.
In long run full costs for all products must be recovered,
although not necessarily full costs for each individual
product.
Are helpful in estimating how rivals will react to setting a
specific price.
1. Costs
Marginal pricing
The company’s price floor was direct cost (those that
are incurred by the decision that is made), since
every unit sold at a price in excess of direct cost
would contribute to net profit.
Dynamic pricing
In which the prices they charge vary from one market
to another, depending on the market conditions,
differences in costs, and variations in the way the
consumers value the offering.
2. Market Conditions (demand)
The nature of the market determines the upper limit for
prices.
The utility, or value, placed on the product by purchasers
sets the price ceiling.
The value may be determined by asking people, by some
type of barter experiment, by test market pricing, by
comparison to substitute products, or by statistical
analysis of historical price/volume relationships.
Market Factors that affects pricing decisions:
1. demographic,
2. customs and tradition,
3. economic considerations,
4. all of which related to customer acceptance and
5. use of a product.
3. Competition
Reaction to competitors is often the crucial consideration
imposing practical limitations on pricing alternatives.
Barriers that a marketer can use to provide “shelter” from

competition include:
1. product distinctiveness,
2. a brand prominence with high brand equity and
3. a well established channel of distribution both between
countries and within a country (when it comes to export).
Significant:
4. pure competition, price set in the market place
5. Monopolistic or imperfect competition, the seller has some
discretion to vary the product quality, promotional efforts, and
channel policies in order to adapt the price of the “total product”
to serve preselected market segments.
4. Legal/Political Influence
Determining prices must consider the legal and political
situations as they exist and as they differ from country
to country.
5. Company policies and marketing mix
Pricing is influenced by past and current corporate,
organization, and managerial policies.
Pricing cannot divorced form product consideration.
(management decisions)
The channel of distribution utilized affects price.
Utility of a product depends not only on its physical
characteristics but also on how it is sold and serviced.
Pricing Strategies:
1. Skimming the market
Involves the strategy of getting the highest possible price
of a product out of a product’s distinctiveness in the
short run without worrying about the long-run company
position in the market.
A high price is set until the small market at that high price
is exhausted.
2. Sliding down the demand curve
Primarily used by companies introducing product
innovations.
Strategy that has the objective to become established in
foreign markets as an efficient producer at optimum
volume before foreign or domestic competitors can get
entrenched.
Pricing Strategies:
3. Penetration Pricing
Strategy establishing a price sufficiently low to rapidly
create a mass market.
4. Preemptive pricing
Setting prices so low as to discourage competition.
The price will be close to total unit costs for this reason
(long-run through market dominance)
5. Extinction Pricing
Purpose is to eliminate existing competitors from
international markets. (dumping-associated to
preemptive)
Types of Costs
Fixed Costs (or overhead) are constant in the short term,
regardless of production volume or sales revenue.
Include rent, interest, heat, executive salaries and
functional departments such as purchasing and R&D.
Fixed cost. Total fixed costs remain constant in the short

term regardless of volume , the fixed cost per unit of a
product declines as a firm produces and sells more the
product in a given period.
Variable Costs vary in magnitude directly with the level of

production, but they remain constant per unit regardless
of how many units are produced. They involve such
things as the cost of materials, packaging, and labor
needed to produce each unit of the product.
Types of Costs
Marketing Mix Costs include both fixed and variable
costs as well as other costs such as retailers or
distributors’ markups that don’t appear on the company’s
book
Analyzing Competitors’ Cost and Prices
Methods Managers Use to Determine an
Appropriate Price Level
a. Cost-Oriented Methods
a.1. Cost-plus or mark-up pricing
a.1.1
a.1.2
a.2. Rate-of-return or target return pricing, is

similar in principle to, but somewhat more
sophisticated in practice than, markup pricing.
Analyzing Competitors’ Cost and Prices
Methods Managers Use to Determine an
Appropriate Price Level
a. Cost-Oriented Methods
a.2. Rate-of-return or target return pricing
a.3. break-even analysis

References
Traditional Marketing, Strategic Marketing
Solutions, 2013
http://www.strategicdriven.com/traditional-mar
keting/
Retrieved on May 22, 2016
Saghar, Contemporary Approaches of
Marketing, May 12, 2010, Yalwa Local
Business Blog,
http://www.yalwa.info/local_business/2010/05/
contemporary-approaches-in-marketing.html
Retrieved on May 22, 2016.
References
Customer Service Definition | Investopedia
http://www.investopedia.com/terms/c/customer-service.asp#ix
zz49NPsPYaF
Building Customer Relationship,
http://www.slideshare.net/Deepak25/building-cutsomer-relatio
nship?next_slideshow=2

http://www.businessdictionary.com/definition/strategy.html#ixz
z49QxhXxPT

http://www.businessdictionary.com/definition/tactics.html#ixzz
49QyA3Q3Y
References
 Need and Importance of Marketing Research by
Smriti Chand
http://www.yourarticlelibrary.com/marketing/need-and
-importance-of-marketing-research/32281/
References
Zarate, Cynthia A. Principles of Marketing, C & E
Publishing, Inc. Quezon City, 2014.
Go, Josiah et. al., Marketing Plan Building the Profitable
Preferred Brand 2nd edition. 2012
Mullins, John W. et. al., Marketing Management A strategic
Decision-Making Approach Seventh Edition McGraw Hill,
2010
Tristan H. Macapanpan, MSC 525M COURSE
MATERIALS: Soft copy of other course materials
(Powerpoint lectures, cases, readings, and videos) and
hard copies of some readings
References
Kurtz, David L. et.al., Principles of Marketing Second
Philippine, Thomson South-Western, reprint 2011
Albauam, Gerald et. al. International Marketing and
Export Management 5th edition, Prentice Hall, 2005
Mullins, John W., et. al. Marketing Management A
strategic Decision-Making Approach Seventh Edition
McGraw Hill, 2010

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Principles of Marketing

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PRINCIPLES OF

Marketing plays an important role in the broader

Is a social process involving the activities necessary

Through PRODUCT BUNDLE

Customer Needs and Wants

Do Customers Always know what they want?

A customer’s estimate of a product’s or service’s benefits

Focuses on maintaining a continuous relationship with

The purpose is to establish, maintain, and enhance

5. SWOT Analysis. These includes the company’s

#2 and #3 – Situational Analysis. Examine the macro

The Marketing Environment

Business Buying Behavior

f Product that is a Good Percent of Product that is a Service

P&G sells the benefit of clean clothes

 Customers buy satisfaction, not parts

Time © 1995 Corel Corp.

© 1995 Corel Corp.

THE DESIGN OF GOODS AND

 Creating a value-adding system:

 Other costs: Taxes, wages, rent etc.

© 1995 Corel Corp.

 inventory planning personnel

Focus on questions such as how many levels of

Two aspects of availability must be considered for Consumer

Marketing Channels for Consumer Goods

Marketing Channels for Consumer Goods

b. International media – is often used in reference to

c. Foreign media – the availability and suitability of local

1. setting promotional objectives,

Generally speaking most advertising people would agree that it is

Price decisions must be made for different classes of purchaser,

Barriers that a marketer can use to provide “shelter” from

Fixed cost. Total fixed costs remain constant in the short

Variable Costs vary in magnitude directly with the level of

a.2. Rate-of-return or target return pricing, is

a.3. break-even analysis

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