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Objectives
At the end of the lesson the student shall be able to:
• Identify and develop understanding the nature and scope of
marketing;
• Define and discuss customer’s needs and wants;
• Define different marketing concepts;
• Illustrate and discuss the importance of marketing
• Give, discuss and understand the goals of marketing and its social
effects;
• Develop student interest in marketing jobs; and
• Understand the new challenges in the field of marketing.
The Field of Marketing
Marketing is the creation and communication of value to customers.
It involves the customer’s maintenance of relationships that should last for
lifetime. It is the link between society’s material requirements for its needs
and wants. Marketing must satisfy human needs and wants through the
exchange process and the building of long-term relationships.
Definition of Marketing
Through the decades, marketing has evolved various definition and
its meaning changes according to the views of the different marketing gurus.
Many view marketing as process or dynamic business activity that is designed
to plan and promote the delivery or satisfy needs and wants of the potential
and present market.
It is also defined as the meeting of the minds between the seller and
the buyer to satisfy human needs and wants with profit on the part o0f the
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marketer and the satisfaction of thee buyer for the money he spent. On the
bases of this view, marketing is an organization intervention and functions
that set the process of creating, communicating and delivering value to
customers.
From the academic point of view, marketing is the art and science of
creating tangible products or services and finding the market, getting and
retaining them to attain profitable operations. On one hand, it is a societal
process that marketers must communicate the sustainable value of the
product or service to its target market. It is a critical business process for
attracting customers to satisfy their needs and wants.
Customer Needs and Wants
Need is one important component in the marketing of products. It is
the consumer’s desire for a particular product or service. The product or
service must have specific benefits that satisfy the functional or emotional
needs. On the other hand, basic needs are food, clothing, and shelter. We
cannot live without them and marketers must be able to provide them to
human population.
Food can be processed in different tastes; styles and menus that shall
meet the human craving and satisfaction. Clothing could be designed into
different styles depending on people’s taste and social values. Shelters are
constructed differently depending on the capacity of the buyer to finance his
home. These needs are the marketer’s point of interest for profit.
Wants are higher-level human needs as they appeal more to the
emotions. These are the social needs for recognition and the development of
higher social satisfaction is limitless. The development of technology and
different electronic gadgets are more of human wants. The marketers must
continuously improve technological inventions to sustain customer wants.
Marketing Concepts
The philosophy of doing business is developed as people realized that
marketing is vital to the success of any marketing organization. The marketing

concept emphasizes customer orientation and coordination of marketing
activities to achieve the marketing goals and objectives. The philosophy that
“The customer is the boss”, rings over the minds of the marketing people that
customer satisfaction which is of paramount consideration. While it is
important to satisfy customer wants and needs, this could only be achieved
under the following marketing concepts.
1. Marketing must be Customer Oriented.
The planning and operation must be directed towards customer orientation.
The whole marketing organization and its operating staff must be focused on
determining what will satisfy the needs and wants of the target customers,
the important link in the business operation.
2. Marketing must be Coordinated Activities
Coordination activities must start in the product planning process, the
process. The product is the key element that the customer want to buy that
is worth his money. Price is another important component as customers
would like to get his money’s worth. The place of distribution must be within
his reach and the promotional activities must be appealing for him to decide
which product to purchase.
3. Marketing must be able to achieve the Performance Target Goals and
Objectives.
Customer-oriented and coordinated marketing aims to achieve its profit,
objectives and goals. These goals and objectives hinge on the increase in sales
volume and customer’s patronage. When product planning, price, promotion
and distribution and properly coordinated, it will result in the most effective
way of satisfying the customer’s needs and wants. The sales volume and
profit objective will be realized.
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Factors for Developing Marketing Concepts
1. Capturing Marketing Insights
The overall direction must focus on its vison and mission. The organizational
goals and objectives must be directed towards the creation of value to its
customers. These must be the inherent philosophy of the marketing
organization. The functional areas in the marketing organization must be
focused towards its ultimate set of tasks in the building of long lasting
relationship with its target market.
2. Effective Financial Management System
This system in the procurement of quality and affordable materials for
processing of the product is a vital component in effective operation of the
marketing system. The competition in the market is based on affordable
quality products where labor and materials interplay in their production.
Financing the marketing program will develop effective sales program that
will bring in sustainable profitability.
3. The Value of Human Resources
All business activities need human resources in their operation. The
employees must be committed in the production of quality products and the
delivery of quality service. They must develop work ethics and strong
commitment to the marketing efforts of the organization. Sustainable
development and progress rest with people who are willing to put all efforts
towards the organizational objective of quality products and service.
4. The Production Process
The process must conform to standards in terms of product quality. The race
to economic profitability is the production of products that shall satisfy the
customer’s wants and needs. The role of marketing is to sell more products
but it must conform to customer demand. Production may produced so many
products, yet they are useless inventory when they fail to reach their target
market. Marketing efforts will turn them into profitable inventory.
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5. The Presence of Competitors 3. Maximize Choice of Goods or Service

The marketing of products becomes interesting with the presence of
competitors. Marketing outfit must develop strategies in capturing their
target market and develop and sustained patronage. These marketing
strategies must develop customer loyalty to the brand or the product.
Product improvement and pricing strategies with sustained promotional and
advertising program are important components in the competitive market.
The Goals of Marketing and their Social Effects
1. Maximize the Consumption of Goods
Some marketers believe that the goal of marketing is to maximize the variety
of the product in the market and provide consumers a wide assortment of
choices. The main objective is for customers to find the goods that will satisfy
their biological needs as well as their emotional and social wants.
Development of new products needs research but that will mean time and
costs. Maximizing consumer choice entails cost as the economies of scale do
not operate in production of goods. The consumers has to spend time
studying the benefits of the production of goods. The consumer has to spend
time studying the benefits of the product, only to find out later that the utility
and functions are the same.

The Aggressive marketing strategies and policies had increased the 4. Maximize the Quality of Life
consumption of goods and services. The demand of the market is
The improvement of the quality of life is the target of marketing people. New
tremendous. Sellers face many challenges on what products to offer. Buyers
hand phones are created to communicate with various sectors of society,
want quality products at reasonable price and t the most convenient location.
friends and families. Easy communications access satisfies not only social
The marketing job is to stimulate greater product consumption. needs but also business requirements. Compu0terss and others electronic
Greater production requires consumption of material inputs and more goods gadgets bring pleasures to homes and enjoyment of the comfort of living.
in the market that create more employment. More jobs are created and more
people enjoy economic wealth. Maximum consumptions generates economic
development for the nation.

2. Maximize Consumer Satisfaction The quality of life is difficult to measure. Life satisfaction is more than the
physical comfort. The impact of electronic radiation has created health
The market demand is varied and customer satisfaction is the challenge of
problems among the many users of modern gadgets. People in the previous
the marketing organization. Measurement of customer satisfaction is
generations lived longer because they lived a simple life. They ate
difficult. It embraces careful analysis of the market demand which varies with
unadulterated food and lived free from pollution and radiation.
the time and the social development of society.

The customer may be satisfied with the product the marketing people
produce but it may create pollution to the environment. Plastics are good The Careers in Marketing
packaging materials for consumer goods but they create flood and
Student in the field of business must make one of the most significant
environmental pollution. Cars and other vehicles using gas serve the
decisions in the choice of a career plan if they would like a life of prosperity
convenience of the riding public, but they create global warming that result
and enjoyment. Their career decisions will influence their future happiness,
to environmental imbalance.
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self-fulfillment and well-being. Before landing a serious decisions, one must 1. Personal Selling
be able to look into the process of introspection. It is the process of looking
This is the most common job in any community. It varies in depth depending
into oneself, honestly assessing what he really likes as a chosen profession.
on the product being carried. It starts with the street vendor and extend to
Introspection would mean finding out one’s personal wants and selling aircraft and other valuable equipment and computers. There are
needs such as; opportunities of earning higher income in the field of personal selling. Salaries
and allowances are for personal expenses, while commissions and incentives
1. Money and financial stability
are then incentives that drive one to seek more fortunes.
2. Leisure and social surroundings
a. Sales Representatives
3. Working in stable company or the government
They sell goods or services to ultimate consumers, business organizations, or
4. Living in simple and silent community to middlemen. They are commonly found in insurance business, drug
companies, soft drinks and other beverages, wines and cigarettes and other
5. Importance of social prestige and a career consumer items.
6. Dealing with pressures as source of challenge b. Sales Support Representatives
7. Tangible signs of fulfillment in the job

8. Working alone or with groups of people
A deeper analysis of the above is to look into the student’s strengths and/ or
weaknesses. They must identify their goals in life. Their college program will
help them identify the career path they would like to choose. Their life
program will bee shaped by the personality they develop through time. A
marketing career poses so many challenges and pressures but the rewards
are tremendous and enjoyable.
Their personal attributes and social upbringing are ingredients in any of the
career in marketing. Strategies shows that about one third of the total jobs
are in the field of marketing. Each of this chosen field needs personal
attributes and qualities that will make them successful in any of the following
fields.
The work is about assisting Sales Manager and staff in various trade shows,
sales training and other sales program of an organization. They also assist in
product development and distribution.
c. Customer Service Representatives
They assist customer in after sales, often handling customer complaints, or
giving information about the product or service. This job is most common in
appliances, machinery and equipment, or in other consumer goods.
d. Assistant Store Manager
The position is of a sales management trainee handling staff sales clerk in
supermarkets, department stores or superstores. They supervise the
activities of the sales staff and arrangement of the store display.

e. Research Trainee

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He assists in the research activities of large organizations, gathering and
collecting data and information that may be needed by management in
preparing marketing plans and programs, report preparation and data
analysis.
While personal selling is rated low in the sales career among the white collar
jobs, the personal progress in terms of income is limitless depending on the
personal performance in the sales person. Personal selling requires a lot of
travelling and meeting different people. The social exposure will yield
tremendous dividends. His ascendancy to higher selling career depends on
ability and performance.
2. Store Management
The next in rank among those new in field of marketing is store management.
This position is mostly common in smaller outlets where the new marketing
graduates are exposed to the rudiments of purchasing, inventory control, and
general supervision of the sales staff. Marketing graduates who were working
students on fast food chain stores before are given the opportunity to take
the management examination for sales management trainee and later
promoted to the position of assistant store manager.
3. Logistic Management Purchasing
A purchasing agent is the business counterpart of the retail store buyer.
Those assigned in the purchasing or logistic functions buy materials for
manufacturing, office supplies and equipment or for resale to big
establishments. Larger organizations employ a lot buyers or purchasing
agents.
Graduates of marketing are potential agents or buyers. Positions along this
line need the qualities of honesty and integrity as they are exposed to
temptations of bribery and corruptions.
4. Advertising Assistant
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This requires graduates with artistic and creative ability and strong sense of
imaginations. Advertising agencies needs artists, copy writers,
photographers, layout designers, and printing artists in computers to create
various advertising materials for the organizations clients. Some also need
representatives for selling media ads to various marketing outlets. They
conduct related studies or advertising research program.
5. Sales Promotion
Those employed under these marketing programs are required to have
imaginative minds to tie up the activities of personal selling and advertising.
Effective sales promotion requires creativity and imagination, coupled with a
sound knowledge of marketing fundamentals. It also deals with the design of
stored display, trade shows, and other company exhibits to attract new and
old customers. They are also engaged in the design of the premiums,
giveaways, contests, product sampling, and other sales promotional
activities.
6. Marketing Research
Marketing students are trained in college in writing feasibility studies and
marketing research to expose them in this important field of marketing.
Those employed in this area must have critical minds and acumen in
marketing analysis and trends. These position need an aptitude of precise
analytical work and quantitative skills. They must have the basic knowledge
of statistics and its application in the marketing research program.
7. Product and Brand Management
Trainees along this line are responsible in assisting higher management in the
planning and development of new product. It entails product planning and
the development of marketing programs. They are trained in labelling,
packaging activities, and other product designs that will add product value to
its target clients. Product management involves pricing strategies, physical
distributions planning, and studies of legal issues. Studies of competitors
activities is one important aspect as the planning mode must counter the
threats of competitions in the market.

8. Physical Distributions
They are related to the distributions of the product from the producer to the
direct consumer. They follow several stages from the manufacturing plant to
the warehouse and then to the different outlet of sales. Distribution entail
proper handling of the product in the warehouse, inventory control system,
and transportation management. They also require knowledge in system
approach and development of new distribution strategies that will reduce
cost in product movement.
9. Public Relation
These positions are for marketing graduates with higher level of verbal and
written communication skills. They must have strong personality to project
the good image of the organizations. Public relation is valuable connections
between the marketing organizations and its various public. People are
responsible for telling the public about their company, products and services,
and the community programs. They answer adverse issues confronting the
company’s activities and require great knowledge of human and public
relations.
10. Consumer Affairs and Protection
Consumer awareness of their rights and protection on product usage and
warranties is increasing. Company needs college graduates in the field of
marketing who are computer literate and can handle customer’s complaints
either thru the telephone or in person. Customers must be answered tactfully
and promptly to keep their loyal patronage. One lost customer may multiply
a hundred fold. The evaluation of the marketing program must be looked in
deeper perspective due to the various attacks of market exploitation.
Marketing efforts must consider how it can satisfy its customers, meet its
own needs and wants, and serve the best interest of the general public.
Challenges of Marketing in the New Generation
The changing global landscape poses challenges for marketing
people. The marketing strategies of the last decade may be obsolete in the
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changing global economy. The world economy had changed from the world
power in America and Europe to the new progressive countries in the Asian
region that was not badly affected by the world’s recession. As a result of this
changing economic condition, countries are wrestling for economic
competitions.
Marketers has to face the following challenges;
1. The Rapid Product Globalization
With the General Agreement in Tariff and Trade (GATT) among member’s
countries, products could freely enter in member countries with less tariff or
taxes, making global products available to many consumers. This allows
countries to expand their market coverage in production and marketing
resulting in the more complex marketing system. New marketing strategies
had had to evolve as small and big companies begin to compete in the
complex marketing environment.
2. The Rapid Change in Global Economy
The purchasing power of the peso had changed overtime. The rising
population has not improved the economy of the people found no
opportunity for gainful employment. In the last decade, wages have
increased, but the purchasing power has not coupled with the rising cost of
living. Marketing strategies had changed from big packaging of products from
bottles to small containers to sachets.
The advent of computers and more efficient system of production has
created loss of jobs to less skilled manpower contributing to unemployment.
While the country is less affected by these global shift in economic condition
due to employment opportunities abroad for OFW the country has to content
with the political and social problems in the local scenario.
3. Social Problems and Marketing Ethics
The environmental issues on pollution created by the introduction of new
products in the market are issues that need to be content with by marketing
people. The negligence of people in the proper discharge of garbage has
created flooding in all of Metro manila and other developing cities. Disposing

toxic waste in the environment created danger to the life of people. Plastics
or non-biodegradable materials are disposed in waterways creating mass
distractions due to floods.
The ethics on environmental pollution should place stricter demand on
marketing people to change some of their packing materials and these
involve additional cost that had to be passed on to consumer. Advertising and
promotional ethics has eroded some cultural and moral issues of the Filipino
and advocates of morale regenerations are up against this practice.
4. The Changing Marketing Strategies
The advent of modern technologies in communication has changed the
marketing landscape. The distributions of the product has gone miles away
capitalizing on the modern system of telemarketing. The advent of speed
delivery system has changed the marketing system that consumers need to
go out of their comfort zone to enjoy products they want to eat or wear.
Buying and selling products through the internet could be done globally,
advertising and promotional activities have to reach cope with the changing
marketing demand. They have to reach out to the other continent to sell their
products globally. With speed of communications network, products could be
in your doorsteps in a few days or hours. This major paradigm shift is not the
monopoly of large marketing organization but also the budding
entrepreneurs of the new generations.
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MODULE: MARKETING PRINCIPLES AND STRATEGIES
Learning Competencies:
1. Define and understand marketing
2. Describe the traditional approaches to marketing
3. Discuss the goals of marketing
4. Identify and explain contemporary marketing
The concept of marketing connotes the cration go what is valuable to a
customer in the form of goods and services. Specifically, it is the process of
creating, producing, promoting, distributing, and selling a product/service at
a particular price. In simpe terms, marketing is continuously satisfying the
customer’ needs and wants at a profit.
Marketing is defined by the American Marketing Association as “the activity,
set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and
society at large.”American Marketing Association,
Marketing is the homework that managers undertake to assess needs,
measure their extent and intensity and determine whether a profitable
opportunity exists. Marketing continues throughout the product’s life, trying
to find new customers and keep current customers by improving product
appeal and performance, learning from product sales results and managing
repeat performance.
Marketing—A social and managerial process by which individuals and groups
obtain what they need and want through creating and exchanging products
and value with others. To explain this definition, we examine the following
important terms: needs, wants and demands; products and services; value,
satisfaction and quality; exchange, transactions and relationships; and
markets.
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internal environment involves a quick review of the firm’s present

product line, its suppliers and distributors, and alliances and
affiliates. In this manner, the firm will be able to gauge its capacity
to create, produce and deliver the products/services which will
satisfy the consumers. The external environment, on the other hand,
refers to the economic, political, legal, and technological forces that
might affect the process of creation and production of the firm’s
products. The analysis of the internal and external environment is
summarized in the acronym SWOT which stands for STRENGTHS,
WEAKNESSES, OPPORTUNITIES and THREATS.
2. Classify and define target markets, - There should always be a careful
analysis of consumers. 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. From there, the company should come up with plans
and strategies that would target the chosen market segments. For
example, a shampoo manufacturer would develop a product
specifically for people who suffer from dandruff and for those who
would like to prevent it. In this scenario, what the manufacturer
wants is to produce an anti-dandruff shampoo. Likewise, a shampoo
CORE MARKETING CONCEPT
manufacturer can come up with different variants of shampoos to
cater to more market segments. One variant could be developed for
users with fine hair, another for falling hair, and one more for frizzy
MARKETING PROCESS
hair.
3. Develop marketing mix efforts. Once the target market is identified,
Implement the
classify and Develop the next task of the marketer is to develop strategies that would elicit
Identify market planned
define target marketing mix
opportunities marketing
markets efforts
efforts
positive response for the product from the target market. The
marketing mix efforts include the following: product, place, price,
promotion, people, physical environment, process.
The diagram illustrates the four main steps of the marketing process.
4. Implement the planned marketing efforts. Translating marketing
1. Identifying Market Opportunities- It is imperative to find out the strategies into action plans require extensive market analysis. Before
unfulfilled needs and wants of consumers that are still there to fill, its actual implementation, an action plan is first translated into
the segment of the population they come from, and how these needs marketing plan.
should be satisfied. A firm can identify market opportunities by
scanning both the internal and external environments. Scanning the
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Who Does Marketing?
The short answer to the question of who does marketing is “everybody!” But
that answer is a bit glib and not too useful. Let’s take a moment and consider
how different types of organizations engage in marketing.
For-Profit Companies
The obvious answer to the question, “Who does marketing?” is for-profit
companies like McDonald’s, Procter & Gamble (the makers of Tide detergent
and Crest toothpaste), and Walmart. For example, McDonald’s creates a new
breakfast chicken sandwich for $1.99 (the offering), launches a television
campaign (communicating), makes the sandwiches available on certain dates
(delivering), and then sells them in its stores (exchanging). When Procter &
Gamble (or P&G for
short) creates a new Crest tartar control toothpaste, it launches a direct mail
campaign in which it sends information and samples to dentists to offer to
their patients. P&G then sells the toothpaste through retailers like Walmart,
which has a panel of consumers sample the product and provide feedback
through an online community. These are all examples of marketing activities.
For-profit companies can be defined by the nature of their customers. A B2C
(business-to-consumer) company like P&G sells products to be used by
consumers like you, while a B2B (business-to-business) company sells
products to be used within another company’s operations, as well as by
government agencies and entities. To be sure, P&G sells toothpaste to other
companies like Walmart (and probably to the army, prisons, and other
government agencies), but the end user is
an individual person.
Other ways to categorize companies that engage in marketing is by the
functions they fulfill. P&G is a manufacturer, Walmart is a retailer, and
Grocery Supply Company (http://www.grocerysupply.com) is a wholesaler of
grocery items and buys from companies like P&G in order to sell to small
convenience store chains. Though they have different functions, all these
types of for-profit companies engage in marketing activities. Walmart, for
example, advertises to consumers.
Grocery Supply Company salespeople will call on convenience store owners
and take orders, as well as build in-store displays. P&G might help Walmart
or Grocery Supply Company with templates for advertising or special cartons
to use in an instore display, but all the companies are using marketing to help
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sell P&G’s toothpaste. Similarly, all the companies engage in dialogues with
their customers in order to understand what to sell. For Walmart and Grocery
Supply, the dialogue may result in changing what they buy and sell; for P&G,
such customer feedback may yield a new product or a change in pricing
strategy.
Nonprofit Organizations
Nonprofit organizations also engage in marketing.
When a nonprofit organization engages in marketing activities, this is called
nonprofit marketing. Some schools offer specific courses in nonprofit
marketing, and many marketing majors begin their careers with nonprofit
organizations.
Individuals
If you create a résumé, are you using marketing to communicate the value
you have to offer prospective employers? If you sell yourself in an interview,
is that marketing? When you work for a wage, you are delivering value in
exchange for pay. Is this marketing, too? Some people argue that these are
not marketing activities and that individuals do not necessarily engage in
marketing. (Some people also argue that social marketing really isn’t
marketing either.) Can individuals market themselves and their ideas? In
some respects, the question is a rhetorical one, designed for academics to
argue about in class. Our point is that in the end, it may not matter. If, as a
result of
completing this book, you can learn how to more effectively create value,
communicate and deliver that value to the receiver, and receive something
in exchange, then we’ve achieved our purpose.
Why Study Marketing?
Marketing Enables Profitable Transactions to Occur
Products don’t, contrary to popular belief, sell themselves. Generally, the
“build it and they will come” philosophy doesn’t work. Good marketing
educates customers so that they can find the products they want, make
better choices about those products, and extract the most value from them.
In this way, marketing helps facilitate exchanges between buyers and sellers
for the mutual benefit of both parties. Likewise, good social marketing
provides people with information and

helps them make healthier decisions for themselves and for others.
Of course, all business students should understand all functional areas of the
firm, including marketing. There is more to marketing, however, than simply
understanding its role in the business. Marketing has tremendous impact on
society.
Marketing Delivers Value
Not only does marketing deliver value to customers, but also that value
translates into the value of the firm as it develops a reliable customer base
and increases its sales and profitability. So when we say that marketing
delivers value, marketing delivers value to both the customer and the
company. Franklin D. Roosevelt, the U.S. president with perhaps the greatest
influence on our economic system, once
said, “If I were starting life over again, I am inclined to think that I would go
into the advertising business in preference to almost any other. The general
raising of the standards of modern civilization among all groups of people
during the past half century would have been impossible without the
spreading of the knowledge of higher standards by means of
advertising.”Famous Quotes and Authors, “Franklin D. Roosevelt Quotes and
Quotations,” referred to advertising, but advertising alone is insufficient for
delivering value.
Marketing finishes the job by ensuring that what is delivered is valuable.
Marketing Benefits Society
Marketing benefits society in general by improving people’s lives in two ways.
First, as we mentioned, it facilitates trade. As you have learned, or will learn,
in economics, being able to trade makes people’s lives better. Otherwise
people wouldn’t do it. (Imagine what an awful life you would lead if you had
to live a Robinson Crusoe–like existence as did Tom Hanks’s character in the
movie Castaway.) In addition, because better marketing means more
successful companies, jobs are created. This generates wealth for people,
who are then able to make purchases, which, in turn, creates more jobs.
The second way in which marketing improves the quality of life is based on
the value delivery function of marketing, but in a broader sense. When you
add all the marketers together who are trying to deliver offerings of greater
value to consumers and are effectively communicating that value, consumers
are able to make more informed decisions about a wider array of choices.
From an economic
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perspective, more choices and smarter consumers are indicative of a higher
quality of life.
Marketing Costs Money
Marketing can sometimes be the largest expense associated with producing
a product. In the soft drink business, marketing expenses account for about
one-third of a product’s price—about the same as the ingredients used to
make the soft drink itself. At the bottling and retailing level, the expenses
involved in marketing a drink to consumers like you and me make up the
largest cost of the product.
Some people argue that society does not benefit from marketing when it
represents such a huge chunk of a product’s final price. In some cases, that
argument is justified. Yet when marketing results in more informed
consumers receiving a greater amount of value, then the cost is justified.
Marketing Offers People Career Opportunities
Marketing is the interface between producers and consumers. In other
words, it is the one function in the organization in which the entire business
comes together. Being responsible for both making money for your company
and delivering satisfaction to your customers makes marketing a great career.
In addition, because marketing can be such an expensive part of a business
and is so critical to its success, companies actively seek good marketing
people. At the beginning of each chapter in this book, we profile a person in
the marketing profession and let that person describe for you what he or she
does. As you will learn, there’s a great variety of jobs available in the
marketing profession. These positions represent only a few of the
opportunities available in marketing.
• Marketing research. Personnel in marketing research are responsible for
studying markets and customers in order to understand what strategies or
tactics might work best for firms.
• Merchandising. In retailing, merchandisers are responsible for
developing strategies regarding what products wholesalers should
carry to sell to retailers such as Target and Walmart.
• Sales. Salespeople meet with customers, determine their needs,
propose offerings, and make sure that the customer is satisfied. Sales
departments can also include sales support teams who work on
creating the offering.
• Advertising. Whether it’s for an advertising agency or inside a

company, some marketing personnel work on advertising. Television
commercials and print ads are only part of the advertising mix. Many
people who work in advertising spend all their time creating
advertising for electronic media, such as Web sites and their pop-up
ads, podcasts, and the like.
• Product development. People in product development are responsible for
identifying and creating features that meet the needs of a firm’s customers.
They often work with engineers or other technical personnel to ensure that
value is created.
• Direct marketing. Professionals in direct marketing communicate
directly with customers about a company’s product offerings via
channels such as e-mail, chat lines, telephone, or direct mail.
• Digital media. Digital media professionals combine advertising, direct
marketing, and other areas of marketing to communicate directly with
customers via social media, the Web, and mobile media (including texts).
They also work with statisticians in order to determine which consumers
receive which message and with IT professionals to create the right look and
feel of digital media.
• Event marketing. Some marketing personnel plan special events,
orchestrating face-to-face conversations with potential and current
customers in a special setting.
• Nonprofit marketing. Nonprofit marketers often don’t get to do
everything listed previously as nonprofits typically have smaller
budgets. But their work is always very important as they try to change
behaviors without having a product to sell. A career in marketing can begin
in a number of different ways.
Entry-level positions for new college graduates are available in many of the
positions previously mentioned. A growing number of CEOs are people with
marketing backgrounds.
Traditional Marketing Approach
Traditional marketing is an umbrella term that covers the wide array of
advertising channels we see daily. These may include print media, billboard
and TV advertising, flyer and poster campaigns and radio broadcast
advertising. They are not necessarily outdated, however, research has shown
those companies that have abandoned simply using these channels, and
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adopted contemporary marketing channels proposed in this article, have
remained prosperous and in fact seen an increase in leads, sales and traffic
to web content.
Traditional marketing theories include Ansoff's Matrix, a theory that
proposes products/services fall into one of four categories depending on the
market and the product released. New Product- New Market is considered as
diversification. This theory recommends that businesses should try to
diversify their product portfolio so as to spread risk amongst their product
range. An example of this would be when apple created the first iPhone
released in 2007. This product was new and introduced into a new market.
Apple soon reaped the benefits of introducing this hugely popular phone.
Their product range grew from accommodating for designers on the Apple
Mac, to mobile devices, tablet devices, watches and beyond.
Another marketing theory that's considered to be traditional is the marketing
mix. Made up of the 7 P's. These include product, place, price, promotion,
people, physical environment, process.. All these components, when
combined, create a solid marketing proposal. However this theory as well as
Ansoff's, can be drastically improved with the use of contemporary marketing
strategies.
Traditional Marketing seeks to pull customers to a product, whatever the
cost. It is, for this reason, considered to be fairly outdated as it does not
consider the customer they are selling to, more the market that the company
operates within. There are however channels that have developed from
traditional marketing, including digital, that aim for the same goal, however,
use more subtle and approachable mediums so as to capture their target
audience. This may include Pay-Per-Click Campaigns, social media posts,
search engine optimisation and email marketing.

Ansoff Matrix
Market Penetration is the safest of the four options. Here, you focus on
expanding sales of your existing product in your existing market: you know
the product works, and the market holds few surprises for you.
Product development- is slightly more risky, because you’re introducing a
new product into your existing market.
Market development- you’re putting an existing product into an entirely new
market. You can do this by finding a new use for the product, or by adding
new features or benefits to it.
Diversification-is the riskiest of the four options, because you are introducing
a new, unproven product into an entirely new market that you may not fully
understand.
Contemporary Marketing Approach
Contemporary Marketing refers to theories that stress the importance of
customer orientation versus the traditional market orientation. They are
strategies that, when implemented, offer greater support for their client base
with a product range that varies depending on what the target market
desires. Rather than what the company wants them to have.
Products including the vast array of kitchen appliances with built in failure
components attracting their customer base back to them for further
purchases are an example of product orientation. Traditional marketing
theories are said to favour this ideology. Though somewhat devious, it is most
definitely effective. Attracting customers to their product range has become
more difficult because consumers have become more literate in technology
and, therefore, can research items before purchase. This allows them to make
a conscious and informed decision to avoid companies with this ethos.
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Contemporary marketing theories include Co-Creation. This theory suggests
creating a bridge between customer and business through gamification. A
practical example would be attracting customers through social media
content relevant to their needs or writing article blog posts that have useful
information. Research conducted by Harvard business school and London
school for business found that businesses that utilised the contemporary
marketing strategy and incorporating both co-creative and shared value
ideas, over the long run prospered far more than those companies who
hadn't chosen this avenue.
Another popular contemporary marketing theory is shared value. This theory
considers the market that the company is wanting to penetrate and seeks to
offer perks in said market. A successful example of this would include Tesla.
They have invested millions of dollars building charging stations for electric
cars across North America, Europe and Asia. The stations can be used by
many different branded electric cars. They have actively tried to improve the
market whilst simultaneously attract more customers to them. For B2B
companies, this may include creating events where companies in the same
industry can be invited and discuss amongst themselves offers they can give
each other.
Overview of the Marketing Plan
The marketing plan is a summary of what the company or firm wants and
plans to do before launching a new product, or before re-launching
product/service. It is composed of the following elements
Executive Summary
Present market Situation
SWOT ANALYSIS
Marketing Objectives
Marketing Strategies
Marketing Programs in the Marketing Mix

1. Executive Summary- it is a rundown of the programs and
recommendations particular to a product/service under study.
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 what the other competitors products are offering and what
the firm’s product intends to offer to be competitive in the market.
3. SWOT analysis- this analysis includes the company’s strength,
weaknesses, opportunities and threats.
4. Marketing Objectives should be SMART
5. Marketing Strategies- these strategies are based on the marketing
mix
6. Marketing Programs in the Marketing Mix
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.
8. Controls- these are mechanisms 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.
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MODULE 2: CONSUMER BEHAVIOR
OBJECTIVES:
1. Describe the personal and psychological factors that may influence what
consumers buy and when they buy it.
2. Explain what marketing professionals can do to influence consumers’
behavior.
3. Explain how looking at lifestyle information helps firms understand
what consumers want to purchase.
4. Explain how Maslow’s hierarchy of needs works.
5. Explain how culture, subcultures, social classes, families, and reference
groups affect consumers’ buying behavior.
Why do you buy the things you do? How did you decide to go to the college
you’re attending? Where do like to shop and when? Do your friends shop at
the same places or different places? Do you buy the same brands multiple
times or eat at the same restaurants frequently?
Marketing professionals that have the answers to those questions will have a
much better chance of creating, communicating about, and delivering value-
added products and services that you and people like you will want to buy.
That’s what the study of consumer behavior is all about. Consumer behavior1
considers the many reasons—personal, situational, psychological, and
social—why people shop for products, buy and use them, sometimes become
loyal customers, and then dispose of them.
the study of consumer behaviour is an important part of the managerialist
approach to marketing. Underpinning this notion is the belief that if
academics and industrialists can come to a better understanding of why
people behave as they do, it should be possible to develop products which
have a better chance of success in the market place. Over and above the
interests of firms, there is a societal interest in seeking to understand
consumer behaviour.
Consumer behavior is influenced by many things, including environmental
and marketing factors, the situation, personal and psychological factors,

family, and culture. Businesses try to figure out trends so they can reach the
people most likely to buy their products in the most cost-effective way
possible. Businesses often try to influence a consumer’s behavior with things
they can control such as the layout of a store, music, grouping and availability
of products, pricing, and advertising. While some influences may be
temporary and others are long lasting, different factors can affect how buyers
behave—whether they influence you to make a purchase, buy additional
products, or buy nothing at all.
Consumer behavior is 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.
Factors that Influence Consumer behavior
1. Culture- it 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- social aspects refer to the status and roles of people
in the society.
3. Personal factors- these include age, lifestyle, occupation, civil status,
religion, economic status,, and personality of the consumers.
4. Psychological factors- consumers’ buying patterns are largely
influenced by the following psychological factors: motivation,
perception, learning, beliefs, and attitudes. Consumers have
different preferences due to various psychological tendencies.
Low-Involvement Versus High-Involvement Buying Decisions and the
Consumer’s Decision-Making Process
The level of involvement reflects how personally important or interested you
are in consuming a product and how much information you need to make a
decision. The level of involvement in buying decisions may be considered a
continuum from decisions that are fairly routine (consumers are not very
involved) to decisions that require extensive thought and a high level of
involvement. Whether a decision is low, high, or limited, involvement varies
by consumer, not by product, although some products such as purchasing a
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house typically require a high-involvement for all consumers. Consumers
with no experience purchasing a product may have more involvement than
someone who is replacing a product.
Consumers often engage in routine response behavior27 when they make
low involvement decisions—that is, they make automatic purchase decisions
based on limited information or information they have gathered in the past.
For example, if you always order a Diet Coke at lunch, you’re engaging in
routine response behavior. You may not even think about other drink options
at lunch because your routine is to order a Diet Coke, and you simply do it.
Similarly, if you run out of Diet Coke at home, you may buy more without any
information search.
Some low-involvement purchases are made with no planning or previous
thought. These buying decisions are called impulse buying28. While you’re
waiting to check out at the grocery store, perhaps you see a magazine with
Angelina Jolie and Brad Pitt on the cover and buy it on the spot simply
because you want it. You might see a roll of tape at a check-out stand and
remember you need one or you might see a bag of chips and realize you’re
hungry or just want them. These are items that are typically low-involvement
decisions. Low-involvement decisions aren’t necessarily products purchased
on impulse, although they can be.
By contrast, high-involvement decisions30 carry a higher risk to buyers if they
fail, are complex, and/or have high price tags. A car, a house, and an insurance
policy are examples. These items are not purchased often but are relevant
and important to the buyer. Buyers don’t engage in routine response
behavior when purchasing high-involvement products. Instead, consumers
engage in what’s called extended problem solving31, where they spend a lot
of time comparing different aspects such as the features of the products,
prices, and warranties.
High-involvement decisions can cause buyers a great deal of post purchase
dissonance (anxiety) if they are unsure about their purchases or if they had a
difficult time deciding between two alternatives. Companies that sell high
involvement products are aware that post purchase dissonance can be a
problem. Frequently, they try to offer consumers a lot of information about
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their products, including why they are superior to competing brands and how Stages in the Buying Process
they won’t let the consumer down. Salespeople may be utilized to answer
questions and do a lot of customer “hand-holding.”

Abraham Maslow’s Hierarchy of Needs

Stage 1. Need Recognition

You plan to backpack around the country after you graduate and don’t have
a particularly good backpack. You realize that you must get a new backpack.
You may also be thinking about the job you’ve accepted after graduation and
know that you must get a vehicle to commute. Recognizing a need may
involve something as simple as running out of bread or milk or realizing that
you must get a new backpack or a car after you graduate. Marketers try to
show consumers how their products and services add value and help satisfy

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needs and wants. Do you think it’s a coincidence that Gatorade, Powerade,
and other beverage makers locate their machines in gymnasiums so you see
them after a long, tiring workout? Previews at movie theaters are another
example. How many times have you have heard about a movie and had no
interest in it—until you saw the preview? Afterward, you felt like you had to
see it.
Stage 2. Search for Information
For products such as milk and bread, you may simply recognize the need, go
to the store, and buy more. However, if you are purchasing a car for the first
time or need a particular type of backpack, you may need to get information
on different alternatives. Maybe you have owned several backpacks and
know what you like and don’t like about them. Or there might be a particular
brand that you’ve purchased in the past that you liked and want to purchase
in the future. This is a great position for the company that owns the brand to
be in—something firms strive for. Why? Because it often means you will limit
your search and simply buy their brand again. If what you already know about
backpacks doesn’t provide you with enough information, you’ll probably
continue to gather information from various sources. Frequently people ask
friends, family, and neighbors about their experiences with products.
Magazines such as Consumer Reports (considered an objective source of
information on many consumer products) or Backpacker Magazine might also
help you. Similar information sources are available for learning about
different makes and models of cars. Internet shopping sites such as
Amazon.com have become a common source of information about products.
Epinions.com is an example of consumer-generated review site. The site
offers product ratings, buying tips, and price information. Amazon.com also
offers product reviews written by consumers. People prefer “independent”
sources such as this when they are looking for product information.
However, they also often consult non-neutral sources of information, such
advertisements, brochures, company Web sites, and salespeople.
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Stage 3. Product Evaluation
Obviously, there are hundreds of different backpacks and cars available. It’s
not possible for you to examine all of them. In fact, good salespeople and
marketing professionals know that providing you with too many choices can
be so overwhelming that you might not buy anything at all. Consequently,
you may use choice heuristics or rules of thumb that provide mental shortcuts
in the decision making process. You may also develop evaluative criteria to
help you narrow down your choices. Backpacks or cars that meet your initial
criteria before the consideration will determine the set of brands you’ll
consider for purchase.
Evaluative criteria are certain characteristics that are important to you such
as the price of the backpack, the size, the number of compartments, and
color. Some of these characteristics are more important than others. For
example, the size of the backpack and the price might be more important to
you than the color—unless, say, the color is hot pink and you hate pink. You
must decide what criteria are most important and how well different
alternatives meet the criteria.
Stage 4. Actual Purchase/ Product Choice and Purchase
With low-involvement purchases, consumers may go from recognizing a need
to purchasing the product. However, for backpacks and cars, you decide
which one to purchase after you have evaluated different alternatives. In
addition to which backpack or which car, you are probably also making other
decisions at this stage, including where and how to purchase the backpack
(or car) and on what terms. Maybe the backpack was cheaper at one store
than another, but the salesperson there was rude. Or maybe you decide to
order online because you’re too busy to go to the mall. Other decisions
related to the purchase, particularly those related to big-ticket items, are
made at this point. For example, if you’re buying a high-definition television,
you might look for a store that will offer you credit or a warranty.

Stage 5. Postpurchase Use and Evaluation
At this point in the process you decide whether the backpack you purchased
is everything it was cracked up to be. Hopefully it is. If it’s not, you’re likely to
suffer what’s called post purchase dissonance34. You might call it buyer’s
remorse. Typically, dissonance occurs when a product or service does not
meet your expectations. Consumers are more likely to experience dissonance
with products that are relatively expensive and that are purchased
infrequently. You want to feel good about your purchase, but you don’t. You
begin to wonder whether you should have waited to get a better price,
purchased something else, or gathered more information first. Consumers
commonly feel this way, which is a problem for sellers. If you don’t feel good
about what you’ve purchased from them, you might return the item and
never purchase anything from them again. Or, worse yet, you might tell
everyone you know how bad the product was.
Companies do various things to try to prevent buyer’s remorse. For smaller
items, they might offer a money back guarantee or they might encourage
their salespeople to tell you what a great purchase you made. How many
times have you heard a salesperson say, “That outfit looks so great on you!”
For larger items, companies might offer a warranty, along with instruction
booklets, and a toll-free troubleshooting line to call or they might have a
salesperson call you to see if you need help with product. Automobile
companies may offer loaner cars when you bring your car in for service.
Companies may also try to set expectations in order to satisfy customers.
Service companies such as restaurants do this frequently. Think about when
the hostess tells you that your table will be ready in 30 minutes. If they seat
you in 15 minutes, you are much happier than if they told you that your table
would be ready in 15 minutes, but it took 30 minutes to seat you. Similarly, if
a store tells you that your pants will be altered in a week and they are ready
in three days, you’ll be much more satisfied than if they said your pants would
be ready in three days, yet it took a week before they were ready.
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Stage 6. Disposal of the Product
There was a time when neither manufacturers nor consumers thought much
about how products got disposed of, so long as people bought them. But
that’s changed. How products are being disposed of is becoming extremely
important to consumers and society in general. Computers and batteries,
which leech chemicals into landfills, are a huge problem. Consumers don’t
want to degrade the environment if they don’t have to, and companies are
becoming more aware of this fact.
Take for example Crystal Light, a water-based beverage that’s sold in grocery
stores. You can buy it in a bottle. However, many people buy a concentrated
form of it, put it in reusable pitchers or bottles, and add water. That way, they
don’t have to buy and dispose of plastic bottle after plastic bottle, damaging
the environment in the process. You have probably noticed that most grocery
stores now sell cloth bags consumers can reuse instead of continually using
and discarding of new plastic or paper bags.
Other companies are less concerned about conservation than they are about
planned obsolescence35. Planned obsolescence is a deliberate effort by
companies to make their products obsolete, or unusable, after a period of
time. The goal is to improve a company’s sales by reducing the amount of
time between the repeat purchases consumers make of products. When a
software developer introduces a new version of product, it is usually designed
to be incompatible with older versions of it. For example, not all the
formatting features are the same in Microsoft Word 2007 and 2010.
Sometimes documents do not translate properly when opened in the newer
version. Consequently, you will be more inclined to upgrade to the new
version so you can open all Word documents you receive. Products that are
disposable are another way in which firms have managed to reduce the
amount of time between purchases. Disposable lighters are an example. Do
you know anyone today that owns a non-disposable lighter? Believe it or not,
prior to the 1960s, scarcely anyone could have imagined using a cheap
disposable lighter. There are many more disposable products today than
there were in years past—including everything from bottled water and
individually wrapped snacks to single-use eye drops and cell phones.
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MODULE 3: CUSTOMER RELATIONSHIP MARKETING expectations. The salesperson also solicits from the customer any
product improvement suggestions and any specific disappointments.
Relationship marketing is a facet of customer relationship management
This information helps the company continuously to improve its
(CRM) that focuses on customer loyalty and long-term customer engagement
offering.
rather than shorter-term goals like customer acquisition and individual sales.
4. Proactive. The salesperson or others in the company phone the
The goal of relationship marketing (or customer relationship marketing) is to
customer from time to time with suggestions about improved
create strong, even emotional, customer connections to a brand that can lead
product use or helpful new products.
to ongoing business, free word-of-mouth promotion and information from
5. Partnership. The company works continuously with the customer
customers that can generate leads
and with other customers to discover ways to deliver better value.
We define marketing management as the art and science of choosing target
SIX MARKET MODELS
markets and building profitable relationships with them. This involves
obtaining, retaining and developing customers through creating and 1. Customer Market: This market contains buyer, intermediates, final
delivering and communicating superior customer value. customers and retailers. They are our final consumers for a product. So they
are the most important entity for any business. We need to retain them as
(http://searchcrm.techtarget.com/definition/relationship-marketing)
long as we can. We also need to attract new customers. Ultimately creating
Relationship marketing involves creating, maintaining and enhancing strong brand loyal customers is our main goal. We can add more values to our
relationships with customers and other stakeholders. Increasingly, marketing product. Customer Market directly influences an organization. If customers
is moving away from a focus on individual transactions and towards a focus are not satisfied with our product, we can not retain them. In case of Service
on building value-laden relationships and marketing networks. Relationship Marketing customers’ satisfaction is more crucial.
marketing is oriented more towards the long term. The goal is to deliver long-
2. Influence Market: Influence market includes stakeholders as well as
term value to customers and the measure of success is long-term customer
third parties. Customers who have bought our product must give feedback to
satisfaction. Relationship marketing requires that all of the company’s
their friends, relatives and neighbors. For any organization these customers
departments work together with marketing as a team to serve the customer.
are their influencers and when third party like supply partners and retailers
It involves building relationships at many levels – economic, social, technical
influence our customer to buy our product, they are called value added
and legal – resulting in high customer loyalty.
influencers. They may be TV reporters, Shopkeeper, Article writers, Analysts
We can distinguish five different levels of relationships that can be formed etc.
with customers who have purchased a company’s product, such as a car or a
Sometimes our own competitors also act as our influencer. Their ads can help
piece of equipment:
an organization to add more customers and their promotional activities can
1. Basic. The company salesperson sells the product, but does not decline our sale.
follow up in any way.
2. Reactive. The salesperson sells the product and encourages the
customer to call whenever he or she has any questions or problems. 3. Referral Market: Referral marketing is when we buy something after
3. Accountable. The salesperson phones the customer a short time being referred by our friends and relatives. In general we can understand this
after the sale to check whether the product is meeting the customer’s term as “Word of Mouth”. In case of Service Marketing, Referral marketing is
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very common. We can also find this in our daily life. We can get hundreds of
advises when we look for a doctor. Everyone in our family would suggest a
different Physician. So this is what Referral Marketing is.
So Referral Market can further be divided into 2 categories: Customer and
Non Customer Referral Markets. So this is the cheapest way of promotion and
effective too. So our main priority should be “Customer Satisfaction”.
(1) “Customer markets” include existing and prospective customers as well as
intermediaries like retailers, wholesalers;
(2) “Referral markets” include two main categories – existing customers who
recommend their suppliers to others, and referral sources, or “multipliers”,
such as an accounting firm who may refer work to a law firm;
(3) “Influencer markets” include financial analysts, shareholders, the business
press, the government, and consumer groups;

4. Supplier Market: Suppliers are like partners to an organization. They
do supply the crucial raw materials and parts. We need to develop an
strategic alliance with them. We need to maintain a good relation with them
as well.
(4) “Employee markets” concerns with attracting the right employees to the
organization);
(5) “Supplier markets” include traditional suppliers as well as organizations
with which the firms has some form of strategic alliance); and

(6) “Internal markets” (the organization including internal departments and

5. Employee/Recruitment Market: This market helps an organization to staff (Christopher et al., 1991).
keep the best people who can add values to the organization. They should be
(https://topbullets.com/2013/09/11/six-markets-model-relationship-
talented, experienced, skilled and loyal. In IT industry the firm needs
marketing-crm/)
innovative and skilled persons but in case of Service Markets firms need
skilled as well as experienced people. So we can say that people inside the
firm also affect the profitability. An organization always looks for individuals
with particular skills; who are highly productive, innovative, and effective;
and who share a given organization’s values.

6. Internal Market: This kind of market applies to the customers and

employees within the organization. Actually there should be proper harmony
among the employee and suppliers and customers so that organization can
work together and achieve its mission.

Specifically in terms of relationship marketing, those within the organizations

must understand how the impact relationships between the firm and other
parties, do so in a way that reflects and supports the organization’s long-term
goals, and resolve conflicts of interest accordingly.

Payne, Adrian, David Ballantyne, and Martin Christopher (2005) summarize

this 6 Markets model as:

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THE LOYALTY LADDER
This loyalty ladder is the heart of CRM.
Customer Relationship Marketers focus their
resources on moving their customers up the
loyalty ladder. This new view of marketing is
not merely a better way to practice marketing;
it will require fundamental changes in
marketing practice.
THE CUSTOMER RELATIONSHIP MARKETING REVOLUTION
Customer Relationship Marketing is not about an evolution of marketing
thought. CRM is a genuine revolution in how marketers manage their brands.
Each marketing wave has been swelled by its own agents of change.
Waves of Marketing Thoughts
Mass-marketing was facilitated by department stores and supermarket
chains—themselves the product of accelerated delivery systems—and by
patent-protecting legislation for national brands.
Targeted marketing got a boost from the demographic fractionization of the
“Me Generation,” from FM radio, specialty magazines, the birth of cable TV
and other fragmented media, and from a retail revolution in which malls,
filled with specialty stores, challenged department-store dominance.
Global marketing’s facilitators include legislation like NAFTA, the
development of a European Economic Union, the increased reliance on global
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manufacturing, the growing interdependency of financial markets, the
increasing accessibility and popularity of international travel, the
development of international media, and the advent of the satellite dish,
which allows anybody anywhere to pick off programming that isolationists
previously contained.
Customer Relationship Marketing -will make earlier agents of change look
inadequate. The key facilitator is technology available to marketers. CRM
weds the individual customer and technology in ways that are unique. These
fourth-wave relationships, propelled by a confluence of technological
advances, will themselves change at geometric rates.
 one-to-one marketing
 Database marketing
 Integrated marketing
 Interactivity
Service Marketing
Service marketing is marketing based on relationship and value. It may be
used to market a service or a product. With the increasing prominence of
services in the global economy, service marketing has become a subject that
needs to be studied separately. Marketing services is different from
marketing goods because of the unique characteristics of services namely,
intangibility, heterogeneity, perishabil-ity and inseparability.
Reference:http://www.yourarticlelibrary.com/marketing/service-marketing-
definition-features-and-problem-faced-in-marketing-services/32336/
A service is any activity or benefit that one party can offer to another which
is essentially intangible and does not result in the ownership of anything. Its
production may or may not be tied to a physical product.

The American Marketing Association defines services as - “Activities, benefits
and satisfactions which are offered for sale or are provided in connection with
the sale of goods.
Reference: http://www.managementstudyguide.com/definition-and-
characteristics-of-services.htm
CHARACTERISTICS of Service
Intangibility: Services are intangible and do not have a physical existence.
Hence services cannot be touched, held, tasted or smelt. This is most defining
feature of a service and that which primarily differentiates it from a product.
Also, it poses a unique challenge to those engaged in marketing a service as
they need to attach tangible attributes to an otherwise intangible offering.
Physical products in the store are widely displayed for customers to see, feel,
touch, weigh or sniff at before deciding whether or not to buy.
Comparing this with the choice of the service of say, an insurance policy. You
cannot touch, see or smell the products before choosing, although clearly you
can make some assessment based on past experience, word of mouth, or
even the location and decor of the insurance office. The intangible nature of
most services gives rise to special problems both for suppliers and
consumers.
2. Heterogeneity/Variability increase control over the service; switch from
people to machine; reduce perceived risks. In the production and marketing
of physical products, companies have increasingly paid special attention to
ensuring consistency in quality, feature, packaging, and so on. More often
than not all customers can be sure that every bottle of Coke he/she buys,
even in a life-time of purchases, will not vary. The provision of services,
however, invariably includes a large measure of the “human element” Given
the very nature of services, each service offering is unique and cannot be
exactly repeated even by the same service provider. While products can be
mass produced and be homogenous the same is not true of services. eg: All
burgers of a particular flavor at McDonalds are almost identical. However, the
same is not true of the service rendered by the same counter staff
consecutively to two customers.
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3. Perishability: Services cannot be stored, saved, returned or resold once
they have been used. Once rendered to a customer the service is completely
consumed and cannot be delivered to another customer. eg: A customer
dissatisfied with the services of a barber cannot return the service of the
haircut that was rendered to him. At the most he may decide not to visit that
particular barber in the future. Perhaps of all the suggested special
characteristics of service products or classification of services, this is one of
the most difficult to appreciate. Why? Services are highly perishable
compared to physical products. But how could, for example, the services of
say, an airline be considered to be more perishable than, say, fresh food and
vegetable products?
The reason is that unlike most physical products, many services cannot be
stored. For example, if an airline does not sell all the seats on a particular
flight, then those seats or rather the sales revenue of filling of them would
have carried, has immediately and irreversibly gone.
4. Inseparability/Simultaneity of production and consumption: This refers
to the fact that services are generated and consumed within the same time
frame. Eg: a haircut is delivered to and consumed by a customer
simultaneously unlike, say, a takeaway burger which the customer may
consume even after a few hours of purchase. Moreover, it is very difficult to
separate a service from the service provider. Eg: the barber is necessarily a
part of the service of a haircut that he is delivering to his customer. A key
distinguishing feature of service marketing is that the service provision and
provider are inseparable from the service consumption and consumer. For
example, we cannot take a hotel room home for consumption; we must
“consume” this service at the point of provision. Similarly, the hairdresser
needs to be physically present for this service to be consumed.
Non-ownership
The final distinguishing feature of a service is that, unlike a physical product,
the consumer does not secure ownership of the service. Rather the customer
pays only to secure access to or use of the service. Again the hotel room is a
good example. Similarly, with banking services, although the customer may
be given a Cheque book, credit cards, etc, they serve only to allow the
customer to make use of what he or she is actually buying, namely, bank
services.
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Reference:http://www.entrepreneurshipsecret.com/5-major- 1. Gap between consumer expectation and management perception—

characteristics-of-services/ Management does not always correctly perceive what customers want.
Hospital administrators may think patients want better food, but patients
Types of Services may be more concerned with nurse responsiveness.

1. Core Services: A service that is the primary purpose of the
transaction. Eg: a haircut or the services of lawyer or teacher.
2. Supplementary Services: Services that are rendered as a corollary to
the sale of a tangible product. Eg: Home delivery options offered by
restaurants above a minimum bill value.
Difference between Goods and Services
Given below are the fundamental differences between physical goods and
services:
Goods Services
A physical commodity A process or activity
2. Gap between management perception and service-quality specification—
Management might correctly perceive customers’ wants but not set a
performance standard. Hospital administrators may tell the nurses to give
“fast” service without specifying it in minutes.
3. Gap between service-quality specifications and service delivery—
Employees might be poorly trained, or incapable of or unwilling to meet the
standard; they may be held to conflicting standards, such as taking time to
listen to customers and serving them fast.
4. Gap between service delivery and external communications—Consumer
expectations are affected by statements made by company representatives
and ads. If a hospital brochure shows a beautiful room but the patient finds
it to be cheap and tacky looking, external communications have distorted the
customer’s expectations.

5. Gap between perceived service and expected service—This gap occurs

Tangible Intangible when the consumer
misperceives the service quality. The physician may keep visiting the patient
Homogenous Heterogeneous to show care, but
the patient may interpret this as an indication that something really is wrong.

Production and distribution are Production, distribution and Customer Service Strategy in the Philippines
separation from their consumption consumption are simultaneous Customer service is the act of taking care of the customer's needs by
processes providing and delivering professional, helpful, high quality service and
assistance before, during, and after the customer's requirements are
Can be stored Cannot be stored met. Customer service is meeting the needs and desires of any
customer. Some characteristics of good customer service include:
Transfer of ownership is possible Transfer of ownership is not possible Characteristics of Good Customer Service
Promptness: Promises for delivery of products must be on time. Delays
Five gaps that cause unsuccessful delivery of Service and cancellations of products should be avoided.

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Politeness: Politeness is almost a lost art. Saying 'hello,' 'good
afternoon,' 'sir', and 'thank you very much' are a part of good
customer service. For any business, using good manners is appropriate
whether the customer makes a purchase or not.
Professionalism: All customers should be treated professionally, which
means the use of competence or skill expected of the professional.
Professionalism shows the customer they're cared for.
Personalization: Using the customer's name is very effective in
producing loyalty. Customers like the idea that whom they do business
with knows them on a personal level.
Reference: http://study.com/academy/lesson/what-is-customer-service-
definition-types-role-in-marketing.html
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STRATEGIC PLANNING
Just like the luxury-goods makers in the prelude case, all companies need
strategies to meet changing markets. No one strategy is best for all
companies. Each company must find the way that makes most sense, given
its situation, opportunities, objectives and resources. Marketing plays an
important role in strategic planning. It provides information and other inputs
to help prepare the strategic plan. Strategic planning is also the first stage of
marketing planning and defines marketing’s role in the organisation. The
strategic plan guides marketing, which must work with other departments in
the organisation to achieve strategic objectives. Strategic planning is
important for organizations to make decisions on how to utilize their
resources in order to achieve their organizational goals.
Strategic planning is an organizational management activity that is used to
set priorities, focus energy and resources, strengthen operations, ensure that
employees and other stakeholders are working toward common goals,
establish agreement around intended outcomes/results, and assess and
adjust the organization's direction in response to a changing environment. It
is a disciplined effort that produces fundamental decisions and actions that
shape and guide what an organization is, who it serves, what it does, and why
it does it, with a focus on the future. Effective strategic planning articulates
not only where an organization is going and the actions needed to make
progress, but also how it will know if it is successful.
Reference:(http://balancedscorecard.org/Resources/Strategic-Planning-
Basics)
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SWOT ANALYSIS- is a strategic planning tool that organizations can use to Weaknesses (shore up, internal factor)
identify the following:

Strengths (capitalize, internal factor)

What tasks do you usually avoid because you don’t feel confident doing
them?

What advantages do you have that others don’t have (for example, skills,
certifications, education, or connections)?
What do you do better than anyone else?
What personal resources can you access?
Which of your achievements are you most proud of?
What will the people around you see as your weaknesses?
Are you completely confident in your education and skills training?
What are your negative work habits/ study habits?
Do you have personality traits that hold you back in your field? For instance,
if you have to conduct meetings on a regular basis, a fear of public speaking.

What values do you believe in that others fail to exhibit?

Are you part of a network that no one else is involved in? If so, what
connections do you have with influential people?

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Opportunities (invest, secondary data) THE PLANNING PROCESS

Putting plans into action involves four stages: analysis, planning,

implementation and control.

Analysis. Planning begins with a complete analysis of the company’s

situation. The company must analyse its environment to find attractive
opportunities and to avoid environmental threats. It must analyse company
strengths and weaknesses, as well as current and possible marketing actions,
to determine which opportunities it can best pursue. Analysis feeds
information and other inputs to each of the other stages.

Planning. Through strategic planning, the company decides what it wants to

do with each business unit. Marketing planning involves deciding marketing
strategies that will help the company attain its overall strategic objectives.
Marketing, product or brand plans are at the centre of this.

Implementation. Implementation turns strategic plans into actions that will

achieve the company’s objectives. People in the organisation who work with
Threats (identify, secondary data) others, both inside and outside the company, implement marketing plans.

Control. Control consists of measuring and evaluating the results of plans and
activities, and taking corrective action to make sure objectives are being
achieved. Analysis provides information and evaluations needed for all the
other activities.

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THREE IMPORTANT PLANNING STRATEGIES
The annual plan is a short-term plan that describes the current situation,
company objectives, the strategy for the year, the action programme,
budgets and controls. For an oil company, such as BP, this is about
maintaining profitability through the continuing Middle East crises and
Europe’s continued slow growth. The annual marketing budget is prepared
together with its action program that will be implemented. The company sets
control mechanism as bases for performance evaluation. A short-term plan
that describes the company’s current situation, its objectives, the strategy,
action programme and budgets for the year ahead, and controls.
The long-range plan describes the primary factors and forces affecting the
organization during the next several years. It includes the long-term
objectives, the main marketing strategies used to attain them and the
resources required. This long-range plan is reviewed and updated each year
so that the company always has a current long-range plan. The company’s
annual and long-range plans deal with current businesses and how to keep
them going. For BP the long-range plan looks at future oil supplies and
strategies for emerging markets, such as China. Long range planning covers a
period of about five years or more. It is setting the company direction for a
longer period which shall be updated by the annual plan. Target goals and
objectives are futuristic in nature anticipating the company’s position in
marketing environment. Budgets and targets are set within the five year
level. A plan that describes the principal factors and forces affecting the
organisation during the next several years, including long-term objectives,
the chief marketing strategies used to attain them and the resources
required.
The strategic plan involves adapting the firm to take advantage of
opportunities in its constantly changing environment. It is the process of
developing and maintaining a strategic fit between the organisation’s goals
and capabilities and its changing marketing. It is the set of all planning
activities that identifies its vision and mission, its company portfolio and
attendant strategies. Targets are set together with detailed strategies to
accomplish the specific objectives and goals. A plan that describes the
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principal factors and forces affecting the organisation during the next several
years, including long-term objectives, the chief marketing strategies used to
attain them and the resources required.
THE THREE LEVELS IN STRATEGIC MARKETING PLANNING
1. Strategic Company Planning
It is defining the organization mission and vision, setting long range
goals, and formulation brand strategies to accomplish the goals. The
company planning framework sets the direction in all other areas of
the functional organization such as production, finance, human
resources, research and development and finally marketing.
4 Essential Steps in Company Strategic Planning
 Define the organizational mission
 Analyze the marketing situation
 Set the organizational objectives
 Define the suitable strategies to achieve the desired
objectives
2. Strategic Marketing Planning
It is the function of the higher management in setting the goals and
strategies of the marketing organization. It is the company’s wide
planning process that involved all other executives. It involves round
table discussions of the company’s direction and the strategies shall
be implemented
5 Steps in Marketing Planning
 Conduct situation analysis
 Develop specific marketing objectives
 Determine product positioning and establishing differential
advantage
 Select target market and measure market demand
 Design a strategic marketing mix
3. Strategic Annual Planning
This is the process of making short term plans in an annual basis. The
strategic marketing plans prepared by top executives are now
developed in achievable levels in shorter period of one year.
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Marketing managers in this level prepare annual budgets, prepare
target market analysis, and develop specific marketing strategies.
Michael Porter’s 5 Forces Model
Porter's Five Forces of Competitive Position Analysis were developed in 1979
by Michael E Porter of Harvard Business School as a simple framework for
assessing and evaluating the competitive strength and position of a business
organisation.
to price increases. This reduces both the power of suppliers and the
attractiveness of the market.
5. Threat of new entry. Profitable markets attract new entrants, which
erodes profitability. Unless incumbents have strong and durable barriers to
entry, for example, patents, economies of scale, capital requirements or
government policies, then profitability will decline to a competitive rate.
Reference: http://www.cgma.org/Resources/Tools/essential-tools/Pages/porters-
five-forces.aspx?TestCookiesEnabled=redirect

This theory is based on the concept that there are five forces that determine threat of
the competitive intensity and attractiveness of a market. Porter’s five forces new entrants
help to identify where power lies in a business situation. This is useful both in
understanding the strength of an organisation’s current competitive position,
and the strength of a position that an organisation may look to move into.

Strategic analysts often use Porter’s five forces to understand whether new
products or services are potentially profitable. By understanding where power of competitive power of
power lies, the theory can also be used to identify areas of strength, to suppliers rivalry customers

improve weaknesses and to avoid mistakes.

The five forces are:

1. Supplier power. An assessment of how easy it is for suppliers to drive up

prices. This is driven by the: number of suppliers of each essential input; threat of
uniqueness of their product or service; relative size and strength of the substitutes

supplier; and cost of switching from one supplier to another.

2. Buyer power. An assessment of how easy it is for buyers to drive prices
down. This is driven by the: number of buyers in the market; importance of
each individual buyer to the organisation; and cost to the buyer of switching
from one supplier to another. If a business has just a few powerful buyers,
they are often able to dictate terms.
3. Competitive rivalry. The main driver is the number and capability of
competitors in the market. Many competitors, offering undifferentiated
products and services, will reduce market attractiveness.
4. Threat of substitution. Where close substitute products exist in a market,
it increases the likelihood of customers switching to alternatives in response

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FACTORS TO CONSIDER IN PREPARING ANNUAL PLANNING STRATEGIES
1. Analyze previous year performance- learning comes from
experience. The previous year performance must be analyzed in
terms of variances in the allocation of resources and the success or
failure in the implementation of the program objectives
2. Set Accurate Timelines- timing the season of the year is one
important factor to consider. The timing in the marketing industry
must consider the celebration of the different holidays such as
Christmas, new year, fiestas, wedding months, valentine’s Day or
many occasions in the local calendar.
3. Develop Distribution Strategies- after analyzing the past marketing
campaign, it is important that the marketing channels and
promotional programs be revised to provide a new twist in the
marketing campaign.
4. Create a Workable Financial Budget- The success of the marketing
efforts hinges on the proper allocation of funds. The expected retrun
on investment (ROI) must be more than the program expenditure
METHODS OF FORECASTING DEMAND
The cornerstone of successful marketing planning is forecasting accurately
the demand for the product. Demand forecasting is the establishment of
product sales in the future or a period of one year. It is the basis in the
development of strategic plans. It will serve as a guide in the preparation of
the annual marketing budget and in allocating material resources in the
production of the marketable goods.
Top-down approach - is the major activity of top management in forecasting
market demand based on the analysis of the total market condition and
analysis. Under this approach management has to:
a. Develop a forecast of the general economic condition
b. Determine the total market potential
c. Measure the current market share, and
d. Forecast the projected product sales
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Bottoms-up-approach- is the forecasting method wherein the management
get information directly from sales people who are in touch with customers
or the dealers and distributors of the product. Under this approach
management has to:
a. Get information form sales people who are exposed to the market,
b. Analyze the information based on previous sales,
c. Make reasonable and accurate estimates, and
d. Make a total sales forecast for a given period.
CHARACTERISTICS OF POTENTIAL BUYERS
1. INTEREST- it is the state of mind of the potential buyer who likes to
buy the product for his needs and wants. A customer who sees a new
hand phone is a potential buyer but he might not have at the moment
enough money to purchase the said item. Interest alone is not
enough to call him a buyer. Potential market is the set of consumers
who profess some level of interest for a particular product or service.
2. Income or Money to Buy- potential buyers must have the money to
buy the product or service. Money is the most important
determinant for the customer to buy the product he wants for
himself or he must have enough income to own the product. Income
is the state or capacity to purchase the product either in cash or
instalment. Marketers could afford to vie out the product in differed
payments. Potential buyers must have the credit potentials through
their credit cards.
3. Access or Place of Distribution- the potential buyer must have access
to the goods or product he wanted.

MARKETING RESEARCH AND INFORMATION SYSTEM
Objectives:
1. Define and discuss the need for marketing research;
2. Give the pars of marketing research projects;
3. Analyze the development of new research paradigm research project;
4. Develop and discuss the structure of marketing information system;
5. Define decision support system and its role for marketing professional; and
6. Give the role of market competitive intelligence in the marketing of products.
MARKETING RESEARCH
Managers cannot always wait for information to arrive in bits and
pieces from the marketing intelligence system. They often require
formal studies of specific situations. For example, Apple Computer
wants to know how many and what kinds of people or companies will
buy its new ultralight personal computer.
Marketing research is the function linking the consumer, customer and
public to the marketer through information that is used to identify and
define marketing opportunities and problems, to generate, refine and
evaluate marketing actions, to monitor marketing performance, and to
improve understanding of the marketing process. Marketing
researchers specify the information needed to address marketing
issues, design the method for collecting information, manage and
implement the data collection process, analyse the results and
communicate the findings and their implications. Marketing
researchers engage in a wide variety of activities, ranging from
analyses of market potential and market shares to studies of customer
satisfaction and purchase intentions. Every marketer needs research.
A company can conduct marketing research in its research department
or have some or all of it done outside. Although most large companies
have their own marketing research departments, they often use
outside firms to do special research tasks or special studies. A company
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with no research department will have to buy the services of research
firms.
Marketing research has been variously defined but, essentially, it
relates to the collection of information regarding actual and potential
customers in the market place together with the analysis and
interpretation of these market data for use in management marketing
decision making. Usually such decisions relate to the elements of the
marketing mix, i.e. to product, pricing, promotion and channels of
distribution decisions. The following are examples of marketing
research definitions:
the systematic and continuing study and evaluation of all factors
bearing on any business operation which involves the transfer of goods
from a producer to a consumer. (Delens, 1950)
the objective gathering, recording and analysing of all facts about
problems relating to the transfer and sales of goods and services from
producer to consumer. (British Institute of Management, 1962)
the gathering and analysis of information to assist management in
making marketing decisions. These decisions involve the manipulation
of the firm’s pricing, promotion, distribution and product variables.
(Wentz, 1972)
The marketing research process
Defining the problem and research objectives
The objective of most research project is to solve the problems
prevailing in the marketing environment. The researcher should state
clearly the purpose of the study. It must include relevant information
and what information is needed and how it will be used to solve the
research problem.
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Developing the research plan and design between one or more variables affecting the market conditions.
This involved laboratory or field experiments.
The second step of the marketing research process calls for
determining the information needed, developing a plan for gathering Sampling Procedure and Research Instruments
it efficiently and presenting the plan to marketing management. The
1. Population
plan outlines sources of existing data and explains the specific research
The researcher must identify the total population covered by
approaches, contact methods, sampling plans and instruments that
the study. He must be able to develop the questionnaires that
researchers will use to gather new data.
will give the best results and the correct information that will
Research Design answer the problems under consideration. The source of
information must be properly identified, either coming from
a. Exploratory research—Marketing research to gather
primary or secondary data.
preliminary information that will help to better define
Primary data are direct answers to the questions in the study
problems and suggest hypotheses. It can be performed using
or direct observations conducted by the researcher. The
literature search, survey of people about their experiences
sources may come from internal company records or
about the product and some case studies. Interviewing people
comparative annual sales for a given period. Secondary data
may provide information on their perceptions about the
are from different sources like previous research findings,
product or provide vital information about the relationship of
periodicals, company publications, economic journal, books
some variables as to product acceptance in the market.
and publications, electronic sources and many more.
b. Descriptive Research—Marketing research to better describe
2. Development of Research Information
marketing problems, situations or markets, such as the market
A situation analysis is the background investigation that helps
potential for a product or the demographics and attitudes of
in refining the research problem. It includes interviewing
consumers. It is more rigid than exploratory research. It seeks
company officials or getting internal information that will aid in
to describe issues related to future demands of a particular
making hypothesis for testing. A hypothesis is a tentative
product. It tries to determine the number of population that
supposition that the researchers would prove its validity or a
uses the product or predict future demand. The researcher
possible solution.
must be able to define the population sample, the scope of the
project and the method of statistical analysis to be used in Data Gathering and Collecting Information
coming up with the data or information. In short, it must define
A good marketing research is scientifically done and creatively
the questions of what, who, where, when, why and how
presented. It is a process that is based on controlled environment with
aspects of the research.
variables that are clearly identified. The creative marketing research
c. Causal Research-Marketing research to test hypotheses about
findings hardly come in because some people that serve as population
cause-and-effect relationships. It seeks to fined cause and effect
sample don’t usually give the correct information on what they think
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about the product or service. Therefore, it is necessary that the
researcher come up with questionnaires that are easy to answer and
neutral enough to give the more accurate information.
Interpreting and Reporting the Findings
The researcher must analyze and report the findings to the
management. It must contain important information that will be
useful in making major decisions. It must contain important facts
rather than fancy statistical numbers or techniques. During the
presentation of data and findings the management may have various
questions that need further clarifications. It must be remembered that
the management may have various questions that need further
clarifications. It must be remembered that the management is the
ultimate decision maker on what to do with the research results.
The interpretation is the most important phase of the marketing study.
The best research is useless and meaningless if the management
accepts the results blindly as they many contain wrong interpretations.
Conclusions and Recommendations
The final phase of any research project is the drawing of conclusions
based on the research findings and after carful interpellations with the
management. The research findings will probe very useful in
developing marketing strategy about product development, pricing,
market perceptions and other important marketing aspects.
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MARKETING INFORMATION SYSTEM
A marketing information system (MIS) consists of people, equipment
and procedures to gather, sort, analyse, evaluate and distribute
needed, timely and accurate information to marketing decision
makers. The information needed by marketing managers comes from
internal company records, marketing intelligence and marketing
research. The information analysis system then processes this
information to make it more useful for managers.
Internal records information—Information gathered from sources within the
company to evaluate marketing performance and to detect marketing
problems and opportunities. Most marketing managers use internal records
and reports regularly, especially for making day-to-day planning,
implementation and control decisions. The company’s accounting
department prepares financial statements and keeps detailed records of
sales, orders, costs and cash flows. Manufacturing reports on production
schedules, shipments and inventories. The sales force reports on reseller
reactions and competitor activities. The customer service department
provides information on customer satisfaction or service problems. Research
studies done for one department may provide useful information for several
others. Managers can use information gathered from these and other sources
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within the company to evaluate performance and to detect problems and FUNCTIONS OF MARKETING INFORMATION SYSTEM
opportunities. Information from internal records is usually quicker and
1. It must generate current reports and studies
cheaper to get than information from other sources, but it also presents some
2. It must integrate previous and new data
problems. Because internal information was intended for other purposes, it
3. Data analysis must muse mathematical model
may be incomplete or in the wrong form for making marketing decisions. For
example, accounting department sales and cost data used for preparing
financial statements need adapting for use in evaluating product, sales force
or channel performance. In addition, the many different areas of a large
company produce great amounts of information, and keeping track of it all is
difficult. The marketing information system must gather, organise, process
and index this mountain of information so that managers can find it easily
and get it quickly.

Marketing intelligence is everyday information about developments in the

marketing environment that helps managers prepare and adjust marketing
plans. The marketing intelligence system determines the intelligence needed,
collects it by searching the environment and delivers it to marketing
managers who need it. Marketing intelligence comes from many sources.
Much intelligence is from the company’s personnel – executives, engineers
and scientists, purchasing agents and the sales force. But company people
are often busy and fail to pass on important information. The company must
‘sell’ its people on their importance as intelligence gatherers, train them to
spot new developments and urge them to report intelligence back to the
company. The company must also persuade suppliers, resellers and
customers to pass along important intelligence. Some information on
competitors comes from what they say about themselves in annual reports,
speeches, press releases and advertisements. The company can also learn
about competitors from what others say about them in business publications
and at trade shows. Or the company can watch what competitors do – buying
and analyzing competitors’ products, monitoring their sales and checking for
new patents.

Competitor intelligence— Information gathered that informs on what the

competition is doing or is about to do.

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CONSUMER AND BUSINESS MARKETS
Consumer market—All the individuals and households who buy or
acquire goods and services for personal consumption.
Consumer buying behaviour—The buying behaviour of final
consumers – individuals and households who buy goods and services
for personal consumption.
Consumers’ buying roles
Group members can influence purchases in many ways. For example,
men normally choose their own newspaper and women choose their
own tights. For other products, however, the decision-making unit is
more complicated with people playing one or more roles:
1. Initiator. The person who first suggests or thinks of the idea of
buying a particular product or service. This could be a parent or
friend who would like to see a visual record of Anna’s holiday.
2. Influencer. A person whose view or advice influences the buying
decision, perhaps a friend who is a camera enthusiast or a
salesperson
3. Decider. The person who ultimately makes a buying decision or
any part of it – whether to buy, what to buy, how to buy or where
to buy.
4. Buyer. The person who makes an actual purchase. Once the
buying decision is made, someone else could make the purchase
for the decider.
5. User. The person who consumes or uses a product or service.
Once bought, other members of Anna’s family could use her
camera.
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Business Market
Business-to-business (B2B) markets differ from business-to-
consumer (B2C) markets in many ways. For one, the number of
products sold in business markets dwarfs the number sold in
consumer markets. Suppose you buy a five-hundred-dollar computer
from Dell. The sale amounts to a single transaction for you. But
think of all the transactions Dell had to go through to sell you that
one computer. Dell had to purchase many parts from many
computer component makers. It also had to purchase equipment and
facilities to assemble the computers, hire and pay employees, pay
money to create and maintain its Web site and advertise, and buy
insurance and accounting and financial services to keep its
operations running smoothly. Many transactions had to happen
before you could purchase your computer.
Each of those transactions needed a salesperson. Each of those
companies have a marketing department. Thus, there are a lot more
college marketing graduates going into B2B companies than in B2C,
which is reason enough to spend some time studying the subject.
There are other differences, too.
Business products can be very complex. Some need to be custom
built or retrofitted for buyers. The products include everything from
high-dollar construction equipment to commercial real estate and
buildings, military equipment, and billion-dollar cruise liners used in
the tourism industry. A single customer can account for a huge
amount of business.
Not only can business products be complex, but so can figuring out
the buying dynamics of organizations. Many people within an
organization can be part of the buying process and have a say in
ultimately what gets purchased, how much of it, and from whom.
Having different people involved makes business marketing much
more complicated. And because of the quantities each business
customer is capable of buying, the stakes are high. For some

organizations, losing a big account can be financially devastating and
winning one can be a financial bonanza.
Business-to-Consumer Markets versus Business-to-Business
Markets: How They Compare
The Demand for B2B Products
Even though they don’t sell their products to consumers like
you and me, B2B sellers carefully watch general economic
conditions to anticipate consumer buying patterns. The firms
do so because the demand for business products is based on
derived demand. Derived demand1 is demand that springs
from, or is derived from, a source other than the primary buyer
of a product. When it comes to B2B sales, that source is
consumers. If consumers aren’t demanding the products
produced by businesses, the firms that supply products to these
businesses are in big trouble. Fluctuating demand2 is another
characteristic of B2B markets: a small change in demand by
consumers can have a big effect throughout the chain of
businesses that supply all the goods and services that produce
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it. Often, a bullwhip type of effect occurs. If you have ever held
a whip, you know that a slight shake of the handle will result in
big snap of the whip at its tip. Essentially, consumers are the
handle and businesses along the chain compose the whip—
hence the need to keep tabs on end consumers. They are a
powerful purchasing force.
B2B buyers also keep tabs on consumers to look for patterns
that could create joint demand. Joint demand occurs when the
demand for one product increases the demand for another. For
example, when a new video console like the Xbox comes out, it
creates demand for a whole new crop of video games.
Types of B2B Buyers
Business buyers can be either nonprofit or for-profit
businesses. To help you get a better idea of the different types
of business customers in B2B markets, we’ve put them into four
basic categories: producers, resellers, governments, and
institutions.
Producers are companies that purchase goods and services
that they transform into other products. They include both
manufacturers and service providers. Procter & Gamble,
General Motors, McDonald’s, Dell, and Delta Airlines are
examples. So are the restaurants around your campus, your
dentist, your doctor, and the local tattoo parlor. All these
businesses have to buy certain products to produce the goods
and services they create. General Motors needs steel and
hundreds of thousands of other products to produce cars.
McDonald’s needs beef and potatoes. Delta Airlines needs fuel
and planes. Your dentist needs drugs such as Novocain, oral
tools, and X-ray machines. Your local tattoo parlor needs
special inks and needles and a bright neon sign that flashes
“open” in the middle of the night.

Resellers are companies that sell goods and services produced by
other firms without materially changing them. They include
wholesalers, brokers, and retailers. Walmart and Target are two big
retailers you are familiar with. Large wholesalers, brokers, and
retailers have a great deal of market power. If you can get them to
buy your products, your sales can exponentially increase.
Governments
Business-to-government (B2G) markets6, or
when companies sell to local, state, and federal governments,
represent a major selling opportunity, even for smaller sellers. In fact,
many government entities specify that their agencies must award a
certain amount of business to small businesses, minority- and
women-owned businesses,
Who participates in the business buying process?
Who buys the goods and services needed by business organisations?
The decision-making unit of a buying organisation is called its buying
centre, defined as all the individuals and units that participate in the
business decision-making process. The buying centre includes all
members of the organisation who play any of the following five roles
in the purchase decision process.
1. Users. Members of the organisation who will use the product or
service. In many cases, users initiate the buying proposal and help
define product specifications.
2. Influencers. People who affect the buying decision. They often help
define specifications and provide information for evaluating
alternatives. Technical personnel are particularly important
influencers.
3. Buyers. People with formal authority to select the supplier and
arrange terms of purchase. Buyers may help shape product
specifications, but they play their most important role in electing
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vendors and in negotiating. In more complex purchases, buyers might
include high-level officers participating in the negotiations.
4. Deciders. People who have formal or informal power to select or
approve the final suppliers. In routine buying, the buyers are often
the deciders or at least the approvers.
5. Gatekeepers. People who control the flow of information to
others. For example, purchasing agents often have authority to
prevent salespersons from seeing users or deciders. Other
gatekeepers include technical personnel and even personal
secretaries.
Types of B2B Buying Situations
A straight rebuy-- is a situation in which a purchaser buys the
same product in the same quantities from the same vendor.
Nothing changes, in other words. Post-purchase evaluations
are often skipped, unless the buyer notices an unexpected
change in the offering such as a deterioration of its quality or
delivery time. Sellers like straight rebuys because the buyer
doesn’t consider any alternative products or search for new
suppliers. The result is a steady, reliable stream of revenue for
the seller. Consequently, the seller doesn’t have to spend a lot
of time on the account and can concentrate on capturing other
business opportunities. Nonetheless, the seller cannot ignore
the account. The seller still has to provide the buyer with top-
notch, reliable service or the straight-rebuy situation could be
jeopardized. If an account is especially large and important, the
seller might go so far as to station personnel at the customer’s
place of business to be sure the customer is happy and the
straight-rebuy situation continues. IBM and the management
consulting firm Accenture station employees all around the
world at their customers’ offices and facilities.

a new-buy selling situation occurs when a firm purchases a
product for the first time. Generally speaking, all the buying
stages we described in the last section occur. New buys are the
most time consuming for both the purchasing firm and the
firms selling to them. If the product is complex, many vendors
and products will be considered, and many RFPs will be
solicited. New-to-an-organization buying situations rarely
occur. What is more likely is that a purchase is new to the
people involved. For example, a school district owns buildings.
But when a new high school needs to be built, there may not
be anyone in management who has experience building a new
school. That purchase situation is a new buy for those involved.
A modified rebuy occurs when a company wants to buy the
same type of product it has in the past but make some
modifications to it. Maybe the buyer wants different quantities,
packaging, or delivery, or the product customized slightly
differently. A modified rebuy doesn’t necessarily have to be
made with the same seller, however. Your instructor may have
taught this course before, using a different publisher’s book.
High textbook costs, lack of customization, and other factors
may have led to dissatisfaction. In this case, she might visit with
some other textbook suppliers and see what they have to offer.
Some buyers routinely solicit bids from other sellers when they
want to modify their purchases in order to get sellers to
compete for their business. Likewise, savvy sellers look for ways
to turn straight rebuys into modified buys so they can get a shot
at the business. They do so by regularly visiting with customers
and seeing if they have unmet needs or problems a modified
product might solve
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Stages in the B2B Buying Process
1. A need is recognized. Someone recognizes that the organization
has a need that can be solved by purchasing a good or service. Users
often drive this stage, although others can serve the role of initiator.
2. The need is described and quantified. Next, the buying center, or
group of people brought together to help make the buying decision,
work to put some parameters around what needs to be purchased.
In other words, they describe what they believe is needed, the
features it should have, how much of it is needed, where, and so on.
3. Potential suppliers are searched for. At this stage, the people
involved in the buying process seek out information about the
products they are looking for and the vendors that can supply them.
Most buyers look online first to find vendors and products, then
attend industry trade shows and conventions and telephone or email
the suppliers with whom they have relationships. The buyers might
also consult trade magazines, the blogs of industry experts, and
perhaps attend Webinars conducted by vendors or visit their
facilities.
4. Qualified suppliers are asked to complete responses to requests
for proposal (RFPs). Each vendor that makes the cut is sent a request
for proposal (RFP) which is an invitation to submit a bid to supply the
good or service. An RFP outlines what the vendor is able to offer in
terms of its product—its quality, price, financing, delivery, after-sales
service, whether it can be customized or returned, and even the
product’s disposal, in some cases. Good sales and marketing
professionals do more than just provide basic information to
potential buyers in RFPs. They focus on the buyer’s problems and
how to adapt their offers to solve those problems.
5. The proposals are evaluated and supplier(s) selected. During this
stage, the RFPs are reviewed and the vendor or vendors selected.

RFPs are best evaluated if the members agree on the criteria being
evaluated and the importance of each. Different organizations will
weigh different parts of a proposal differently, depending on their
goals and the products they purchase.
6. An order routine is established. This is the stage in which the
actual order is put together. The order includes the agreed-upon
price, quantities, expected time of delivery, return policies,
warranties, and any other terms of negotiation.
7. A post purchase evaluation is conducted and the feedback
provided to the vendor. Just as consumers go through an evaluation
period after they purchase goods and services, so do businesses. The
buying unit might survey users of the product to see how satisfied
they were with it.
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MARKET SEGMENTATION
Markets consist of buyers, and buyers differ in one or more ways.
They may differ in their wants, resources, locations, buying attitudes
and buying practices. Through market segmentation, companies
divide large, heterogeneous markets into smaller segments that can
be reached more efficiently with products and services that match
their unique needs. In this section we discuss levels of market
segmentation, and in the following six sections we deal with the
important topics of segmenting consumer markets, segmenting
business markets, segmenting international markets, multivariate
segmentation, developing market segments, and requirements for
effective segmentation.
Segmentation, involves breaking the market down into groups of
customers with similar characteristics in order to concentrate on
serving the needs of one or two groups really well rather than trying
to satisfy the mass market. involves an analysis of the nature and
composition of a market to identify groups of potential buyers who
have similar needs or characteristics, or display similar behaviour.
These groups are known as market segments. Each segment seeks a
unique set of benefits from the product or service purchased.
Segmentation is quite different from a total market approach. For
example, it used to be common for many people to use a ‘family’
medicated shampoo. While ‘family’ shampoos are still produced their
share progressively has been taken away by others which have been
tailored to the needs of particular groups of users.
Target marketing—Directing a company’s effort towards serving one
or more groups of customers sharing common needs or
characteristics.
Market segmentation— Dividing a market into distinct groups of
buyers with different needs, characteristics or behaviour, who might
require separate products or marketing mixes.
Market targeting—The process of evaluating each market segment’s
attractiveness and selecting one or more segments to enter.
Market positioning— Arranging for a product to occupy a clear,
distinctive and desirable place relative to competing products in the

minds of target consumers. Formulating competitive positioning for
a product and a detailed marketing mix.
Six Steps in Market segmentation, targeting, and positioning
Types of Market Segmentation (Levels of Market segmentation)
Mass marketing—Using almost the same product, promotion and
distribution for all consumers. 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.
Henry Ford epitomised this marketing strategy when he offered the
Model T Ford to all buyers; they could have the car ‘in any colour as
long as it is black’. That cost Ford the world market leadership that it
has never regained. The traditional argument for mass marketing is
that it creates the largest potential market, which leads to the lowest
costs, which in turn can translate into either lower prices or higher
margins. However, many factors now make mass marketing more
difficult. For example, the world’s mass markets have slowly
splintered into a profusion of smaller segments – from those living
near the Arctic to the tropics; from the grey market to the gay
market. It is increasingly hard to create a single product or
programme that appeals to all of these diverse groups. The
proliferation of advertising media and distribution channels has also
made it difficult to practise ‘one size fits all’ marketing. Not
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surprisingly, many companies are retreating from mass marketing
and turning to segmented marketing.
Segmenting markets----Adapting a company’s offerings so they more
closely match the needs of one or more segments.
A company that practises segment marketing recognises that buyers
differ in their needs, perceptions and buying behaviours. The
company tries to isolate broad segments that make up a market and
adapts its offers to match more closely the needs of one or more
segments. Segment marketing offers several benefits over mass
marketing. The company can market more efficiently, targeting its
products or services, channels and communications programmes
towards only consumers that it can serve best. The company can also
market more effectively by fine-tuning its products, prices and
programmes to the needs of carefully defined segments. And the
company may face fewer competitors if fewer competitors are
focusing on this market segment.
Unilever, for instance uses this method to pinpoint particular market
segments for its products. The company’s cream silk, for example,
targets people who are not satisfied with just shampooing. To
answer this need, the developers of Cream silk created a product
variant that combines the functions of a shampoo and a conditioner.
Niche marketing---- Adapting a company’s offerings to more closely
match the needs of one or more subsegments where there is often
little competition.
Market segments are normally large identifiable groups within a
market – for example, luxury car buyers, performance car buyers,
utility car buyers and economy car buyers. Niche marketing focuses
on subgroups within these segments. A niche is a more narrowly
defined group, usually identified by dividing a segment into
subsegments or by defining a group with a distinctive set of traits
who may seek a special combination of benefits. For example,
property developers have recognised a niche within the grey market.

Further segmenting the grey market, the Palms runs gay and lesbian
retirement communities and Rainbow Vision runs retirement homes
for the same niche market. Whereas segments are fairly large and
normally attract several competitors, niches are smaller and normally
attract only one or a few competitors. Niche marketers have to
understand their niches’ needs so well that their customers willingly
pay a price premium. For example, Ferrari gets a high price for its
cars because its loyal buyers feel that no other automobile comes
close to offering the product–service–membership benefits as
Ferrari. Niching offers smaller companies an opportunity to compete
by focusing their limited resources on serving niches that may be
unimportant to, or overlooked by, larger competitors. For example,
Mark Warner succeeds by selling to distinct holiday niches: all-
inclusive family
watersports holidays in southern Europe to northern Europeans, and
no-kids holidays for older people who want some peace and quiet.
However, large companies also practise niche marketing. For
example, Nike makes athletic gear for aerobics, jogging and football,
but also for smaller niches such as fell running and street hockey.
Micromarketing---- A form of target marketing in which companies
tailor their marketing programmes to the needs and wants of
narrowly defined geographic, demographic, psychographic or
behavioural segments. In practicing micromarketing, companies
pattern their marketing programs to suit a particular group of people
in specific location. For example, McDonalds offers products that
appeal to the palates of Latinos.
Segment and niche marketers tailor their offers and marketing
programmes to meet the needs of various market segments. At the
same time, however, they do not customize their offers to each
individual customer. Thus, segment marketing and niche marketing
fall between the extremes of mass marketing and micromarketing.
Micromarketing is the practice of tailoring products and marketing
programmes to suit the tastes of specific individuals and locations.
Micromarketing includes local marketing and individual
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marketing.
Local marketing
Local marketing involves tailoring brands and promotions to the
needs and wants of local customer groups – cities,
neighborhoods and even specific stores. Local marketing has
some drawbacks. It can drive up manufacturing and marketing
costs by reducing economies of scale. It can also create logistical
problems as companies try to meet the varied requirements of
different regional and local markets. And a brand’s overall image
may be diluted if the product and message vary in different
localities. Still, as companies face increasingly fragmented
markets, and as new supporting technologies develop, the
advantages of local marketing often outweigh the drawbacks.
Local marketing helps a company to market more effectively in
the face of pronounced regional and local differences in
community demographics and lifestyles. It also meets the needs
of the company’s ‘first-line customers’ – retailers – who prefer
more fine-tuned product assortments for their neighborhoods. It
maintains local variety and color, but at a cost.
Individual marketing— Tailoring products and marketing
programs to the needs and preferences of individual customers.
In the extreme, micromarketing becomes individual marketing –
tailoring products and marketing programmes to the needs and
preferences of individual customers. Individual marketing has
also been labelled ‘markets-of-one marketing’, ‘customised
marketing’ and ‘one-to-one marketing’.
New technologies are permitting many larger companies to
return to customized marketing. More powerful computers,
detailed databases, robotic production, and immediate and
interactive communication media such as email, fax and the
Internet – all have combined to foster ‘mass customisation’.
Mass customisation is the ability to prepare on a mass basis
individually designed products and communications to meet

each customer’s requirements. Consumer marketers are now
providing custom-made products in areas ranging from hotel
stays and furniture to clothing and bicycles. The move towards
individual marketing mirrors the trend in consumer self-
marketing. Increasingly, individual customers are taking more
responsibility for determining which products and brands to buy.
Consider two business buyers with two different purchasing
styles. The first sees several salespeople, each trying to persuade
him to buy their product. The second sees no salespeople but
rather logs on to the Internet, searches for information on and
evaluations of available products, interacts electronically with
various suppliers, users and product analysts, and then makes up
her own mind about the best offer. The second purchasing agent
has taken more responsibility for the buying process, and the
marketer has had less influence over her buying decision. Mass
customisation— Preparing individually designed products and
communication on a large scale.
TYPES OF CONSUMER MARKET SEGMENTS (Segmenting
consumer markets)
There is no single way to segment a market. A marketer has to
try different segmentation variables, alone and in combination,
to find the best way to view the market structure.
1. Demographic segmentation- Dividing the market into
groups based on demographic variables such as age, sex,
family size, family life cycle, income, occupation, education,
religion, race and nationality. Consumers can be segmented
according to age, gender, and economic status. Likewise,
products are segmented according to the age, gender, and
income of the buyers. Signature clothes, for instance, are for
high-income earners. In the same way there are clothes
specifically tailored for men and women. Nonetheless,
marketers also know that price is a factor often considered
by minimum wage earners whenever they buy clothes.
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a. Life-cycle segmentation— Offering products or marketing
approaches that recognise the consumer’s changing needs at
different stages of their life. Life-cycle stage is important in recreation
markets. In the holiday market, for instance, Club 18–30 aims at
young singles seeking the four Ss: sun, sand, sea and sex. This
boisterous segment does not mix well with the families that the Club
Mediterranean caters for. Children’s activities and all-day child care
are an important part of the latter’s provision. Meanwhile, Saga
Holidays caters for older people and keeps prices low by offering off-
peak holidays.
b. Ethnic segmentation—Offering products or marketing approaches that
recognise the special strengths or needs of an ethnic community. The multi-
ethnic communities within Europe define market segments for all manner of
goods: clothes, music, cosmetics and many others. The communities also
nurture businesses that appear beyond their own ethnic boundaries.
c. Gender segmentation—Dividing a market into different groups based on
sex. Gender segmentation is usual in clothing, hairdressing, cosmetics and
magazines. Recently, marketers have noticed other opportunities for gender
segmentation. For example, both men and women use most deodorant
brands. Procter & Gamble, however, developed Secret as the brand specially
formulated for a woman’s chemistry, and then packaged and advertised the
product to reinforce the female image. In contrast, Gillette’s association with
shaving makes its deodorant male oriented.
d. Income segmentation— Dividing a market into different income groups.
Income segmentation is often used for products and services such as cars,
boats, clothing, cosmetics and travel. Many companies target affluent
consumers with luxury goods and convenience services.
2. Geographic segmentation- Dividing a market into different
geographical units such as nations, states, regions, counties,
cities or neighborhoods. The market can be also divided
according to location. For example, firms selling air-
conditioners do not expect their product to do well in places
with cooler weather conditions like Baguio. In the same way,

there is no significant demand for mink coats in the
Philippines.
3. Psychographic segmentation- Dividing a market into
different groups based on social class, lifestyle or personality
characteristics. Psychographic segmentation classified the
market population under these categories: personality,
values, hobbies and interests, opinion, and lifestyle. The
most common segment category targeted by marketers is
lifestyle. People acquire various lifestyle patterns as they go
through the different stages of their lives.
4. Behavioral segmentation- Dividing a market into groups
based on consumer knowledge, attitude, use or response to
a product. This refers to the consumers’ attitude towards a
product/service. Consumers who are first-time users of a
product/service usually show apprehension and concern
before and after purchasing it. For a guaranteed repeat
purchase, marketers should ensure that first-time users will
be satisfied with the product/service through word-of-
FACTORS OT CONSIDER IN EVALUATIONG MARKET SEGMENTS
mouth is motivated by their previous experience of
satisfaction.
a. Occasion segmentation— Dividing the market into
groups according to occasions when buyers get the idea
to buy, actually make their purchase, or use the
purchased item.
b. Benefit segmentation— Dividing the market into groups
according to the different benefits that consumers seek
from the product.
Business Market Segments (Segmenting business markets)
1. Type of Customer- the firm that caters to a variety of
customers may want to segment the market on the basis
of their type. Industries in still products will have the
volume of customers who are in housing and
condominium development or the car manufacturing
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industries. Supplier of chicken products will have their
volume customers on the fast food chain.
2. Size of Customer- The size of the customers is measured
on the number of employees, the volume of sales, and
the size of the production facilities. It can also be
determined by the number of sales outlet or the extent
of sales distribution. The large size or big volume
customers may be serviced directly by company sales
representative, while small size consumers may be
serviced by appointed distributors.
3. The Purchasing Process- This has something to do with
supplier and buyer relationship where business
developed strategies on supply chain relationships. This
may involve competitive bidding strategies or negotiated
contracts. Some major industries develop long term
partnership with business supplier to enjoy volume
discounts and the delivery of quality materials.
1. THE CUSTOMER ECONOMIC INDEX- The type of customer will
determine the strategies that will be most effective to attract him to
the product being offered for sale. Lower income and middle income
groups would prefer fast food with reasonable price such as Jollibee,
McDonald, KFC, and other which are mostly seen in crowded areas
like malls and point of convergence. Higher income groups and upper
social class are mostly in fine dining restaurants.
2. THE MARKET SIZE AND GROWTH POTENTIAL- The market segment
must be large enough to attract business. It must have growth
potential as investment in terms of facilities and must be utilized for
a number of years as return on investments (ROI) is computed by its
utility. Big marketing company would target, those with higher
volume sales, high growth rate and high profit margin. Puregold will
target higher volume sales while small or a mini grocery will
concentrate on smaller market in a subdivision.

3. Structural Competitiveness and Competitors- The market may have
all the good potentials for investment. Yet we have to examine the
structural competitiveness as over saturated market may not vie the
expected ROI. We have also to examine the products being offered
in terms of quality and price. Product substitute limits the potentials
for higher sales volume. Customers will always try to find bargains
for their money.
4. THE COMPANY PROFILE AND OBJECTIVES- Finding the market with
the three other potentials for investment, the company must
examine its financial resources and capabilities in terms of manpower
expertise and skills to handle the market. It must be fitted to the
corporate objectives and goals for expansion and investments. It
must have the will power to outsmart the competitors or possible
competitors. The name of the game in business is strong
determination to succeed in the area of operation.
CHARACTERISTICS OF EFFECTIVE SEGMENTATION
Clearly there are many ways to segment a market, but not all
segmentations are effective. To be useful, market segments must
have the following characteristics:
 Measurability—The degree to which the size, purchasing power
and profits of a market segment can be measured. The size,
buying power and profiles of the segments need measuring.
Certain segmentation variables are difficult to measure.
 Accessibility—The degree to which a market segment can be
reached and served. This also refers to the distance between the
marketing organization and the prospective market segment.
 Substantiality—The degree to which a market segment is
sufficiently large or profitable. A profitable market must have a
large number of prospective buyers. It must be composed of the
largest homogeneous group worth developing a marketing
program that will generate profitable business operation.
 Actionability—(action oriented process) The degree to which
effective programmes can be designed for attracting and serving
a given market segment. After determining the total market
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segment potential, the marketer must be able to put into action
the designed marketing program as competitors may take place
before they make sensible action.
TARGET MARKET COVERAGE STRATEGIES (Segment strategy)
After evaluating different segments, the company must now decide which
and how many segments to serve. This is the problem of target-market
selection. A target market consists of a set of buyers who share common
needs or characteristics that the company decides to serve.
 Undifferentiated market—(Aggregate market) A market coverage
strategy in which a firm decides to ignore market segment differences
and go after the whole market with one offer. Using an undifferentiated
marketing strategy, a firm might decide to ignore market segment
differences and go after the whole market with one offer. This can be
because there are weak segment differences or through the belief that
the product’s appeal transcends segments. The offer will focus on what
is common in the needs of consumers rather than on what is different.
The company designs a product and a marketing programme that appeal
to the largest number of buyers. It relies on quality, mass distribution and
mass advertising to give the product a superior image in people’s minds.
Advertising and promotions have to avoid alienating segments, and so
are often based on product features. An example of this is a burger store
seen in most accessible corner that caters only to passersby who feel
hungry. Some drawbacks of this strategy is the entrance of many
competitors and the changing product preference of most buyers who
want variety products. This marketing strategy can be limited to smaller
companies that concentrate on mass marketing.

 Differentiated marketing— (multiple market) A market-coverage
strategy in which a firm decides to target several market segments and
designs separate offers for each. Differentiated marketing typically
creates more total sales than does undifferentiated marketing. The
changing wants and needs of customers have developed marketing
strategies that cater to several market segments. This is the particular
example adopted by one fast food chain that offers a lot of choices for its
valued customers. Due to the variety of demands it bought several
competing fast food chains and controlled the fast food chain industry
under one corporate organization. The same is true with a beer company
that develops variety of products to serve changing taste of beer drinkers.
 Concentrated market—(single market) A market-coverage strategy in
which a firm goes after a large share of one or a few submarkets. A third
market-coverage strategy, concentrated marketing, is especially
appealing when company resources are limited. Instead of going after a
small share of a large market, the firm goes after a large share of one or
a few submarkets. This strategy involved the selection of one particular
segment within the total market. One example of this is the company
that specialized in pest control. The drawback lies when some employees
who learned the trade secrets retired or resigned and developed the
same or similar operation and captured the same limited market.
Another risk and limitation is the marketer puts all the eggs in one basket
and the market potential declined due to the entrance of a competing
team.
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PRODUCT POSITIONING
Having segmented the market and decided on a targeting strategy,
the next stage is to create and maintain a clear and appropriate
positive image of the product or service in the minds of consumers.
This helps to differentiate the product from current and potential
competing products. For example, Porsche is positioned in the
prestige segment of the car market with a differential advantage
based on performance while Volvo is positioned in the family
segment, where it has capitalized on its reputation for safety. In this
section the stages that are involved in the positioning process will be
considered.
Positioning is how consumers perceive a product relative to the
competition. Companies want to have a distinctive image and
offering that stands out from the competition in the minds of
consumers.
STAGES INVOLVED IN MARKET POSITIONING
There are stages involved in product positioning, each of which is
described below.
STAGE 1: IDENTIFY KEY PRODUCT CHARACTERISTICS
Marketing research data should be studied in order to select the key
product characteristics that members of the target market consider
most important when making purchasing decisions. These features
may be tangible, e.g. colour, size, design, or intangible, e.g.
reputation or guarantees.

STAGE2: DRAW A PERCEPTUAL MAP
This is a useful tool by which the current brands available to a market
segment can be depicted visually. In its simplest form the perceptual
map consists of a grid that shows the two most important attributes
identified at Stage 1 placed at two axes on the grid. Qualitative
marketing research enables consumer perceptions about the current
brands to be plotted, so that the
organization can see at a glance where competition is most intense
and where there might be gaps in the market
STAGE 3: DECIDE ON A COMPETITIVE STRATEGY
Perceptual mapping provides insights into appropriate competitive
actions and helps firms to decide whether they should compete
head-on or position their products away from competition.
Avoiding the completion: At first glance it seems evident that
a strategy to avoid the competition holds most potential. Even when
a quadrant on a perceptual map may indicate an area where there is
a gap in the market, it may be difficult to enter. Sometimes, firms
which enter these segments may experience only short-term
profitability. This leaves them with the costly task of repositioning
themselves if they wish to build their profit margins as well as their
sales revenue. However, in the example given, the costs involved in
stocking a wide range of goods may be incompatible with sustaining
a profitable low-price strategy.
Head-on-competition: This may be equally, if not more,
problematic. Unless the market is growing significantly,
there may be no room for extra supply without the profitability of all
firms suffering
badly. None the less, often, large and well financed firms are
reluctant to leave a segment
unchallenged and sometimes are willing to challenge a leader head-
on, e.g. sales growth in
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Cadbury’s Caramel spawned ‘me too’ products in the form of Galaxy
toffee bars and Rolo bars. Smaller firms with less financial backing
may be squeezed out or will fail to find a foothold unless their
product offering is demonstrably better than existing brands.
STAGE 4: DESIGN PRODUCT ATTRIBUTES AND ASSOCIATED IMAGERY
At this stage the features of the product should be designed, along
with the type of imagery to help the targeted customers identify the
benefits being offered to them. Features such as brand name,
packaging, advertising themes, price levels and distribution outlets
are all important in creating this position in the mind of the customer.
STAGE 5: SUSTAIN A COMPETITIVE ADVANTAGE
Competitive advantage is gained when the firm establishes a market
position that sets its product apart from competitors in the eyes of
its target market. In order for this advantage to be sustained,
marketing information must be kept up to date to ensure that the
needs of the target markets are being met more effectively and
efficiently than by competition.
How many differences to promote?
Unique selling proposition (USP)—The unique product benefit that a
firm aggressively promotes in a consistent manner to its target
market. The benefit usually reflects functional superiority: best
quality, best services, lowest price, most advanced technology.
Emotional selling proposition (ESP)—A nonfunctional attribute that
has unique associations for consumers.
Overpositioning— A positioning error referring to too narrow a
picture of the company, its product or a brand being communicated
to target customers.
Confused positioning—A positioning error that leaves consumers
with a confused image of the company, its product or a brand.
Implausible positioning— Making claims that stretch the perception
of the buyers too far to be believed.
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Underpositioning— A positioning error referring to failure to position

a company, its product or brand.

Criteria of effective Product Positioning

Not all brand differences are meaningful or worthwhile. Not every difference
makes a good differentiator. Each difference has the potential to create
company costs as well as customer benefits. Therefore, the company must
carefully select the ways in which it will distinguish itself from competitors. A
difference is worth establishing in so far as it satisfies the following criteria:

Important. The difference delivers a highly valued benefit to target buyers.

Distinctive. Competitors do not offer the difference, or the company can

offer it in a more distinctive way.

Superior. The difference is superior to other ways by which customers might

obtain the same benefit.

Communicable. The difference is communicable and visible to buyers.

Pre-emptive. Competitors cannot easily copy the difference.

Affordable. Buyers can afford to pay for the difference.

Profitable. The company can introduce the difference profitably.

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MARKETING MIX
What is product?
A product is anything that a firm offers to customers (both consumers and
business buyers) for acquisition, use, or consumption. Consumer goods,
ideas, organizations, and people are examples of products and services.
Product is a systematic decision process of development relation to the
totality of its features and attributes including branding and packaging.
Product has broad connotations that may refer to tangible or intangible
goods which we call service.
Product—Anything that can be offered to a market for attention, acquisition,
use or consumption that might satisfy a want or need. It includes physical
objects, services, persons, places, organizations and ideas.
Services are products that consist of activities, benefits or satisfactions that
are offered for sale that are essentially intangible and do not result in the
ownership of anything.
Product consists of the following:
Tangible/ actual product- this pertains to the physical qualities/features of a
product. A product’s parts, quality level, features, design, brand name,
packaging and other attributes that combine to deliver core product benefits.
product planners must turn the core benefit into an actual product. Actual
products may have as many as five characteristics: a quality level, product
and service features, styling, a brand name and packaging. For example,
Sony’s cam camcorder is an actual product. Its name, parts, styling, features,
packaging and other attributes have all been combined carefully to deliver
the core benefit – a convenient, high-quality way to capture important
moments.
Supplement/augmented product-marketers offer supplements or add-ons to
entice consumers to make a repeat purchase of the product.
Therefore, a product is more than a simple set of tangible features.
Consumers tend to see products as complex bundles of benefits that satisfy
their needs. When developing products, marketers must first identify the
core consumer needs that the product will satisfy. They must then design the
actual product and finally find ways to augment it in order to create the
bundle of benefits that will best satisfy consumers.

1. Features- this refers to the product attributes which include characteristics

and its uniqueness that attract the attention of the customer

2. Functions- it refers to the usability of the product to satisfy the needs of

the costumers.

3. Benefits- it is a bundle of positive effects that the product gives the

customer.

Parts or Level of a Product

Center/core product- this refers to the primary reasons and motivations of

consumers for purchasing a product. The problem solving services or core
benefits that consumers are really buying when they obtain a product. For
example, a laptop can be used both at home and in the office.

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Supplement Classification of Products (according to their durability and tangibility)

the add-ons of a product 1. Durable products- are products used over an extended period of time and
such as warranty, manner
of delivery, and credit normally survive for many years. Examples are refrigerators, cars and
terms (installation, furniture.
delivery, warranty, after
sale service 2. Non-durable products- are goods that are normally consumed quickly and
used on one or a few usage occasions, such as beer, soap and food products.
Tangible
3. Services- these are essential intangible goods that do not result in
the characteristics of a
product such as size, ownership of anything but are necessary for human satisfaction. These are
brand, name, bundles of activities, benefits, or form of satisfaction that is offered for sale
packaging, quality, at specific location. Beauty salons, barber shops, massage parlors, and home
design and features
repairs are some examples.
(brand name, quality,
packaging, features, Classification of Products (based on the types of customer that use them)

1. Consumer products- these are products bought by consumers for their

Center personal use and consumption. Most of these products are considered basic
the reason why goods, and consumers buy them most frequently. Marketers usually classify
consumers buy a these goods based on consumer shopping habits. Consumer products include
product (core convenience products, shopping products, speciality products and unsought
benefit or products. Customers along this line could be found in mini-grocery or corner
stores in shopping malls buying goods like detergents, canned goods, rice and
service)
many others. These goods are further classified according to their use and
features.

 Convenience goods/convenience goods- these are consumer

goods that are bought by final consumers for personal and daily
use. It may be in the form of actual products like batch soap,
baby diapers, newspapers and magazines. Convenience goods
are usually low priced, and marketers place them in many
locations to make them readily available when customers
need them.
 Shopping Goods/shopping products- these are goods customers
have to spend some time to decide whether to buy them or not.
They compare the quality, price, style and suitability to other
items of the same kind. Also, it is a consumer product with unique
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characteristics or brand identification for which a significant
group of buyers is willing to make a special purchase effort.
 Specialty Goods- A consumer product with unique characteristics
or brand identification for which a significant group of buyers is
willing to make a special purchase effort. These are products with
unique characteristics or it is identified according to the brand. It
is a are consumer goods with unique characteristics or brand
identification for which a significant group of buyers is willing to
make a special purchase effort. Examples include specific brands
and types of car, high-priced home entertainment systems and
photographic equipment, luxury goods, designer clothes and the
services of medical or legal specialists.
 Unsought products- are consumer goods that the consumer
either does not know about or knows about but does not
normally think of buying. Most major new innovations are
unsought until the consumer becomes aware of them through
advertising. Classic examples of known but unsought goods are
life insurance, home security systems, funeral services and blood
donations. By their very nature, unsought goods require a lot of
advertising, personal selling and other marketing efforts. It is a
consumer product that the consumer either does not know
about or knows about but does not normally think of buying.
2. Industrial Goods/Industrial Products- these are products/services used for
the production of new products. Depending on their use, industrial goods can
sometimes be classified as consumer goods. Examples of industrial goods
include capital goods, raw materials, and repairs, supplies and services. Thus
the distinction between a consumer product and an industrial product is
based on the purpose for which the product is purchased. If a consumer buys
a lawnmower for home use, the lawnmower is a consumer product. If the
same consumer buys the same lawnmower for use in a landscaping business,
the lawnmower is an industrial product.
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Three groups of industrial products
Materials and parts are industrial goods that become a part of the buyer’s
product, through further processing or as components. They include raw
materials and manufactured materials and parts.
Raw materials consist of farm products (wheat, cotton, livestock, fruits,
vegetables) and natural products (fish, timber, crude petroleum, iron ore).
Manufactured materials and parts include component materials (iron, yarn,
cement, wires) and component parts (small motors, tyres, castings).
Component materials are usually processed further – for example, pig iron is
made into steel, and yarn is woven into cloth.
Capital items are industrial products that help in the buyers’ production or
operations. They include installations and accessory equipment. Installations
consist of buildings (factories, offices) and fixed equipment (generators, drill
presses, large computer systems, lifts). Accessory equipment includes
portable factory equipment and tools (hand tools, lift trucks) and office
equipment (fax machines, computers, desks). These products do not become
part of the finished product. They have a shorter life than installations and
simply aid in the production process. Supplies and services are industrial
products that do not enter the finished product at all. Supplies include
operating supplies (lubricants, coal, computer paper, pencils) and repair and
maintenance items (paint, nails, brooms). Supplies are the convenience
goods of the industrial field because they are usually purchased with a
minimum of effort or comparison. Business services include maintenance
and repair services (window cleaning, computer repair) and business advisory
services (legal, management consulting, advertising)
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Product Decisions 2. Branding- a brand is a symbol, name, design, or the combination of all three
that makes a product distinct from its competitors. Brand—A name, term,
Marketers are faced with product decisions which they need to make to
sign, symbol or design, or a combination of these, intended to identify the
develop a product that can attract numerous consumers.
goods or services of one seller or group of sellers and to differentiate them
1. Product Attributes- these pertain to the quality, design, and features of a from those of competitors.
product. The quality of a product refers to its performance and physical
A brand is a name or mark that is intended to identify the seller’s product and
condition. A quality product is a product that is in good order and condition
differentiate it from the product of the competitors. A brand name consists
and performs well. Developing a product involves defining the benefits that
of letters, words, or numbers that can be read or verbalized. A brand mark is
the product will offer. These benefits are communicated and delivered by
the part of the brand that appears in the form of symbols designed in
tangible product attributes, such as quality, features, style and design.
distinctive lettering or colors.
Decisions about these attributes are particularly important as they greatly
affect consumer reactions to a product. Advantages of Branding

We will now discuss the issues involved in each decision.  Brands make it easy to identify the product or service.
 It assures the buyer that they get the same quality or products.
Product quality- The ability of a product to perform its functions; it includes
 It reduces price comparison
the product’s overall durability, reliability, precision, ease of operation and
 It adds prestige to the product of the seller
repair, and other valued attributes.
 It provides legal protection for the seller.
Quality is one of the marketer’s major positioning tools. Quality has a direct  It helps in product market segmentation
impact on product performance; hence, it is closely linked to customer value
Brand equity spells out the value of the brand in the market.
and satisfaction. In the narrowest sense, quality can be defined as ‘freedom
from defects’. But most customer-centered companies go beyond this Brand loyalty is developed as customers become aware on the quality of the
narrow definition. Instead, they define quality in terms of customer product compare with other brand in the market.
satisfaction. For example, Siemens defines quality this way: ‘Quality is when
Selecting a Good Brand Name
our customers come back and our products don’t. This customer-focused
definition suggests that quality begins with customer needs, goes beyond a. It should suggest about the product or service
customer satisfaction and ends with customer retention. b. It must be easy to pronounce and to remember
c. It must be simple and short in one syllable
Product style and design- Design is a broader concept than style. Style simply
d. It must be distinct or different from others
describes the appearance of a product. A sensational style may grab attention
e. It must be adaptable to new company product that may be added
and produce pleasing aesthetics, but it does not necessarily make the product
f. It must be capable of registration and legal protection
perform better. In some cases, it might even result in worse performance. For
example, a chair may look great yet be extremely uncomfortable. Unlike
style, design is more than skin deep – it goes to the very heart of a product.
Good design contributes to a product’s usefulness as well as to its looks.

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Branding Strategies the product, or describe several things about the product – who made it,
where it was made, when it was made, its contents, how it is to be used and
 Producer’s Strategies- this strategy is employed by product
how to use it safely. Finally, the label might promote the product through
manufacturers’ that dominate the greater market due to the
attractive graphics.
superiority of their product.
 The middleman’s strategy- this strategy is commonly called as co- Types of Labels
branding where the producer and sole distributor carry the brand
Brand label- It is simply the brand alone that is applied to the product or
name of the manufacturer and that of the middlemen. Middlemen
package. Clothing has labels that could be seen inside the collars. Others are
may find it advantageous to market their own brand because it
embroidered as in underwear, tshirts, socks, etc.
increases their control over their target market.
A Descriptive label- it gives objective information about the product’s use/s
construction, care, performance and other pertinent features. They are
3. Packaging- this refers to the appearance and design of a product’s wrapper
commonly found in food ingredients, medicines, canned goods and others.
or container. Marketers weigh different factors when it comes to packaging.
In terms of appearance, they consider the size, weight, and type of packaging Grade label- it identifies the product judge quality with letters, number or
material to be used on a product. Developing a good package for a new words. It contains product expiry dates, the content values and other
product requires making many decisions. The first task is to establish the features. Labels are regulated by the operation of labelling laws especially in
packaging concept, which states what the package should be or do for the medicines, vitamins, milk and other related products.
product.
Functions of Labels
A package is the container or the wrapper of the product. Packaging is a
business function that must not be taken for granted. Package gives 1. The labels identify the product or brand in the market
significant and differential advantage over other products. 2. They describe the product features and uses
3. They serve as an advertising medium with its colors and design
The Vital Purpose of Packaging 4. They create lasting impression about product quality
 To protect the product on its way to the customer
 To provide protection after the product is purchased
 It becomes part of the company’s trade marketing program. 5. Support services- Services that augment actual products. Marketers also
 It becomes part of the company’s marketing program offer product support services to consumers. Extending support services is a
way for marketers to review and improve a product/service’s performance
4. Labels- labels are attached to provide the consumers the necessary and quality.
information about the products. Other than the product manufacturer’s
name, labels also indicate the products; expiration date, nutritional contents,
and manufacturing location. Labels may range from simple tags attached to
products to complex graphics that are part of the package. They perform
several functions. At the very least, the label identifies the product or brand,
such as the name ‘Sunkist’ stamped on oranges. The label might also grade
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PRODUCT LIFE CYCLE
After launching the new product, the management challenge lies in making
sure that the product enjoys a long and healthy life. The new product is not
expected to sell for ever, but the company will want to recover a decent profit
to cover all the effort and risk that went into launching it. Management is
aware that each product will have a life-cycle, although the exact shape and
length is not known in advance.
1. Product development begins when the company finds and develops a new-
product idea. During product development, sales are zero and the company’s
investment costs mount.
2. Introduction is a period of slow sales growth as the product is being
introduced in the market. Profits are non-existent in this stage because of the
heavy expenses of product introduction.
3. Growth is a period of rapid market acceptance and increasing profits.
4. Maturity is a period of slowdown in sales growth because the product has
achieved acceptance by most potential buyers. Profits level off or decline
because of increased marketing outlays to defend the product against
competition.
5. Decline is the period when sales fall off and profits drop.
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The Length of the Product life Cycle
The length of the product life cycle starts at the time of commercialization
and ends at the time of product decline. It may be for a period of weeks or
month in case of fashion clothing, to many decades in the case of household
appliances or electronic components. It varies form one product category to
another.
Circle Management Strategies
1. Early to Rise Strategy- it is the strategy where the marketing firm
plunges into the market at the early stage or during the introductory
period. This strategy aims to build a dominant market position
before any other marketing organization enters into the market.
2. Delayed Strategy- some big organizations which have the capability
to outsmart other small marketing outfit believe in the delayed
strategy. This involves proving first that product investment will pay
off if the market is already proven to be profitable.
3. The Rising Market Status Strategy- the growth of the product in the
market should not be taken sitting down just counting the sales and
profits. Managers have to devise strategic plans and programs that
will sustain a bigger market share.
4. Management Strategy at Maturity Stage- the age of maturity is
investible. It is at this period when the product has to be modified,
design a new promotion strategy and add new product features.
5. Survival Strategy in the Declining Stage- the greatest challenge for the
marketing organization is to develop strategies when the product
begins to slow down in sales and profit is at the edge.

Price
Price is the only element in the marketing mix that produces revenue; all
other elements represent costs.
Price is the amount of money needed in order to acquire the product or
services from the marketer or the seller. It determines the value of the goods
or services. It is the amount or the sum of the values that consumer exchange
for the benefit or having or using product.
Price may involve more than money. It can be set in monetary or non-
monetary forms. It can be an exchange of goods or services or a combination
of monetary terms.
The price of a product or service will determine how consumers perceive it,
reflect on its brand positioning, influence the choice of marketing channel,
affect how it is promoted and have an impact on the level of customer service
expected by target customers. The price ingredient of the marketing mix will
also affect the viability of the supplying organization. The concept of pricing
is complex and of fundamental importance to the successful implementation
of a marketing strategy.
Pricing is one of the most important elements of the marketing mix, as it
affects profit, volume and share of the market and consumer perceptions.
Just as pricing plays a crucial role in determining brand image, increasingly
companies are being judged on the transparency and equity with which they
treat price as a marketing variable.
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Factors to consider when setting prices
Internal factors affecting pricing decisions
Internal factors affecting pricing include the company’s marketing
objectives, marketing-mix strategy, costs and organization.
I. Marketing objectives
Before setting price, the company must decide on its strategy for the
product. If the company has selected its target market and positioning
carefully, then its marketing-mix strategy, including price, will be
straightforward. For example, when Toyota decided to produce its Lexus
cars to compete with European luxury cars in the higher-income segment,
this required charging a high price.
Examples of common objectives are sales survival, current profit
maximization objective, price for market-share leadership, price for quality
product, equity pricing
a. Sales survival- it is setting the price that is within the present market
competition due to oversupply and the changing market preferences.
b. Current profit maximization objective- the firm estimates the current
market demand. When there is high demand, the price is increased
to get the most profit objective, increase in cash flow and return on
investment. Many companies use current profit maximization as
their pricing goal. They estimate what demand and costs will be at

different prices and choose the price that will produce the maximum
current profit, cash flow or return on investment.
c. Price for Market Share Leadership- this objective refers to the
philosophy that the company with the higher share of the market
enjoys the higher percentage of profit. The bigger the sales volume,
the lower is the price as economies of scale operate in the system.
d. Price for Quality Product- the company produces high quality of the
products in the market and command higher price to sustain research
and development cost. Customers who perceive quality is not price
conscious.
e. Equity Pricing- it is setting the price low to prevent competition from
entering the market. This will develop customer’s loyalty and
support of the middlemen. Price is set to attract more customers and
help other products survive competition.
II. Marketing Mix Strategy
A product’s base price is influenced considerably by the other ingredients in
the market mix. The cost of production and the quality of materials as inputs
affect the price of the product in the market. The other factors in the making
of the product such as labor cost, interest rates and overhead cost are
considered in setting price. These factor in the marketing mix are important
consideration in pricing decisions.
a. Product- the cost of the product is affected by the different
production inputs that are used to make it available for sale. The
product life cycle also affects the pricing decisions as price
adjustments are necessary in the course of its presence in the
market. Price adjustments would be necessary depending on the
stage of the product in its life cycle.
b. The channel of Distribution- the channels and types of middlemen
selected in the distribution of the product will influence the decision
of the internal marketing organization. The price for direct and
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wholesale distributors will be different from the retailers, as the
wholesaler will be performing the other functions before the product
reaches customers. Each of these channels has to input some
percentage of the profit objective.
c. Promotions- The promotional and advertising are factors in pricing
decisions. The extent of these promotional activities and the
methods used to promote products it is end users must be
established before price is determined. If promotional and
advertising expenses will be on the part of the distributors, the price
index is lower.
d. Cost of the product- pricing of the product should also consider its
cost. The product’s total unit cost is made up of several types of costs
reacting differently to the changes in the quantity produced. The
following variables are important consideration:
1. The average cost per unit declines as production output
increases as the total fixed cost is spread over an
increasing number of units.
2. The average variable cost starts high for the first few
units of production and decreases or decline as efficiency
of production is realized.
3. The average total cost is the sum of the fixed cost and the
variable cost. When the variable and fixed costs
decreases, the price of the product becomes lower.
4. The marginal cost slopes down until the next unit is
produced. There is a relationship between the marginal
and the average total cost. The average variable cost is
increasing faster than the average fixed cost.
III. Cost
Costs set the floor for the price that the company can charge for its product.
Types of Cost
Fixed costs (also known as overheads)—Costs that do not vary with
production or sales level. For example, a company must pay each month’s
bills for rent, heat, interest and executive salaries, whatever the company’s
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output. In many industries, such as airlines, fixed costs dominate. If an airline
has to fly a sector with few passengers on board it can only save on the 15
per cent of its costs accounted for by cabin crew and passenger service. All
other costs, including flight crew (7 per cent), fuel (15 per cent) and
maintenance (10 per cent), are fixed.
Variable costs—Costs that vary directly with the level of production. These
are those, which vary according to the quantity produced. These costs are
incurred through raw materials, components and direct labor used for
assembly or manufacture. Variable costs can be expressed as a total or on a
per-unit basis. Each personal computer produced involves a cost of computer
chips, wires, plastic, packaging and other inputs. These costs tend to be the
same for each unit produced, their total varying with the number of units
produced.
Marginal costs- involve the change that occurs to total cost if one more unit
is added to the production total.
Total costs—The sum of the fixed and variable costs for any given level of
production Management wants to charge a price that will at least cover the
total production costs at a given level of production. The company must
watch its costs carefully. If it costs the company more than competitors to
produce and sell its product, the company will have to charge a higher price
or make less profit, putting it at a competitive disadvantage
Pricing Method/Pricing Strategy
Pricing method or strategy is the route taken by the firm in fixing the price.
The method/strategy must be appropriate for achieving the desired pricing
objectives.
product to obtain the final price. In other words, cost-based pricing
can be defined as a pricing method in which a certain percentage of
the total cost of production is added to the cost of the product to
determine its selling price.
2. Demand Based pricing the pricing decision is also depending on
demand and supply of the commodity.
3. Competition Oriented Pricing (Competition-based pricing) refers to
a method in which an organization considers the prices of
competitors’ products to set the prices of its own products. The
organization may charge higher, lower, or equal prices as compared
to the prices of its competitors
IV. Organizational considerations
Management must decide who within the organization should set prices.
Companies handle pricing in a variety of ways. In small companies, prices are
often set by top management rather than by the marketing or sales
departments. In large companies, pricing is typically handled by divisional or
product line managers. In industrial markets, salespeople may be allowed to
negotiate with customers within certain price ranges. Even so, top
management sets the pricing objectives and policies, and it often approves
the prices proposed by lower level management or salespeople. In industries
in which pricing is a key factor (such as in aerospace, steel and oil), companies
will often have a pricing department to set the best prices or help others in
setting them. This department reports to the marketing department or top
management. Others who have an influence on pricing include sales
managers, production managers, finance managers and accountants.

The Pricing Methods are the ways in which the price of goods and services
can be calculated by considering all the factors such as the product/service,
competition, target audience, product’s life cycle, firm’s vision of expansion,
etc. influencing the pricing strategy as a whole.

1. Cost-based pricing refers to a pricing method in which some

percentage of desired profit margins is added to the cost of the

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The external factors in pricing strategy
I. The Market Demand
The market forces are prime considerations in setting the price
of the product. While cost set the limit of price, the dictate of
the market sets the upper limit in the pricing strategy. The
freedom to set price is dictated by various variables prevailing in
the marketing environment.
Economists recognize types of market structure, each presenting
a different pricing challenge.
a. Pure competition-A market in which many buyers and sellers
trade in a uniform commodity – no single buyer or seller has
much effect on the going market price. A seller cannot
charge more than the going price because buyers can obtain
as much as they need at the going price. Nor would sellers
charge less than the market price because they can sell all
they want at this price. If price and profits rise, new sellers
can easily enter the market. In a purely competitive market,
marketing research, product development, pricing,
advertising and sales promotion play little or no role. Thus
sellers in these markets do not spend much time on
marketing strategy. It is one of four market structures in
which thousands of firms each produce a tiny fraction of
market supply in their respective industries. Examples:
farm commodities (wheat, soybean, strawberries, milo), the
stock market, and the foreign exchange market, shampoo,
cellphones, internet providers. If market supply increases,
the market price falls. Since each firm is a price taker, it has
no choice but to charge the lower price for its product
b. Monopolistic competition-A market in which many buyers
and sellers trade over a range of prices rather than a single
market price. A range of prices occurs because sellers can
differentiate their offers to buyers. Either the physical
product can be varied in quality, features or style or the
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accompanying services can be varied. Each company can
create a quasi-monopoly for its products because buyers see
differences in sellers’ products and will pay different prices
for them. Sellers try to develop differentiated offers for
different customer segments and, in addition to price, freely
use branding, availability, advertising and personal selling to
set their offers apart.
c. Oligopolistic Competition- A market in which there are
a few sellers that are highly sensitive to each other’s pricing
and marketing strategies. The product can be uniform (steel,
aluminium) or non-uniform (cars, computers). There are few
sellers because it is difficult for new sellers to enter the
market. Each seller is alert to competitors’ strategies and
moves. If a steel company slashes its price by 10 per cent,
buyers will quickly switch to this supplier. The other steel
makers must respond by lowering their prices or increasing
their services. An oligopolist is never sure that it will gain
anything permanent through a price cut. In contrast, if an
oligopolist raises its price, its competitors might not follow
this lead. The oligopolist would then have to retract its price
increase or risk losing customers to competitors.
d. Pure monopoly -A market in which there is a single seller
– it may be a government monopoly, a private regulated
monopoly or a private non-regulated monopoly. The
example of pure monopoly is MERALCO that controls the
supply of electricity. To counter the pricing system the
government imposed regulations to regulate the price
among its customers.
e. Price Freedom- the seller dictates the price based on the
customers perceptions on value. They buy the product
because of its perceived quality features or other
characteristics that they find worth their money. The buyer
places the benefits above the product value.

f.
Price elasticity- the price will influence the demand
relationships. Price elasticity is the measure of the buyers
sensitivity of demand on the changes in price. It is
conditioned when the buyer perceives the product to high
quality, prestige or exclusiveness. This is the case of branded
shirts and other clothing apparels.
COMPETTITORS’ STRATEGY
Another external factor affecting the company’s pricing decisions is
competitors’ costs and prices, and possible competitor reactions to
the company’s own pricing moves. A consumer who is considering
the purchase of a Canon camera will evaluate Canon’s price and value
against the prices and values of comparable products made by Nikon,
Minolta, Pentax and others.
Competitors pricing strategy may be below or above the market. The
seller’s price may be set right at the market price to meet the
competition.
a. Pricing to Meet Competition
This competition is simple to carry out. The marketing
organization ascertains the competitor’s price after allowing
customary mark up for the middlemen and sets its own selling
price. These pricing strategies operate under a perfect
competition when there is an absence of product differentiation.
Buyers are well informed through advertising and the seller has
no discernible control over the selling price.
b. Pricing Below Competition
A variation of market-based pricing is to set a price that is below
the level of the main competitor in the industry. It is done by
retailers who stress low mark up, high volume sales, and
employing few customer service. The market strategy employed
by PureGold and Super Eight are concrete example of this
strategy which can be true in most consumer goods.
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c. Pricing above competition
Producers and sellers sometimes set their price above the
prevailing market level. It works effectively when the product is
distinctive or when the sellers had acquired the reputation above
the competitors in the industry. This is the case with some
boutique and other fashion stores that set their price differently
according to their industry reputations.
ECONOMIC AND OTHER SOCIAL CONCERNS
A. RECESSION
It is the state where the economic condition of the country is affected
by higher interest rate and inflation. It affects price as the buying
power of the market is at low level and price adjustment is necessary
to cope with economic situation.
B. GOVERNMENT REGULATION
Prices are regulated by the government in cases when it declares a
state of calamity to avoid manipulation of prices by the sellers. In
case of utilities such as water and electricity the government
intervene in the pricing of these social services.
PRICE STRATEGIC IMPLEMENTATION (New Product Pricing
Strategies)
The implementation of pricing strategy is one of the basic
management functions that generates the desired profit objectives.
The firm’ readiness to sell the product would be effective if they
adopted price decisions that will sustain its operation. The pricing
decision is dependent on the factors prevailing in the marketing
environment. Careful analysis of the market condition must be made
to determine which pricing strategy will be implemented.

Pricing strategies usually change as the product passes through its
life-cycle. The introductory stage is especially challenging. We can
distinguish between pricing a product that imitates existing products
and pricing an innovative product that is patent protected. A
company that plans to develop an imitative new product faces a
product-positioning
problem. It must decide where to position the product versus
competing products in terms of
Product Mix Pricing Strategies used by marketers
1. Product Bundle Pricing-some firms offer their products in bundles
or promo packages. Shampoos, for example, are packed
together with conditioners: tomato sauce together with pasta
noodles; and milk together with coffee or biscuits. As separate
products, they are more expensive; however, when packaged as
one product, they cost less. Unilever and Procter and Gamble are
examples of firms that utilize this pricing strategy.
2. By-product Pricing- some firms, instead of discarding the by-
products of their main products, sell them at relatively lower
prices. This strategy can give firms significant competitive
advantage by reducing the price of their main product and
recovering losses by selling its by-products. By employing this
strategy, firms can save money earn marked for the cost of waste
disposal. Chemical plants and petroleum companies that have
efficient solid and chemical waste management systems usually
apply this pricing strategy. Example petrol industry, or sugar
industry.
3. Optional pricing- firms that use this strategy offer their main
products at a lower price while placing additional charges to the
supplementary services that come with it. For example, most
telecommunication companies set a fixed price on their postpaid
plans. However, services such as calls to other networks, text
messaging to other networks and unlimited internet access are
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not covered by some postpaid plans. To avail themselves of
these services, customers must pay additional charges.
4. Captive Pricing or Premium Pricing- this involves charging
additional costs for the necessary adjuncts of a main products.
For example, after purchasing a television, the consumer cannot
avoid purchasing an antenna or speakers if he/she wants
maximum quality performance of the main product.
5. Product Line Pricing- this involves putting noticeable and
sufficient price gaps between particular products in a product
line in order to produce different product quality levels in the
minds of consumers. A firm that uses product line pricing must
know the distinct price differences of the products in the product
line. For example, what are the differences in the prices of J&J
baby powder, lotion, bath oil, and shampoo? In this strategy, the
pricing decision is based on the perceived value derived by
consumers form the slights differences in the prices of products.
Another example is Samsung. It offers different smartphones
with different features at different prices
6. Customary Pricing- this is use for one price over an estimated
period. The price of the product is kept for a period unless the
prevailing condition in the market changes. It must consider the
market affordability in buying. Example: Candy bars of a certain
weight all cost a predictable amount-unless your purchase them
in an airport shop.
7. Variable Pricing- it is the condition when the price changes with
the fluctuation in demand and the difference is brought by the
entrance of a new product that offers different features. A
pricing strategy in which the price of a good or service may vary
based on region, sales location, date, or other factors. Variable
pricing strategies adjust product prices to achieve optimal
balances between sales volume and income per unit sold based
on the characteristics of different categories of points-of-sale.
Traditional examples include auctions, stock markets, foreign
exchange markets, bargaining, electricity, and discounts. More
recent examples, driven in part by reduced transaction costs

using modern information technology, include yield
management and some forms of congestion pricing.
8. One Price Policy- One price is charged to all customers buying the
product or service under similar conditions. A one-price policy
may also mean that prices are set and cannot be negotiated by
customers. A one-price policy is the opposite of a variable pricing
approach, in which prices may vary based on location,
promotional offers, method of payment, or other factors. The
entrepreneur will set one price for all products available for sale
even if there are differences in taste or design. Variations of
NESCAFE is an example.
9. Flexible Pricing- pricing is based on customers’ ability to
negotiate or the buying power of the prospective consumers.
Method of selling where the prices are open to negotiations
between buyers and sellers, and allow for bargaining within a
certain range.
10. Odd pricing strategy- prices are set at levels below even values.
The sellers used odd numbers to attract customers to buy the
product. Odd pricing is a pricing method aimed at maximizing
profit by making micro-adjustments in pricing structure. It relies
on the assumption that consumers are calculation-averse and
will therefore only read the first digits of a price when making
their purchasing decision. According to this method, the relevant
information of any given price does not usually relate to the last
digits, but rather to the first digits, or in other words, to the order
of magnitude of the numbers. For example, the price of P17.99
looks more like P17 and not like P18, products are priced at
P99.95, for children shirt, and P295 for a man’s shirt. The odd
pricing strategy relies on the fact that consumers highly value
their time when evaluating prices. There is an increasing time
cost associated with examining each additional digit within any
given number, which means that when examining a price, the
first digits carry more weight than the last ones. We can define a
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relevance rate for each digit and hence define the two concepts
of “perceived price” and “true price”.
11. Price for Quality- consumers believe that when the product is
priced higher than the other product it is more superior quality.
It is conditioning the mind of the consumers that when the
product is priced higher than that of the competing brand, the
product is guaranteed to be of high quality.
12. Leader Pricing- it is selling the product lower than the
competitors in order to gain consumer interest about the
product. Leader pricing is an aggressive step to win the respect
of the consumers and the competitors. The product must meet
the standard quality requirements and the price is reasonable for
the buyer.
13. Multiple Unit Pricing- the firm offers discount to consumers for
buying in large quantities. Selling more products will generate
more profit. The objective is to prevent overstocking of goods
and maintain proper inventory level by selling in bulk. Profit and
growth are assured with sustained customer patronage. Example
Buy 2 get 1 free.
14. Unbundled Pricing- it is the opposite of the bundled pricing
strategy. The firm sells the product and makes a separate price
for the service component. There is a separate contract for the
service.
15. Geographic Pricing- this is the pricing strategy where the sellers
and the buyers are far from each other and shipping cost will be
an added value to the product. It is either the seller or the buyer
pays for shipping cost including insurance and other incidental
expenses.
a. FOB Factory- the buyer pays for all shipping cost and
other incidental charges including custom duties and
insurance that will cover the product while in transit. In
case of damage while on transit, the insurance pays for
the cost of damage.
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b. Uniform Delivered pricing- Price that includes costs of
transport where a seller retains title until goods are given
to the customer.
c. Zone pricing- this is setting the price uniformly in one
specific area of delivery or operation. Same price is
charged for Metro Manila are and another set price for
other regions in the country
d. Base Point Pricing- the cost of transporting the goods is
computed based on the nearest buyer. The longer the
distance of delivery, the higher the percentage of
delivery cost. It may be computed on a per kilometer
basis
e. Terms of Sale-when products are sold on cash basis,
discounts are given. When paid at a later date, interest
charges may be part of the price. Cash on delivery is
made when the product is paid upon receipt of goods.
PRICE ADJUSTMENTS
Competition and changes in the market condition need price
adjustments to keep the product moving in the shelf of the
middlemen. The changes in the production due to technological
advancement that brought about the economies of scale need price
adjustment to vie the customer more value for the product.
adjustments before the product is delivered to the customer.
The price difference must be communicated to the customer
before delivery, stating the reasons for the price increase or
adjustments.
3. Surcharges- these are increase in price that are added to the
value of the product in the form of taxes or fees or price
adjustments due to some extra packaging or protection to keep
the product safe while in transit to the customer. It may cover
insurance protection.
4. Mark ups- this is the increase in price to the regular price due to
increase in market demand or due to increase in the price of raw
materials at a particular season of the year. Care must be taken
in this adjustment as it may affect customer loyalty and
continuous patronage.
5. Mark down- this is reduction from the original selling price due
to product obsolescence or competition in the industry. This will
avoid overstocking and sale of products that are nearing expiry
dates.

The changes in the price of raw materials and transportation cost are
factors that affect prices in the market. Products that don’t sell in the
shelf need adjustment in price to turn them into moving inventory.
Marketers cannot keep sitting down with the above conditions or
they will find themselves out in the cold.

1. List price- this is quoted price in customer catalogue, price tags,

and purchase orders. Sales people must have updated price list
so that when negotiations take place they are ready to answer
and make minor adjustments when necessary.
2. Escalation clauses- it is the provision in the contract of sale which
stipulates that price of the goods or product that allows price
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PLACE
PLACE OF DISTRIBUTION AND RETAIL MARKETING
The nature of channels of Distribution
Marketing channel (distribution channel)— A set of
interdependent organizations involved in the process of making
a product or service available for use or consumption by the
consumer or industrial user. They are set of pathways a product
or service follow after production
A Distribution Channel is a set of people and business
organization involved in the transfer of the title of a product form
the producer to the ultimate consumers or to other business
users. The channel of distribution always includes both the
producer of goods and the final customer in its present form. It
includes the middleman as distributors, wholesalers, and the
retailers.
The distributor’s role within the marketing mix is getting the
product to its target market. The most important activity of the
distributor is arranging the transfer of the title of the product to
its target consumers. The distributors assume the warehousing
of the product, promoting and assuming the financial risk during
the distribution process.
The middlemen are business organizations that render service
related to the sale or purchase of the product. They are the
bridge between the producers or distributors to the customer in
the market. They take the position of the product and arrange
the transfer of title to the next customer.
Intermediaries- are the middlemen and signify those individuals
in the channels that either take title to take goods and sell at
profit. They are directly involved in process of flow of goods
from manufacturer to consumer.
The objective is to move the goods or services efficiently, with
the lowest possible number of intermediaries between the
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producer and the end user. Ideally, the producer aims to
exchange the products directly with the consumer. However, as
the physical distance between the two parties and the volume of
goods to be exchanged increases, it becomes necessary for
producers to use the help of others to complete the movement
of the goods associated with the transaction. These are the
intermediaries within the channels of distribution, or the ‘value
chain’, as it is termed.
Value delivery network—A network made up of the company,
suppliers, distributors and customers who ‘partner’ with each
other to improve the performance of the entire system.
Channel level—A layer of intermediaries that performs some
work in bringing the product and its ownership closer to the final
buyer.
Direct-marketing channel—A marketing channel that has no
intermediary levels. For example, Avon and Tupperware sell
their products door-to-door or through home and office sales
parties.
Conventional distribution channel—A channel consisting of one
or more independent producers, wholesalers and retailers, each
a separate business seeking to maximise its own profits, even at
the expense of profits for the system as a whole
Types of Distribution Channel
1. Direct to the consumer
2. Distribution via retailers
3. Distribution via wholesalers and retailers
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Classification of Middleman (Types of Intermediaries) 3. Distributors- These are sales intermediaries who share willingness to
hold stock. Usually, distributors are linked to a single supplier for each
1. Merchant Middleman- the two important groups are the wholesalers line carried. For example, in the car industry, Ford has a network of
and retailers. They take position of the product and handle the distributors (or dealers) that provide showrooms (and salesmen) as
distribution until it reaches the consumers. They plan and execute well as car servicing dedicated to the Ford range of cars. The
these essential functions of assorting and storing the product before manufacturer contributes to the costs associated with the running of
it is shifted to the customers. the dealership. However, such distributor agreements are becoming
a. Retailers- are firms or people that offer less rigorously maintained, so that some distributors are beginning to
products/services directly to consumers. Sari-sari stores carry cars for more than one car manufacturer, which inevitably leads
and supermarkets are some popular and common to conflicts of interests for all concerned.
examples of retailers. In bigger retail outlets like
supermarkets, products and placed on shelves and
freezers with corresponding product classification signs Factors Affecting the Channel of Distribution/Channel Constraints
for consumers to locate them easily. Some retailers, on
1. Channel conflict— Disagreement among marketing channel
the other hand, expand their product line by purchasing
members on goals and roles – who should do what and for what
new products form a new set of wholesalers. For
rewards.
example, SM Hypermarkets, which only carried or sold
grocery items initially, has recently started offering Two Level of Conflicts
baked goods and pastries in most of their branches.
a. Horizontal conflict is conflict among firms at the same level of the
b. Wholesalers- wholesaling refers to the practice of firms
channel. For instance, Peugeot dealers in a particular geographic
of purchasing products in bulk from big suppliers and
territory may complain that the other dealers in the territory steal
manufacturers to sell them to retailers. Wholesalers are
sales from them by pricing too low or by selling outside their assigned
the people in charge of purchasing products from
territories.
suppliers and selling them to retailers. Many wholesalers
b. Vertical conflict is more common and refers to conflicts between
are classified as jobbers or middlemen because they buy
different levels of the same channel. For example, some personal
products in large quantities and sell them to retailers or,
computer manufacturers created conflict with their high street
occasionally, to end consumers. Because they buy in
dealers when they opened online stores to sell PCs directly to
bulk and directly from suppliers, they get products for
customers.
relatively lower prices.
2. Market Consideration (customer characteristics)
2. The Agent Middleman (sales agents)- these are organizations or
a. The type of product- consumer products are served by most
persons who do not actually own the product of the producer or title.
wholesalers and retailers that could be found even in the
They are middlemen who arrange the transfer of title form producer
remote sector of the towns and cities. Business product on
to the consumers. They are the Real Estate Brokers, Real Estate
the other hand reaches the market through dealers or
Salesman, Insurance Agents, Travel Agents and others.
agents.

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b. Number of potential customers- the wide potential market
for consumer products needs the services of more outlets
which are the middlemen in a supply chain. Business
products have few volume customers and they can utilize
their salespeople or distributors. The number of customers
that a producer targets influences the selection of the
intermediaries used within the supply channel.
c. Geographic concentration (geographical dispersion)- the
market for consumer goods is dispersed and spread all
throughout the various locations in the urban centers and in
the rural areas. It is impractical to use few outlets to serve
consumers needs. Business product users are mostly
concentrated in urban centers and they can be serviced by
salespeople or dealers.
d. The volume of orders- consumer goods are ordered in big
volume while business products are less in volume but higher
in price per unit.
3. Product Consideration ( product characteristics)
a. Unit Value- the price attached to each unit of product affects
the amount of money available for distribution. Products
with low unit value are sold through indirect channels while
products with higher sales value are sold through sales
people.
b. Perishability-Products have differing degrees of perishability
that influence the type of storage and warehousing required
and the distance that such products can be moved. Highly
perishable products such as fresh food require different
warehousing conditions from products such as vegetable oil,
lubricating oil and toilet paper. Some products need to have
temperature controlled chilled or freezing conditions; others
are better stored at room temperature. Safety of dangerous
products also necessitates special storage, e.g. petroleum
and gaseous fuels.
c. Technical nature of the Product (SERVICE SUPPORT
REQUIREMENTS)- business product that is highly technical is
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distributed directly to users. It provides pre-selling and post
selling services before the transaction is consummated.
4. Company characteristics
a. SIZE OF ORGANIZATION- The resources of the supplier of the
product, or service, influences the selection of the channels
of distribution. Such resources include finance, the number
of employees and the geographical spread of the
organization’s operations.
b. PRODUCT MIX- The range of products that an organization
supplies affects the channel selection. The organization
supplying different product types to different markets, of
necessity, will be likely to operate more complex channel
systems than the firm supplying a more limited range of
standard products
c. PAST CHANNEL MIX EXPERIENCE-The channel mix used
evolves over time and is influenced by the experience of past
practice. If, traditionally, a product has been distributed by
a supplier using wholesalers and retailers, and that system
has worked effectively, then the supplier will probably
continue to use the same system. It is when the system fails,
or when the cost of using such channels becomes excessive,
or the competition becomes intense, that suppliers consider
alternative approaches.
Determining the Intensity of Product Distribution
The intensity of distribution refers to the different levels that the product will
pass through before it reaches the final consumers. There are many possible
degrees of intensity and management must make a choice of the appropriate
one that will make the product more accessible to the target consumers.
 Intensive Distribution-Mass-market products have to be made available
in as many outlets as possible to ensure that consumers have the
convenience of being able to purchase the products whenever they wish.
This strategy is used for lower-priced convenience items, e.g.
confectionery, snack foods, tobacco and soap. Producers of these types
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of goods use a range of outlets of varying status, including railway kiosks,
multiple high-street shops and retail superstores. Location convenience
is the priority in selecting these retail outlets.
 Selective Distribution-Rather than intensive distribution, producers may
select their preferred outlets to match their marketing strategies by
targeting particular market segments. For example, the producer of
digital cameras may select electrical goods retailers that are located in
prime shopping centres and in airport duty-free zones, rather than use all
the available electrical goods retailers. In this way, the digital camera
producer can concentrate efforts on retailers that perform best at selling
the cameras.
 Exclusive Distribution-Should the producer have an exclusive range of
products, e.g. Omega watches or Gucci fashion clothes, it is appropriate
to distribute the products through exclusive retail outlets and to limit the
number of intermediaries handling the company’s goods or services.
Exclusive distribution is used when the producer wants to maintain
control over the service level offered. Frequently it involves exclusive
dealer arrangements in which the retailers agree not to carry competing
brands.
channel network, obliging the supplier to meet the retailer’s demands. The
demands of all concerned must be met.
In this way, channel design is affected by ‘push’ and ‘pull’ factors:
1. Push from the manufacturer pushing production on to customers
through the channel intermediaries.
2. Pull from customers exerting product stocking pressure on retailers
and manufacturers through the channel intermediaries.
3. Constraints come from retailers, e.g. stock specifications on suppliers
to match customer database information.
This leads to channel of distribution ‘shuffle’ whereby the nature and
responsibilities of intermediaries within the network change to meet the
pressures imposed by users of the system. Increasingly, it is the retailers
within the network that have the dominant role within the channels of
distribution, or the value chain.

While, in principle, the choice of whether to use intensive, selective or

exclusive distribution relates to the nature of the products or services being
marketed, and the distribution methods appear to be mutually exclusive, yet
there are pressures to move towards intensive intermediary coverage. Often
the user of exclusive and selective distribution is under pressure to widen the
outlet coverage, especially in times of falling sales. However, the greater
coverage can reduce the image of exclusivity, thereby losing the advantages
associated with the established outlets. The situation has to be monitored
carefully to choose the most appropriate outlet coverage.

Throughout the selection of the most effective distribution network, the

channel design has to consider the demands of the manufacturer, i.e. the
need to move the goods or services from the location where they are
produced, through the intermediaries, to the consumer. At the same time the
pressures of the customer on the supplier of the goods or services must be
considered. Compounding this situation, the retailer places pressures on the
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Promotion
The nature of Sales Promotion
Promotion mix—The specific mix of advertising, personal selling, sales
promotion and public relations that a company uses to pursue its advertising
and marketing objectives.
Promotion planning is a systematic decision making relating to the whole
organization micro and macro environments that sustain information flow to
the customers.
Promotion is an attempt to influence the buyer. It is widely used by a wide
range of organizations in both consumers and business market.
A company’s total marketing communications mix – also called its promotion
mix –consists of the specific blend of advertising, personal selling, sales
promotion, public relations and direct marketing tools that the company uses
to pursue its advertising and marketing objectives.
Five Main Promotional Tools:
Advertising. Any paid form of non-personal presentation and promotion of
ideas, goods or services by an identified sponsor.
Personal selling. Personal presentation by the firm’s sales force for the
purpose of making sales and building customer relationships.
Sales promotion. Short-term incentives to encourage the purchase or sale of
a product or service. It is the process of persuading a potential customer to
buy the product. It is designed to be used as a strategy and tactics to boost
sales.
Public relations. Building good relations with the company’s various publics
by obtaining favourable publicity, building up a good ‘corporate image’, and
handling or heading off unfavourable rumours, stories and events.
Direct marketing. Direct connections with carefully targeted individual
consumers both to obtain an immediate response and to cultivate lasting
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customer relationships – the use of telephone, mail, fax, email, the Internet
and other tools to communicate directly with specific consumers.
Each category in the promotions mix involves specific tools. For example,
advertising includes print, radio and television broadcast, outdoor and other
forms. Personal selling includes sales presentations, fairs and trade shows,
and incentive programmes. Sales promotion includes activities such as point-
of-purchase displays, premiums, discounts, coupons, competitions, speciality
advertising and demonstrations. Direct marketing includes catalogues,
telephone marketing, fax, kiosks, the Internet and more. Thanks to
technological breakthroughs, people can now communicate through
traditional media (newspapers, radio, telephone, television) as well as
through newer types of media (fax machines, mobile phones, computers).
The new technologies have encouraged more companies to move from mass
communication to more targeted communication and one-to-one dialogue.
Purposes of Promotion
1. Promotion and Imperfect Competition- the local market for our
products to operates under a condition of imperfect competition. It
is characterized by product differentiation, emotional buying
behavior, and incomplete market information. Through promotion
the marketing firm strives to increase its market share and sales
volume at any given price.
2. Promotion and Marketing- promotion in product marketing serves to
inform, persuade and remind prospective customers about the
company and its products. The purpose of promotion is to
disseminate information and let the potential buyer know about the
product’s existence, its availability and price.
3. Promotion and Strategic Planning- the strategic approach in
marketing is a coordinated effort of all marketing executives who
have something to do with the product mix. Promotion is influenced
by how distinctive a product is and whether the price is abouve or
below the competition.
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Factors Inluencing the Promotional Mix more promotional activities are necessary to give the widest
information dissemination through advertising and publicity.
1. Target Customer or Market
c. Type of Customer- the customer can be classified in many
a. Readiness to buy the product- the target market is affected
different ways. Market segmentation is determining
by the following steps in the buying process:
assortment of different types of market. The promotional
i. Awareness-This can be attained by the ability to
strategies therefore must match with the type of customer.
capture the interest of the customers. For example,
d. The concentration of the Market- the density of population
when cellphone companies introduced its mobile
must be identified before any promotional activity be
phone network, it began with an extensive ‘teaser’
implemented.
advertising campaign to create name familiarity.
ii. Knowledge- it is the process of assimilating the
information about the product or service of the
2. The Nature of the Product
marketing organization. Example: At launch, of
a. Unit Value- the product with lower sales value like consumer
mobile phones ads created knowledge by informing
goods, needs more advertising to penetrate the target
potential buyers of the company’s service and
market. On the other hand, products with higher value like
innovative features.
housing units need more the services of salesperson.
iii. Liking- it can be measured when the customers begin
b. Degree of customization- customization is the desire of the
to inquire about the benefits and features of the
individual customer to have unique features for the product
product. If the audience looks unfavourably on the
he wants for himself. This is true in housing construction
brand, the communicator has to find out why, and
where the services of the civil engineers and architects are
then resolve the problems identified before
needed. Sales people are needed to complete the
developing a communications campaign to generate
transaction.
favourable feelings.
c. The need for pre-sale and post-sale service- the promotional
iv. Preference- it is determined when the customers ask
strategy under this category would be the services of sale
about the price and the place where it could be
engineers for machineries and installations. Advertising for
available.
this kind of product would not be necessary.
v. Conviction- it is evaluated when the customers make
3. The Stage of Product Life Cycle
options and choices.
Promotional Strategies are influenced by the product’s life cycle. At
vi. Purchase- it is the ultimate degree of the customer’s
the introductory stage, the consumers products must have intensive
preference when he pays the product.
advertising and call of sales people to more dealers and retailers in
b. Geographic Scope of the Market- the area of marketing
order that the product will be known and available in the market.
operation is another factor to consider in promoting the
Promotion strategies that can be employed at each stage of the
product to its target market. A small territory may require
Product Life Cycle are as follows:
the service of salesperson. The bigger the geographic area
Introduction

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When a product is new the organisation's objective will be to inform

the target audience of its entry. Television, radio, magazine, coupons
etc may be used to push the product through the introduction stage
of the life cycle. Push and Pull Strategies will be used at this crucial
stage.
Growth
As the product becomes accepted by the target market (at this stage
of the life cycle) the organisation will employ strategy to increase
brand awareness and customer loyalty.
Maturity
At this stage of the life cycle the product will be experiencing
increased competition and will need persuasive tactics to encourage
consumers to choose their product over their rivals. Any differential
advantage/benefit will be need to be clearly communicated to the
target audience.
Decline
Source: http://www.learnmarketing.net/promotion.htm
As the product reaches the decline stage of its life cycle, all the
organisation can do is use strategy to remind consumers about the
product in a bid to slow the inevitable.

Promotion Through The Product Life Cycle
As products move through the four stages of the product life cycle
different promotional strategies should be employed at these stages
to ensure the healthy success and life of the product.
4. The Availability of Financial Resources
Big marketing organizations have the financial resources to back up
their products with intensive advertising. Advertising is one of the
most expensive strategies in the promotional mix. This could only be
possible if the organization has the fund to sustain advertising
strategy.

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ADVERTISING

Important decisions in advertising

Marketing management must make four important decisions when

developing an advertising program.

1. Setting Advertising Objectives

2. Setting the advertising budget
3. Developing advertising strategy
4. Evaluating advertising campaigns

I. Setting Advertising Objectives

Advertising Objectives-A specific communication task to be accomplished

with a specific target audience during a specific period of time.

Advertising objectives can be classified by primary purpose – whether the aim

is to inform, persuade or remind II. Setting the Advertising Budget

Possible Advertising Objectives
a. Informative advertising— Advertising used to inform consumers
about a new product or feature and to build primary demand.
b. Persuasive advertising—Advertising used to build selective demand
for a brand by persuading consumers that it offers the best quality
for their money. Some persuasive advertising has become
comparison advertising, in which a company directly or indirectly
compares its brand with one or more other brands
c. Reminder advertising—Advertising used to keep consumers thinking
about a product. For example, car firms might use reinforcement
advertising that depicts satisfied owners enjoying some special
feature of their new car.
After determining its advertising objectives, the company next sets its
advertising budget for each product. Here we describe some specific
factors that should be considered when setting the advertising budget:
a. Stage in the product life-cycle. A brand’s advertising budget often
depends on its stage in the product life-cycle. New products typically
need large advertising budgets to build awareness and to persuade
consumers to try the products. In contrast, mature brands usually
require lower budgets as a percentage of sales.
b. Market share. Market share also impacts the amount of advertising
needed. Because building the market or taking share from
competitors requires larger advertising spending than does simply
maintaining current share, low-share brands usually need more
advertising spending as a percentage of sales.
c. Competition and clutter. In a market with many competitors and
high advertising clutter, a brand must be advertised more heavily to
be noticed above the noise in the market.

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d. Advertising frequency. When many repetitions are needed to
present the brand’s message to consumers, the advertising budget
must be larger.
e. Product differentiation. Undifferentiated brands – those that closely
resemble other brands in their product class (coffee, laundry
detergents, chewing gum, beer, soft drinks) – may require heavy
advertising to set them apart. When the product differs greatly from
those of competitors, advertising can be used to point out the
differences to consumers.
III. Developing Advertising Strategy
Advertising strategy covers two major elements: creating the advertising
messages and selecting the advertising media.
 Creating the advertising messages-No matter how big the budget,
advertising can succeed only if commercials gain attention and
communicate well.
 The changing message environment
 Message Strategy-Message strategy statements tend to be plain,
straightforward outlines of benefits and positioning points that the
advertiser wants to stress. The advertiser must develop a compelling
creative concept – or ‘big idea’ – that will bring the message strategy
to life in a distinctive and memorable way.
 Message execution-The advertiser now has to turn the ‘big idea’ into
an actual ad execution that will capture the target market’s attention
and their interest. The impact of the message depends not only on
what is said, but also on how it is said. The creative people must find
the best style, tone, words and format for executing the message.
 Different execution styles
 Slice of life. This style shows one or more people using the
product in a normal setting (e.g. the classic Persil laundry
detergent commercials which show the role of the mother
who knows she can rely on Persil to keep her family’s
washing clean, white and bright).
 Lifestyle. This style shows how a product fits in with a
particular lifestyle
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 Fantasy. This style creates a fantasy around the product or its
use. For instance, many ads are built around dream themes.
Gap introduced a perfume named Dream. Ads show a
woman sleeping blissfully and suggest that the scent is ‘the
stuff that clouds are made of ’.
 Mood or image. This style builds a mood or image around the
product, such as beauty, love or serenity. No claim is made
about the product except through suggestion.
 Musical. The ad is built around a song or some well-known
music, so that emotional responses to the music are
associated with the product.
 Personality symbol. This style creates a character that
represents the product.
 Technical expertise. This style shows the company’s
expertise in making the product.
 Scientific evidence. This style presents survey or scientific
evidence that the brand is better or better liked than one or
more other brands. For years, Crest toothpaste has used
scientific evidence to convince buyers that Crest is better
than other brands at fighting cavities.
 Testimonial evidence or endorsement. This style features a
highly believable or likeable source endorsing the product. It
could be ordinary people saying how much they like a given
product or a celebrity presenting the product.
 Selecting the advertising Media
The advertiser must next decide upon the media to carry the message.
The main steps in media selection are: (1) deciding on reach, frequency
and impact; (2) choosing among chief media types; (3) selecting specific
media vehicles; and (4) deciding on media timing.
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 Deciding on reach, frequency and impact- To select media, the

advertiser must decide what reach and frequency are needed to
achieve advertising objectives. Reach is a measure of the percentage
of people in the target market who are exposed to the ad campaign
during a given period of time. For example, the advertiser might try
to reach 70 per cent of the target market during the first three
months of the campaign. Frequency is a measure of how many times
the average person in the target market is exposed to the message.
For example, the advertiser might want an average exposure
frequency of three. The advertiser must also decide on the desired
media impact – the qualitative value of a message exposure through
a given medium. For example, for products that need to be
demonstrated, messages on television may have more impact than
messages on radio because television uses sight and sound. The same
message in a national newspaper may be more believable than in a
local weekly. In general, the more reach, frequency and impact the
advertiser seeks, the higher the advertising budget will have to be.
 Choosing among chief media types- The media planner has to know
the reach, frequency and impact of each of the major media types.
The major media types are newspapers, television, direct mail, radio,
magazines, outdoor, and the Internet.

 Selecting specific media vehicles

Media vehicles—Specific media within each general media type, such
as specific magazines, television shows or radio programmes.
numerous stations and channels to choose from, together with
hundreds, even thousands, of programme vehicles – the particular
programmes or shows where the commercial should be broadcast.
Prime-time programmes are the favourites, but costs escalate with
the popularity of the programme

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 Deciding on media timing
The advertiser must also decide how to schedule the advertising over
the course of a year. Suppose sales of a product peak in December
and drop in March. The firm can vary its advertising to follow the
seasonal pattern, to oppose the seasonal pattern, or to be the same
all year. Most firms do some seasonal advertising. Some do only
seasonal advertising: for example, many department stores advertise
– usually their seasonal sales – in specific periods in the year, such as
Christmas, Easter and summer. Advertisers can also ensure greater
efficiency in running their TV campaigns – in terms of the number of
television impacts and their price – by shifting TV campaigns into
cheaper months.
Finally, the advertiser has to choose the pattern of the ads. Continuity
means scheduling ads evenly within a given period. Pulsing means
scheduling ads unevenly over a given time period. Thus 52 ads could
be either scheduled at one per week during the year or pulsed in
several bursts. The idea is to advertise heavily for a short period to
build awareness that carries over to the next advertising period.
Those who favour pulsing feel that it can be used
to achieve the same impact as a steady schedule, but at a much lower
cost. However, some media planners believe that although pulsing
achieves minimal awareness, it sacrifices depth
of advertising communications.
IV. EVALUATING ADVERTISING
The advertising programme should regularly evaluate both the
communication impact and the sales effects of advertising.
Measuring the communication effects of an ad or copy testing
tells whether the ad is communicating well. Copy testing can be
done before or after an ad is printed or broadcast. Before the
ad is placed, the advertiser can show it to consumers, ask how
they like it, and measure recall or attitude changes resulting
from it. After the ad is run, the advertiser can measure how the
ad affected consumer recall or product awareness, knowledge
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and preference. Copy testing—Measuring the communication
effect of an advertisement before or after it is printed or
broadcast.
SALES PROMOTION
Sales promotion—Short term incentives to encourage purchase or
sales of a product or service. Whereas advertising offers reasons to
buy a product or service, sales promotion offers reasons that would
achieve immediate sales. It seeks to motivate the customer to buy
now. Sales promotion includes a wide variety of promotion tools
designed to stimulate earlier or stronger market response. These
tools are used by many organisations – manufacturers, distributors,
retailers, trade associations and non-profit institutions – and may be
targeted towards the consumer or final buyer, business customers,
the trade or retailer and the company’s sales force.
Types of Promotion
1. Consumer promotion—Sales promotion designed to stimulate
consumer purchasing, including samples, coupons, rebates,
prices-off, premiums, patronage rewards, displays, and contests
and sweepstakes.
2. Trade (or retailer) promotion—Sales promotion designed to
gain reseller support and to improve reseller selling efforts,
including discounts, allowances, free goods, cooperative
advertising, push money, and conventions and trade shows.
3. Business promotion—Sales promotion designed to generate
business leads, stimulate purchase, reward business customers
and motivate the salesforce.
4. Sales force promotion— Sales promotion designed to motivate
the sales force and make sales force selling efforts more
effective, including bonuses, contests and sales rallies.

Setting Sales Promotion Objectives
Consumer promotions objectives
(1) increase short-term sales;
(2) help build long-term market share;
(3) entice consumers to try a new product;
(4) lure consumers away from competitors’ products;
(5) encourage consumers to ‘load up’ on a mature product; or
(6) hold and reward loyal customers.
Trade promotion objectives
(1) motivating retailers to carry new items and more stock;
(2) inducing them to advertise the product and give it more shelf space; and
(3) persuading them to buy ahead.
Sales Force objectives
(1) get more sales force support for current or new
products; or
(2) stimulate salespeople to sign up new accounts.
Sales promotions are usually used together with advertising, personal selling
or other promotion mix tools. Consumer promotions are usually advertised
and can add excitement and pulling power to ads. Trade and sales force
promotions support the firm’s personal selling process.
Objectives, however, should be measurable. Rather than stating that the
promotion aims to increase sales, the objective should be specific about the
level of increase, who the main targets are and whether increased sales are
expected to come from new trial lists or from current consumers who are
loading up or bringing forward their purchase.
In general, sales promotions should be consumer relationship building.
Rather than creating only short-term sales volume or temporary brand
switching, sales promotions should help to reinforce the product’s position
and build long-term relationships with customer relationships. Increasingly,
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marketers are avoiding the ‘quick fix’, price-led promotions in favour of
promotions designed to build brand equity. Even price promotions can be
designed to build customer relationships. Examples include all the ‘frequency
marketing programmes’, ‘loyalty card schemes’ and ‘clubs’ that have
mushroomed in recent years.
Consumer relationship building promotions—Sales promotions that promote
the product’s positioning and include a selling message along with the deal.
Major Sales Promotion Tools
Many tools can be used to accomplish sales promotion objectives. The
promotion planner should consider the type of market, the sales promotion
objectives, the competition and the cost-effectiveness of each tool.
Descriptions of the main consumer and trade promotion tools follow.
The main consumer promotion tools include samples, coupons, cash refunds,
price packs, premiums, advertising specialities, patronage rewards, point-of-
purchase displays and demonstrations, and contests, sweepstakes and
games.
Consumer Promotion Tools
Samples—Offers to consumers of a trial amount of a product.
Coupons—Certificates that give buyers a saving when they purchase a
product.
Cash refund offers (rebates)—Offers to refund part of the purchase price of a
product to consumers who send a ‘proof of purchase’ to the manufacturer.
Price packs—Reduced prices that are marked by the producer directly on the
label or package.
Premiums—Goods offered either free or at low cost as an incentive to buy a
product.
Advertising specialities— Useful articles imprinted with an advertiser’s name,
given as gifts to consumers.

Patronage rewards—Cash or other awards for the regular use of a certain
company’s products or services.
Point-of-purchase (POP) promotions—Displays and demonstrations that take
place at the point of purchase or sale.
Competitions, sweepstakes, lotteries and games—Promotions that offer
customers the chance to win something – cash, goods or trips – by luck or
extra effort.
(Reference: page 788)
Trade Promotion Tools
Trade promotion can persuade retailers or wholesalers to carry a brand, give
it shelf space, promote it in advertising and push it to consumers. Shelf space
is so scarce these days that manufacturers often have to offer price discounts,
allowances, buy-back guarantees or free goods to retailers and wholesalers
to get on the shelf and, once there, to stay on it.
Manufacturers use several trade promotion tools. Many of the tools used for
consumer promotions – contests, premiums, displays – can also be used as
trade promotions. Alternatively, the manufacturer may offer the following:
straight discount off the list price on each case purchased during a stated
period of time (also called a price-off, off-invoice or off-list).
Allowance—(1) Reduction in price on damaged goods. (2) Promotional
money paid by manufacturers to retailers in return for an agreement to
feature the manufacturer’s product in some way.
Free Goods-- are extra cases of merchandise, to intermediaries that buy a
certain quantity or that feature a certain flavour or size
Push incentives – cash or gifts to dealers or their sales force to ‘push’ the
manufacturer’s goods.
speciality advertising items that carry the company’s name, such as pens,
pencils, coffee mugs, calendars, paperweights, matchbooks and memo pads.
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Business Promotion Tools
Companies spend huge sums of money each year on promotion to industrial
customers. These business promotions are used to generate business leads,
stimulate purchases, reward customers and motivate salespeople. Business
promotion includes many of the same tools used for consumer or trade
promotions. Here, we focus on two of the main business promotion tools –
conventions and trade shows, and sales contests.
Convention and Trade Shows
Many companies and trade associations organise conventions and trade
shows to promote their products. Firms selling to the industry show their
products at the trade show. Vendors receive many benefits, such as
opportunities to find new sales leads, contact customers, introduce new
products, meet new customers, sell more to present customers and educate
customers with publications and audiovisual materials.
Trade shows also help companies reach many prospects not reached through
their sales forces. A high proportion of a trade show’s visitors see a
company’s salespeople for the first time at a show. Business managers face
several decisions, including which trade shows to participate in, how much to
spend on each trade show, how to build dramatic exhibits that attract
attention, and how to follow up on sales leads effectively.
Sales Contests
A sales contest is a contest for salespeople or dealers to urge their sales force
to increase their efforts over a given period. Sales contests motivate and
recognise good company performers, who may receive trips, cash prizes or
other gifts. Sales contests work best when they are tied to measurable and
achievable sales objectives (such as finding new accounts, reviving old
accounts or increasing account profitability) and when employees believe
they have an equal chance of winning. Otherwise, employees will not take
up the challenge.

Developing the Sales promotion program
1. the marketer must decide on the size of the incentive.-- The marketer
must ensure that the promotion genuinely offers extra value and
incentives to targets. Importantly, the promotion must not be
misleading, and the firm must have the ability to honour
redemptions. If not, the campaign could backfire, exposing the firm
to bad publicity which damages its reputation and brand image.
2. The marketer must also set conditions for participation. Incentives
might be offered to everyone or only to select groups. Conditions,
such as the proof of purchase or closing date of the offer, must be
clearly stated.
3. The marketer must then decide how to promote and distribute the
promotion programme itself.
4. The length of the promotion is also important.
5. The marketer also must decide on the response mechanism: that is,
the redemption vehicle to be used by the customer who takes part in
the promotion. Immediate reward – for example, a price reduction,
or a free gift attached to the product on offer – often yields a higher
response. If the incentive requires further action to be taken by the
consumer – for instance, to make another purchase or to collect the
required number of tokens in promotion packs and then post these
off to claim a gift or free product – the redemption rate can be
reduced.
6. sales promotion tools should be pre-tested to find out whether they
are appropriate and of the right incentive size.
7. Companies should prepare implementation plans for each promotion,
covering lead time and sell-off time.
8. Evaluation is also very important
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PUBLIC RELATIONS
Public relations—Building good relations with the company’s various publics
by obtaining favourable publicity, building up a good ‘corporate image’, and
handling or heading off unfavourable rumours, stories and events. Major PR
tools include press relations, product publicity, corporate communications,
lobbying and counselling.
Another important mass-promotion technique is public relations. This
concerns building good relations with the company’s various publics by
obtaining favourable publicity, building up a good ‘corporate image’ and
handling or heading off unfavourable rumours, stories and events. Public
relations (PR) departments perform any or all of the following functions:
1. Press relations or press agency. Creating and placing newsworthy
information in the newsmedia to attract attention to a person,
product or service.
2. Product publicity. Publicising specific products.
3. Public affairs. Building and maintaining local, national and
international relations.
4. Lobbying. Building and maintaining relations with legislators and
government officials to influence legislation and regulation.
5. Investor relations. Maintaining relationships with shareholders and
others in the financial community.
6. Development. Public relations with donors or members of non-profit
organisations to gain financial or volunteer support.
Public relations is used to promote products, people, places, ideas, activities,
organisations and even nations. Trade associations have used public relations
to rebuild interest in declining commodities such as eggs, apples, milk and
potatoes. Even nations have used public relations to attract more tourists,
foreign investment and international support. Companies can use PR to
manage their way out of crisis, as in the case of Johnson & Johnson’s masterly
use of public relations to save Tylenol from extinction after its product-
tampering scare.

Major Public Relations Tools
1. News- PR professionals find or create favourable news about the
company and its products or people. Sometimes news stories occur
naturally. At other times, the PR person can suggest events or
activities that would create news.
2. Speeches- create product and company publicity. Increasingly,
company executives must field questions from the media or give talks
at trade associations or sales meetings. These events can either build
or hurt the company’s image.
3. Special Events- ranging from news conferences, press tours, grand
openings and firework displays to laser shows, hot-air balloon
releases, multimedia presentations and star-studded spectaculars, or
educational programmes designed to reach and interest target
publics.
4. Written Materials- to reach and influence their target markets. These
materials include annual reports, brochures, articles and company
newsletters and magazines.
5. Audio visual materials- such as films, slide-and-sound programmes
and video and audio cassettes, are being used increasingly as
communication tools.
6. Corporate-identity materials also help create a corporate identity
that the public immediately recognises. Logos, stationery, brochures,
signs, business forms, business cards, buildings, uniforms and even
company cars and trucks make effective marketing tools when they
are attractive, distinctive and memorable.
7. Public Service Activities- campaigns to raise funds for worthy causes
– for example, to fight illiteracy, support the work of a charity, or
assist the aged and handicapped – help to raise public recognition.
8. Sponsorship is any vehicle through which corporations gain public
relations exposure. Corporate sponsorships have become an
important promotional tool for companies looking to lift their brand
image, or introduce new product lines or services.
9. Company’s website- can also be a good public relations vehicle.
Consumers and members of other publics can visit the site for
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information and entertainment. Websites can also be ideal for
handling crisis situations. As more and more people look to the Net
for information, a ‘web’ of opportunity now unfolds for public
relations.
Main Public Relations Decisions
As with the other promotion tools, in considering when and how to use
product public relations, management should set PR objectives, choose the
PR messages and vehicles, implement the PR plan and evaluate the results.
1. Setting public relations objectives The objectives for public relations
are usually defined in relation to the types of news story to be
communicated, the communication objectives to be achieved (for
instance, awareness creation, knowledge dissemination, generation
of specific publicity for target groups) and the specific target
audiences.
2. Choosing public relations messages and vehicles -Message themes
for the public relations exercise should be aligned with the
organisation’s PR objectives. In some cases the choice of PR messages
and tools will be clear-cut. In others, the organisation has to create
the news rather than find it by sponsoring noteworthy events.
Creating events is especially important in publicising fund-raising
drives for non-profit organisations. In the past, fund-raisers have
created a large set of special events, ranging from art exhibits,
auctions and dinners, to marathons, walkathons and swimathons.
3. Implementing the public relations plan The PR campaign must be
implemented with care. For example, a great story is easy to place,
but, unfortunately, most stories are not earth shattering and would
not get past busy editors. Thus PR professionals have to acquire a
good feel for what media editors want to feature in their papers and
magazines as well as establish good relationships with them. They
view media editors as a market to be satisfied so that editors will
continue to use their stories.
4. Evaluating public relations results Public relations results are difficult
to measure because PR is used with other promotion tools and its
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impact is often indirect. Ideally, the company should measure the

change in product awareness, knowledge and attitude resulting from
the publicity campaign. Assessing the change requires measuring the
before-and-after-the-campaign levels of these measures.
5. Finally, like the other communications tools, public relations should
be blended smoothly with other promotion activities within the
company’s overall integrated marketing communications effort.

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