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Senior High School – Accountancy, Business and Management (ABM) Specialized Subject
Lesson 1: Product
Product is a key element in the overall market offering. Marketing-mix planning begins with formulating an offering that brings value
to target customers. This offering becomes the basis upon which the company builds profitable relationships with customers.
PRODUCT DEFINED
Product is anything in the form of good, service, or idea consisting of a bundle of tangible and intangible attributes that can be offered
to a market that might satisfy a want or need and is received in exchange for money or something else of value.
3 Components of a Product:
1. Core Product – This is the end benefit for the buyer. The core product is what the buyer really buying.
2. Formal Product – This is the actual physical or perceived characteristics of the product including its level of quality, special features,
styling, branding and packaging.
3. Augmented Product – These are the support items that complete the total product offering such as after-sales service, warranty,
delivery and installation.
2 Types of Products:
1. Consumer Products –wide array of manufactured good which are purchased for personal, family and/or household purposes.
2. Industrial Products – are goods that are sold to other businesses, and used to produce other goods.
Source: Principles of Marketing by Prof. Angelita Ong Camilar-Serrano, DBA Prepared by: Mc Gill Contreras
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PRINCIPLES OF MARKETING
Senior High School – Accountancy, Business and Management (ABM) Specialized Subject
Services Features
1. Intangible – intangible things that are not physical objects and only exist in connection to other things.
2. Heterogeneous – heterogeneous refers to the multifaceted different experience that may had from a single type of service is considered
as a factor to distinguish goods from services.
3. Inseparable – services may be said to be inextricably linked with customers in terms of production and consumption and so it is said
that service is inseparable.
4. Perishable – services are not a stock of fixed assets and it is not possible store services in inventories.
Experiences
Among these two extremes (goods & services), many goods-and-services combinations are possible.
Today, as products and services become more commoditized, many companies are moving to a new level in creating value for their
customers. In order to make a distinction of their offers, beyond just making products and delivering services, they are creating and managing
customer experiences with their brands or company.
Experiences have constantly been an essential part of marketing for some companies. Experiences come about whenever a company
intentionally uses services as the stage and goods as props to engage an individual. Tangible goods and intangible services are brought as one to
create a memorable experience for customers at a point in time.
Today, all kinds of firms are recasting their traditional gods and services to create experience. Companies that market experiences
become conscious that customers are really buying much more than just products and services. They are buying what those offers will do for
them. “A brand, product, or service is more than just a physical thing. Humans that connect with the brand add meaning and value to it,” says
one marketing executive. “Successfully managing the customer experience is the ultimate goal,” adds another.
As that life cycle nears an end, the company must decide what to do. Decisions could be to retire the product altogether or extend the
life cycle of the product through a number of strategies.
Source: Principles of Marketing by Prof. Angelita Ong Camilar-Serrano, DBA Prepared by: Mc Gill Contreras
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PRINCIPLES OF MARKETING
Senior High School – Accountancy, Business and Management (ABM) Specialized Subject
Product line manager’s takes product line decisions considering the sales and profit of each items in the line and comparing their product line
with the competitors’ product lines in the same markets. Product mix decision refers to the decisions about adding a new or getting rid of any
existing product from the product mix, adding a new product line, lengthening any existing line, or bringing fresh variants of a brand to enlarge
the business and to boost the profitability.
1. Product Line Length– marketing managers have to settle on the best length of the product line by adding fresh items or dropping existing
items from the line.
2. Product Line Expansion
a. Product Line Stretching Decision – takes place when a business adds fresh product to the product line and the latest product
types are of a higher or lower quality than present products in the product line.
i. Downward stretching means adding low-end items in the product line.
ii. Upward stretching means adding high-end items in the product line.
iii. Two-way stretching means stretching the line in both directions if an organization is in the middle range of market.
b. Product Line Filling Decision–it means adding more items within the present range of the product line.
PRODUCT STRATEGIES
Product strategy is often called the roadmap of a product and outlines the end-to-end vision of the product and what the product will
become. Companies utilize the product strategy in strategic planning and marketing to identify the direction of the company’s activities.
Good product strategies either meet an existing need with a quality solution or create a need by offering something so modern and
special that customers decide they don’t want to live without it.
Source: Principles of Marketing by Prof. Angelita Ong Camilar-Serrano, DBA Prepared by: Mc Gill Contreras
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PRINCIPLES OF MARKETING
Senior High School – Accountancy, Business and Management (ABM) Specialized Subject
Lesson 2: Pricing
Pricing is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the organization.
The remaining 3p’s are the variable cost of the organization. It costs to produce and design a product; it costs to distribute a product and costs
to promote it.
Price is a key element relating directly to total revenue and ultimately to the profit of the organization. However, it is the most flexible
component of the marketing mix.
PRICING DEFINED
Price is the amount of money charged for a product or a service. More broadly, price is the sum of all the values that customers give up
to gain the benefits of having or using a product or service. Traditionally, price has been the major factor affecting buyer choice. Although in
recent years, non-price factors have gained increasing importance.
PRICE DETERMINANTS
Beyond customer value perceptions, costs, and competitor strategies, the company must consider several additional internal and
external factors.
Internal Factors
1. Marketing Strategy – Price is only one element of the company’s broader marketing strategy. Thus, before setting price, the company
must settle on its overall marketing strategy for the product or service.
2. Objectives – Pricing may play an essential function in helping to achieve company objectives at many levels. A firm can set prices to
draw new customers or profitability keep existing ones. It can set prices low to avoid competition from entering the market. It can help
continue the loyalty and support of resellers or ignore government intervention.
3. Marketing Mix – Price choices must be harmonized with product design, distribution, and promotion decisions to structure a reliable
and valuable integrated marketing program. Decisions prepared for other marketing mix variables may influence pricing decisions.
4. Other Organizational Considerations – Management must fix on who within the organization should set prices. Companies handle
pricing in a variety of ways. In small companies, prices are often fixed 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 permitted to bargain with customers within definite price ranges. Even so, top management sets the pricing objectives and
policies, and it often approves the prices planned by the lower-level management or salespeople. In industries in which pricing is a key
factor, companies usually have pricing departments to set the best prices or help others in setting them.
External Factors
1. Nature of the Market – Both consumer & industrial buyers weigh the price of a product or service against the benefits of possessing it.
The seller’s pricing freedom varies with different types of markets presenting a different pricing challenge for each.
a. Pure Competition – market consists of many buyers and sellers trading in a uniform commodity.
b. Monopolistic Competition – market consists of many buyers and sellers who trade over a range of prices rather than a single
market price.
c. Oligopolistic Competition – market consists of not many sellers who are extremely responsive to each other’s pricing and
marketing strategies.
d. Pure Monopoly – market only has one seller.
2. Demand – Buyers are less price conscious when the product they are buying is inimitable or when it is high in quality, prestige, or
exclusiveness. Or substitute products are hard to find or when they cannot easily compare the quality of substitutes.
3. Economy – Economic conditions can have a strong impact on the firm’s pricing strategies. Economic factors like a boom or recession,
inflation and interest rates affect pricing decisions because they affect consumer spending, consumer perceptions of the product’s price
and value, and the company’s costs of producing and selling a product.
4. Other Environmental Factors – Companies should distinguish what impact its prices will have on other elements in its environment. The
company must set prices that offer resellers a reasonable profit, push their support, and assist them to sell the product well. The
government is another vital external pressure on pricing decisions. Lastly, social concerns may require to be taken into consideration.
Source: Principles of Marketing by Prof. Angelita Ong Camilar-Serrano, DBA Prepared by: Mc Gill Contreras
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PRINCIPLES OF MARKETING
Senior High School – Accountancy, Business and Management (ABM) Specialized Subject
Market-Skimming Pricing
Many companies that create new products set high initial prices to “skim” revenues layer by layer from the market. This is sensible under
the following conditions:
1. Product’s quality and image have to support its higher price, and sufficient number of buyers must desire the product at that price.
2. Costs of producing a smaller volume are not so high that they can call off the advantage of charging some extra.
3. Competitors must not be able to penetrate the market without difficulty and destabilize the high price.
Source: Principles of Marketing by Prof. Angelita Ong Camilar-Serrano, DBA Prepared by: Mc Gill Contreras
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PRINCIPLES OF MARKETING
Senior High School – Accountancy, Business and Management (ABM) Specialized Subject
Lesson 3: Distribution
Distribution channels consist of physical access point where the product is provided to customers and the methods of transporting or
storing goods before making them available for clients. They also refer to the sales channels used, like online or via shops and distributors or
other intermediaries.
Producer Retailer Consumer – purchases are made by the retailer from the producer or manufacturer and then the retailer sells the
merchandise to the consumer. Works best for manufacturers of shopping goods.
Producer Wholesaler/Distributor Customer – wholesalers buy the products from the manufacturer/distributor and sell them to the
consumer.
Producer Agent/Broker Wholesaler or Retailer Customer – involves more than one intermediary before product gets into the hands of
the consumer. Fishermen contacts an agent, agent then distributes the fish to the wholesalers, wholesalers sells to the consumers.
1. Information Provider
2. Price Stability
3. Promotion
4. Financing
5. Title
6. Help in production function
7. Matching demand and supply
8. Pricing
9. Standardizing transactions
10. Matching buyers and sellers
Source: Principles of Marketing by Prof. Angelita Ong Camilar-Serrano, DBA Prepared by: Mc Gill Contreras
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PRINCIPLES OF MARKETING
Senior High School – Accountancy, Business and Management (ABM) Specialized Subject
b. Convenience – means less hassle. Channel and intermediaries must be proximate or driving time to reach is at a minimum.
c. Variety – reflects buyer’s interests to have numerous choices of competing and complementary products.
d. Attendant Services – requirement for intermediaries of large home appliances that needs delivery, installation and credit.
3. Be most lucrative – being profitable is determined by profit margins earned for each channel member and for the channel as a whole.
1. Sourcing and Procurement – lessen the costs of raw materials and supplies, buyers and sellers can develop cooperative relationships
that lessen costs and improve efficiency with the aim of trimming down prices and increasing profits.
2. Production Scheduling – goods are scheduled and produced based on past sales and demand and then sent to retailers to resell.
3. Order Processing – processes requirements of the customer and sends the information into the supply chain through the logistic
information
4. Inventory Control – develops and maintains enough variety of materials or products to meet a manufacturer’s or consumer’s demands.
5. Warehousing and Materials Handling – storage aids manufacturers manage supply and demand or production and consumption.
6. Transportation – concerns the decision on the mode of transportation that will move the goods from supplier to producer and from
producers to customers.
a. Cost – the total amount of charge by the carrier to move the product from point of origin to destination.
b. Transit Time – the total time for the carrier to pick-up, delivery, handling and movement from point of origin to destination.
c. Reliability – consistency of the carrier on delivering the goods on time and satisfactory condition to.
d. Capability – ability of the carrier to provide applicable equipment and conditions for moving the goods
e. Accessibility – ability of the carrier to transport the goods a particular route or network.
f. Traceability – relative ease that a shipment of goods can be located and transferred.
Source: Principles of Marketing by Prof. Angelita Ong Camilar-Serrano, DBA Prepared by: Mc Gill Contreras
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PRINCIPLES OF MARKETING
Senior High School – Accountancy, Business and Management (ABM) Specialized Subject
Lesson 4: Promotion
Promotion is all the communication methods used by a company to inform both customers and prospects about their products or
services.
Advertising
Advertising is bringing a product or service to the attention of potential and current customers. Every single tactic available to the
advertiser falls into one of the following:
1. Print Advertising – an advertisement printed on paper, be it newspapers, magazines, newsletters, booklets, flyers, direct mail, or
anything else that would be considered a portable printed medium.
2. Guerrilla Advertising – broadly used term for anything unconventional and usually encourages the consumer to participate or interact
with the piece in some way. Flash mob is one perfect example.
3. Broadcast Advertising – a mass-market form of communication comprising of television and radio.
4. Outdoor Advertising – also known as out-of-home (OOH) advertising, this is a broad term that describes any type of advertising that
gets to the consumes when they are outside of the home.
5. Public Service Advertising – are mainly designed to enlighten and educate instead of to sell a product or service.
6. Product Placement Advertising – promotion of branded goods and services within the context of a show or movie, instead of an explicit
advertisement.
7. Cellphone and Mobile Advertising – latest form of advertising, one that’s spreading fast, uses cellphones, iPads, Kindles, Nooks and
other portable electronic devices.
8. Online Advertising (Digital) – internet users see an advertisement via the Internet (World Wide Web). There are ads on this very page,
and most other websites being visited, as they are the prime revenue driver for the Internet.
Sales Promotion
Sales Promotion is the process of persuading a possible customer to purchase the product. Sales promotion is designed to be used as a
short-term tactic to boost sales.
1. Money Off Coupons – customers receive coupons or cut coupons out of a newspapers or a product’s packaging that enables them to
purchase the product next time at a reduced price.
2. Competitions – buying the product will let customer to take part in a chance to win a prize.
3. Discount Vouchers – a voucher works like a money-off coupon. Examples would be Gold’s gym tied up with Metrodeal offering vouchers
for membership services at a discounted rate.
4. Free Gifts – it is a free product when customers buy another product.
5. Point of Sale Materials – posters or display stands, ways of presenting the product in its best way or show the customer that the product
is here.
6. Loyalty Cards – customer earn points for buying certain goods or shopping at certain retailers that can later be exchanged for money,
goods, or other offers.
Personal Selling
Personal Selling is a promotional method in which the sales person uses skills and techniques for building personal relationships with
another party (those involved in a purchase decision) that result in both parties obtaining value.
Personal selling is a strategy that salespeople use to convince customers to purchase a product. The salesperson uses a personalized
approach, tailored to meet the individual needs of the customer, to demonstrate the ways that the product will benefit him.
1. Ask Questions – salesperson needs to know why the customer is interested in the product or service.
2. Address Concerns – salesperson should ask the customer to share any concerns he has about the product or service.
3. Ask for the Sale – salesperson can directly ask if the customer has decided to buy the company’s product or service.
4. Follow-up – a good salesperson always follow-up with both prospects and clients subsequent to making a presentation.
Source: Principles of Marketing by Prof. Angelita Ong Camilar-Serrano, DBA Prepared by: Mc Gill Contreras
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PRINCIPLES OF MARKETING
Senior High School – Accountancy, Business and Management (ABM) Specialized Subject
Public Relations
Public Relations includes ongoing activities to ensure the overall company has a strong public image. Public relations activities include
helping the public understand the company and its products.
Public relations involves cultivation of favorable relations for organizations and products with its key publics through the use of a variety
of communications channels and tools. These days, the role of public relations is much broader and includes:
1. Building awareness and a favorable image for a company or client within stories and articles found in relevant media outlets
2. Closely monitoring numerous media channels for public comment about a company and its products
3. Managing crises that threaten company or product image
4. Building goodwill among an organization’s target market through community, philanthropic and special programs and events
Like other aspects of marketing promotion, public relations is used to address several broad objectives including:
1. Building Product Awareness
2. Creating Interest
3. Providing Information
4. Stimulating Demand
5. Reinforcing the Brand
Marketing have at their disposal several tools for carrying out public relations. The key tools available for PR include:
1. Media Relations – efforts to publicize products or the company to members of the press such as TV and radio, newspaper, magazine,
newsletter and Internet.
a. Press Kits – information such as a news release, organization background key spokesperson biographies
b. Audio or Video News Releases – prerecorded features distributed to news media that may be included within media
programming.
c. Matte Release – small local newspapers may accept articles written by companies often as filler material when their
publication lacks sufficient content.
d. Website Press Room – online press room that caters to media needs and provides company contact information
2. Media Tours – new products can be successfully publicized when launched with a media tour.
3. Newsletters – marketers who captured names and addresses of customers and potential customers can use a newsletter for regular
contact with their targeted audience.
4. Special Events – these run the range from receptions to elegant dinners to stunts.
5. Speaking Engagements – speaking before industry conventions, trade association meetings, and other groups provides an opportunity
for customers.
6. Sponsorships – companies and brands use sponsorships to help build goodwill and brand recognition by associating with an event or
group.
7. Employee Communications – for many companies communicating regularly with employees is important in keeping employees
informed of corporate programs, sales incentives, personal issues, as well as keeping them updated on new products and programs.
8. Community Relations and Philanthropy – for many companies fostering good relations with key audiences includes building strong
relationships with their regional community.
DIRECT MARKETING
Direct Marketing occurs when businesses address customers through a multitude of channels, including mail, e-mail, phone and in
person. Direct Marketing messages involve a specific “call to action”, such as “Call this toll-free-number” or “Click this link to subscribe.” The
results of such campaigns are immediately measurable, as a business can track how many customers have responded through a message’s call
to action.
Source: Principles of Marketing by Prof. Angelita Ong Camilar-Serrano, DBA Prepared by: Mc Gill Contreras
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