FUNDAMENTALS OF MARKET

Lesson 1: Unique Selling Proposition and Value Proposition

Unique Selling Proposition a method to market your product or service in a way that is different than other competitor’s marketing
strategies
Unique - clearly sets you apart from your competition, positioning you the more logical choice.
Selling - It persuades another to exchange money for a product or service.
Proposition - It is a proposal or offer suggested for acceptance

Example #1 - Package Shipping Industry Pain - I have to get this package delivered quick! USP - "When it absolutely,
positively has to be there overnight."

Example #2 - Food Industry Pain - The kids are starving, but Mom and Dad are too tired to cook! USP - "Pizza delivered in
30 minutes or it's free."

Example #3 - Real Estate Industry Pain - People want to sell their house fast without losing money on the deal. USP - "Our
20 Step Marketing System Will Sell Your House In Less Than 45 Days At Full Market Value"

7-step process in constructing your Unique Selling Proposition

Step 1: Use Your Biggest Benefits - Clearly describe the 3 biggest benefits of owning your product or service.
Step 2: Be Unique - your USP separates you from the competition, sets up a "buying criteria"
PRODUCT: "A unique baseball swing that will instantly force you to hit like a pro." • OFFER: "You can learn this simple
technique that makes you hit like a pro in just 10 minutes of batting practice." •
GUARANTEE: "If you don't hit like a pro baseball player the first time you use this new swing, we'll refund your money."
Step 3: Solve An Industry "Pain Point" Or “Performance Gap” - Identify which needs are going unfulfilled within either your industry
or your local market.
Step 4: Be Specific and Offer Proof - Consumers are skeptical of advertising claims companies make.
Step 5: Condense into One Clear And Concise Sentence - The most powerful USPs are so perfectly written, you cannot change or
move even a single word.
Step 6: Integrate Your USP Into ALL Marketing Materials - Variations of your USP will be included in the ALL your marketing
materials
Step 7: Deliver on Your USP's Promise –Be bold when developing your USP but be careful to ensure that you can deliver.
Value Proposition An analysis or statement of the combination of good and services offered by a company to its customer in
exchange for payment.
Step 1: Know your customer
 Who is he or she? What does s/he do and need?
 What problems does s/he need to solve?
 What improvements does s/he look for?
 What does s/he value?
Step 2: Know your product, service or idea
 How does the product, service or idea solve the problem or offer improvement?
 What value and hard results does it offer the customer?
Step 3: Know your competitors
 How does your product or idea create more value than competing ones?
Step 4: Distill the customer- oriented proposition
 "Why should I buy this specific product or idea?"
Step 5: Pull it all together turn around your customers' answer' from step 4 into a value proposition statement.
Best Value Proposition Example
 One tap and a car comes directly to you
 Your driver knows exactly where to go
 Payment is completely cashless
Lesson : Market Segmentation

 Market Segmentation

Think of all the ways a marketer might describe you as a consumer. Begin with your age and gender, and then get more
specific about your shopping and requirements.

OBJECTIVES
1. Explain the concept of market segmentation.

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 2. Analyze a target market.
3. Differentiate between mass marketing and market segmentation.

THE MAIN IDEA

Key to marketing is to know your customer or target market. Market segmentation helps identify the target market.

VOCABULARY
1. Market Segmentation 4. Discretionary income 7. Mass marketing
2. Demographics 5. Geographic
3. Disposable income 6. Psychographics
MARKET SEGMENTATION
METHODS OF SEGMENTATION REASON FOR USE

1. Demographics People with different personal characteristics have different needs

and interest
2. Geographic People needs vary depending on where they live

3. Psychographics Lifestyle has an impact on how many is spent

4. Behavioral characteristics Behavioral characteristics influence shopping patterns

Market Segmentation: The process of classifying people who perform a given market into smaller groups.

Identifying and Analyzing Markets

 Age
 Price
 Desired Features
A company gathers data from multiple sources

a) Government Data
b) Private Research
c) Trade Associations
d) Company Research
Types of Segmentation

Demographics Geographic Psychographics Behavioral characteristics

Age Local Attitudes Shopping

Gender State Pinions Patterns
Income Regional Interest Decision- making process
Marital status National Activities
Ethnic background Global Personality
Values

Psychographic: Grouping people with similar attitudes, interest, and opinions, as well as lifestyles and shared values.

Demographic: Statistics that describe a population in terms of personal characteristics such as age, gender, income ,
marital status, ad ethnic background.

Labels Used to segment by Generation

Baby Boom Generation Generation X Generation Y

Income

Disposable Income Discretionary Income

Money left after paying for basic

Money left after taking out taxes
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R Snecessities
H I P - such
M I as
D Tfood,
ERM
shelter, and clothing.
Geographic

Segmentation of the market based on where people live.

Demographics + Psychographics + Geographics = Comprehensive Customer Profile

Changing Time + Personal Experience = Attitude and Opinion

80/20 : 80 % of a company’s sale and 20% are generated by 20 % of its loyal customers

Mass marketing Vs Segmentation

Mass Marketing :
Using a single marketing Strategy to reach all customers
Advantages Disadvantages
Economics of Scale Competitors can identify unmet needs and wants and then steal
Simplified marketing plan customers

Niche Marketing
Advantages Disadvantages
Extremely precise Cost
Increased chance for Success : Research
: Production
: Packaging
: Advertising

Short Quiz :

1. Explain how much segmentation can help a company increase its market share

2. Define the four factors that are used to describe a target market

3. List the disadvantages of Niche Marketing and why?

Activity 1 : Use a Venn Diagram to compare and contrast about the Psychographics and Geographic

Lesson: Customer Validation; Interviews

 How to do Customer Development Interviews to validate your Startup Idea
 Everyone knows you should talk to customers.
 But no one talks about how to actually do it.
 Let’s make this easy.
 A Customer Development Interview is like a house…
 It starts with a good foundation. Then you build on it. Finally, you add the roof. Your foundation is the walls are. The roof is
the solution of their problem. Let’s get down to the nuts and bolts. Build the foundation:
 Get to know the person you’re interviewing.

Person Questions: • Who are they? What’s their role? • Where do they interact with peers? • How do they find new products for
home or work? • How much time do they spend on [Task X]? • How is their budget handled? Let’s write the script

Learn about them & their role in the industry

Problem Questions: • What are your top 3 challenges you face in your job related to [industry]? • Why? Tell me more… • What’s
frustrating or time consuming about [problem area]? • If you could wave a magic wand… what would the solution be? Let’s write the
script

Learn if they have the problem you’re solving

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Solution Questions: • Does this solve any of the problems we discussed earlier? • Would you be willing to pay for this? • Are you
interested in signing up to be one of our early users? • What’s your biggest concern with my product? Let’s write the script

Lesson : Customer Validation ; Focus Group Discussion

Focus Group Discussions

“ No cross-talk means sharing your experience, concerns, feelings, opinions, and hopes related to a particular issue or topic without
referring to, or reacting to, any other group member’s sharing and without evaluating what has previously been said.”

Focus Group Discussions

1. Group depth interviews” or “focused interviews”
2. Developed shortly after WWII
3. Initially used by the entertainment industry
4. Eventually came into widespread use in consumer market research

Characteristics of Focus Groups

 Agreement is not necessary or even desired in the  Multiple groups are conducted
focus group  Neutral Facilitator
 Homogeneity, not heterogeneity, is most often sought  Duration: 1 ½ to 2 hours
 Used as a research/evaluation tool  Responses are recorded in detail
 Issues discussed are limited  Questions are pre-formulated
 Groups are small (8-12)

Consider using an FGD when…

 Presence of power differential  Need to find out degree of consensus on a
 Gap exists between professionals and target topic
audience  Need for friendly research method
 Need to investigate complex behavior and  Insights are needed
motivations

Do NOT use FGD’s when…

 Primary intent is not research  Statistical data is required
 Group discussion is not an appropriate forum  Researcher cannot ensure confidentiality of sensitive
 Topic is not appropriate for participants information
 Researcher has lost control over critical aspects of
study

Advantages of FGD’s
 Captures real life data in a social environment  Speedy results
 Flexible  Economical
 High face validity
 Researcher can increase sample size for qualitative research

Disadvantages of FGD’s
 Facilitator has less control  Nature of group varies
 Data more difficult to analyze  Groups may be difficult to assemble
 Special skills required  Venue must be conducive

Methodology
1. Problem Definition
2. Identification of Sample
3. Identification of Moderator
4. Generation and Pre-testing FGD Schedule
a) Opening questions
b) Introductory questions
c) Transition questions
d) Key questions
e) Ending questions

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  All things considered question
 Summary question
 Final question
Methodology
1. Recruiting the sample group
2. Conducting the FGD
1. Pre-FGD
 >Prepare resources
 Practice introduction and questions
 Plan to arrive early
 Assemble equipment
 Arrange the room
 Quiet Time

Methodology
Conducting the FGD
During the FGD
 Welcome the Group
 Introductions
 Set ground rules and norms
 Explain recording methods
 Present questions one by one (don’t forget to probe!)
o Practice active listening
o Remain neutral
o Publish answers, if necessary
o Synthesize

ACTIVITY 1 : Members of the hospitality industry have hired you to define the ideal romantic getaway. Given the limited
time you have to complete the first phase of the project, you have decided to conduct focus group discussions to gather your data.

Lesson : Customer Validation ; Survey

What It Means

Validating a survey refers to the process of assessing the survey questions for their dependability. Because there are multiple,
tough-to-control factors that can influence the dependability of a question, validating a survey is neither a quick nor easy task.
How to Do It

Calling ridge outlines a six-step validation method he has successfully used over the years.
Step 1: Establish Face Validity

This two-step process involves having your survey reviewed by two different parties. The first is a group familiar with your
topic who can evaluate if your questions successfully capture your topic. The second review should come from someone who is
an expert on question construction, ensuring that your survey does not contain common errors such as leading, confusing or
double-barreled questions.
Step 2: Run a Pilot Test

Select a subset of your intended survey participants and run a pilot test of the survey. Suggested sample sizes vary, although
about 10 percent of your total population is a solid number of participants. The more participants you can round up, the better,
although even a smaller sample can help you weed out irrelevant or weak questions.
Step 3: Clean Collected Data

Enter your collected responses into a spreadsheet to clean the data. Having one person read the values aloud and another
entering them into the spreadsheet greatly reduces the risk of error. Once data is entered, your next step is to reverse code
negatively phrased questions.

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If respondents have responded carefully, their answers to questions that are phrased negatively should be consistent with their
answers to similar questions that are phrased positively. If that is not the case, you may want to think about eliminating that
respondent from the survey.

Also double-check minimum and maximum values for your overall dataset. If you’ve used a five-point scale and you see a
response indicating the number six, you may have an error with data entry.
Step 4: Use Principal Components Analysis (PCA)

Principal components analysis, or PCA, allows you to identify underlying components that are being measured by your survey
questions. These are known as factor loadings, and questions point back to the same elements should load into the same factors.

A factor loading scale runs between -1.0 and 1.0. Solid values to look for are factor loadings of 0.6 or above. You’ll
occasionally run across questions that don’t appear to load onto any factors, which may necessitate a question removal or
separate analysis.

Your overall goal at this stage is to determine what the factors represent by seeking out common themes in questions that load
onto the same factors. You can combine questions that load onto the same factors, comparing them during your final analysis of
data. The number of factor-themes you can identify indicates the number of elements your survey is measuring.

This step validates what your survey is actually measuring. For instance, several questions may end up measuring the
underlying component of employee loyalty, a factor not expressly asked about in your survey but one uncovered by PCA.

Because PCA can be complex and needs to be precise, calling on a skilled expert for guidance during this step is a wise idea if
you’re not familiar with the process.
Step 5: Check Internal Consistency

Your next step is to review the internal consistency of questions that load onto the same factors. Checking the correlation
between questions that load on the same factor measures question reliability by ensuring the survey answers are consistent.

You can review the internal consistency with a standard test known as Cronbach’s Alpha (CA). Test values range from 0 to 1.0,
and values should generally be at least 0.6 to 0.7 or higher to indicate internal consistency. If you have a value lower than 0.6,
some CA programs let you delete a question from the test to see if it improves consistency. If it does, you may want to consider
deleting the question from the survey.

Like PCA, CA can be complex and most effectively completed with help from an expert in the field of survey analysis.
Step 6: Revise Your Survey

The final stage of the validation process is to revise your survey based on the information you gathered from your principal
components analysis and Cronbach’s Alpha. If you run across a question that doesn’t neatly load onto a factor, you can choose
to delete it. If the question is an important one you’d rather not delete, you can always retain it and analyze it separately.

If only minor changes were made to your survey, it’s likely to be ready to go after its final revisions. If major changes were
made, especially if you removed a substantial amount of questions, another pilot test and round of PCA and CA is probably in
order.

Validating your survey questions is an essential process that helps to ensure your survey is truly a dependable one. You may
also include your validation methods when you report on the results of your survey.

Mention your survey’s face value was established by experts, the survey was pilot tested on a subset of participants, and your
pre-launch analysis included using PCA and CA methodology. Validating your survey not only fortifies its dependability, but it
also adds a layer of quality and professionalism to your final product

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ACTIVITY : Develop a product and service survey. It must consist of 20 questions.

LESSON : The Marketing Mix (7Ps) in relation to the business opportunity

Marketing Mix: The 7P’s of Marketing

 Marketing Mix  Diagnostic Marketing Mix

 Buyer Behavior  Marketing Plan
 Assembling the Marketing Mix  4S’s in Marketing Plan
Marketing Mix
•The Marketing Mix is one of two interrelated components of strategy
•The Marketing Mix, more popularly referred to as the 7Ps of Marketing is a set of controllable and interrelated variables
composed of product, place, price and promotions that a company assembles to satisfy a target group better than its competitor.
•Marketing Mix strategy is choosing and implementing the best possible course of action to attain the organization’s long-
term objectives and gain competitive edge.
7P’s
1. Product 4. Price 6. Physical
2. Place 5. People Appearance
3. Promotions 7. Process

1. Product To satisfy the needs and wants of the target market.

2. Place To make the product conveniently available to the target market consistent with their purchasing pattern.
3. Promotions To build and improve consumer demand. Promotions has four components called the Promotions Mix as follows:
•Advertising – to effectively inform and persuade the target market
•Public Relations – to offer a positive image of the company and the brand
•Selling – to get the customers buy
•Sales Promotions – to convince customers to buy immediately
4. Price To make the product affordable to the target market and reflect the value of benefits provided.
5. People they are the target consumers of the company. They are the ones who are the consumers
6. Physical Appearance is the first distinction of a product. A product could be easily recognized by it’s appearance.
7. Process The process of the product is essential in marketing. This determines the capability of the product to supply the
demand of the consumers.
•Product, place and people are considered as the strategic Ps of marketing mix since they cannot be changed
overnight.
•Promotions, price, process and physical appearance are considered as the tactical Ps of marketing mix because
these can be changed more easily.
•Marketers of consumer packaged goods such as food and personal care products sold in supermarkets would often
add “Merchandising” as another component of the marketing mix.
•Merchandising aims to extend advertising message at the point of purchase (POP) by generating superior presence
within the store.
•Many companies’ uses store signs, posters, price tags, shelf takers and island displays.
•Companies spend a significant 1% of their sales on merchandizing.

Buyer Behavior
An important component of the consumer purchase decision-making process. The Factors Influencing Buyer
Behavior in Consumer Markets
•Cultural Factors
•Social Factors
•Personal Factors
•Psychological Factors
A. Cultural Factors

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 a. Culture and sub-culture – Many older Chinese like to eat Shark’s fin soup as well
as Bird’s nest soup, which environmentalist despise.
b. Social class – Buying a real estate property is dependent, among others, on the how
consumer perceive the quality of their desired neighborhood and the status symbol
that comes with a high-end development.
B. Social Factors
a. Reference Group – High-end brands like Nike shoes or acquiring a Globe cellphone
to be a member of their Gen Txt Club are examples of how peers can affect a
purchase
b. Family – demand for products such as PLDT long-distance calls is influenced by the
Pinoy’s strong family attachment
c. Role and statutes – Mont Blanc pens are positioned as the pen for presidents of
companies, as well as countries. Johnny Walker Label is another example of whiskey
positioned for successful people.
C. Personal Factors
a. Age and life cycle – Retirees are the prime market for many luxury cruises, as it is
consistent with the slow, relaxing pace they desire.
b. Occupation – Pamper Uni are bought by working mothers who cannot afford to rest
in the morning. The International School targets children of expatriates.
c. Economic Circumstances – Network marketing offers equal opportunity to those
who want to start and grow their own business without the large capital involved in
putting uptraditional businesses.
d. Lifestyle – Kraft imported cheese and Lazy Boy chairs are examples of lifestyle
products.
e. Personality and Self-concept – Premium brands like Rolex, cars and even clothes are
driven by how the buyer looks at himself of herself
D. Psychological Factors
a. Motivation – Many government employees now enroll in graduate school to gain the
competitive advantage versus their peers in aspiring for a promotion.
b. Learning – AMC cookware utilizes demonstration to show the product’s unique
ability to fry chicken without oil, boil egg without water and cook food
simultaneously without taste transfer using low fire.
c. Beliefs and Attitudes – Sony is believed to be a brand with a higher quality. Some
consumers think that installing chimes can bring in good luck to homes and offices.
A diamond ring is a must in every engagement and wedding.
Assembling the Marketing Mix
Before a marketing mix is formed, there must be an analysis and definition of target customers.
1. In the Macro level, market segmentation answers the question “What are the groupings of similar customers?”
2. In Micro level,
a. Decision Making Unit (DMU) points to “Who purchases the product?”
b. Decision Making Process (DMP) answers the question “How, where, and when is the purchase
made?”
c. Consumer motivation and preferences guides the marketer to answer, “What does the
consumers want and why?”
d. In satisfying customers, marketers must not assume who the decision maker is or the mistake
may be costly for the firm.
e. Marketers must consider the more complex DMU’s that are usually involved in the decision
making process (DMP) for most products and services.
f. Marketers must therefore consider the initiator, influencer, decider, buyer and the user for every
purchase – not just the user.
g. The general characteristics of the firm’s marketing mix is shaped by the target market’s
preparedness to adopt a product.
h. Marketers usually make use of several market researches to understand their customers better.
One of the most popular and widely used market research report is called Us age ,Attitude and Image (UAI)
survey.
Product Value
 Products may either be superior, at par with (the same), or basic to those competition.
 A superior product satisfies more needs and wants of customers while a basic product satisfies lesser needs.

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  While our initial tendency is to think that consumers enjoy superior products all the time, we must realize
that products with fewer features may still be desired by the lower income consumer segment.
 In the Philippines for instance, some 92% of our nationwide population belongs to the lowerincome D and
E class and these “consumers” may be looking for very basic products
 The new definition of “Quality” is that which conforms to consumer’s specification, measured through
indicators of customers satisfaction ,rather than indicators of self-gratification.
 •It is consumers who decides on quality not the company.
 •After product quality is defined, it’s inseparable twin, price, is defined to ensure an appropriate product
value.
Marketing Program
 After product value is formulated and accepted to the target customers, marketing programs are then assembled by
identifying which of the marketing mix component should logically be the main weapon and which should be the support
strategy.

Product Value (Marketing) Program (Competitiveness)

1. Distribution Driven
Some companies are distribution-driven, meaning, their product must be available when and where customers
expect them to be. Their locations are the single most important factor in their business.
2. Selling – Driven
Some companies are selling driven especially when products are only available through the salesman.
3. Sales Promo – Driven
Other companies that are sales promo driven are fast food parlors like Jolibee and Mc Donalds which have at least
eight major promo campaign yearly to bring back consumers to the store as often as possible.
4. Price – Driven
Makro is a price driven brand. Without any fancy display, Makro boasts of rock-bottom prices everyday, which
attract people to visit the hypermarket.
5. Advertising – Driven
Coke is advertising-driven. It intends to be top-of-mind in the soft drinks industry as it constantly reminds
consumers of the different usage occasions for Coke. Its ad-driven strategy is supported with a heavy distribution effort, sales
promo support and parity pricing with competition.

Diagnostic Marketing Mix

Diagnostic marketing mix entails the matching of correctly defined marketing problems with the proper marketing
solution.
Marketing Problem Marketing Solution
Low awareness level Advertising
Low Availability Placement
Low Trial Rate Pricing and/or Promotions
Low Repeat Purchase Product and/or Service Quality

The marketing mix of a company seldom stays the same

 Marketers must therefore have a systematic way of reviewing what worked and why, what didn’t work and why.
 Answering these queries are a prerequisite before planning what should be added or what should be dropped in order to
attain, enhance or maintain competitive edge.
 Competitive advantage is secured by providing better or best value in the perception of the customer, relative to all your
competitors.
 A company’s capabilities can become a true competitive advantage if the following 5 criteria are met:
1. It is valuable in the marketplace
2. It is superior in the marketplace
3. It is difficult to match or imitate
4. It is difficult to substitute
5. It is difficult to trade and gain
Marketing Plan
The marketing mix is actually the heart of an important company document called the marketing plan, which
outlines how the company intends to grow in the marketplace and win against competition.
The marketing plan is usually formulated annually, but results are reviewed monthly.

Format of a Marketing Plan

Executive Summary

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 Business Review (performance of the previous years)
Environmental Analysis
a. Key Factors for Success
b. Strengths and Weaknesses Analysis
c. Threats and Opportunities Analysis
Market Segmentation
Marketing Objectives and Goals
Marketing Strategy
a. Product Positioning
b. Customer Satisfaction Strategy
c. Preferred Brand Strategy
d. Contingency Plan
Marketing Budget
Marketing Implementation Guide
Appendix

4S’s in Marketing Plan

The marketing mix can change over time. However, all marketing programs must be able to meet the 4 basic
criteria to be considered a diligently through-out campaign

1. Sufficiency – the marketing mix must be able to adequately meet the defined marketing objectives. This means
ambitious growth objectives would naturally need the corresponding heavier investment in marketing support programs.

2. Selective – the marketer must be able to consider all potential alternatives of each marketing mix before short-
listing all possible combinations of the marketing mix that can meet their marketing objectives. The one that can provide the
best profitability is the one logically to be chosen. This is not easy as there are literally millions of combinations. But the least
the marketing man can do is to short list the more obvious one and apply due diligence in planning each possible option.

3. Synchronize – when the marketing mix is selected, the different elements must combine harmoniously for the
brand become successful. For example, a marketer cannot choose to invest in heavy advertising of a low quality product sold
on a high price. In such a case, the element of the marketing mix is not logically synchronized.

3. Sustainability – the marketing mix that is finally chosen must be able to last in the long term vis-à-vis competition. For
instance, a lower price strategy not only risks a price war but is not sustainable unless the firm is the cost leader in the
industry.
7Ps and 7Cs
The 7ps 7cs
Organization Facing Customer Facing
Product Customer/Consumer
Price Cost
Place Convenience
Promotion Communication
People Caring
Processes Co-ordinated
Physical Evidence Confirmation
Requirement:

Develop a Marketing Plan.

Follow the Format given above. Your output must be in a Short bond paper and brown folder. Handwritten or
printed is acceptable.
For Printed :
Century Gothic –Font Style
12- Font Size
Single Space

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