LESSON 3 –Importance of Marketing Mix in the Development

of Marketing Strategy

Marketing Mix – also known as the four P’s (Product, Price, Place,
Promotion) broad levels of marketing decision. It is a foundation concept of
marketing.
 It is defines as the “set of marketing tools that the firm uses to pursue its
marketing objectives in the target market.
 In services marketing, a modified and expanded marketing mix is used,
typically comprising seven P’s made up of the original 4 P’s plus Process,
People, Physical evidence.

1. PRODUCT – refers to what the business offers for sale and may
include products or services. Product decisions include the ( quality,
features, benefits, style, design, branding, packaging, services,
warranties, guarantees, life cycles, investments and returns”.
2. PRICE – refers to decisions surrounding “list pricing, discount pricing,
special offer pricing, credit payments or credit terms. It refers to the
total cost for customer to acquire the product, and may involve both
monetary and psychological costs such as the time and effort
extended in acquisition.
3. PLACE – is defined as the “direct or indirect channels to market,
geographical distribution, territorial coverage, retail outlet, market
location, catalogues, inventory, logistics, and order fulfillment.
PLACE refers either to the physical location where a business
carries out business or the distribution channels used to reach
markets.
PLACE may refer to a retail outlet, but increasingly refers to virtual
stores such as “a mail order catalogue, a telephone call center or
a website”.
4. PROMOTION – refers to “the marketing communication used to make
the offer known to potential customers and persuade them to
investigate it further.
Promotion elements include “advertising, public relations, direct
selling and sales promotions.
5. PEOPLE – the essential in the marketing of any product or service.
In the professional, financial or hospitality service industry, people
are not producers, but rather the products themselves. When
people are the product, they impact public perception of an
organization as much as any tangible consumer goods.
6. PROCESS – refers to “the set of activities that results in delivery of the
product benefits”. A process could be a sequential order of tasks that
an employee undertakes as a part of their jobs.
 7. PHYSICAL EVIDENCE – the lasting proof that the service has
happened, in terms of buying a physical product, the physical
evidence is the product itself.

LESSON 3.1.1 PRODUCT

PRODUCT – is anything that can be offered for satisfaction.
 It may be an idea, a physical entity, a service or any
combination of the three.
 It is the bundle of satisfaction which the buyer receives as the
result of a lease or purchase.
 It includes the physical good or service itself ( its form, taste,
smell, color, and texture), the function of the product in use,
the package, the label, the warranty, the manufacturer’s and
retailer’s services.
 Product is anything in 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.
(p.195 Principles of Marketing by Serrano 2016 edition)

MARKETING STRATEGY
To be successful, a firm must possess one or more competitive
advantages that it can leverage in the market in order to meet its objectives. A
competitive advantage is something that the firm does better than its
competitors that give it an edge in serving customer’s needs and maintaining
mutually satisfying relationships with important stakeholders.

STRATEGIES FOR MATURE PRODUCTS

1. Develop new uses or functions and new purposes for
products.
2. Develop new or add latest product features.
3. Find new classes of consumers or new potential markets for
present products.
4. Find new classes of consumers for modified products.
5. Increase product use for new product users.
6. Change marketing policies or strategy.

WAYS TO IDENTIFY MARKET OPPORTUNITIES

1. Introduce new products.
2. Redesign existing products.
3. Eliminate non-performing products.
 PRODUCT STRATEGIES
1. Breadth Strategy is reaching multiple segments with a
single product.
2. Depth Strategy is serving one segment with multiple
products.
3. Tailored Strategy is customizing products for each
segment.

LESSON 3.1.2 PLACE

PLACE – is making the products available in the right quantities and
locations where customers want them.
DISTRIBUTION STRATEGY – refers to the process of moving goods and services
from the company to the customer.
The distribution channel that will be adapted must provide a strategic advantage
to the company.

COMMON DISTRIBUTION CHANNELS

1. Direct Sale – is when the company/ firms plans are to move goods directly to
the ultimate users. This is the most effective channel.
2. Original Equipment manufacturer – the sales involve selling a manufactured
product and which is later sold as a finished product to the end user.
3. Manufacturer’s Representative – is a wholesaler employed by one or several
producers and paid on commission basis according to quantity sold.
4. Wholesalers – are channel members that sell to retailers or other agents for
further distribution through the channel until they reach the final users.
5. Brokers – are distributors who buy directly from distributor or wholesaler
and sell to retailers or end user.
6. Retailers – are the ones who sell directly to customers in the store. They buy
product without any intermediaries or middlemen.
7. Direct mail – includes printed materials used in a targeted campaign to
consumers. These are sent directly to consumers. These include catalogues,
letters, e-mail, and other direct appeals.

CHANNEL OF DISTRIBUTION – is made up of people or organizations involved in

the distribution process. It is any activity of firms or individuals who take part in
the flow of goods and services from manufacturer to final consumer or business
user.

Channel members – examples are manufacturer, service providers, wholesalers,

retailers, marketing specialist or consumers.
 Middlemen – act as go-between the producer and consumer. It refers to he
following: wholesalers, retailers and marketing specialist.

Basic Types of Channel Distribution

1. Direct Channel Distribution – is the transfer or movement of goods and
services from manufacturer to final user or customer without the
intervention of independent middleman.
2. Indirect Channel Distribution – is the transfer of goods or tangible products
and services or intangible goods from manufacturer or producer to
independent intermediaries to customer.

INTENSITY OF CHANNEL COVERAGE

1. EXCLUSIVE DISTRIBUTION – is the limited number of middleman used in a
geographic area.
2. SELECTIVE DISTRIBUTION – is organizing a moderate number of wholesalers
or retailers.
3. INTENSIVE DISTRIBUTION – is organizing a large number of middlemen that
are used to obtain widespread market coverage and channel acceptance.

Physical Distribution – covers the broad range of activities in connection with the
efficient delivery of raw materials, parts, semi-finished items and finished
products to designated places and designated times and in proper conditions.

WAYS OF DISTRIBUTION
Through transportations, railroads, motor carriers, waterways, pipelines and
airways.

LESSON 3.1.3 PRICE

The company must provide ways to conceptualize actions to attract
customer patronage using the price.

PRICE – determines the value of a good or service to the buyers even to

the sellers. It is the amount of money needed in order to acquire a product or
service and its accompanying service. It is the amount of money charged for a
product or service or the sum of the values that consumers exchange for the
benefits of having or using the product or service. Price means the money value
of a product or service expressed in terms of peso and/or centavos.
 FIVE STEPS IN DEVELOPING A PRICING STRATEGY

1. OBJECTIVE STRATEGY
a) Sales Based- The firm is interested in sales growth and/or maximizing
market share. The concern of the company is to increase sales by
offering new product design, product lines, and promotional items.

b) Profit-Based- The firm is interested in maximizing profit, optimizing

the return on investment or securing an early recovery of cash. Its
thrust is to satisfy the investors/stockholders by providing them
immediate return of investment.

c) Status Quo Based- The firm seeks to avoid reasonable government

actions, minimize the effects of competitor actions, maintain good
channel relations, discourage the entry of competitors, reduce
demands from suppliers and stabilized prices. The goal of the
company is to maintain good image to the community by creating
projects/programs that protects its welfare and goodwill.
2. BROAD PRICE POLICY- Provides procedures, rules, and methods to act in one
specific situation. It links prices with the target market, image, and other
marketing elements. It makes sure that pricing decisions are coordinated
from other sellers.
a) Penetration pricing- uses low prices to capture/attract the
larger/mass market for a product or service. The preference of the
mass majority of the market will be the basis of the price set.

b) Skimming pricing- uses high prices to attract the market segment

more concerned with product quality, uniqueness or status than
price. The seller chooses high price in order to determine who will
really patronize the product.
3. PRICE STRATEGIES- are ways or some actions to accomplish the goals and
objectives of the company in gaining profit. Price strategy can be classified
into 3 different categories.
a) Cost-based price strategy- is when the firm sets prices by computing
merchandise, services and overhead costs then adding the desired
profit to those figures. After combining all the expenses incurred
during the production of the product, the seller must also decide the
best profit as part of the price of the product.

b) Demand-based price strategy- is when the firm sets prices after

researching consumer desires and makes sure the range of prices is
acceptable to the target market. The firms conduct researches
regarding the sale-ability of the product. If the product meets the
 criteria of the market, the firm can raise the price of the product
because it can assure profit based on the market demand.

c) Competition-based price strategy- is when the firm sets prices in

relation to the competitors. The entrepreneur must research the
prices set by their competitors.

4. IMPLEMENTATION PRICE STRATEGY- is the firm readiness to sell the product

which would be effective if given an attractive price strategy listed below:
a) Customary Pricing – is when one price is maintained over an extended
period of time. The entrepreneur must consider the price of the
product which is affordable to majority of buyers.
b) Variable Pricing – is when the price responds to costs fluctuations or
differences in demand. The entrepreneur must consider the law of
supply and demand. If there are sufficient supplies and few demands,
the price will decrease and vice versa.
c) One-Price policy – is when the price is charged to all customers
buying the product or service under similar conditions. The
entrepreneur will set one price for all products available for sale even
though they differ from design.
d) Flexible Pricing – is based on customer’s ability to negotiate or buy
power of the customer. The entrepreneur must meet the needs and
wants of the customer so that they need to adjust the price just to
ensure continuous patronage and loyalty.
e) Odd Pricing – are prices set at levels below even values. The
entrepreneur uses odd numbers to attract customers in pricing a
product.
f) Price-Quality Association – is when the consumers believed that high
price represents high quality and low prices represent low quality.
The entrepreneur instilled to the mind of the customers that having a
high price contain high quality materials.
g) Prestige Pricing – is when customers set price floors and will not buy
at prices below those floors. Above price ceilings, items would seem
too expensive. The entrepreneur must consider that products must
follow the price floor and price ceiling set by the government.
h) Leader Pricing – is selling key items at low prices to gain consumer
loyalty within its product line.
i) Multiple-Unit Pricing – is when the entrepreneur offers discounts to
consumers for buying in large quantities. This is to prevent
overstocking and maintain proper inventory, selling in bulk can
increase profit and promote growth.
 j) Price Lining – is when instead of setting one price for a single model
of a good or service, the firm sells two models of different quality and
features at different prices.
k) Price Bundling – is when the firm offers a basic product, options and
customer service for one total price. The entrepreneur will combine
product and service to the price set in the product.
l) Unbundling Pricing – is when the firm sells by individual components
and allows customer to decide what to buy. The entrepreneur will set
price of the product item from the other. It can be sold separately
and individually.
m) Geographic Pricing – is when the prices are set depending on the
distance of the buyer to the seller. Normally this activity is done if
both parties are far from each other.

TERMS OF PAYMENT – are price agreements, including discounts, timing of

payments and credits agreements.
DISCOUNTS – are reduction in the selling price given to customers for varying
reasons: paying in cash, performing certain functions, buying in large quantities,
and off-season buying.

5. PRICE ADJUSTMENTS – Change in cost, competitive conditions and consumer

demand require changes in price.
a. List Prices – are regularly quoted prices to customers, as in
catalogues, price tags and purchase order. The salesman must have a
clear and updated price so when the negotiation takes place, a minor
correction of price will be made.
b. Escalator Clauses – happen when the contract which allows price
increase after the sales is concluded before delivery is made. The
seller must communicate to the buyer that there is a price
adjustment due to some reasons (increase of raw materials, or
gasoline) and must agree to the new price.
c. Surcharge – is the supplementary of list prices. These are additional
charges added to the total price. The seller can include this or
disregard to better gain customer loyalty and profitability of the
company.
d. Mark-downs – are reductions from original selling prices to meet
lower prices of competitors, overstocking, shop-worn merchandise,
and increase customer traffic.
e. Rebates – a deduction from an amount that is already paid.

PRICING STRATEGY
 How the firm prices its product or service is a very important
component of the business plan. If the firm wants to achieve its
objectives, the right price for its product or service must be maintained.
The price set by the firm may be established through any of the
following methods:
1. Cost-Plus Pricing – this method covers all costs, variable and
fixed, plus an extra increment to deliver profit.
2. Demand Pricing – This is the method of pricing where the firm
set prices based on buying desires.
3. Competitive Pricing – this method of pricing calls for price-
setting on the basis of prices charged by competitors.
4. Market Pricing – this is the form of cost-oriented pricing in
which the firm sets prices by adding per-unit merchandise
cost, operating expenses and desired profits.

LESSON 3.1.4 PROMOTION

PROMOTION – Is any form of communication which is used to inform,
persuade and remind people about an organization or individuals goods,
services, image, ideas, community involvement or impact on the society.

PROMOTIONAL MIX – is a combination of the strategies to accomplish the

promotion objectives of an organization. It includes advertising, publicity,
personal selling, and sales promotion that help the organization to fully inform,
persuade, and remind the costumer about the organization goods and services.

PROMOTIONAL MIX TOOLS – refer to the entire set of activities, which

communicate the products, brand or service to the user. The idea is to make
people aware, attract and induce to buy the product, in preference over others.
It raises customer awareness of the product or brand, generating sales and
creating brand loyalty.

PROMOTIONAL MIX TOOLS ARE:

1. ADVERTISING – is paid, non-personal communication regarding goods,
services, organizations, people, places and ideas that is transmitted through
various media by business firms, government and other non-profit
organization and individuals who are in some way identified in the
advertising message as the sponsor.
 ADVERTISING is also a paid form of communication. The leading medium
has been the newspapers, followed by television, radio, magazines,
industry publications and outdoor ads.
  PUBLICITY – is a non-personal communication regarding goods, services,
organizations, people, places and ideas that is transmitted through
various media but not paid for by an identified sponsor.

2. PERSONAL SELLING – involves oral communication with one or more

prospective buyers by paid representatives for the purpose of making sales.
Normally, this is done through door to door selling.

3. SALES PROMOTION – involves paid marketing communication activities that

stimulate consumer purchases and dealer effective.

PROMOTION STRATEGY
How the products or service of the company will be promoted is an
important component of the marketing strategy. The promotion strategy must
include the following:
1. Advertising Aspects
a. Advertising Budget
b. Positioning Message
c. First Year Media Schedule
2. Public Relations – this will be a detailed presentation of the publicity strategy
of the firm. This will include a list of media that will be tapped to convey the
firm message to the target market. The schedule of special events like
product launching will also be included.
3. Sales Promotion – these are means used to support the sales message like
special sales, coupons, contests, premium awards, trade-in, etc.
4. Personal Sales – present the sales strategy which includes: pricing
procedures, rules on returns and adjustments, methods of sales
presentation, generation of leads, policies on customer services,
compensation of salesmen and responsibilities of the salesmen.

LESSON 3.1.5 PEOPLE

PEOPLE can be considered as product by providing satisfaction to the
consumer. These are the celebrity, model, artist, dancer, singer and the like.
Example:
1. Political candidate who promotes his candidacy for a particular
position.
2. Author to promote their books.
3. Celebrity endorsement makes use of famous athletes, entertainers
and experts or authority figures to promote products for profit
organizations or social causes for non-profit organization.
Businesses can improve their ability to attract, retain and improve productivity
by applying the following five-step PRIDE process:
P – Provide a Pleasant Working Environment
R – Recognize, Reward and Reinforce the Good Behavior
I – Involve and Participate in the Activities and Programs
D – Develop Skills and Attitude
E –Evaluate and Measure Performance

NETWORKING – it involves socioeconomic business activity by which

entrepreneurs and business people meet to form business relationships to
recognize, create, or act upon business opportunities, share information and
seek potential partners for business ventures. The following tips can help
someone to become successful in networking career:
1. Be humble and confident when dealing with others.
2. Remember, both of you are important in the meeting.
3. Make the first meeting successful. Remember first impression last.
4. Share information to create understanding.
5. Praise other people, avoid being arrogant.
6. Let other people share, do not monopolize the conversation.
7. Thank someone.
8. Ask for referrals.
9. Bring the best ideas; avoid talking nonsense or junk ideas.
10. Be conscious in time, some people are busy.

NETWORK MARKETING
As a concept, network marketing has been founded the fastest way to
accumulate wealth nowadays. The concept is used to penetrate the market as
fast as possible without entailing expensive marketing costs such as advertising
and promotions. For the most part, network marketing is spread by word-of-
mouth. You most likely have to be invited to join the business. Network
marketing is a non-traditional business with unconventional results. (p.26 A
Smart & Practical Guide for New Entrepreneurs by Sanchez 2008 edition)

LESSON 3.1.6 PACKAGING

PACKAGING THE PRODUCT – involves the development and branding of
product. It is one critical aspect that must be properly designed to attract the
customers.
 It should be properly designed to attract the customers.
  It is a group of activities in product planning which involve
designing and producing container or wrapper for a product.
Containers like tin can, glasses are for liquid-based products,
while wrappers like tin foil, paper, and carton for solid-based
products.
A package is the container or the wrapper of the product.

PURPOSE OF PACKAGING
1. To protect the product on its way to the customer. It prevents
tampering the product while in storage or in warehouse.
2. To provide protection after the product is purchased. It protects them
enclosing or encasing medicines and other harmful products from
unnecessary use.
3. It becomes part of the company trade marketing program. It must be
packaged to meet the needs of the wholesaling and retailing
middlemen.
4. It becomes part of the company marketing program. It must identify
the product and prevent substitution from the competitor’s product
in the market.

DESIRABLE PACKAGING APPEARANCE

1. It should be environment-friendly.
2. It should be durable and maintain quality after using.
3. It must protect the design, color, taste, and smell of the product.

CRITERIA FOR CHOOSING PACKAGING MATERIALS

1. PROTECTION – Can the package give ample protection to the
product? For example, can TV set be packed in plastic bags alone
without protective corrugated boxes and Styrofoam? Magnolia
Chicken, for instance, has their fresh chilled packs so flies won’t touch
it in the wet market.
2. DISPLAY VALUE- can it attract consumers? An example is a
comparison of four-color print versus a black and white package.
3. COST – will it be cost-efficient? For instance, can the weight of a
plastic container be reduced without sacrificing quality to reduce
cost?
4. CONVENIENCE – is it easy to carry? Will the package be too heavy?
5. SIZE – any weight limit? What is minimum order quantity? What
about average purchase size?
 PACKAGING STRATEGIES
1. FAMILY PACKAGING – involves making the package identical for all
products using common feature on all products using common
feature on all packages. Example: Johnson baby oil.
2. REUSE PACKAGING – is designing and promoting package which can
serve other purposes when contents are consumed. Example:
decorative tin
3. MULTIPLE PACKAGING – is placing several units of a product in a
single container. Example: 3-in-1 package for tennis and balls.

LESSON 3.1.7 POSITIONING

POSITIONING – refers to how the firm differentiates their product or
service from those of the competitors and serving a niche. The objective of
positioning is to establish the firm’s product or service identity in the mind of the
buyer.
The end result of positioning is the successful creation of a
market-focused value proposition, a cogent reason why the target market should
buy the product.

PRODUCT POSITIONING – is placing a brand in that part of the market

where it will have an approving acceptance compared with competing brands.

PRODUCT REPOSITIONING – means reviewing the current position of the

product and its marketing mix and seeking new position for it that seems more
appropriate.

MARKET POSITIONING – is developing a product and brand image in the

minds of the consumers.

PRODUCT POSITIONING
The entrepreneur must create an image to the public presenting how
they want to position the product. The target market must be well informed
about a new product – what it is, what it can do, what makes it better than other
products and who should buy it.
The company must inform the market on the different concepts a
product must be: low price and high quality (Surf detergent soap they claimed
that their products are high in quality but low in price); high price and high
quality (Ariel detergent soap claims that although their product is pricey, it is of
high quality) and low price and low quality.
LESSON 3.2 BRAND NAME
Brand – is a name or mark that is intended to identify the seller’s
product and differentiate it from the product of the competitors. A brand
name consists of letters, words or numbers that can be read or
verbalized. A brand mark is the part of the brand that appears in the form
of symbols designed in distinctive lettering or colours.

A Brand Mark is recognized by sight but cannot be expressed. A trade

mark is a brand that have been adopted by the seller and given legal
protection. The trade mark is protected by law under the DTI. Branding
protects the company from imitations and fake products.

Advantages of Branding
1. easy to identify the product or service,
2. It assures the buyer that they get the same quality of
products.
3. It reduces price comparison.
4. It adds prestige to the product of the seller.
5. It provides legal protection for the seller.
6. It helps in product market segmentation.

Selecting a Good Brand Name

1. It should suggest about the product or service.

2. It must be easy to pronounce and remember.
3. It must be simple and short.
4. It must be distinct or different from others.
5. It must be adaptable to new company product that may be
added.
6. It must be capable of registration and legal protection.

Branding Strategies

The producers and middlemen are partners in the distribution of the

products to their target consumers. Their partnership is a long life process
of mutual concern and cooperation for the development of customer
satisfaction. Producers and middlemen alike must choose strategies with
respect to branding their product mixes and branding for product
saturation.
1. Producer’s Strategy
The manufacturers have to establish a wide distribution system and rely
heavily on their capability to penetrate the market with the amount of
resources in promoting the brand to its target market.

This strategy is employed by product manufacturers’ that dominate the

greater market due to the superiority of their product. They have built
strong name especially when they are the first in the market. The
manufacturers have established a wide distribution system and rely
heavily on their capability to penetrate the market with the amount of
resources in promoting the brand to its target market.

This branding strategy has an advantage when the manufacturer has

greatly dominated the widest market as advertising and promotion
could be carried under one name. On the other hand, middlemen have
contested this idea as they want to carry a separate brand name for
their own marketing organization.

2. Middleman’s Strategy
This is also called as co-branding where the producer and sole
distributor carry the brand name of the manufacturer and that of the
middlemen. Middlemen usually can sell their brands at lower cost below
the producer’s price index because they can get other products using
their own brand name.

Brand equity spells out the value of the brand in the market. Brand
loyalty is developed as costumers become aware on the quality of the
product compared with other brand in the market. Powerful brand
names command strong consumer preferences. A product with strong
brand equity is one valuable asset and marketing professionals must
have the ability to create, develop, maintain and enhance their brand
name in the market.

Advantages of Co-Branding
1. It creates broader costumer appeal.
2. It develops brand equity.
3. It expands the middlemen brand in the market.
Disadvantages of Co-Branding
1. Coordination is oftentimes difficult with the producer and the
middlemen.
2. It entails legal contract which can be complex and difficult.
3. Licensing agreement is necessary.
4. It requires mutual trust between the two parties.

The Different Strategies Used to Sell More Products

1. Branding Within a Product Mix

a) Separate Name for Each Product-This is often termed as
family branding. It is simple and less expensive to introduce
new and related products to a line. The prestige of the brand
can be spread more easily as it appears on several products.

b) The Company Name Combined with the Product Name-The

company name is best suited for marketing products that are
related in quality and use. Costumers look at quality products
and mind-setting for the brand quality are the objectives of
the marketing organization.

c) The Company Name Alone-Branding with the company name

alone places a great burden on the procedures’ reputation for
quality. Other products carrying the same brand name may
not make the grade and this will affect the other products of
the middlemen.

2. Branding for Market Saturation

a) Introduction of Line Extension-This is the strategy where
brand names are extended into new forms and sizes of an
existing product category. The marketing organization might
introduce line extension to low cost and low risk products to
meet customer demand for variety and to command more
shelf space of the middlemen.
b) Introduction of Brand Extension-This strategy calls for the
extension of the brand name to new or modified product
categories. It aims to penetrate the market easily with new
product categories as the brand name had performed
excellently in the market. This will develop product
recognition with low advertising cost.
c) Introduction of New Brand Name – It is the strategy where a
new brand name is attached to a new product category.
Corporate brand acquisition is resorted in order to protect
 the existing brand that had reached its maturity and declining
stage. This is to refocus customer attention to new innovative
products with new brand name with different features and
added benefits to the customer.

REASONS FOR THE EXISTENCE OF BRANDS

1. IDENTIFICATION - Brands enable consumers to easily distinguish one product from

another.
Example: Magnolia branded a generic product-dressed chicken, which became
the leading brand within two years from launch. It continues to command a
premium in pricing.

Alaska created sub-brands to distinguish their premium product

(evaporated milk) from its low price product (evaporada). Its label
shows the Alaska boy in the premium line to convey Alaska’s long
tradition of quality products, while tempting pictures of halo-halo and
fruit salad grace the labels of the low-price sub-brand to appeal to the
budget-conscious housewives or the vendors.

2. PROTECTION – it enables the owner of the brand name to enjoy the goodwill
associated with the name so as not to be taken advantage by others.
Example: Levi’s jeans have been resorted to the legal remedy of running
after unscrupulous individuals and companies faking their brand.

AMC of Germany, a US$1 billion company, sent lawyer’s letters warning

companies and parties selling imitations that it is ready to file charges.
They are after all the world’s leading manufacturer of stainless steel
cookware with operations and sales companies in over 35 countries.

3. POSITIONING – It enables the owner to communicate the benefits of his product vis-
à-vis competition.

Example: In the pharmaceutical industry, Viagra, a pill for erectile dysfunction, connotes
vitality, vigor, and conjures images of Niagara Falls; Zithromax, an
antibiotic connotes power; Celebrex, an arthritis pain reliever, connotes
joy.

The brand becomes the consumer’s simplifier of choice. Compatibility must always
be considered in choosing brand names. Never choose a soft name like “Betty Boop”
for a hard product like power generators.
Criteria for Choosing a Brand Name
(p. 125 Principles of Marketing by Pereda, Pereda & Castillo 2013)

1. Distinctive – is the brand closely associated with another product?

 McDonald’s is known for fast food buy would a McDonald’s Hotel (in Europe) be
okay?
 Betadine is closely associated with antiseptic external wound remedy but would
a mouthwash succeed?

2. Word Association – does it have a pleasant meaning?

 Gardenia was a local motel before a major Singapore Bread Company decided to
enter the market in the mid 1990’s with a similar brand name, Gardenia. Good
thing Gardenia motel was not as well known outside its Sta. Mesa area.
 Dumex, the milk product never took off because costumers associated it with
another product, called Domex, a household cleanser.

3. Legal requirements – can it be registered?

 Sharp already owns the brand name so “Sharp” calculators cannot be registered
for being confusingly similar.
 “Beer”,”Inasal” or “The Spa” are generic names so these names cannot be
registered.

4. Memorability – can your name be remembered easily?

 Johnson & Johnson is an institution locally but would a competing brand Zwitsal
be as easily remembered?
 Would Corona or a Rizal be better remembered than Olivenza Bueno match
sticks?

5. Pronounceability – can it be pronounced easily?

 Mortimer mouse (the original intended name conceived by Walt Disney) is not as
easily pronounced as Mickey Mouse (the name suggested by Disney’s wife
Lilian).
 Unilab is much easier to say than Boehringer.

6. Limitations – is the brand name too limiting to be used for expansion?

 Would a name like “Gee, Your Hair Smells Terrific” be as versatile as an L’Oreal
hair care line?
 Would the name Aqua Vida be as flexible as an Imarflex?
LESSON 4 DEMONSTRATE UNDERSTANDING OF THE 4’Ms of
OPERATIONS
MANPOWER, METHOD, MACHINE, MATERIALS
MANPOWER REQUIREMENT
Manpower, personnel or laborer should be listed accordingly, from the
managerial position, supervisory position to the staff needed in the operation of the
business. In the selection process, it is best to identify applicants having the
necessary knowledge, skills, abilities and other characteristics that will help the
organization achieve its goals. Both the aptitude and attitude level of the applicant
should be considered in the hiring process.

QUALIFICATION STANDARD
Three kinds of qualification standard:
1. Manpower – this refers to the personality required to a worker’s traits, manners,
values, the way he talks, appearance and his overall physical attributes.
2. Experience – this refers to the length of working experience in relation to the job
criteria required as a worker and also that a worker applied for.
3. Academics – this refers to the worker’s academic qualifications or the
educational attainment required to perform the job better.

It is important to hire the best people who have a good track record of work
experience and ability to help the company grow and be successful. A resume
should be attached in the business plan that includes the following information:
 Name
 Position
 Primary responsibilities and authority
 Education
 Unique experience and skills
 Previous employment
 Industry recognition and awards
 Community involvement and participation
 Number of years with the company

STEPS IN COMING UP WITH THE CRITERIA FOR SELECTING APPLICANTS:

1. List down all the different activities that have to be done in the business. Group
this according to the four functional areas of management:

 Marketing
 Sale and delivery of products to buyers
 Delivery of products to distributors
 Promotion and advertising
 After-service support, etc.
  Production
 Product manufacture or service delivery
 Machine operation
 Repair and maintenance
 Quality control
 Raw materials and finish product inventory
 Finance
 Bookkeeping
 Payroll preparation
 Settlement of payables and collections of receivables
 Petty cash management, etc.
 Administration
 Ordering of supplies
 Sales contract preparation and business permits renewals
 Keeping and maintenance of personnel records
 Business communication and inquiries, etc.

2. List the entire qualification requirement for every position in terms of

education, experience, training, etc. Example, for a bookkeeper, the
requirements could be:
 Graduate of any business-related course;
 Computer literate ;
 Must know how to use the copier and the facsimile machine;
 With good oral and written communication skills;
 With pleasing personality; and
 Preferably with bookkeeping experience

MACHINE
The machine and equipment required in the business should be clearly identified
including detailed specifications and its functions. The determination of the equipment
size should be closely coordinated with the manufacturer or supplier. The origin of the
machine whether local or imported and the country of origin should be known. The
availability of after-sales service and spare parts should be clarified with the suppliers.
The delivery schedule, terms of payment and other arrangements, ex. Electrical, water,
gas, and other utilities connections, should be clearly stated in the quotation.

METHOD
Manufacturing is the conversion of raw materials into finished products. The
sequence of operations should be clearly defined to ensure proper execution thus
assuring the consistency of the quality of the product.

MATERIALS
 The materials include both direct and indirect materials. The specifications,
quantity needed, and the schedule of delivery should be clearly stated. Reliability of the
supplies should be assured and the single source should be avoided.

LESSON 4.1.1 PRODUCT DESCRIPTION

Product Description – is a structured format of presenting information about a
project product. It is usually created by the project manager and approved by the
project board.

The structure of Product Description:

1. Identifier
2. Title
3. Purpose
4. Composition
5. Derivation
6. Format and Presentation
7. Development Skill Required
8. Quality Criteria
9. Quality tolerances
10. Quality Method
11. Quality skills required
12. Quality responsibilities

LESSON 4.1.2 PROTOTYPE OF THE PRODUCT

PROTOTYPE can help add value to a project as well as credibility. In some
instances, the company will need to innovate to be able to prove that the concept works
and that the theoretical design translates into a working model.

PROTOTYPE USEFULNESS FOR LICENSING

STEP 1. DOCUMENT IT
This is the first step to patenting the idea and keeping it from being
stolen. Write down the idea in an inventor’s journal and have it signed by a
witness.

STEP 2. RESEARCH IT.

 The company will need to research the idea from a legal and business
standpoint. Before to file a patent, one should:
 Complete an initial patent search. Visit the website to ensure the
requirement for patenting, complete a rudimentary search for free at
www.ipophil.gov.ph to make sure no one else has patented the idea.
One should also complete a non-patent “prior art” search.
 Research your market. Do some preliminary research of the target
market.
STEP 3. MAKE A PROTOTYPE
A prototype is a model of the invention that puts into practice all the
things that were written in the inventor’s journal. This will demonstrate the
design of the invention that will be presented to the potential lenders and
licensees.

STEP 4. FILE A PATENT

There are two main patents to choose from:
1. Utility patent (for new processes or machines)
2. Design patent (for manufacturing new, non-obvious ornamental
designs)

Patent – a declaration issued by the government agency declaring someone, the

inventor of a new invention and having the privilege of stopping others from
making, using, selling the claimed invention.

LESSON 4.1.3 TESTING OF PRODUCT PROTOTYPE

Testing a prototype is a valid or necessary part of the design and
manufacturing process. Testing and evaluation, determine that the product will
function as it is supposed to, or if it needs sufficient analysis. It allows the
producer and client to assess the viability of a design. This will help identify
potential so that the producer will make improvements.

IMPORTANCE OF TESTING
1. Testing and evaluation, allows the client and customer to determine
the prototype and to give its views. Changes and improvements are
done to finish it.
2. A focus group can conduct test to the prototype and give their views
and opinions. Criticisms and problems are often identified at this
stage. Suggestions for improvement are often discussed at this stage.
3. Evaluating a prototype allows the production costs to be assessed and
finalized it can be scrutinized for potential costs. Alterations of design
or manufacturing processes may have to be made for future
production.
 4. New design or redesign can take place during this part. A component
or part of a product, will be tested separately and not the entire
product. This allows more and direct tests to be carried out.
5. The manufacturer allows the designer to plan an efficient and cost
effective production line.
6. This may lead to improvements and become highly competitive.
7. It can guarantee customer satisfaction; consumer can use the product
efficiently and safely. Testing ensures that any user instruction
included in the packaging will provide pre cautions and warnings.
8. Testing and the design specification should be done separately to
ensure a full and relevant evaluation of a prototype which is carried
out in the entire development process.

LESSON 4.1.4 SERVICE DESCRIPTION OF THE PRODUCT

SERVICES – are rental of goods, alteration or repair of goods owned by

consumers and personal services. These are intangible products that satisfaction
can be measured in future preferences.

Types of SERVICES:
1. RENTED GOODS SERVICES – The consumer rented the facility or products of
the sellers in a certain period of time.
2. OWNED GOODS SERVICES – Repair and maintenance services rendered by
the sellers to the products of the customer.
3. NON-GOODS SERVICES – Personal service on the part of the seller; most
common are the expertise and the profession of the seller.

CHARACTERISTICS OF SERVICES
1. INTANGIBILITY – Services that cannot be displayed, transported, stored,
packaged or inspected before buying.
2. PERISHABILITY – services cannot be stored for future sale. The skills of the
provider must enhance and develop to better serve the customer.
3. INSEPARABILITY – Service provider and services cannot be separated. It
cannot accomplish the purpose if one is missing.
4. VARIABILITY – Service is difficult to standardize because it varies upon the
performance of the provider.

INDUSTRIAL SERVICES – Acts rendered to the industry or company for the

purpose of attaining its goals and objectives.

Examples are:
 1. Repairs and Maintenance Services – includes painting, machinery repair and
janitorial services.
2. Business Advisory Services – Management consulting, advertising agency
services, accounting services and legal services.

LABELLING

LABEL – is the part of the product that carries information of its features and
attributes. It can also provide description of a certain services that the company
can offer. It is closely related to packaging and requires managerial attention.
 Labels may be a tag attached to the product or may be printed material
attached to the package.
 There is a close relationship among labeling, packaging and branding.

TYPES OF LABELS
1. BRAND LABEL – it is simply the brand alone that is applied to the product or
package. Clothing has labels that could be seen inside the collars. Others are
embroidered as in underwear, t-shirts, socks, etc.
2. DESCRIPTIVE LABEL – it gives objective information about the product’s uses
construction, care, performance, and other pertinent features. They are
commonly found in food ingredients, medicines, canned goods and others.
3. GRADE LABEL – it identifies the product judge quality with letters, numbers
or words. It contains product expiry dates, the content values and other
features. Labels are regulated by the operation of labeling laws especially in
medicines, vitamins, milk, and other related products.

FUNCTION OF LABELS
1. The labels identify the product or brand in the market.
2. They describe the product features and uses.
3. They serve as an advertising medium with its colors and design.
4. They create lasting impression about product quality.

LESSON 4.1.5 RAW MATERIALS

RAW MATERIALS – are the unprocessed and basic material that is used to produce
goods, finished products, energy, or intermediate materials which are feedstock for
future finished products.
Example: Lumber is a raw material used to produce a variety of products including
furniture.

Tips in choosing the right Suppliers:

1. Value for money or the price
2. Quality or how it works
3. Reliability or dependability
4. Service or benefits

CRITERIA IN CHOOSING A SUPPLIER

1. RELIABILITY – state of being reliable, worthy of confidence and dependable.
2. QUALITY – A degree of excellence, superior in kind and high distinguishing attribute.
The quality needs to be consistent every time supplier delivers items.
3. VALUE FOR MONEY – the lowest price does not guarantee the best value for money.
One has to decide how much customer is willing to pay the supplies and the balance
they want to strike between cost, reliability, quality and service. ( Strong service and
clear communication)
4. SUPPLIERS SHOULD DELIVER ON TIME – or be honest and give plenty of warning if
cannot deliver on time.
5. FINANCIAL SECURITY – the supplier must be assured that the company has
sufficiently strong cash flow to deliver what the company wants and it needs.
6. A PARTNERSHIP APPROACH – a strong relationship will benefit both producer and
supplier. They make every effort to provide the best service possible

LESSON 4.1.6 VALUE / SUPPLY CHAIN

SUPPLY CHAIN – includes those various firms included in the execution of the
activities needed to produce and transport a product or service to consumers or
industrial users.
- it comprises supplies that provide raw materials to a producer,
wholesalers, and retailers that distribute finished goods to consumers.

SUPPLY CHAIN MANAGEMENT - is the supervision of materials, information and

finance as they move in a process from supplier to manufacturer to wholesaler to
retailer to costumer. This involves collaborating and incorporating flows both within
and among companies.

Supply chain activities cover everything from product development, sourcing,

production, and logistics as well as the information systems needed to coordinate
these activities.

Key Process of Supply Chain Management

There are 8 critical business processes in which supply chain managers must
focus:
1. Customer Relationship Management – this will allow companies
to prioritize their marketing focus on different costumer groups
 based on each group’s long term value to the company or supply
chain.
2. Customer Service Management – this is a multi-company, unified
system of responding to costumers’ complaints, concerns
questions or comments.
3. Demand Management – this process tries to align supply and
demand throughout the supply chain by foreseeing costumer
requirements and creating an action plan before actual purchasing
of costumer.
4. Order-fulfillment – this engages in generating, filling, delivering
and providing on-the-spot service for costumer’s orders.
5. Manufacturing Flow Management – this ensure that firms in the
supply chain have the necessary resources to produce with
flexibility and to move products in a multi stage production
process.
6. Supplier Relationship Management – this provides structural
support for developing and maintaining good relationships
especially with highly valued suppliers in order to gain
performance advantages.
7. Product Development and Commercialization – this facilitates the
joint development and marketing of new products and services
among a group of supply chain partner firms.
8. Returns Management – this enables firms to manage volumes of
returned product efficiently while minimizing related costs.

LOGISTICS COMPONENTS OF THE SUPPLY CHAIN

Logistics – is the strategic managing of the efficient flow and
storage of raw materials, in-process inventory and finished goods
from the point of origin to point of consumption.

The supply chain entails a number of inter connected logistical

components which are:
1) Sourcing and Procurement – the aim is to lessen the costs of raw
materials and supplies.
2) Production Scheduling – it calls for additional products to be
manufactured.
3) Order Processing – it processes the requirements of the costumer and
sends the information into the supply chain through the logistic
information system then to the warehouse.
4) Inventory Control – this system 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 – this concerns the decision on the mode of
transportation of the goods from suppliers to producer and from
producer to costumers.
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, too.
d) Capability – the ability of the carrier to provide applicable
equipment and conditions for moving the goods like those that
must be transported in a controlled environment.
e) Accessibility – the ability of the carrier to transport the goods over
a particular route or network.
f) Traceability – the relative ease that a shipment of goods can be
located and transferred.

Value Chain - is a set of activities that a firm operates activities in a specific industry
in order to deliver a valuable product or service to the market.

PRIMARY ACTIVITIES
1. Inbound Logistics – Arranging the inbound movement of materials, parts, and/or
finished inventory from suppliers to manufacturing or assembly plants,
warehouses, or retail stores.
2. Operations - Concerned with managing the process that converts inputs (in the
forms of raw materials, labor, and energy) into outputs (in the form of goods
and/services).
3. Outbound Logistics – The process related to the storage and movement of the
final product and the related information flows from the end of the production
line to the end user.
4. Marketing and Sales – Selling a product or service and processes for creating,
communicating, delivering, and exchanging offerings that have value for
costumers, clients, partners, and society at large.
5. Service – Includes all the activities required to keep the product/service working
effectively for the buyer after it is sold and delivered.

SUPPORT ACTIVITIES
1. Procurement – The acquisition of goods, services or works from an
outside external source.
 2. Human Resources Management – Consists of all activities involved in
recruiting, hiring, training, developing, compensating and (if necessary)
dismissing or laying-off personnel.
3. Technological Development – Pertains to the equipment, hardware,
software, procedures and technical knowledge brought to bear in the
transformation of the firm inputs into outputs.
4. Infrastructure – Consists of activities such as accounting, legal, finance,
control, public relations, quality assurance and general (strategic)
management.

LESSON 4.1.7 RECRUITMENT

Recruitment – is the process of convincing or encouraging a prospective applicant to fill

in a vacant position.

Steps in Recruitment
1. Study the different company jobs and write its descriptions and specifications.

Job Description – It defines the duties and responsibilities of a particular

position. It is an essential part of hiring and managing your employees. These
written summaries ensure your applicants and employees understand their roles
and what they need to do to be held accountable. Job description also:
 Help attract the right job candidates;
 Describe the major areas of an employee’s job/position;
 Serve as a major basis for outlining performance expectations, job
training, job evaluation and career advancement; and
 Provide a reference point for compensation decisions and unfair hiring
practices.

A job description should be practical, clear and accurate to effectively define

your needs. Good job descriptions typically begin with a careful analysis of the
important facts about a job such as:
 Individual tasks involved;
 The methods used to complete the tasks;
 The purpose and responsibilities of the job;
 The relationship of the job to other jobs; and
 Qualifications needed for a job.

Job descriptions include:

 Job title;
  Job objective or overall purpose statement;
 Summary of the general nature and level of the job;
 Description of the broad function and scope of the position;
 List of duties or tasks performed critical to success;
 Key functional and relational responsibilities in order of significance; and
 Description of the relationships and roles within the company, including
supervisory positions, subordinating roles and other working relationships.

Additional Items for Jobs Descriptions for Recruiting Situations:

 Job specifications, standards, and requirements;
 Job location where the work will be performed;
 Equipment to be used in the performance of the job; and
 Salary range.

Jobs Specification – It gives the specific qualifications required for the position
such as type of experience needed for the job, specials training, skills and
physical demands, special abilities, aptitude, age, physical qualifications and
other requirement.

Jobs are subject to change for personal growth, organizational development,

and/or evolution of new technologies. A flexible job description encourages
employees to grow within their position and contribute over time to the overall
business.

2. Requisition of New Employee – a formal requisition form is required indicating

the position to be filled, date needed, qualifications and other requirements
needed for an applicant.

3. Actual recruitment of applicant/s

a) Internal – employees recruited within the company.
b) External – applicants recruited through advertisement, referrals, placement
agencies, etc.

SELECTION – It is the process through which organizations identify and make

decisions about the applicant/s who will be allowed to join the company.
Organizations should create a selection process in support of its job descriptions and
should be able to identify applicant/s that have the necessary knowledge, abilities,
skills and other characteristics required in the job.

Steps in Selection

1. Reception of Applicants - It involves screening of applicants by

which applicants are interviewed.
2. Preliminary Interview – Its purpose is to check if the applicant is
qualified for the position and eliminate those applicants who are
disqualified.
3. Filling out of Applicant Form – This serves as a guide in
interviewing the applicant to determine if the applicant matches
the job requirements as indicated in the job description and job
specification. This serves also as a basis in checking applicant’s
school records, former employers and references.
4. Employee Test – Employment test is given to measure applicant’s
abilities needed for the job.
5. Final Interview by Immediate Supervisor or Department Head –
To determine who among the applicants should be hired and fitted
for the job.
6. Physical and Medical Examination.
Medical Examination – A medical examination helps to determine
if the applicant is fit to work or to find out health concerns that
might hinder his ability to perform the required job.
Pre-Employment Test – A pre-employment background check is
essential in hiring an employee to obtain important information of
the applicant in terms of work performance and his ability to do a
specific job and other essential information required for the job
before deciding to hire an applicant.
7. Hiring – The applicant who passed the selection requirements is
sent to the Human Resource Department for final completion of
the hiring process.
8. Orientation – The new employee/s are oriented on company
policies, rules and regulations and informed or directed about his
job by the immediate supervisor or training officer.

TRAINING/RETRAINING
New employees are required to undergo training to help him perform
his job efficiently. For the growth of employees and the company,
training is carried out continuously in many organizations according to
the needs of the employees and or company. Retraining is required to
those who need enhancement, new knowledge on the present job,
need promotion and transfer to other department.

COMPENSATION
This part contains the compensation of the personnel based on their
qualifications. After determining the needed number of manpower
and their qualification, the next step is to express it in monetary form.
The usual standard in determining wage rates is matching them with
the industry standards.
 The pay scales shall be set based on the minimum wage in the region
or place of the business and the result of the salary survey that match
the industry standards.
Since the law mandates the provision of benefits to workers, such as
allowances, bonuses, Social Security System (SSS), Pag-ibig, Philhealth
contributions and the like; these should be included in the study. Also,
companies provide benefits such as leave benefits, allowances,
bonuses, insurance and retirement benefits.

ESTABLISHING THE PAY STRUCTURE

This means establishing pay rates or ranges compatible with the ranks,
classifications, or points arrived at through job evaluation. Another
way to establish the pay structure is to conduct compensation surveys
to gather factual information on pay practices within industry or
particular place.

ORGANIZATIONAL POLICES
This section explains the personnel policies that should be
implemented in the workplace. There should be underlying policy in
the recruitment, selection, hiring, training and development of
personnel, including the compensation and benefits.
As part of organizing the business, a company manual code of
discipline that contains information about the company policies,
employees’ privileges and benefits should be prepared.

COMPANY MANUAL
An employee manual is an important communication tool between an
employee and employer. It serves as a guide for employees in the
performance of his job and what is being expected of him as an
employee. It includes company policies and procedures and labor laws
that the employee is expected to comply and such other benefits and
rights of an employee.
An entrepreneur must also comply with the equal employment
opportunity laws prohibiting discrimination and harassment act.

COMPANY CODE OF DISCIPLINE

The rules and regulations stated are important to achieve total
efficiency and harmonious relationship. Discipline is a key factor in any
business undertaking. It promotes greater efficiency in business
operations, creates a general condition of orderliness conducive to
greater manpower productivity, reinforces the moral dignity of all
employees, and most of all enhances company prestige.
MANAGEMENT STRUCTURE AND COMPONENT
It is designing the form of ownership of the business which at the
outset is known to the investors. It shall also define the organizational
structure of the organization and the operational system that must be
put in place. It shall define the duties and responsibilities of the people
in the organizational structure. Management should organize different
operating departments and delegate corresponding authority.

I. Proponents – This refers to the originators of the project,

II. Management
1. Organization Structure – this refers to the hierarchy in
organization ladder and their corresponding duties and
responsibilities and their respective qualification for the
position.
2. Personnel Component
a) Pre-operating Period – the person in charge of
activities in the pre-operating activities
b) Operating Period – this refers to the personnel that
will be assigned the task of handling the day to day
operation of the business.
c) Development of Policy Manuals and Procedures –
standard operating procedure must be established
to simplify decision making and to pinpoint
accountability for operation.