MODULE

LESSON 1

INTRODUCTION TO THE COURSE AND OVERVIEW OF INDUSTRIAL

MARKETING SYSTEM

OVERVIEW

This module is designed for Bachelor of Science in Industrial Engineering students

taking up the course INEN 3163- INDUSTRIAL MARKETING SYSTEM.
It consists of two parts . Part I intends to familiarize the students with the VGMO of the
university and orient them with the classroom rules and policies . The second aims to provide
the overview of the course .
The course shall delve mainly on the full understanding of the basic concepts of
marketing and marketing concepts .Essential topics on marketing strategies which include
marketing segmentation, marketing mix, product strategy ,advertising strategy , sales
promotion strategy, customer service strategy and distribution strategy will be discussed in
this course .

MODULE OBJECTIVES

At the end of the module , the students are expected to :

 familiarize with the VMGO of the university and provide their expectations from the
course; orientation on classroom rules and policies and review of grading system.
 have a thorough understanding of the basic terminologies and concepts of marketing .

COURSE MATERIALS

Part I –INTRODUCTION TO THE COURSE: - kindly refer to syllabus for the discussion of
vision, mission of the university , course requirements and grading system

Part II.

1. BASIC CONCEPTS OF MARKETING

1.1 Nature of Marketing

 Marketing is performed by individuals and organizations.
 Marketing facilitates exchange.
 Marketing operates in a set of dynamic environmental forces.

For an exchange to take place , two conditions must be met:

1. Exchange requires participation by two individuals, groups or organizations. Both
parties must possess something that they value and are willing to give in order to
receive the “ something of value” held by other individuals, groups or organization.
2. The parties in exchange must be able to communicate with each other and to make
available the “ something of value”.( products or financial resources : cash or credit.)

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1.2 Marketing defined :

Marketing – is a social and managerial process by which individuals and groups obtain what
they need and want through creating and exchanging products and value with others.

Other definitions of Marketing:

 Marketing - is getting goods or services to the right people at the right place and at
the right time with the right communication and promotion.

 Marketing is the performance of business activities that direct the flow of goods and
services from producer to consumer or user.

Two significant implications of definition of marketing :

o The entire system of business activity should be customer oriented. Customer wants
must be recognized and satisfied effectively.
o A marketing program should start with an idea about a new product ( good, service ,
idea, person, or place) and should not end until the customer’s wants are completely
satisfied, which maybe sometime after the sale is made.

1.3 Misconceptions About Marketing:

Marketing has often been misunderstood. Some of these are ;
 Marketing is associated with sales … Marketing is not selling …
 Marketing is only selling or promotion.
This is partly true ,these two functions are only part of the total marketing program.
 “Marketing equals advertising” is often reinforced when some companies spend their
huge advertising budget. Advertising like selling is merely a part of the many
functions of marketing .

1.4 Difference between selling and marketing

Selling
 Emphasis is on the product,
 Company makes the product and then figures out how much to sell it.
 Management is sales-volume oriented.
 Planning is short-run oriented in terms of today’s products and markets .
 Stresses needs of seller.

Marketing
 Emphasis is on customer’s wants.
 Company first determines customer’s wants and then figures out how many to make
and deliver a product to satisfy these wants.
 Management is profit oriented.
 Planning is long-run oriented in terms of new products, tomorrow’s markets, and future
growth.
 Stresses the needs of buyer.

1.5 Functions of Marketing includes :

 Market research ( measurement of market potential, market share analysis etc.)
 Customer service

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 Product planning ( includes exploration , screening , business analysis, development

and testing, test marketing , evaluation)
 Pricing
 Distribution
 Promotions ( includes advertising , public relations , selling and sales promotions).

 KEY ISSUES in a service organization:

 Services are intangible
 Services are generic .
 Services are created and delivered at the same time
 Services cannot be inventoried
 Location is often important to service design
 Cannot be exchanged or returned

1.6 Seven Marketing Concepts

1. Need– is an urgent want which satisfaction cannot be postponed indefinitely without in any
way causes adverse effect on individuals. Human need is a state of felt deprivation. Examples :
physical and social needs.
When a need is not satisfied, a person will do use of two things :
 Look for an object that will satisfy it.
 Try to reduce it.
2. Want - a condition of being without something that is desired. The form taken by a human
need as it is shaped by culture and individual personality.
3. Demand – when backed by buying power , wants become demands.
4. Product – anything that can be offered to a market for attention, acquisition, use or
consumption and might satisfy a need or want.
5. Exchange – the act of obtaining a desired object from someone by offering something in
return.
6. Transaction – is a trade between two parties that involves at least two things of value,
agreed upon conditions, a time of agreement , and a place of agreement. Two types are:
monetary and barter transactions.
7. Market – is the set of actual and potential buyers of a product.

1.7 THE STRATEGIC 3CS OF MARKETING :

CUSTOMER

COMPANY

COMPETITION

Exhibit – Strategic 3C’s of Marketing

KEY OBJECTIVES OF THE 3Cs of MARKETING :
3Cs Key Objectives
1. Customers To satisfy the needs , wants and expectations of target customers
2.Competition To outperform competition
3. Company To ensure corporate health and profit.

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Key Result Areas

The output of customers , competition and company is collectively called KEY RESULT
AREAS (KRA).
a. Sales
b. Market shares
C Profit

 Sales results from satisfying customers’ needs and wants .

Sales volume can be increased through what is known as the 4Us of marketing :
1. New Users – Who uses the product or service? or service used ?
Example: Red Bull Energy drink was formulated fro blue collar workers as
well as those who work on midnight shift .

2. Extended Users- Who can still use the product or service ?.

Example :coke zero was formulated to cater to people who do not like or
cannot take the sugar content of regular Coke .

3. New Usage – For what purpose is the product or service used ?

Example : Glutathione was originally intended to boost liver function until
its whitening effect was discovered .

4. MORE Usage – When and in what occasion is the product

Example :
Del Monte regularly comes out with recipes to encourage more usage of
DELMONTE products .
BPI credit card offers free meals and wives payment of annual fees in
exchanging for attaining a minimum spending limit

 Market shares - these are the effects from outperforming competition

It is defined as the ratio of your brand’s sales versus the total sales in your
market.
 Honda and Toyota are almost neck- to neck in the passenger car market
The customers actually ultimately decide the competitive frame .
 Jollibee may defined Macdonald’s and Burger King as key competitors
but consumers may simply go to a Pancake house or a Teriyake Boy or
even a Starbucks when the lines in Jollibee are long.
 Cebu Pacific grabbed shares not from PAL but from land and sea .

 Profit – comes from having excess of sales over cost and expenses in earning market
shares.
 Konosoke Matsushita - founder of Matsushita -National Panasonic Group
believed that profit is a tangible manifestation of consumer confidence
towards your company, your products and your services.

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1.8 NEEDS , WANTS AND EXPECTATIONS

 NEEDS are the basic reasons or the minimum requirements consumers are looking for
a product or service They are called the qualifying or the “ gatekeeper “ dimension in
a purchase .
 WANTS are the determining dimensions among many choices ; the motivating attribute
; desire ; wish for or wish to have .
 EXPECTATIONS are values or intangibles associated with a product or service. They
are actually part of “wants but they become extremely important when product or
services are not differentiated.

1.9 FEATURES, ADVANTAGES AND BENEFITS

 ADVANTAGES
 Are what features can do.
 It is what one firm can do better than another to satisfy customer needs and wants
 BENEFITS
 Advantages that meet the explicit needs and wants of the customers
are what the customers will get when they use the product or service.
 Provides favorable result in the future when the customers use the products or
services .
 FEATURES
 prominent / distinctive characteristics of a product use, construction or design
attributes, quality or characteristics ; a proof of a benefit called as the
“reason why” by advertising .
Examples:
 VICTORIA COURT , ANITO LODGE and other major drive in hotels reveals that
aside from a main entrance , most of their venues also have a side entrance .
 “VICKS” INHALER is a pocket sized inhalation device with soothing vapors (
features) which provide immediate relief( advantages ) of nasal congestion , thus,
removing distractions from your work ( benefit ) while you are abroad.

2.0 MARKETING LEVELS AND FOCUS

There are three levels and their focus on which a firm does its marketing activities.

3 levels Focus
1. Strategic Marketing management Vision and Mission, Industry and competition
analysis ,key factor for success, SWOT analysis
2. Marketing Strategy Market segmentation ,Target market positioning
3. Marketing Tactics Product , Placement (Distribution), Promotions, and
Pricing

 Vision – explains the company’s future and what it intends to be .

 Mission – answers the questions “ What is our business?” as it defines the needs and
wants of the customers,

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 Key Factors for success ( KFS)– identifies the limited number of controllable as well as
uncontrollable functions, activities , factors or even bottlenecks that must be
managed well to outperform competition in the present market.
 Example :Good location is controllable KFS for stores like National bookstore, Mang
Inasal or Potato corner
 Weather is uncontrollable factor for establishments like Enchanted Kingdom, Boom na
Boom, etc.

 Strengths are positive factors which will help the company achieve its key result areas.
 Weaknesses are negative factors which may hinder attainment of the firm’s key result
areas.
-Strengths and weaknesses are part of the internal environment of a company
 Opportunities are positive situations which will enhance the company’s position in the
industry.
 Threats – are negative situations which may dampen its position in the industry .
-Opportunities and threats look at the external environment .

2.1 MARKETING STRATEGY

Marketing strategy has two interrelated components : the target market and the
marketing mix.
In formulating marketing strategies and tactics consider the important factors defined in
the exhibit 1 below.
Customers Competition Company
 Market emerging  Competitor’s strategies and  Company’s strengths
opportunities tactics and weaknesses
 Industry –  Competitors strengths and  Industry structure and
impending weaknesses the firm’s competitive
threats  Competitors strategic focus position
 Personal values and
preferences of key
owners and
executives
 Societal expectations
Exhibit 1. Factors to consider in formulating marketing strategies and tactics.

Company’s strengths competitor’s weaknesses

Customer’s needs and wants

Exhibit 2 Company’s relative strengths are critical to strategy formulation

Exhibit 2 shows that both the strengths and weaknesses of the company and its competitors
should be considered in strategy formulation because strategy uses the company’s
strengths against the competitors weaknesses to serve customer needs and wants

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2.2 FOUR ALTERNATIVE GOALS OF MARKETING SYSTEM.

1. maximize consumption
-stimulate maximum consumption; create maximum production ,employment and
wealth; maximize through advertisement.

2. maximize consumer satisfaction- consumer satisfaction is difficult to

measure.
First, nobody has figured how to measure the total satisfaction created by a
particular or marketing activity.
Second, satisfaction obtained from goods of a product or service must be offset
by the “black” , such as pollution and environmental damage.

Customer satisfaction is accomplished by:

 determining the needs of the customers. (know your customer).

o remember : the customers are the ultimate judge of acceptance.
 meeting the needs of the customers.
 exceeding expectation of customers.
 recognizing that these needs and expectations are constantly changing.

It is important to satisfy customers because :

 customer expectation continue to increase as top competitors raise their
standards for quality.
 96% of dissatisfied customers never complain.
 90% of those who are dissatisfied will not buy again.
 each unhappy customer will tell her/his story to at least nine other people.

3. maximize choice-
 should maximize product variety and consumer choice
 should maximize product variety and consumer choice; satisfies tastes ; able
to fully realize life style goals.

Effects of maximizing consumer choice:

o first goods and services will be more expensive.
o increase consumer search and effort.
o more products do not increase necessarily the consumer’s real choice.
o too much choice leads to confusion and frustration.

4. maximize life quality.

-includes the quality of physical and cultural environment.

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2.3 MARKETING MANAGEMENT PHILOSOPHIES

1. Production concept
 the philosophy that consumers will favor products that are available and
highly affordable and that management should therefore focus in
improving production and distribution efficiency.

 Useful in two types of situation:

o occurs when the demand for a product exceeds of a supply- management
should try to look for ways to increase production.
o when the product’s cost is too high and improved productivity is needed to
bring it down.

2. Product concept
 is the idea that consumers will favor products that offer the most quality,
performance and features and that the organization should therefore
devote its energy to making continuous product improvements.
this concept leads to “ marketing myopia”.

Selling concept
 the idea that consumers will not buy enough of the organizations products
unless the organization undertakes a large –scale selling and promotion
effort.

3. Marketing concept
 holds that achieving goals depend on determining the needs and wants of
target markets and delivering the desired satisfactions more effectively
and efficiently than competitors.

 it has been stated in such colorful ways as “ find a need and fill it”; “ we do
it like you’d do it” ( Burger king ) ; we’re not satisfied until you are “ (
G.E.)

 it is practiced more in consumer goods companies than industrial goods ;

more among large than small companies.

5. Societal marketing concept

 is the idea that an organization should determine the needs, wants and
interests of target markets and deliver the desired satisfaction more
effectively and efficiently than competitors in a way that maintains and
improves the consumer’s society’s well being.

 It balances three considerations in setting their marketing policies:

o company profits
o consumer wants
o society’s interest

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ACTIVITIES /ASSESSMENT :

Exercises:

TEST I . Identification of terms/ Fill in the blanks .

1. It refers to anything that can be offered to a market.

2 A marketing philosophy that is very useful when the product’s cost is too high and
productivity is needed to bring it down.
3. This concept in marketing leads to marketing “myopia”.
4. The output of customer, competition and company ( the 3Cs of marketing ) is collectively
called ________
5. It is defined as the ratio of brand sales and the total market sales /key result area from
outperforming competition .
6. A market opportunity where the company is trying to increase sales by selling products in
new markets .
7. In marketing , the emphasis is on __________ wants.
8. It refers to the urgent wants of individuals that which the satisfaction cannot be
postponed indefinitely
9. It refers to the set of actual and potential buyers of a product.
10-12 . Give the three types of products.
13. It refers to the function of procuring goods until the customers need them.
14. In selling , the emphasis is on the ____________.
15.The parties in exchange must not be able to communicate with each other and to make
available “_____________________”.

TEST II. True or False :

1. An exchange takes place only when one party buys goods from another party.
2. When a product fails to sell as well as expected , the reason always lies with the
product itself.
3. Marketing directly affects those that are influenced by advertising .
4. A firm cannot offer the same product to both the consumer and industrial markets.
5. Successfully implementing the marketing concept may require an organizational
restructuring in order to coordinate activities better.

TEST III. Thinking Application :

How can a firm benefit from practicing marketing concept ? What challenges do
practicing the said concept present ?

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