Fundamentals of International Marketing

Part 1

Marketing: An Overview and an Introduction

Module 1: The Value of Marketing

Learning Objectives

At the end of the module, students will be able to:

1. Analyze the definition, importance, scope and role of marketing in international marketing.

2. Characterize

the core concepts and distinguish the different universal

functions of marketing. Discuss the differences between sales and market operations.

Understand the difference between micro-marketing and macro-marketing.

3. Appreciate the evolution of marketing management philosophies.

4. Evaluate marketing plans

and strategies. Develop corporate

marketing

strategies, critique business marketing strategies and design a marketing plan.

5. Understand segmentation, positioning and target marketing.

Marketing: Definition, Importance, Scope and Role

Marketing is a business term that experts have defined in dozens of different ways. In fact, even
at company level people may perceive the term differently.

According to the American Marketing Association, marketing is the process of planning and
executing the conception, pricing, promotion, and distribution of ideas, goods, and services to
create exchanges that satisfy individual and organizational goals. 1 It is also defined as a
complex business directed towards satisfaction of consumers' present and future wants through
supply of goods and services and in the end would reward those engaged in such activities.

It is a social process which directs and economizes flow of goods and services from producers
to consumers in a way which effectively matches supply and demand and accomplishes the
objectives of society. It is the performance of activities which seeks to accomplish an
organization's objective by anticipating customer or client needs and directing a flow of
need-satisfying goods and services from producer to consumer. 2 It is the process of
continuously and profitably satisfying the target customer's needs, wants and expectations
superior to competition. 3

Marketing is a system concerned with the planning and development of products and services,
determination of prices, creation of promotional programs and distribution system to present and
prospective market for satisfaction of their existing needs and wants, thus maximizing profit in
the long run.

> 1" Element - "Marketing is a System" - It is a system because it requires planning to determine
products/services for production. It is the Organization of basic resources like money or funding
and machineries needed for the creation of goods or services. The direction and control of these
elements, spells success or failure of the enterprise. Production and distribution complement
and balance the total marketing system.

> 2nd Element - "the product or service planning and development, pricing, promotion and place
of distribution". The four variables of the marketing mix - also known as the four P's of Marketing
include the following.

1. Planning for products or services

2. Pricing

3. Promotion

4. Place of Distribution

> 3d Element - "Presence of current and potential market" - The Market is made up of buyers/
consumers.to satisfy the market, there should be product planning and development to fulfil the
demand of current buyers and forecasting the needs of the future market. Based on the
potential market, development of products or services, their features and benefits, should follow.

> 4th Element - "Satisfaction of existing human needs and wants" - Human needs and wants
are insatiable and buyers continuously demand for new or developed goods for their
satisfaction. New products therefore should be planned and developed. There will be assurance
of sales as human requirements are fulfilled.

& Marketing therefore 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.*

The Importance of Marketing

Marketing is one of the most vital things a business can do. Not only marketing forms brand
awareness but it can also escalate sales, nurtures businesses and engages customers.
Marketing is important' because:

1. Helps in the movement of goods - Marketing is very useful in transfer, exchange and
movement of goods. Goods and services are made accessible to customers through various
intermediaries like wholesalers and retailers. Marketing is beneficial to both producers and
consumers. To the former, it tells about the specific needs and preferences of consumers and to
the latter about the products that manufacturers can offer.

2. Helps raise and maintain the standard of living - Marketing is above all the giving of a
standard of living to the community. By means of making obtainable the continuous supply of
goods and services to consumers at a sensible price, marketing has played an essential role in
raising and preserving living standards of the community.

Community comprises of three classes of people which are the rich, middle and poor.

Everything which is used by these different classes of people is supplied by marketing. In the
modern times, with the development of newest marketing techniques even the poorer sections o

3. society have reached a reasonable level of living standard. This is principally due to big scale
production and lesser prices of commodities and services. Marketing has actually, transformed
and updated the living standard of people in modern times.

4. Creates jobs - Marketing is multifaceted instrument involving many people form or the other.
The main marketing functions are buying, selling, financing, transport, warehousing, risk bearing
and standardization, and so on. In every such function diverse activities are executed by a huge
number of individuals and bodies. Thus, marketing gives employment to many people. It is
projected that about 40% of total population is directly or indirectly dependent upon marketing.
In the modern time of large-scale production and industrialization, the role of marketing has
broadened. This enlarged rile of marketing has created many employment opportunities for
people.

5. As a source of revenue • The performance of marketing function is all important, because it is

the single way through which the concern could produce revenue or income and earn profits.
Accountants and engineers could easily assume that the company will earn with the total sales
volume. Yet, someone must in reality go into the market place and find money from society in
order to withstand the activities of the company, since without these funds the organization will
die. Marketing does deliver numerous opportunities to make profits through buying and selling
of goods, by producing time, place and possession utilities. This income and profit are again
placed in production, thereby earning more profits in future. Marketing should be given the
highest importance, since the very existence of the company is contingent on the effectiveness
of the marketing function.

6. Useful in making decisions-A businessman is challenged with countless problems in the form
of what, how, when, how much and for whom to produce? Some time ago, problems were less
on account of local markets. There was a direct link between producer and consumer. In
modern times marketing has become a very difficult and tiresome task. Marketing has
developed as new specialized activity along with production. Consequently, producers are
reliant mostly on the mechanism of marketing, to choose what to produce and sell. With the help
of marketing techniques, a producer can control his production accordingly.

7. Could be a basis of new concepts - The notion of marketing is a dynamic concept. It has
transformed altogether with the passage of time. Such changes have extreme reaching effects
on production and distribution. With the speedy change in tastes and fondness of people,
marketing has to come up with the same. Marketing as a tool of measurement, gives range for
understanding this new demand pattern and thereby create and make obtainable the goods
accordingly.

8. Helps in the development of an economy Adam Smith has commented that

"nothing happens in a country until somebody sells something". Marketing is the principal that
sets the economy revolving. The marketing organization, more scientifically organized, makes
the economy durable and steady, the lesser the stress on the marketing function, the weaker will
be the economy.

The Scope of Marketing

Marketing has an extremely broad scope. It covers all the activities staring from the formation of
ideas to generating profits. The marketing concept® covers the following:

1. A consumer wants and needs - Goods are created to suit consumer wants.

Consequently, a study is made to discover consumer needs and wants. These needs and wants
prompt consumer to buy.

2. Consumer behavior- Marketers do study consumer behavior. It is the buyer behavior analysis
that assists marketer in market segmenting, targeting and positioning.

3. Product planning and development - This scope includes the activities of product research,
market research, market segmentation, product development, finding out the attributes, quantity
and quality of the products.

4. Branding - Many well-known companies espoused to the branding of their products for
reputation, appeal to more investment opportunities, build trust among customers and for many
other reasons. Branding policy, procedures and implementation programs must be carefully
thought of by marketing managers in branding products.

5. Packaging - Besides serving as container or wrapper to the product for protection, the
packaging is also used by marketers as a way to draw the attention of customers. When
packaging is well-designed, the product is easier to use and transport.
6. Channels of distribution - It is the function of the marketing manager and sales manager to
make an important decision concerning the best fitting channel of distribution such as
wholesaling, distribution and retailing for the product.

7. Pricing policies - Pricing policies for their products are planned and decided by the marketing
manager. Pricing policies depend on the nature of products. The level of competition, product
lifecycle and marketing goals and objectives could make an influence on pricing policies.

8. Sales management -Selling is an important component of marketing. Selling includes

identifying customers, determining the customer needs, convincing customer to purchase
products, customer service, and other similar activities.

9. Promotion - Important elements of promotion consist of personal selling, sales promotion, and
advertising. In order to attain the planned marketing goals, there is a need for a marketing
manager to create the right promotion mix.

10. Finance Without finance, no marketing activity could be executed. Every marketing activity
such as packaging, advertising, personal selling and even distribution require an appropriate
budget to be accomplished.

11. After-sales services. - In order to maintain good relationships with customers, marketing
needs to perform after-sales services. After sales services may include maintenance or repair of
equipment by its manufacturer or supplier, during and after a warranty period and attending to
customers' queries and solve their problems.

The Role of Marketing

As we've seen the key objective of an organization's marketing efforts is to develop satisfying
relationships with customers that benefit both the customer and the organization. These efforts
lead marketing to serve an important role within most organizations and within society.

At the organizational level, marketing is a vital business function that is necessary in nearly all
industries whether the organization operates as a for-profit or as a not-for-profit.

include:

At a broader level marketing offers significant benefits to society. These benefits

For the for-profit organization, marketing is responsible for most tasks that bring revenue and,
hopefully, profits to an organization.

For the not-for-profit organization,

marketing is responsible for attracting

customers needed to support the not-for-profit's mission, such as raising donations or

supporting a cause.
For both types of organizations, it is unlikely they can survive without a strong marketing effort.

Marketing is also the organizational business area that interacts most frequently with the public
and, consequently, what the public knows about an organization is determined by their
interactions with marketers. For example, customers may believe a company is dynamic and
creative based on its advertising message.

Developing products that satisfy needs, including products that enhance society's quality of life,
creating a competitive environment that helps lower product prices.

Developing product distribution systems that offer access to products to a large number of
customers and many geographic regions

Building demand for products that require organizations to expand their labor

force

Offering techniques that have the ability to convey messages that change societal behavior in a
positive way (e.g., anti-smoking advertising)

Core Concepts and Universal Functions

Core Marketing Concepts (Important Terms in Marketing)

1. needs,

2. wants,

3. demands,

4. products,

5. exchange,

6. transactions and

7. markets

NEEDS - The most basic concept underlying marketing is that of human needs. A human need
is a state of felt deprivation. Among humans' basic needs are the physical needs for food,
clothing, warmth, and safety; social needs for belonging and affection; and individual needs for
knowledge and self-expression. Needs are the basic reason or the minimum requirements
consumers look for in a product or service. To satisfy the need, people and institutions will look
for or develop objects that will satisfy the need or they may try to reduce the need.

WANTS- A second basic concept in marketing is that of human wants, the form taken by human
needs as they are shaped by culture and individual personality. Wants are the determining
dimensions among many choices. Wants are described in terms of objects that will satisfy
needs. As people are exposed to more objects that arouse their interest and desire, producers
try to provide more want-satisfying products and services.

• Marketing is not the satisfaction of wants alone. Needs must be addressed first or else the
satisfaction of motivating wants becomes irrelevant

DEMANDS - People have almost unlimited wants but limited resources. As a consequence,
people want to choose products that provide the most satisfaction for their money. When backed
by buying power, want become demands.

Consumers view

products as bundles of benefits and choose products that give them the best bundle for their
money.

"Value for money" - the best quality for the lowest price.

Marketing: States of Demand'

Definition

Negative demand

market

dislikes

the

product and they

may

even pay to avoid it

No demand

Latent demand

Falling demand

Irregular demand

target consumers are not interested in the product

Consumers have a want that is not satisfied by any existing product or service
Decline of interest for the product

Demand

varies on a seasonal, daily or even hourly basis, causing problems of idle or overworked
capacity

Marketing Task Needed

Analyze why the market dislikes the product, find out, if product redesign, lower prices and more
positive promotions can change consumer's attitude

find ways to connect the product's benefits with the market's needs and interests

Measure the size of the potential market and develop goods and services that will satisfy the
demand

Find the causes of market decline and re-stimulate demand by finding

Find ways to change the time pattern of demand

through flexible

pricing,

promotion and other incentives

Full demand

The amount of demand wanted is just enough to be handled

Overfull demand

Demand is higher than company can or wants to handle

Work to maintain the current level of demand in the face of the changing consumer

preferences

and increasing

competition. The organization maintains quality and continually monitors consumer satisfaction
to make it is doing a good job

Demarcating, find ways to reduce the demand temporarily or permanently. It involves such
actions as raising prizes and reducing promotion and service.
PRODUCTS - A product is anything that can be offered to a market for attention, acquisition,
use or consumption and that might satisfy a need or want. Producers must know what
consumers want and must provide products that come as close as possible to satisfying those
wants.

The concept of product is not limited to physical objects. Anything capable of satisfying a need
can be called a product. To the consumer, products include:

1. persons,

2. places,

3. organizations,

4. activities and

5. ideas

Product may also be termed "satisfier", "resource" or "offer" = all describe

something of value to someone.

EXCHANGE - The act of obtaining a desired object from someone by offering something in
return. Marketing occurs when people decide to satisfy needs and wants through exchange.
Exchange is the core concept of marketing, production creates value, and exchange creates
value: value gives people more consumption possibilities.

The Concept of Exchange - The idea that people give up something to receive something they
would rather have.

Conditions for Exchange. There must be at least two parties and each party;

1. Must have something the other party values

2. Must communicate and deliver goods

3. Must be free to accept or reject offer

4. Must want to deal with the other party

> Exchange may not take place even if conditions met

• An agreement must be reached

However, exchange may not take place even if conditions are met. An agreement must be
reached. Marketing occurs even if exchange does not take place.
TRANSACTIONS - Consists of a trade of values between two parties. In a transaction, A gives
X to B and gets Y in return.

Examples:

1. Monetary Transactions - paying SM Php 500.00 for a pair of shoes

2. Barter Transactions -

a. Goods - your blue T-shirt in exchange for a black shoe

b. Services - a carpenter's woodwork for a dentist's tooth extraction

MARKETS - A market is the set of actual and potential buyers of a product.

Self-sufficiency - when the people gather the goods that they need by themselves.

Decentralized exchange - each person sees the other three as potential "buyers"

who make up a market.

Centralized exchange - 5 néw person called a "merchant" appears and locates in a central area
called a 'marketplace'. Each trader brings goods to the merchant and trades for other needed
goods. The person now only transacts with one "market" to obtain all the needed goods.

Merchants and central marketplaces

greatly

reduce the total number of

transactions needed to accomplish a given volume of exchange. A market can grow up around
a product, a service or anything else of value.

Examples of a market:

1. Labor market

2. Money market

3. Donor market

• Sellers must search for buyers, identify their needs, design good products, promote them,
store and deliver them, and set prices for them.

• Consumers and buyers do marketing when they search for the goods they need, at prices they
can afford
• Company purchasing agents do "marketing" when they track down sellers and bargain for
good terms

* Product development, research, communication, distribution, pricing and service are core
marketing activities. •

Seller's Market - where sellers have more power and buyers must be more active

"marketers" (demand exceeds supply).

Buyer's market- where buyers have more power and sellers have to be more active marketers
(supply exceeds demand).

Universal Functions of Marketing

The very aim of marketing is the exchange of goods and services from producers to consumers
in order to satisfy the needs of the latter. Marketing functions begins with pinpointing the needs
of customers until they are satisfied at the end. The universal functions of marketing are
composed of the following:

1. Selling is the core of marketing. It is concerned with the prospective buyers to actually
complete the purchase of an offering whether product or service. It involves transfer of
ownership of goods to the buyer. Selling plays an important part in realizing the ultimate aim of
earring profit. The selling function involves promoting the product or service. It includes the use
of personal selling, advertising, and other mass selling methods. Effectiveness and efficiency in
selling determines the volume of company's profits and profitability.

2. Buying and Assembling - it involves what to buy, of what quality, how much from whom, when
and at what price. People in business buy to increase sales or to decrease costs. Purchasing
representatives are much influenced by quality, service and price.

The products that the retailers buy for resale are determined by the needs and preferences of
their customers. A manufacturer buys raw materials, spare parts, machinery, equipment, and
other things. for carrying out his production process and other related activities. A wholesaler
buys products to resell them to the retailers.

Assembling refers to the purchase of necessary component parts and to fit them together to
make a product. Assembly line indicates a production line made up of purely assembly
operations. It is an arrangement of workers and machines in which each person has a particular
job and the work is passed directly from one worker to the next until the product is complete.
The assembly operation involves the arrival of individual component parts at the work place and
issuing of these parts to be fastened together in the form of an assembly or sub-assembly. On
the other hand, fabrication lines constitute a production line made up of operations that form or
change the physical or sometimes chemical characteristics of the product involved.
3. Transportation - The transporting function means the movement of goods from one place to
another where they are produced to those places where they are needed for consumption. It
creates place, utility. Transportation is essential from the procurement of raw material to the
delivery of finished products to the customer's places.

Marketing relies mainly on railroads, trucks, waterways, pipelines and air transport.

The type of transportation is chosen on several considerations, such as suitability, speed and
cost. Transportation may be performed either by the buyer or by the seller.

The nature and kind of the transportation facilities determine the extent of the marketing area,
the regularity in supply, uniform price maintenance and easy access to the supplier or seller.

4. Storage - It involves holding of goods in proper such as usable or saleable condition from the
time they are produced until they are needed by customers (for finished products) or by the
production department (for raw materials and stores).

Storing basically protects the goods from deterioration and helps in holding over surplus future
consumption or use in production. Goods may be stored in various warehouses located at
different places, which is popularly known as wareholusing. Warehouses should be positioned
at such places from where the distribution of goods may be easier and economical. Situation of
warehouses is also important from the view of speedy feeding of emergency demands. Storing
assumes significance when production is regional or consumption may be regional.

Standardization and Grading - The other activities that facilitate marketing are standardization
and grading. The standardization and grading include sorting products based on size and
quality. This makes buying and selling easier because it lessens the need for inspection and
sampling.

Standardization means creation of certain standards or specifications for products depending on

intrinsic physical qualities of any product. This may comprise quantity (weight or size) or it may
involve quality (color, shape, appearance, material, taste, sweetness). Government may also set
some standards, for instance, in case of agricultural products. A standard expresses a
consistency of the products.

Grading means classification of standardized products into certain well-defined classes or

groups. It involves the division of products into classes made of units possessing similar
characteristics of size and quality. Grading is very important for raw materials, marketing of
agricultural products (fruits and cereals), mining products (coal, iron and manganese) and forest
products (timber). Branded consumer products may have grade labels such as A, B, C.

6. Financing involves the usage of capital to meet financial requirements of organizations

dealing with various activities of marketing. Financing offers the needed cash and credit to
produce, transport, store, promote, sell and buy products. In marketing, finances are needed for
working capital and fixed capital which may be secured from three sources which are owned
capital, bank loans and advance and trade credit. In other words, various kinds of finances are
short-term finance, medium-term finance, and long-term finance.

7. Risk Taking - Risk means damage due to some unanticipated situations in future. Risk
bearing in marketing refers to the financial risk interest in the ownership of goods held for a
projected demand including the possible losses. These losses could be because of a fluctuation
in prices caused by changes in their supply and demand and the losses from spoilage,
depreciation, obsolescence, fire and floods or any other loss that may happen with the passage
of time.

From production of goods to its selling stage, many risks are involved due to changes in market
conditions, natural causes and human factors. Changes in fashion or inventions can also be
reasons of risks. Measures taken by a government may also cause risks. There is also risks
during the course of transportation.

8. Securing Market Information - The significance of this facilitating function of marketing has
been recognized only recently. The only sound foundation on which marketing decisions may be
based is correct and timely market information. Right facts and information reduce the aforesaid
risks and thereby result in cost reduction.

Modern marketing requires a lot of information adequately, accurately and speedily. Marketing
information makes a seller know when to sell, at what price to sell, who are the competitors, and
so on. Marketing information and its proper analysis has led to marketing research which has
now become an independent branch of marketing.

Businesses collect, analyze and interpret facts and information from internal sources, such as
records, sales-people and findings of the market research department.

They also seek facts and information from external sources, such as business publications,
government reports and commercial research firms.

Retailers need to know about sources of supply and also about customers "buying motives and
buying habits". Manufacturers need to know about retailers and about advertising media.
Companies in both these groups need information about competitor activities and about their
markets.

Even ultimate consumers need market information about availability of products, their quality
standards, their prices and also about the after-sale service facility. Common sources for
consumers are sales people, media advertisements, colleagues, and the rest.

However, during this modern time more functions have been added including gathering and
analyzing market information, market planning and strategy and product designing and
development.

Evolution of Marketing Philosophies

Marketing Management

Marketing management is defined as the analysis, planning, implementation, and control of

programs designed to create, build, and maintain beneficial exchanges with target buyers for
the purpose of achieving organizational objectives

Marketing

managers include sales managers and salespeople, advertising

executives, sales-promotion people, marketing researchers, product managers, pricing

specialists, etc.

Marketing management is Demand management

Marketing management is concerned not only with finding and increasing demand, but also with
changing or even reducing it.

The Marketing Concept

The idea that the social and economic justification for an organization's existence is the
satisfaction of customer wants and needs while meeting organizational objectives.

Focuses on customer wants and needs to distinguish products from-competition

2. Integrates all organization's activities to satisfy customer wants and needs.

3. Achieve organization's long-term goals by satisfying customer wants and

needs.

These two concepts are management orientations and marketing philosophies.

Marketing has often been

misunderstood. One of the most common

misconceptions is associating "marketing as selling".

While selling is an important activity of Marketing and is a central function in daily business
operations, marketing is not selling.

Marketing Concept versus Selling Concept

Marketing Concept
A management orientation which holds that the key task of the organization is to determine the
needs and wants of the target markets and to adapt the organization to delivering the desired
satisfactions more effectively and efficiently than its competitors.

• Focused on the buyer's needs

Selling Concept management

orientation which

assumes that consumers will either buy or not buy enough of the organization's products unless
the organization makes a substantial effort to stimulate their interest in its products.

Focused on the seller's needs

>

needs

Buyer's interest is satisfaction of

Steps involved are:

1. Determination of customers

needs and wants

2. Product

planning

and

development

Seller's concerns are maximization of profit and

social service

to enhance

quality of human life and society

Steps involved are:

1. product

planning
and

development

2. promotional

programs

personal selling functions in order to sell the product

Organization's

Focus

Firm's Business

For Whom

Primary Profit Gold

Goals to Achieve

Market Concept

Outward

Sales Concept

Inward

Selling goods and services

Specific group of people

Customer satisfaction

Coordinated -

use

of

marketing activities

all

Satisfying wants and needs

Everybody

Maximum sales volume

Primary promotion

Marketing Concept Philosophy

Research - discovering market needs

Production - product planning and development

Selling Concept Philosophy

Production - product planning and development

Persuasive Techniques - promotional methods and selling

Distribution of Products and Services

Distribution of Products and Services

GUARANTEED SALES VOLUME AND PROFITS AT CUSTOMERS

SATIFACTION

GUARANTEED SALES VOLUME AND PROFITS, UNGUARANTEED CUSTOMERS

SATIFACTION

Marketing Management Philosophies

Production Concept (1820-1930)

Consumers favor products that are available and highly affordable and that management should
therefore focus on improving production and distribution efficiency.

It is one of the oldest philosophies guiding sellers. This production concept was built on the
slogan, "we make what we can sell".

The production philosophy works only in two types of situation:

1. When the demand for a product exceeds supply. In this situation, management should look
for ways to increase production.

2.

when the product's cost is too high and improved productivity is needed to bring it down
Toyota Motor Corporation and McDonald's make use of the production concept.

both organizations center on their own internal

As production-oriented companies,

efficiency and the quality of their products. These companies look internally and decide how to
conduct business. They are companies whose product market is spread around the world,
having an advantage of monopoly and their product's demand is more than its supply.

Product Concept

Consumers favor products that offer the most quality, performance and features, and that an
organization should thus devote energy to making continuous improvements.

The concept works on the assumption that customers prefer products of "greater quality" and
"price and availability" do not influence their purchase decision. Companies using the product
concept devotes most of their time in developing a product of greater quality which turns out to
be expensive.

Apple and other companies in the technology industry are generally product concept marketers.
As industry "trailblazers" they tend to have an advantage of monopoly.

Selling Concept (1930-1950)

The failures of the production orientation philosophy of the 1930s opened the way for change in
the viewpoint that was possible during 1940s. This reformed philosophy was selling concept that
holds good to a certain extent even today. It states that "we sell what we make" which means
that mere making available the best product is not enough. It is useless unless the company
resorts to forceful salesmanship. Effective sales-promotion, advertising and public- relations are
of top significance. High pressure salesmanship and heavy doses of advertising are a must to
move the products of the company. Selling concept focuses on making every possible sale of
the product, regardless of the quality of the product or the need of the customer.

Typically, the selling concept is practiced with unsought goods. These unsought goods include
life insurance, vacuum cleaner, arid firefighting equipment including fire extinguishers. These
industries are seen having a strong network of sales force. Such industries must be good at
tracking down prospects and selling them on a product's benefits,

Marketing Concept (1950-1970)

This philosophy came into play during 1950s and points out that the essential task of business
undertaking is to study and understand the needs, wants, desires and values of possible
consumers and create the goods in view of these findings so that consumer specifications are
met completely. The starting point in this concept is the customer rather than the product. The
business is to start with the consumer and conclude with the necessary product. It highlights the
role of marketing research well before the product is made accessible in the market place. It is
also commonly referred to as pull strategy, meaning businesses are so powerful, customers will
always return and buy more. In this case, profits result from customer satisfaction.

This concept is practiced by companies in perfect competition and those who want to stay in the
market for a long time. For instance, most motorists really disliked waiting in lines. In response,
South and North Luzon Expressways began offering Electronic Pass (E-Pass) which allows
customers to avoid queuing in long lines for paying their toll fees.

Samsung also uses the marketing concept. They not only create their product tailored to
customer's preferences; they also add many incentives it their strategy.

The Societal Marketing Concept (1970-2000)

The organization should determine the needs, wants, and interests of target markets. The
organization then deliver the desired satisfactions more effectively and efficiently than
competitors in a way that maintains or improves the consumer's and the society's well-being. It
is the newest of the five marketing management philosophies.

This philosophy cares for not only consumer satisfaction but for consumer welfare or social
welfare using the slogan "we are not free from social responsibility".

This philosophy believes that the business is a part of the society and hence should take part in
social services like the eradication of poverty, illiteracy, and controlling explosive population
growth. Such social welfare includes pollution-free environment and quality of human life. Thus,
a company producing a pack of cigarettes for consumer must not only produce the best
cigarettes but pollution-free cigarettes. Likewise, an automobile should not only be fuel-efficient
but less pollutant as well.

Body Shop and Ariel use the societal marketing concept completely. Body Shop is a company
that uses only vegetable-based materials for its products. It is also against animal testing,
supports community trade, activate self-esteem, defend human rights, and overall protection of
the planet. Ariel on the other hand, is a detergent manufactured by Procter & Gamble. Ariel runs
special fund-raising campaigns for deprived classes of the world specifically the developing
countries. It also contributes part of its profits from every bag sold to the development of the
society. Nestle' is another example, the company is on a mission to make farming and farmer's
life better as well as have resources to cultivate quality cocoa that they transform into premium
chocolate.

Among our local companies we have, Figaro who is at the forefront of an impassioned,
multi-pronged campaign to boost the production of Barako to help the thousands of coffee
farmers and their families, and to make coffee a major export revenue source of the Philippines.

Holistic Marketing Concept (2000-21st Century)

Holistic marketing is a fresh addition to the business marketing management philosophies with
the slogan "develop corporate culture". This reflects that a business and all its parts as one
single unit and gives a common purpose to every activity and person related to that business.
Based on this marketing concept, even if a business is made of different departments, the
departments have to meet to reflect a positive and combined business image in the minds of the
customer. This is a tool through which each and every department and person is working
towards ensuring the success of one certain goal at that particular time. Holistic marketing
concept involves interconnected marketing activities to ensure that the customer is likely to
purchase their product rather than competition. Holistic marketing concept applies this
interdependencies and believes that a broad and combined perspective is crucial to achieve the
best results. In recent years, many organizations have focused on one goal and mechanized
themselves in pursuing that particular goal.

Coca-Cola is the best example of Holistic Marketing. They drafted their entire marketing plan on
one goal - Happiness. They did not market their product, but they marketed Happiness. The
strategy was very smart, their showcase is - whenever you are Happy, have a Coke. This
marketing strategy resulted in massive growth of the company.

Samsung is another example of holistic marketing where the products are developed keeping
the customer in mind. The showrooms are branded in the proper manner, the customer service
is polite and the service is fast. Therefore, Samsung is also an excellent example of Holistic
marketing.

Philosophy

Concept

Key Ideas

Production

Product

Consumers favor products that are

available

and highly

affordable

Consumers favor products that offer

the most quality, performance and features

Focus on efficiency of internal operations

Focus on continuous product improvements

Sales

Consumers buy the products based on products promotions

Market

Organizational goals depends on the needs and wants of the target markets

Focus on aggressive techniques overcoming

customer

for resistance

Focus on satisfying customer needs and wants, more effectively and efficiently delivering than
competitors

Marketing Management Philosophies Compared

Operational Dimensions of Marketing: The Total Marketing System

1. Marketing organizations or marketers [product or service sellers]

a. Producers - institutions buying raw materials for processing into final products

b. Manufacturers - those buying intermediate or half-finished materials and process them into
final products

C.

Wholesalers - institutions who buy final-finished products and re-sell them in bulk in the same
original form

d. Retailers - those who buy finished products and re-sell in small quantities and in the same
form as the final users

2. Things to be marketed

a. Products - tangibles such as pens, appliances, clothing

b. Services - intangibles such as ideas of selling health spa, catering services, cargo packing
and warehousing

c. Ideas - sold through institutional advertisements by reminding people of the public services of
the company, values, policies
d. Institutions - sold by selling organization's image or goodwill

e. People - concept of selling the platform or goodwill of the person

3. Target Market

a. They are the buyer of the goods

b. Present product users

c. Prospective buyers being targeted by the marketing organizations

d. The 'market" are the people with needs to satisfy, capacity or money to spend, and
willingness to buy.

Markets are classified as:

1. Consumer Markets - buy goods for their own personal use and purpose

2. Industrial Markets - institutions or people buying goods either for the purpose of use in
business operations or for re-sell purposes. Industrial markets objective is mainly to gain profit
out of the purchased industrial goods.

Marketing Goals

A society should seek four goals from its marketing system:

1. Maximize Consumption - marketing's job is to stimulate

maximum

consumption, which will in turn create maximum production, employment and wealth.

2. Maximize consumer satisfaction - aside from maximizing quantity, there should also be
maximization of consumer satisfaction though this is difficult to measure because:

a. there is no standard of measurement for customer satisfaction of a product or marketing

activity

b. Satisfaction that some individual consumers get should be offset by the

"bad"

c. Satisfaction that consumers get depends on the fact that few other people have these goods
[defines status in life]

3. Maximize choice - this is done through the delivery of maximum choices through product
variety. This will enable consumers to find goods that exactly satisfy their taste.
4. Maximize life quality - another goal of marketing is to improve the quality of life to the
maximum and this covers not only the quality, quantity, availability, and cost of goods but also
the quality of the physical and cultural environments. Quality though is hard to measure and
may mean different things to different people.

Marketing Strategies and Plans

A marketing strategy is a plan of action designed to promote and sell a product or service. It is
an explanation of the goals needed by a company to accomplish its marketing efforts. It is
shaped by the company's business goals and objectives. Business goals and objectives plus
marketing strategy should go hand-in-hand.

A marketing plan is how the company is going to attain those marketing goals and objectives. It
is the application of strategy, serving as a roadmap that will guide a company from one point to
another. Strategy is the thinking and planning is the doing. However, most companies try to set
out to achieve the "how" (planning) without first knowing the

"what" (strategy). Time and money are both wasted in here. In marketing, it is vital to identify the
"what" first and then dig deeper into the "how".

Strategy is derived from the ancient Greek word "strategies". Its plain translation meant "the
general's art." In the past it referred chiefly to military affair of an overall nature such as a major
campaign or the general conduct of a war. The 1950's and 1960's witnessed the word being
applied to business operations by managers and academics who had served in the United
States (US) Army Air Force. In his 1955 work, The Practice of Management, Peter Drucker
made the distinction between tactical decisions and strategic decisions. Others such as Kenneth
R. Andrews, H. Igor Asoff, Alfred D. Chandler and Michael Porter developed structures,
approaches, conventions and procedures for corporate strategy. Marketing strategy, too,
developed during this period which standardized terms and concepts such as target marketing
and segmentation. Although strategy first became a popular business catchword during 1960s,
it continues to be subject of broadly differing definitions and interpretations. Strategy is not a
thing but rather an ongoing process. It is a way of thinking about a business, of assessing its
strengths, of diagnosing its weaknesses, of envisioning its possibilities. The simplest definition
of strategy has been provided by Ohmae, a famous Japanese strategy guru who devised The
Strategic Triangle of 3C's, who sees strategy "as paying attention to customer needs and
avoiding direct competition". It says that a strategy should always be able to specify:

1. What - Objectives to be accomplished

2. Where - As in, on which industries and product markets to focus.

3. How — To allocate resources and activities, so as to meet environment opportunities and

threats in each product-market and also gain a competitive advantage Strategy is a design or
plan for achieving a company's policy goals and objectives.
It settles on how the goals and objectives of a company are to be accomplished, the operational
units that will be used to accomplish them, and how would those operational units be prepared.
It is also strategy that decides what resources will be necessary and how these resources will
be obtained and employed to attain goals and objectives of the company.

Strategy is therefore a design or plan that defines how policy is to be reached.

There are five components or sets of issues within a well-developed strategy:

1. Scope -The scope of a company is the extensiveness of its strategic sphere* such as the
number and types of industries, product lines, and market segments it competes in or plans to
penetrate. Decisions about a company's strategic scope must mirror management's view of the
organization's purpose or mission. This common line among its different activities and
product-markets describes the fundamental nature of what its business is all about and what it
should be.

2. Goals and objectives - Strategies need also to specify preferred levels of accomplishment on
one or more facets of performance such as volume growth, profit contribution, or return on
investment over particular time frame for each of those businesses and product-markets and for
the entire company.

3. Resource deployments - Every organization has restricted financial and human resources.
Formulating a strategy also entails coming to a decision how those resources are to be acquired
and apportioned, across businesses, product-markets, functional departments, and activities in
every business or product-market.

4. Identification of a sustainable competitive advantage - One vital part of any strategy is a plan
of how the company will participate in each business and product-market within its industry.
Another area of concern in strategy is how a company would position itself to develop and
maintain a differential advantage over present and possible competitors. In order to do this,
managers must study the market opportunities in every business and product-market and the
company's unique competencies or strengths comparable to its competitors.

5. Synergy - Synergy is present when the company's businesses, product markets, resource
deployments, and competencies balance and strengthen one another.

Synergy makes possible the overall performance of the related businesses to be greater than it
would otherwise be, in other words the whole turns greater than the summation of its parts.

Most organizations do not have a single comprehensive strategy any more these days. In fact,
hierarchy in strategies originated in 1920s, when some of the largest companies in the United
States began to diversify strategy. So, companies nowadays, have a hierarchy of interrelated
strategies, which are created at a different level of the company. According to Walker et al.
(2006), the three major levels of strategy in most large, multiproduct organizations are:
1. Corporate strategy - The corporate strategies are managed by the corporate level, which is
the top level in any organization. Corporate managers are concerned with the issues of entire
company, and their decisions or actions influence all other organizational levels.

2. Business level strategy — The business level consists of smaller units within the whole
organization that are commonly administered as self-contained businesses. The idea behind
this is to slice up a big and multifaceted company into smaller units that can profitably operate
like self-governing businesses. This is the level at which competition happens. In other words,
business units typically compete against competitor business units and not corporate levels.

3. Functional strategies -The functional level comprises all the different functional areas within a
business unit. Most of the work of a business unit is completed in its diverse functional units.
Marketing forms a vital part of this level arid therefore, functional level is often also termed as
marketing level. Marketing strategy, as a functional, stratesy, can be subdivided into promotion,
sales, distribution, pricina strategies with each sub-function strategy contributing to functional
strategy.

Corporate Strategies and Marketing

Corporate strategies and marketing strategies often coincide or overlap. This is for the reason
that, opposing to popular belief, a 'key focus of marketing comprises the strategic planning
aspects of developing, pricing and distributing a product. The two disagree when corporate
strategy has less to do with product or service development and sales and more to do with
profitability plans. The executive management of a company must stay in close contact with
their marketing department to find out if any corporate strategies they desire to practice support
the company's marketing strategies. For instance, a corporate cost-control strategy that consists
of using most economical materials to make the company's product may harm an expensive
brand the business relies on to sustain its pricing, distribution and brand strategies. If a
fashionable women's shoe company buys a bargain-brand women's footwear company, the
marketing department will almost certainly suggest that management not to merge the two
companies. Instead let them operate on detach brands using centralized administrative
services. If the company is to combine the two and trade both products under the identical
name, it would puzzle consumers and harm both brands.

Corporate strategy focuses primarily on profitability. Corporate strategies include creating an

organizational structure, debt reduction to improve the company's balance sheet, diversifying
the product or service line to increase profits or decrease dependence on one product, merging
with or buying another business to create economies of scale, accessing new technology and
increasing sales volume, reducing overhead costs to increase profit margin, retooling to
decrease production costs and reducing overall operating expenses. Creating a company
strategy is the final step in this process. Defining the vision and mission is critical before starting
on strategic elements. Nothing will the strategy achieve without any company mission. In
addition to the mission is the embodiment of the vision. Some organizations put additional steps
between forming the vision and mission and creating the strategy. For example, many choose to
create an overall list of objectives and goals first, and then to use those as the basis for their
company strategy. A company strategy should include short- and long-term goals and should
explain how those goals will be achieved. It is focused of present actions and outcomes needed
to move closer to achieving the mission. Company strategies evolve and are updated over time
to adjust for current factors such as local economic conditions and company needs.

Setting up the Corporate Objectives is the first task done by the marketing managers. For
running a successful marketing campaign, it is very essential that what the team is going to do.
Here making the right decision is the key to achieve the goal.

Managers should do SWOT analysis and then what requires to develop the present market or
how to increase the present value of the company. Then everything should go

or opportunities from the above analysis.

through in a proper way by the analysis and make the objectives from the requirements or
opportunities from the above analysis.

Marketing objectives set out what a business wants to achieve from its marketing activities.
They need to be consistent with overall aims and objectives of the business.

They also need to be consistent with the purpose of marketing. What makes a good marketing
objective? It is often said that an effective marketing objective meets the SMART criteria:

SMART Objectives

Specific

Measurable

Achievable

Realistic

Timed

Details exactly what needs to be done

Achievements or progress can be measured

Objective is accepted by those responsible for achieving it

Objective is possible to attain (important for motivational effect)

Time period for achievement is clearly stated

Benefits of Setting Marketing Objectives

There are a lot of important benefits from having and monitoring progress against objectives.
Relevant and achievable objectives place real direction to competing in the business world.
Marketing objectives provide a planned and focused direction when things begin to get rough.
Having clear marketing objectives keep the business right on course regardless of what will
happen.

For most people, the terms goal and objective are identical. While they are very much related,
there is a distinct distinction between the two. A goal takes on a much broader view and is
typically the focus of the primary outcome. An objective, on the other hand, is a step that may
be taken to reach that goal. An easy approach to look at it is for instance the goal may be to
establish a business as an industry leader in its field. Its objective may be to gain a definite
percentage of the market share. The marketing objective should be designed to support the
specific company's goals for the future.

Here are some benefits of setting marketing objectives:

1. Marketing objectives are vital to marketing success

2. Enable a company to control its marketing plan

3. Provide a way to measure company's progress

4. Set out what a company wants to achieve from its marketing activities

5. Help a company to develop products and services that meet the needs of target market

Corporate Growth Strategies

All companies have plans to grow their business and increase sales and profits.

However, there are certain methods companies must use for implementing 2 growth strategy.
The method a company uses to expand its business is largely contingent upon its financial
situation, the competition and even government regulation. Some common growth strategies in
business include the following:

1. Intensive Growth Strategies - Intensive growth is when a company grows by expanding its
product line or its market reach. Thus, if a company introduces a new product, enters a new
market, or further develops its own competency, than the business is undergoing intensive
growth. Intensive growth strategies are likely to help the firm arow in the market faster and make
the company stronger.

8. Market Penetration • One growth strategy is market penetration, A company uses a market
penetration strategy when it decides to market current products within the same market it has
been using. This is a least risky growth stratery for any company which needs just to simply sell
more of its current product to its current customers. It is a strategy perfected by large consumer
roods companies. Looking for new ways for customers to use a product such as turning baking
soda into a deodorizer for refrigerator is a form of market penetration:

b. Market Development • This strategy is to devise a way to sell more of current product to an
adjacent market. This means offering a product or service to customers in another city or
province, for instance. New users can be found in new geographic segments, new demographic
segments, new institutional segments or new psychographic segments. A company will have to
use various promotional tactics as well as implement a marketing strategy to cover the new
market. Many of the great fast-growing companies of the past few decades relied on market
development as their main growth strategy. For example, when Jollibee Foods Corp made an
aggressive international expansion in China, Thailand)'USA, Vietnam, Hong Kong, Saudi
Arabia, Qatar and Brunei, it made use of market development as strategy.

Cr

Alternative Channels - This growth strategy involves pursuing customers in a different way such
as selling products online. A lot of companies particularly those belonging to the apparel
are.now selling through the Internet, so they are adopting this type of strategy. Using the
Internet as a means for customers to access products or services in a new way, like adopting a
rental model or software as a service, is another example.

d. Product Development - A classic strategy, it involves developing new products to sell to both
current and new customers. Given a choice, a company would ideally like to sell its new
products to current customers. That is because selling products to current customers is far less
risky.

e. Diversification - Intensive growth strategies in business also include diversification, where a

company will sell new products to new markets. A company will need to plan carefully when
using this strategy. Marketing research is essential because a company will need to determine if
consumers in the new market will potentially like the new products. A good example of a
diversified company in the Philippines is San Miguel Corporation (SMC), SMC is among the
largest and most diversified Philippine conglomerates. Its wide range of businesses includes
beverages, food, packaging, fuel and oil, energy, infrastructure, mining, real estate and aviation.

2. Integrative Growth Strategies - Integrative growth strategy is used for growth in which a
company acquires some other element of the chain of distribution of which it is a member,
Integration strategies such as mentioned below are used to cross-train management and
employees, reduce ineffective communication and cut supplier costs.

a. Horizontal - Horizontal growth strategy would involve buying a competing business or

businesses. Employing such a strategy not only adds to a company's growth, it also eliminates
another barrier standing in the way of future growth which could be a real or potential
competitor. Many of breakthrough companies acquired key competitors over the years as both a
shortcut to product development and as a way to increase their share of the market. For
instance, Jollibee Foods Corp. bought ChowKing, Greenwich Pizza, Mang Inasal and Red
Ribbon. Jollibee also once owned Deli France but was later sold to Cafe France for P100
million.

b. Backward - A backward integrative growth strategy would involve buying one of the
company's suppliers as a way to better control its supply chain.

Doing so could help to develop new products faster and potentially more cheaply.

For instance, Dole Pineapple (Philippines) has its own plantation of pineapples located in South
Cotabato at the foot of the majestic Mt. Matutum. Another example is The Universal Group of
Companies, a conglomerate of five firms based in Zamboanga City, which is one of the
country's largest producers of canned sardines. From its humble beginnings as a dried fish
maker and retailer, it has become one of the country's most successful vertically integrated
groups of companies. This means that it has effectively executed its strategy of controlling all
stages of the production process, from raw material acquisition to the selling of its final products
which are the Masters and Family brands. Universal Canning had no problems supplying its
growing market because its sister companies took care of the other phases of its sardine
production.

The Zamboanga Universal Fishing Corp., the largest deep-sea fishing company in Mindanao,
caught the fish. The Universal Shipyard took care of maintaining the fishing fleet. The Universal
Ice Plant and Storage made sure the sardines stayed fresh before they went into the cans.
Finally, The Southern Philippines Fishmeal Corp. took care of the fish entrails or waste by
processing them into fishmeal and fish oil, which are used in other industries.

c. Forward - A company performs forward integration strategy when it merges with or purchases
an organization involved in the distribution of its products. Acquisitions can also be focused on
buying component companies that are part of the distribution chain. This commonly includes the
distribution, sale or transportation of the goods. For instance, in May 2014, Puregold formed a
joint venture with Japanese convenience store chain Lawson under the name PG Lawson Inc.
Puregold owns 70% of the venture and they opened their first branch in Sta. Ana, Manila on
March 30,2015.

d. Complete or Balanced - This strategy means a company controls all components from raw
materials to final delivery. Oil companies such as Shell Oil and Petron own the entire supply
chain starting with the oil wells, refines the oil and retails through their roadside gasoline service
stations.

Business Strategies and Marketing

The decisions a company makes on its way to creating, maintaining and using its competitive
advantages are business-level strategies. After evaluating the company's

his competitive advantage lies. A company, for example, might find that it cannot compete on
price; larger corporations often enjoy economies of scale that keep costs low.
Instead, a small business would choose a differentiation strategy, emphasizing freshness,
quality ingredients or some other attribute consumers will value highly enough to pay extra.
Business strategy will affect the small company's functional decisions such as the selection of
its promotions and distribution channels.

A company's relative position within its industry decides whether a company's profitability is
above or below the industry average. The fundamental foundation of above average profitability
in the long run is sustainable competitive advantage.

Porter suggested four generic business strategies that could be adopted in order to achieve
competitive advantage. The strategies relate to the extent to which the scope of a company'
activities are narrow versus broad and the extent to which a business seeks to differentiate its
products.

The differentiation and cost leadership strategies seek competitive advantage in a broad range
of market or industry segments. By contrast, the differentiation focus and cost focus strategies
are adopted in a narrow market or industry.

The Marketing Strategy

A marketing strategy can serve as the foundation of a marketing plan. A marketing plan
contains a set of specific actions required to successfully implement a marketing strategy.

Developing a marketing strategy is vital for any business. Without one, any efforts to attract
customers are likely to be haphazard and inefficient. The focus the strategy should be making
sure that products and services meet customer needs and developing long-term and profitable
relationships with those customers.

To achieve this, there is a need to create a flexible strategy that can respond to changes in
customer perceptions and demand. It may also help identify whole new markets that can
successfully target. The purpose of marketing strategy should be to identify and then
communicate the benefits of the business offering to its target market. Once created and
implemented the strategy, it needs to be monitored for its effectiveness and make any
adjustments required to maintain its success.

In companies that are marketing oriented, the marketing strategy on a functional level influences
the other functions and their strategies. A typical marketing strategy is to determine customer
needs in an area where the company has a natural competitive advantage. Such advantages
might be in location, facilities, reputation or staffing. Once the marketing strategy has identified
the kind of product customers want, it passes the information to operations to design and
produce such a product at the required cost. The advertising department must develop a
promotional strategy, sales must sell the product and customer service must support it. The
marketing strategy forms the basis for the strategies of these other departments. The
non-marketing functional strategies must support the marketing strategy that, in turn, is a
component of the overall business strategy.
The sffectiveness of strategy imptementation datermines the outcorne of

marketing planning. The management of the plannine process may enhance Implementation
effectiveness by buitding commitment and ownership of the plan and its execution, A good
example would be actively managing the participation of different functions and executives from
different specializations may improve the fit between the plan and the company's real
capabilities and resources and avoid implementation barriers. Planning and execution are
interdependent parts of strategie change,

The Marketing Plan

A marketing plan is a business document outlining the marketing strategy and tactics, It is often
focused on a specific period of time (over the next 12 months) and covers a range of
marketing-related details, such as costs, goals, and action steps.

A marketing plan is not a static document, it needs to change and evolve as the business
grows, and as new and changing marketing trends develop.

The importance of a detailed marketing plan cannot be overstated. Marketing is as important as

the product or service being provided. Without marketing, consumers cannot find out about the
company. If they do not know about the company, they cannot buy from it, and as a result, it
would not make money.

A marketing plan:

1. Gives precision to who the market is. It is easier to find customers if the company knows who
they are.

2, Helps a company crafts marketing messages that will generate results.

Marketing is about knowing what the company's product or service can do to help a target
market. Its messages need to speak directly to its market.

3. Provides focus and direction, Email, social media, advertising, guest blogging direct mail,
publicity, and on and on. With so many marketing choices, a company needs a plan for
determining the best course of action for its business.

Marketing Plan Outline

The exact nature of the plan, and the company's marketing situation, dictates its contents. A
company adds detail or takes it away to suit its needs.

In the real business world company needs to customize its outline according to whether it is
selling products or services, to businesses or consumers, or it is a nonprofit organization.
Although the outline does change in some respects as a result, according to Dave Lavinsky the
right marketing plan identifies everything such as:
1. who target customers are?

2. how will the company reach them?

3, how the company will retain customers so they repeatedly buy from the company,

Contents of a Marketing Plan

1. Executive Summary - This section merely summarizes each pf the other sections of a
marketing plan. It will be helpful in giving the company and other constituents (such as
employees, advisors) a general idea of the plan.

2. Target Customers - This section describes the customers a company is targeting.

It defines their demographic profile (such as age, gender), psychographic profile (like their
interests) and their precise wants and needs as they relate to the products and/or services
being offered. Being able to more clearly identify the target customers will help the company
both identify advertising (and get a higher return on investment) and "better speak the language"
of potential customers.

3. Unique Selling Proposition (USP) - Having a strong unique selling proposition

(USP) is of serious importance as it distinguishes a company from competitors. The trademark

of several great companies Is their USP. For example, FedEx's USP of "When it absolutely,
positively has to be there overnight" is well known and resonates strongly with customers who
desire reliability and quick delivery.

4. Pricing & Positioning Strategy- The pricing and positioning strategy must be aligned. For
example, if a company wants to be known as the leading brand in its industry, having too low a
price might discourage customers from purchasing. In this section of a marketing plan,
specifying the positioning desired and how pricing will support it.

5. Distribution Plan-The distribution plan specifies how customers will purchase from a
company. For example, customers buy directly from a company on its website. Or perhaps they
purchase from distributors or other retailers' company should think through different ways in
which it might be able to reach customers and document them in this section of a marketing
plan.

6. Offers of the Company - Offers are special deals a company put together to secure more new
customers and drive past customers back to it. Offers may include free trials, money-back
guarantees, packages (such as combining different products and/or services) and discount
offers. While a business does not necessarily require offers, using them will generally cause a
customer base to grow more rapidly.

7. Marketing Materials - Marketing materials are the collateral used to promote a business to
current and prospective customers. Among others, they include website, print brochures,
business cards, and catalogs. A company should identify which marketing materials it has
completed and which it needs to be created or redone in this section of the plan.

8. Promotions Strategy- The promotions section is one of the most key sections of a marketing
plan and details how a company will reach new customers. There are many promotional tactics,
such as television ads, trade show marketing press releases, online advertising, and event
marketing. In this section of a marketing plan, consider each of these alternatives and choose
which ones will most effectively allow a company to get in touch with its target customers.

9. Online Marketing Strategy- Like it or not, most customers go online these days to find and/or
appraise new products and/or services to purchase. As such, having the correct online
marketing strategy can help a company secures new customers and gain

competitive advantage. The four key components to a company's online marketing strategy are
as follows:

a. Keyword Strategy - identify what keywords to optimize the website for

b. Search Engine Optimization Strategy - document updates will make one's website so it shows
up more notably for top keywords.

c. Paid Online Advertising Strategy write down the online advertising programs that will be used
to reach target customers.

d. Social Media Strategy-document how social media will be used as websites to attract
customers.

10. Conversion Strategy - Conversion strategies are the techniques a company employs to turn
prospective customers into paying customers. For example, improving sales scripts can boost
conversions. Similarly increasing social proof such as showing testimonials of satisfied past
customers will nearly always boost conversions and sales. In this section of the plan, a
company must document which conversion-boosting strategies it will use.

11. Joint Ventures & Partnerships - Joint ventures and partnerships are agreements a company
forges with other organizations to help reach new customers or better monetize existing
customers. For example, if it sold replacement guitar strings, it could be quite profitable to
partner with a guitar manufacturer who had a list of thousands of customers to whom it sold
guitars (and who probably need replacement strings in the future). A company should reflect
what customers buy before, during and/or after they buy from itself. Many of the companies who
sell these products and/or 'services could be good partners. Document such companies in this
section of a marketing plan and then reach out to try to secure them.

12. Referral Strategy - A strong customer referral program could revolutionize a company's
success. For example, if every one of its customers referred one new customer, its customer
base would constantly grow. However, rarely will it get such growth unless it has a formal
referral strategy. For example, it needs to find out when it will ask customers for referrals, what if
anything it will give them as a reward, and so on.

A company must think through the best referral strategy for its organization and document it.

13. Strategy for Increasing Transaction Prices - While a company's primary goal when
conversing with prospective customers is often to secure the sale, it is also essential to take
notice to the transaction price. The transaction price, or amount customers pay when they
purchase from the company, can dictate its success. For example, if its average customer
transaction is Php100 but its competitor's average customer transaction is Php150, it will
generate more revenues, and probably profits, per customer. As a result, it will be able to
outspend it on advertising, and continue to gain market share at competitor's expense. In this
section of the plan, a company should think about ways to increase its transaction prices such
as by increasing prices, creating product or service bundles/packages, and so on.

14. Retention Strategy - Too many organizations spend too much time and energy trying to
secure new customers versus investing in getting existing customers to buy more often.
Through using retention strategies such as a monthly newsletter or customer

loyalty program, a company can boost revenues and profits by getting customers to buy from it
more often ultimately. It should name and document ways it can better preserve

customers here.

15. Financial Projections - The concluding part of a marketing plan is to construct financial
projections. In a company's projections, incorporate all the information documented in its
marketing plan. For example, include the promotional expenses it expects to incur and what its
expected results will be in terms of new customers, sales and profits. Equally, it should include
its expected results from its new retention strategy.

While financial projections will never be 100% exact, use them to identify which promotional
expenses and other strategies should provide a company the highest return on investment. In
addition, by completing its financial projections, a company will set goals (such as its goals for
its referral program) for which it should make every effort.

Segmentation, Positioning and Target Marketing

Total Market Approach

The Total Market Approach assumes that everybody has the same needs and wants and will
therefore look for the same products or services. This is also often called Mass Marketing, It is
generally used by non-consumer-oriented business firms. This is in contrast to
consumer-oriented firms who uses Market Segmentation

Marketing Management Process

•Opportunities - identifying opportunities which may come in the form of a product or

Step 1

a market opportunity (this may be new or existing)

Step

•Market Segmentation - process of matching the company's opportunities to the their resources
and strengths.

Step 3

Step 4

•Positioning - emphasizes key attributes or benefits that differentiate products in the consumer
mind. In industrial marketing and direct selling where there is direct contact with the consumer,
positioning determines the talking points

•Marketing Mix - action to

choosing and implementation of the best

advantage

attain the organization's long-term objectives

possible course of and

gain competitive

Market Segmentation

Market Segmentation is the process of dividing the total market into smaller groups seeking
similar needs and wants from a product or service. It enables a company to develop a
positioning and marketing mix strategy that can satisfy a smaller group called niche, more
focused range of consumer's needs and wants given the identified opportunity. This translates
to a more efficient use of resources, especially in communications and resources. It reduces
competitive pressures as the firm is focus on its niche.

The strategy of segmentation tries to find a market and penetrate it to the greatest extent
possible through customized product, services and marketing strategies to satisfy their needs.

Important Features of Effective Segmentation:

a.
It defines needs and wants on which the groups strongly differ [identification of consumer needs
in a submarket]

b. These needs and wants must be capable of being served by the firm [a product or service
must be designed to satisfy the submarket's needs]

Market Segmentation for Consumer Products:

1. By needs and wants (or benefit)

2. By demographics

3. By psychographics

4. By consumer behavior

1. Need Segmentation - is the identification of consumer needs and wants.

There are various bases or variables for this segmentation and among the examples are:

1. "component" - i.e. Vitamins and minerals

2. taste preferences - i.e. Restaurants and food parlors

3. health conscious segment - i.e. lifestyle parlors

4. price conscious segment - i.e. Travelling style

5. youth segment - i.e. gadgets

6. alcoholic mix segment - i.e. drinks and beverages

2. Demographic Segmentation - deals with the questions such as "who you are" and "how much
do you earn" and is commonly used when planning and allocating selling efforts. The formal
concept of demographics was introduced back in the 1950's and is now found limiting by some
markets as there are now emerging characteristics such as "values" and "attitudes".

Demographic Segmentation Variables

Variables

Some Examples

Age

Children (Newborn, baby, child, 0 to 12 years), teenager (13 to 19), young adults (work
beginner, yuppies, 20 to 34 years), middle age (35 to 49), older and matured (50 to 65), retirees
(65 above)
Sex or Gender

Civil Status

Male, female and "in-between"

Legitimate single, single parent, married, separated, divorced or annulled, widow/widower

Economic or Income

High Income Group A, upper middle-income B, lower middle-income C+, Broad C, low income
group D and E

Education (Cultural)

Profession (Cultural)

Illiterate, grade school,

high school, vocational,

college, masters / doctoral

Unemployed, housewife, mother, white collar worker, blue collar worker, executive,

owner, professional,

military, farmer, technical worker, teacher, religious, student, retirees.

Urban, sub-urban and rural

Location

Density

and

population

Location

b. geographic

Family Size or Family

Population

Religion [Cultural)
Nationality and [Cultural)

Race

Climate

Greater manila area, Luzon, Visayas, Mindanao, Asia, Middle East, Europe, Africa, USA, Russia

Bachelor, husband and wife, small family, big family, extended family

Catholic, Protestant, Iglesia ni Kristo, Born-Again (Christians), Buddhist, Muslims

Filipino, Chinese, Japanese, Americans, Koreans, British or may be classifies as Asians,

Americans, Europeans, Latins

Hot and cold

3. Psychographic Segmentation - deals with the questions such as "what you do" instead of
"who you are" and "how you spend your money" instead of "how much do you earn" and is now
often used for creating advertising messages. Generally, market segments are classified as to
personality, buying attitudes and product benefits desired. It is done by asking consumers
various questions and classifying according to a cluster of answers.

Psychographics Segmentation

Social Issues

Religion

Politics

Work Drugs

Women's rights

Sex

Personal Interest

Family Home

Food

Health Friends

Shopping
4. Behavioral Segmentation - refers to the grouping of total consumers in a market into
homogeneous groups based on their mutual buying behavior patterns.

There are many factors that affect the consumer behavior while responding to a product and
take a decision to buy it.

Variables

Purchase frequency

User status

User rate

Loyalty status

Readiness

Examples

Regular, occasional

Non-user, ex-user, first time user, regular user Heavy user, medium user, light user Absolute,
strong, medium, small, none

Unaware, aware, interested, desirous, intending to buy

Profitability is Key

There is no single way of segmenting the market. Market segments must be reviewed
periodically with the best being the segment that offers the highest profitability in relation to
return on investment. The operative question is what quantity has been sold at a profit, not the
quantity sold.

Market Segmentation

Criteria to Shortlist Desired Market Segments:

1. Market size

2. Market growth

3. Homogeneity

4. Cost of creating awareness

5. Purchase authority
6. Loyalty level

7. Customer responsiveness

Price Segmentation

Price segmentation is identifying the price range that the target market can easily afford. There
will always be buyers who are quite price sensitive in an economic slow-down and buyers who
may just be the opposite specially in an economic boom.

When price segmentation is already been defined, the market researcher may then proceed to
look for other variables like lifestyle and attitudes.

Consumer and Industrial Goods: Consumer and Industrial Markets

The target market is grouped into two:

1. Consumer market - those people who purchase goods and services for their own personal
use;

2. Industrial market - those people who buy goods and services for business use or for re-sell
purpose in order to gain profit.

In industrial marketing or business-to-business marketing (also called b2b), there are fewer
buyers and they generally order in larger quantities and has more levels of decision makers.
The demand of the industrial clients is inelastic and fluctuates according to the business climate.

Industrial Segmentation

Variables

Demographic

Operating variables

Purchasing approaches.

Situation factors

Personal characteristics

Examples

Industry, company size, geography

User / non-user status, customer requirements, technology

Purchase policies, organization, decision criteria Urgency, specific application or end use, order
size Compatibility, attitude towards risk, loyalty

Classifications of Market and Goods

1. Consumer goods are products purchased by the consumer market.

2. Industrial goods are products purchased by the industrial users.

Consumer Goods: Classification based on consumer's buying habits

Goods

1. Convenience goods

examples: toothpaste,

Characteristics

Consumers know what, how, when and where to buy these products because they have
complete product knowledge Consumers do not exert so much effort in buying since they are
purchased in accessible outlets like sari-sari stores

Seasonings, candies,

Consumers are willing to accept substitute brands because temporary or permanent product
unavailability exists

cigarettes

Consumer purchase these products because they are not bulky and have low unit prices

Marketing Considerations: there should be intensive product distribution and wider product
selection by carrying several brands.

Goods

Characteristics

2. goods

Shopping

Sub-classified into service goods or fashion goods

examples: appliances,

Furniture, RTW
clothes

Consumers compare prices, styles and other product features before deciding for the best buy

Consumers solicit product information as they shop around because the market may not have
full product knowledge

desktop computers

Service goods have high unit value, bulky and require servicing like delivery, installation, repair
and maintenance

Marketing Considerations: fewer retail outlets are required but are advantageous if they are
near each other for consumers convenience to go from one outlet to another as they compare
features. Outlet image or reputation maybe more important than the manufacturer brands.

Goods

Specialty

3.

goods

Examples: Levi's,

Nine

West,

Guess

Apple, Whirlpool

Characteristics

Consumers are willing to exert special buying effort and may spend time to reach exclusive
dealers of these products

Consumers are after the brand prestige irrespective of its high price

Consumers may not accept substitute brands

Marketing Considerations: Exclusive distributorship or dealership is generally used for these

products. Franchise agreements are utilized for control of sales territories and effective
distribution..

Industrial Goods: Classification based on industrial organization's buying habits

Goods

Characteristics

1. Raw materials

Products which will become a part of another final product

Examples: flour for making bread, eggs for processing milk

Products when integrated to produce another product can be unidentifiable or cannot be

physically separated.

Marketing Considerations: supply may be low or limited, standardization and grading is

essential. Distribution can be direct from producer or manufacturer to industrial user.

Goods

2. Fabricating materials and parts

Examples: automobile spark plugs and fan belts, buttons for dresses

Characteristics

Products which will become a part of another final product but are identifiable in finished form

Products that when assembled this do not undergo any further change in form.

Marketing Considerations: purchase in bulk ahead of the selling season, ire personal selling is
done between producer and consumer, branding may be unimportant.

Characteristics

These are major equipment of the industrial user.

They affect operating scale for production quota of the company

Goods

3. Installations

Examples: adding dozens of computers in a business, adding 3 presser machines for a tin can
industry, computers for IT schools, tarpaulin printers

Marketing Considerations: presale and post-sale services are needed, with no middlemen
involve, pre-sale includes negotiation period before closing of sale through personal selling.

Goods
4. Accessory equipment

Examples: cash registers for food chain outlets, • calculators for auditing firms,

desktop

computers for travel agencies

Characteristics

They facilitate or aid in the production operation of the industrial market.

It will not be part of any final product nor gives significant effort in production scale.

Marketing Considerations: direct selling is used for bulky orders; middlemen are used for
geographically dispersed market.

Goods

5. Operating supplies

Characteristics

Convenience goods of the industrial market

Examples:

pens,

pencils,

typewriting papers, short bond papers.

Have low unit price, short-lived and facilitates business operations

Marketing Considerations: demands broad distribution, price wars can happen since products
are highly competitive.

Examples of Marketing Organizations vis-a-vis Products to be Marketed

Marketing

Examples of Products that they market

Organization

Classification
producers

manufacturers

wholesalers

retailers

animal skin for shoe-making, flour for making bread, eggs for processing milk, schools

dyed-leather products measured per meter for use in shoemaking,

service shops who offer services using the aid of machines, SUV's and Vans, laptops and
computers

SM Hypermarket selling food items in bulk to restaurants computer sold to companies, clothes
shoes and bags sold to boutique stores

soft drinks sold by Seven-Eleven, napkins sold by Mini Stop, leather shoes by SM, laptops sold
by Abenson, cars sold by car dealers

Examples: Consumer and Industrial Products

Consumer

Industrial

Both Markets

Shampoos, body wash, conditioners, facial scrubs, body soap, toothpaste

Spark plugs, auto batteries and other mechanical parts

Computers, laptops and other devices

• technical

Food, food additives, food supplements, specialty medicines

Bus,

Dump Trucks,

Airplanes, Ships

Telephones cellphones

and
Specialty books, magazines, gadgets,

Office and school

machines and supplies

Cars, Vans, Service Utility Vehicles

Spa, parlor, barber shops, restaurants, schools, dental clinics, derma clinics

Celebrities,

politicians,

Lawyers,

Industrial machineries

Insurances, health, preneed,

life or non-life

appliances, furniture

and

NATURE AND CHARACTERISTICS OF SERVICES

1. Intangibility - Intangibility is used in marketing to describe the inability to assess the value
gained from engaging in an activity using any tangible evidence. It is often used to describe
services where there isn't a tangible product that the customer can purchase, that can be seen,
tasted, or touched.

2. Inseparability - Inseparability is the characteristic that a service has which renders it

impossible to divorce the supply or production of the service from its consumption. Other key
characteristics of services include perishability, intangibility and variability.

3. Variability - Variability -Service variability may be defined as the changes in the quality of the
same service provided by different vendors. The change varies because of the nature of the
service, the person who provides the time of the year when it is provided and the method of
delivery of the service.

4. Perishability - Perishability is used in marketing to describe the way in which a service

capacity cannot be stored for sale in the future. Services cannot be stored, saved, returned, or
resold once they have been used. Once rendered to a customer, the service is completely
consumed and cannot be delivered to another customer.
"Product brand can grow and become dominant by attracting consumers away from the
competition and developing new users and new segments" Juan Santos, President - Nestle
Philippines