Marketing

Plan
LESSON 1: The Marketing Function of an
Enterprise

LESSON 2: Marketing Plan: Guide and

Examples
1.0 Marketing Goods and Services
1.1 Market Concepts
Market
• Refers to consumers and customers for the goods and
services produced by an enterprise.
• Also a place or location where exchange of goods and
services take place.
Thus,
The market for hamburgers is all hungry passers-by
The market for books printed by a publishing
company is the student population
Marketing Management
• one of the major functions in an enterprise.
• Philip Kotler, a renowned marketing expert, defines marketing
management as the analysis, planning, implementation and control of
programs designed to bring about desired exchange with target
markets for the purpose of personal or mutual gain
4 P’s of Marketing
• Product service offerings
• Price that is acceptable to both buyers and sellers
• Place or channel of distribution so that the accessible to the buyers
• Promotion or communication activities to inform prospective buyers
to buy the product
1.2 Understanding the Consumer and
Customer
Consumers
• the one who uses the product

Customer
• the one who buys the product
An entrepreneur who wants to understand his market must first
understand man’s motivation for buying a particular product or
products.

So how to determine the man’s motivation?

• Abraham Masłow, postulated that human beings have
different levels of need and wants.
Maslow "Triangle“ / Hierarchy of Needs
Products and services are bought by institutional buyers for
any of the following reasons:
• Economical to use
• Convenient to use
• Promotes efficiency and productivity
• Service guarantee
• Creates goodwill to the customers and the general public
• Promotes safety for workers and customers
• Generates savings
• Environment friendly
• Other reasons
1.3 Buying Behavior
5 Stages in Buying Product
1. Feeling a need
2. Information search
3. Purchase decision
4. Uses of the Product
5. After-purchase feelings
2.0 Market Segmentation
2.1 The market can be classified according to:
Income: high, middle, low
Age: infants (1 day to below 2 years old); pre-schoolers (2-6 years old),
grade-schoolers (7-12); teen-agers (12-19); young professionals (20 -
39): 40-59 adult professionals; senior citizens (60 and above)
Sex: male and female.
Educational attainment: no education, elementary; college; graduate
school.
Socio-cultural background: according to race or ethnic background,
religion, etc.
Geographical location: according to rural or un region or specific
location in the world;
By occupation: farmers, teachers, bank executive
Others
In order to illustrate the market segment, let us
imagined the circle which is divided into sections
or segment according to age group:
2.2 In what way will market segmentation
help in marketing activities?
3.0 Variables in the Market Mix
3.1 Product
Product
- refers to what the company sells.
- It could be a tangible product or an intangible service.
The entrepreneur must make product decisions
and strategies. These decisions include:
• What features to include in the product?
• Will the firm sell more than one product, thereby developing a
product line?
• Will the firm regularly change the features of the product or the
product line: How often will this change occur?
3.1.1 Product Life Cycle
There are four distinct phases in the life of a
product as shown in Figure 2. These are:
• Stage 1 - Introduction
• •Stage 2 – Growth
• Stage 3 -- Maturity
• Stage 4- Decline
3.2 Price
3.2 Price
• is the value placed on goods and services offered to the public.
• A product or service may be paid in the form of money or it could be
paid with other goods and/or services.
• a value is placed on the product or service.
Now there are three basic methods in setting
the price of your product namely: cost-
oriented pricing, demand-oriented pricing,
and competition-oriented pricing
3.2.1 Cost-oriented pricing

• Most business set their price largely or even wholly on the basis of
the money used (or the costs) in producing the goods. Normally, all
costs are added and divided by the number of products made in
order to arrive at the cost per unit produced. Then, a certain
percentage of the cost per unit is added (known as mark-up) to the
cost per unit to arrive at the selling price per unit.
There are two different pricing techniques pricing
method: cost-plus and break-even techniques.
• 3.2.1.1 Cost-plus-
This term literally means cost plus mark-up. This has been
illustrated in the above example in setting a price to a balloon.

• 3.2.1.2 Break-even technique

The "break-even" is the level of sales volume where the sales
receipts are equal to the total cost. Using this technique requires
knowledge of cost breakdown and the differences between variable
and fixed costs.
You can compute for the break-even price,
volume, and sales with the break-even formula.
The general formula for break-even is:
• TOTAL SALES = TOTAL COSTS
• To get the break-even selling price, you have to understand the following
equations:
• Unit Selling Price (USP) x Volume (Y) = Total Sales
• Total Fixed Cost (TFC) Unit Variable Cost (UVC) X Volume (V) =Total cost
• At break-even: Total Sales=Total Costs
• Substituting the first two equations into the third equation, you get:
• USP x Y = TFC+ (UVC x Y)
• By simplifying, you get:
• USP = TFC + (UVC x Y)
• Y
Suppose you decided to price the bamboo trays at
P 25 each. How much will your profits be?
PROFITS = TOTAL SALES - TOTAL COSTS
Profits = (USP XY) -- TFC - (UVC X Y)
Profits = (P 25 x 10,000)-P 50,000 - (P 10 X 10,000)
Profits = P 250,000-P 50,000-P 100,000
Profits = P 100,000
From the foregoing, you can now see that by using
the break-even formula you can determine the
price at which you can start making a profit
3.2.2 Demand-oriented pricing

• The approach is based primarily on how many buyers want or

demand the product. A high price is charged when and where
demand is strong and a low price is asked when and where the
demand is weak, even though cost per item may be the same in both
cases.
3.2.3 Competition-oriented pricing

• A firm resorts to this approach when its pricing is based chiefly on

what its competitors are charging. This does not necessarily mean
that it charges exactly the same price as the competitors do but
rather that it keeps its price constantly higher or lower than
competition by certain percentage.
3.2.4 Other pricing strategies
• Loss-Leader Pricing
- low price is set for the most popular item hoping it will act at many buyers who are
expected to buy the other goods in the store.
• Psychological Pricing
- pricing an item a few centavos below a whole number price
• Buy one-take-one
- this creates the impression of a bargain purchase
• Target-earnings Pricing
- sets the price for his products according to the price that would give the desired earnings or
sales
• Price structure
- same product is offered at different prices
• Price Differential
- if there is volume and cash payments discounts
3.3 Place or Channels of Distribution

• The different middlemen through which your products final users are
better known as the "channels of distribution” different channels of
distribution.
Figure 3 Channel of Distribution
4.0 The Marketing Strategy
The Customer: The Center of Your Marketing Strategy
• Because businesses are beginning to understand that the
customer is the source of their survival and growth.
• Roles in Shaping the Successful Marketing of Today:
• Customer loyalty
- Loyal customers are not only interested in their own
satisfaction. In a sense, they are also interested in yours - they want
to see you do well. Customers are Cheerleaders.
• Relationship marketing
- Various marketing techniques strive to maintain a personal and long-
term relationship with customers.
The difference between the customer (outward) and business
(inward) orientation is captured by replacing Lauterborn's
(1993) by Four C's, from the text Integrated Marketing
Communications with the more traditional Four P's:

• (1) customer needs and wants instead of the product,

• (2) customer communication instead of promotion,
• (3) customer cost instead of price, and
• (4) customer convenience instead of place.
4.1.1 Customers Needs and Wants Instead of
the Product
• No matter how brilliantly conceived a product is, if consumers do not
want or need it, it will not sell.
• INTERVIEWS. Interviews include personal interviews, focus grou
interviews, and telephone interviews.
• Personal interviews. A face-to-face encounter fosters in-depth discussions that will allow
you to address complex issues.

• Focus groups. You can interview more than one customer ac the same time

• Telephone interviews. A personal interview can easily be conducted over phone.

• QUESTIONNAIRES. Since prospects can respond to questionnaires
anonymously, the interview bias is not a problem.
4.1.2 Customer Communication Instead of
Promotion
• The business and customers exchange ideas.
4.1.3 Customer Convenience Instead of Price
• The customer determines the price tag, not you.
4.1.4 Customer Convenience Instead of Place
• When deciding where you are going to sell your product, your first
priority thought to be customer convenience.
4.2 Steps in the Marketing Strategy
• Step 1: Research the Market
• The purpose of researching the market is to gather information in order 10 understand
customer preferences for products and services.
• You will need two types of marketing research primary and secondary.
- Primary research gives you an up-close and personal view of your potential
customer
 Look before you leap
- secondary research provides guidance and perspective.
 Demographic studies
 Marketing research studies
 Newspaper and magazine articles
 Opinion polls
Step 2: Segment the Market
• Segmenting the market means grouping similar customers together.
- There are many ways to group customers:
 demographics,
 geographic,
 taste,
 experience,
 income,
 gender, or
 customer needs.
• A Niche or Your Own: Your product or service should be very high quality, not
mediocre.
• Pricing. Attracting your target market will depend to the large extent on what
price tag you put to your product or service.
Step 3: Communicate Your Unique Selling
Proposition (USP)
• A USP is the special benefit that you provide the customer. It is the magic
touch that will transform a prospect into your customer. The following are
some examples of USPs:
• Skytel's USP is the fact that they are the first nationwide paging service that guarantees you'll get all
of your massages.
• Telecom's USP is saving on long-distance calls: Dial 10-10-321. save up to 50 percent.
• Little Bear Organic Food's USP is that their tortilla chips are made with organic white corn and no
hydrogenated oils.

• Your USP will cast a spell if you keep in mind these two pointers:
1. Good USPs address customer values such as knowing what's going on at all times, saving
money, or being healthy.
2. Your USP should be a short, clear statement that gets to the point.
• Part of the Picture.
Step 4: Build Long-Lasting Relationships with
Your Customer
• Here are some questions to keep in mind:
• Are my employees knowledgeable?
• Does the company web site provide enough information?
• Is ordering through the company web site fast and easy?
• Are my employees helpful?
• Is it easy to find the products and services customers are looking for?
• How would I rate product qualify?
• Are my prices competitive?
• Is my location convenient?
• What would make the customers' experience with us better?
Step 5: Develop a Distribution Plan
• Distribution is simply the way in which you answer the question of
where you to sell your product.
• A distribution channel is the path of the product from you to the customer.
There are two types of distribution: indirect and direct.
- Indirect Distribution Channels:
simply means that between you and the customer, there is an
intermediary who is responsible for getting the product to the customer -
a middleman.
- Direct Marketing Channels:
A direct marketing channel means your business distributes the product.
• These channels have several benefits.
- It is conducive to just-in-time inventory systems where you order the product
from
- suppliers (or make the product yourself) when you receive consumer
payments instead of having a pre-ordered inventory. The result is that you can
cut down on inventory costs and offer a greater variety of products.
-You can cut out the cost you pay to distributors since there is no need for
them. You, not the distributors, are sending the product directly to the
customers.
-Mail-order and online catalogs are also popular forms of direct distribution
channels.
Lesson 2: Marketing Plan: Guide and Example
1.0 Marketing Plan: Guide
1.1 What is the product?
• Give a short description of the product, its size, color, shape and the
range of products to be offered. Describe the product's features, uses
and benefits, and whether it is anew or an existing product.
1.2 How does it compare in does it compare
in quality? In price with its competitors?
• determine what will make the product unique in the market.
1.3 Where will the business be located?
• Location of the business is essential to either reduce costs, or
increase the chances of customers stopping at the business, to look at
your product or at least make inquiries.
• The important factors to consider in location are:
-proximity to essential raw materials
-proximity to market and distribution channels
-availability of transport facilities
-availability of efficient and cheap skilled labor
-existence of related industries (forward/backward linkages)
-infrastructure facilities (e.g., road, power, port, etc.)
-communication facilities (e.g., post office, telephone, fax, telex, etc.)
1.4 What geographical areas will be covered by
the project?
• In general, it is easier to deal with a limited market area, since travel
time and distribution costs can be kept to a minimum.
1.5 Within the market area, to whom will the
business sell its product?
• Here we are really talking about a specific target group on the
population, within the specified market area you have chosen, to
whom you will aim to sell your product
1.6 Is it possible to estimate how much of the
product is currently being sold?
• This estimate should be possible to do in a number of ways. Basically,
the approach is to move from general to the particular.
• 1.6.1 Market Survey Checklists
- The following is a series of checklists which can guide you in your interview with
wholesalers, retailers, and consumers (people who use the product) or customers
(people who buy your product).
• There are two main reasons for doing the survey:
a) Accurate collection of information so that a reliable level of sales and production can be
forecasted;
b) Establishment of good relations with your own potential customers or buyers.
1.6.1.1 Wholesalers/Importers' Checklist
1.6.1.2. Retailers' Checklist

• 1.6.1.2.1 The objectives of interviewing retailers are:

a) to cross-check data provided by wholesalers;
b) to learn about the needs, wants, taste, buying habits, etc., of the consumers;
c) to look for potential new products;
d) to learn how to position your product as against your competitors' products;
e) to learn how to market your product more effectively,
f) to help identify promotional measures that will be useful in selling the
product (e.g., display boards, giveaways, samples, etc.);
g) to help formulate the marketing strategy of the business.
1.6.1.2.2 Some questions which may be asked
from the retailer:
1) How much of the product does he sell in a year?
2) How many competitors does he have in his neighbourhood?
3) Does he experience any seasonal fluctuation in sales?
4) From what wholesaler or manufacturer does he buy the product?
5) Is he given any credit by his suppliers?
6) If he is given credit for the product, for how long is the credit given?
7) Does he sell on wholesale anywhere, if so, where?
8) What is his purchase price of the product?
9) What is his selling price for the product?
10) Does he have any ideas whether his customers would like any change improvements in
the product?
11) Does he buy the product cash or on credit?
12) Does he sell on commission?
1.6.1.3 Customers' or Consumers' Checklist
• Even if you have interviewed wholesalers and retailers, it is important to
discuss market acceptance with customers (who buy the product) and
consumers (who use the product).
• Some questions which can be asked from customers and consumers are:
1) Why did you buy this product?
2) When (What month) did you buy it?
3) How often do you buy this product?
4) Will you be needing more of his product in future? How many?
5) How much did you pay for it?
6) Are you satisfied with it?
7) Would you like to see any changes or improvements?
8) From where did you buy it (locality), from whom?
9) Why did you buy it from this particular supplier?
1.7 What share or percent of this market can
be captured by the business?
• If you have done your market survey properly, you will know the
following information about your competitors:
• whether there are few or many competitors;
• whether they are large or small in size:
• whether their product features are similar or not similar to one another,
• whether their product features are similar or not similar to yours.
1.8 How much of the product will be sold?
• Now that you have estimated the market share you can realistically
capture, you make an estimate of your targeted sales (sales forecast),
that is, every month for the first year and yearly for the next three
years.
1.9 What is the selling price of the product?
• There are three common ways of determining the selling price of your
product. These are:
a) The "Cost-Plus Method"
b) The “Comparative Method"
c) "What the Market Will Bear Method“

• Two alternatives to avoid reducing profit margin are:

(1) to reduce the reduce the product cost by identifying which areas under
marketing, production, administration and finance can be reduced), and
(2) to identify other market segments who can afford to buy at the
original price.
1.9.1 What promotional measures will be
used to sell the product?
Some of these specific • -posters,
measures are: • -billboards,
• -advertisements on radio, newspapers, • -signboards,
magazines, trade journals or, i • -free samples,
appropriate on television, ---volume
discount (reduced prices when selling • -free trail,
in bull). • -press release,
• -handbills distribution, • -buy one - take one
• -prompt, regular, courteous and • -raffles,
efficient service to your clients,
• -coupons,
• -good merchandising ensuring proper
display of your product on the shelves • -sponsorship of local shows, festivals,
of your market outlets, • -participation in trade fairs and exhibits,
• -special credit facilities to regular • -personal selling.
customers,
1.10 What marketing strategy is needed to
ensure that sales forecasts are achieved?
• Formulating a marketing strategy means proper planning, balancing
and integration of the business's product strategy, pricing strategy,
distribution strategy and promotion strategy.
2.0 Marketing Plan Example
• 2.1 Description of the Product
• 2.2 Comparison of the Product with its Competitor
• 2.3 Location
• 2.4 Market Area
• 2.5 Main Customer
• 2.6 Total Demand
• 2.7 Market Share
• 2.8 Selling Price
2.9 Sales Forecast
2.10 Promotional Measures
• In order to secure the goodwill of the retailers, 15 days' credit will be
extended to these village shopkeepers who regularly buy in bulk.
Present manufactures/distributors do not extend credit. Other
promotional measures to help in marketing the product will be tree
delivery for volume purchases, word of mouth advertisement by
satisfied clients, use of posters, and regular and prompt supply by the
manufacturer.
2.11 Marketing Strategy
• The Project's marketing strategy is based on the following strategies:
a) product strategy - it has a superior quality.
- it has an appealing brand name "Energizer“
connoting more cleansing power
• b) pricing strategy -its retail price of P14.00 is lower than the
most expensive brand's price of P15.50
• c) promotion strategy - free delivery;
- word of mouth advertisement;
- prompt, courteous & efficient service;
• d) distribution strategy -over-the-counter sales in his existing grocery
stores
- 15 major village retail stores.
2.12 Marketing Budget