Customer Relationship:

Customer Service

Fourth Quarterly
Week 1 to 3 – ( four topics)
Customer Relationship:
Customer Service

Fourth Quarterly
Week 1
 Objectives:
At the end of this module, you
should be able to:
1. Define a product.
2. Differentiates the product,
services and experiences
Directions: From the pool words inside
the box, choose the appropriate term
for each description below.

Satisfaction Market share

Label Marketing Products
Packaging Goods
Idea Generation Marketing
__ 1. It is a product’s “silent salesman”
__ 2. It refers to tangible products that
consumers can actually observe with their
senses.
__ 3. It applies to anything that is offered to
satisfy the needs and wants of consumers
__ 4. It serves to contain and protect, and
sometimes, identify and promote the product
__ 5. It is the initial stage of the new product
development process
 Answer Key

1. Label
2. Goods
3. Products
4. Packaging
5. Idea Generation
(4) Elements of the
Marketing Mix
 (4) Elements of the Marketing Mix
 All four elements must focus on the target market.
They should create value by satisfying the
customers’ needs and wants.
 the first element in the marketing mix which is the
Product. After identifying need in the market, a
company may have a product that is capable of
satisfying the need”
 The word “product” applies to anything that is
being marketed, whether it is a tangible product, an
intangible good, a service, a place, or even a person.
 Here are some of the examples of products:

 Amusement parks  Musical bands

 Apps on smartphones  Pet care  Radio
 Banking services stations
 coffee shop: the  Social media sites
coffee, the food, and  Telecommunication
the place itself
 Hotel services
accommodations  Television
 Legal advice programs
 Terminologist

The term “product” applies to anything that is offered

to satisfy the needs and wants of consumers, whether
these are tangible goods or intangible services.
Goods refer to tangible products that consumers can
actually observe with their senses.
Services, on the other hand, refer to intangible
offerings that are abstract in nature and cannot be
observed with our senses. In fact, a key characteristic
of services is that the act of delivery itself is the
product.
The New Product Development Process
The New Product Development Process
LET US REMEMBER:
Product and services are created because of
human needs and wants. Information about
consumers’ tastes, preferences, perceptions, and
priorities has significant contribution to the design of
the product. We cannot create products without any
existing need or want in the market. This enables
the company to satisfy the needs and wants of the
consumers. Satisfied consumers mean satisfactory
sales and income for the company. This is the very
essence of the product as an element of the
marketing mix.
 Activity: Pretend that your company has been making and
selling one product for the past five years. Plan to make
additional three products. These may be in the same category
as the first product or not. Use the following format

PRODUCTS NEEDS/WANTS GOODS OR REASON FOR

THAT HAS SERVICES OFFERING
BEEN THE
SATISFIED PRODUCT

Original Product
New Product 1
New Product 2
New Product 3
Customer Relationship:
Customer Service

Fourth Quarterly
Week 2
 Objectives:
At the end of this module, you should
be able to:
1. Identify and describe the factors to
consider when setting prices and new
product pricing.
2. Enumerate the general pricing
approaches.
True/False. Draw a heart if the statement is true and write F if the
statement is otherwise.
__ 1. The unit variable cost includes the cost of direct
materials, direct labor and direct overhead.
__ 2. Total fixed costs incurred in a specific period must be
shared by all units of the product produced in the same
period.
__ 3. Total cost of production need not to be taken into
account before determining the price of a product or service.
__ 4. The break-even point is the lowest possible price the
company can set for its product, under normal circumstances
__ 5. The choice of pricing strategy depends almost
exclusively on a company’s objectives.
 Price
The price that a marketer charges for a product or service is a vital
decision that has far-reaching consequences. From the point of view of
the business, products and services are offered with the intention of
making a profit. However, the customer has a specific price in mind that
he considers as “fair and profitable”. This is related to the value or
benefit that he expects to derive from the product or service.
Total cost of production must be taken into account before
determining the price of a product or service. This is because it would
make no business sense if the price is less than the cost of production.
There are two types of production cost. The first one is the unit
variable cost which refers to all expenses incurred in manufacturing
one unit of a product. This includes the cost of direct materials, direct
labor and direct overhead. The second one is the fixed cost or the unit
share of operating and other expenses
Product Cost Estimation
• With physical products, two types of costs are
calculated:
(1) unit variable cost and
(2) unit share of operating and other expenses, or
what is sometimes referred to as fixed costs.
• The unit variable cost refers to how much it
would cost to manufacture one unit of the
product. This includes the cost of direct
materials, direct labor and direct overhead.
Product Cost Estimation
• With physical products, two types of costs are
calculated:
(1) unit variable cost and
(2) unit share of operating and other expenses, or
what is sometimes referred to as fixed costs.
• The unit variable cost refers to how much it
would cost to manufacture one unit of the
product. This includes the cost of direct
materials, direct labor and direct overhead.
• The unit’s direct overhead is the amount that was spent in the manufacturing
overhead (energy, water and other utility costs) for every shirt produced. This
can be computed by dividing the total factory manufacturing overhead in a
month by the number of units of shirts produced within the same month. If the
total factory manufacturing overhead for a particular month is P20,000 and the
total number of shirts produced within the same month is 4,000 pieces, the
direct overhead cost per unit would be P5.00
• The sum of the three costs (direct materials, direct labor, and direct overhead) is
the product’s unit variable cost or the cost to produce one unit of the product.
• The second type of cost unit share of fixed costs. Fixed costs are expenses
incurred by the organization that are not related to the manufacture of the
product. These include executive and staff salaries, office rental, advertising,
and promotions, professional; fees and other similar expenses. Total fixed costs
incurred in a specific period must be shared by all units of the product produced
in the same period. This means that if in a particular month, the shirt factory
incurred total fixed costs of P400,000 and was able to produce 4,000 units of
shirt for the same month, each shirt would have to absorb P100.00 of fixed costs
• Therefore, if the shirt factory is able to sell each of the 4,000 shirts it
produced in a particular month at its unit cost of P430.00, the
company would make no profit but will also incur no loss. This is
called the break-even point. This is the lowest possible price the
company can set for its shirts (under normal circumstances) If the
company decides to sell its shirts at only P425.00, it will incur a loss
of P5.00 per shirt.
• If in a given month it is able to sell 4,000 shirts at this price, it stands
to lose P20,000
• However, the shirt manufacturer may decide to price its shirt at
P500.00. At this price, it shall make a profit of P70.00 per shirt. If it
sells its entire month’s output at this price, the company would make
a profit of P280,000
• Service and experience costing are also computed, with unit variable
costs represented by the cost of the service/experience providers
2. Penetration pricing – a pricing strategy where
the new product is priced only marginally above its
unit cost. The objective of this strategy is to capture
a large part of the market at an early stage by
making the product affordable to the greatest
number of people. An advantage of this strategy is
that it can discourage would-be competitors from
entering the market because of low price mark-up.
The major disadvantage of this pricing method is
that it can prolong the recovery period for research
and development, advertising, and promotions costs.
True/False. Draw a heart if the statement is true and write F if
the statement is otherwise.
__ 1. The unit variable cost includes the cost of direct materials,
direct labor and direct overhead.
__ 2. Total fixed costs incurred in a specific period must be
shared by all units of the product produced in the same period.
__ 3. Total cost of production need not to be taken into account
before determining the price of a product or service.
__ 4. The break-even point is the lowest possible price the
company can set for its product, under normal circumstances
__ 5. The choice of pricing strategy depends almost exclusively
on a company’s objectives.
Customer Relationship:
Customer Service

Fourth Quarterly
Week 3
 Objectives:
At the end of this module, you should be
able to:
1. Discuss the structure of distribution
channels, its functions, and.
2. Discuss the nature of supply chain
management
Place

The Need for Marketing Intermediaries Because

most companies today serve relatively large markets
and their consumers are geographically dispersed, they
rarely sell their products directly to the consumer.
Instead, they utilize marketing intermediaries, also
called distribution channels, to bring their products to the
customer.
Although most marketing intermediaries, i.e.
wholesalers and retailers, are independently owned,
some product manufacturers may decide to own a few, if
not all, of their retail outlets.
The following are other key functions of intermediaries:

1. Information collection and dissemination.

– marketing intermediaries, particularly retailers,
provide product manufacturers with vital marketing
research information on consumer profiles and
product movements.
2. Product storage and movement – the warehousing
facilities of manufacturers are relieved of large
amounts of merchandise.
3. Operational financing – distribution channels that
take care of storage and transport assumes the costs
of these activities.
The following are other key functions of intermediaries:

4. Product promotion – intermediaries,

particularly retailers, help in the development and
implementation of communications programs to
enhance product sales
5. Risk-taking – most marketing intermediaries
eventually pay for merchandise they carry. They
assume financial risk if the product does not sell
as expected. The use of marketing intermediari
Supply Chain

A supply chain is the network of all

the individuals, organizations,
resources, activities, and
technology involved in the creation
and sale of a product.
Product Distribution Types
There are three general ways on how a product can
be distributed using marketing intermediaries:

1. Exclusive distribution – distribution is limited

to a select number of dealers, usually one or a
few.
2. Intensive distribution – this product
distribution type, used mostly by fast-moving
consumer goods and convenience goods,
involves making a product available in as many
retail outlets as possible
3. Selective distribution – positioned between exclusive
and intensive distribution, this type of product distribution
involves the use of more than one but not as many
dealers as in intensive distribution.
Wholesaling and Retailing
Wholesalers and retailers are two of the most crucial
distribution intermediaries, most especially in providing
place utility for a product’s customers. Wholesaling – is
the sale of goods for resale. Wholesaling is an important
product distribution function. Without wholesalers, product
manufacturers would have to deliver goods directly to
retailers.
Retailing – is defined as the sale of goods/services to
the final customer for his personal consumption. Typical
examples of retailing establishments are drug stores,
sari-sari stores, restaurants, movie houses.
Convenience stores and supermarkets. Among others,
product retailers perform the following key functions: 
Information collection and dissemination  Product
assortment selection  Product storage  Financing 
Product promotion  Risk-taking
Retail stores are accessible to its customers where
purchases are done in a single and simple transaction.
Thank you for
Listening!!!