CHAPTER 6

MARKETING MIX IN THE DEVELOPMENT OF

MARKETING STRATEGY

"Don't be the trend. Set the trend."

LEARNING OUTCOMES

1. Define the meaning of product, price, place, promotion, people,

packaging, positioning and their importance;
2 Determine the appropriate strategies in pricing, products, place,
promotion, packaging positioning and people;
3. Evaluate how effective the marketing mix to the organization;
4. Discuss the product life cycle to create strategies;
5. Identify the other P's in marketing

MARKETING MIX is the combination of controllable elements or variables

needed to develop strategy to attain satisfaction to the market particularly both
in customers and consumers. It is also a business tool used in the organization
particularlythe marketers doing the job. The company needed marketing mix
to determine a product or brand's offer with the following: product, price, place,
promotion, product, positioning, packaging and people.

MARKETING STRATEGY are the tactical activities that combine all of its
marketing goals into one comprehensive plan. It should be drawn from
market
research through survey using questionnaire, conducting interview and personal
observation. The organization should focus on the right product mix in order achieve
the goals and objectives. This is the bases in formulating a marketing plan. It also
allows the organization to use pathways and footholds that helps in the usefulness
of the limited marketing budget to be more effective and achieve a sustainable
competitive advantage.

PRODUCT
A product is anything that can be offered for satisfaction. It may be an idea,
a physical entity (a good), a service, or any combination of the three. Product is that
bundle of satisfaction which the buyer receives as the result of a lease or purchase.
It includes the physical good or service itself (its form, taste, smell, colour and.
texture),the function of the product in use, the package, the label, the warranty, the
manufacturer's and retailer's services.

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Product: Its Nature and Sustainability are

Augmented product includes the image and service features of
entity. t 8ives emphasis on the intangible benefits that the customer will be getting
a
certain
what products needed
to
as ofthe target
ntrepreneurs must have
a full knowledge of the group from buying the product.
recognized.
satisfaction

product will be for

the easily be ,

n
the society. The the others,
and
needs and Example: Car insurance, medical and dental benefits, fire insurance
market. It must be specific, identified from determine
b e t e r the d
research to
An entrepreneur must conduct market
Generic product
wants of the target market. emphasizes the impact of the product to the consumer, not
the seller. This will signify the purpose of its existence and the primary objective in
intangible in
nature that can be.oftered for creating the product.
product canbe tangible or
an idea, a physical entity (a 800a, service
dustaction of the recipients and it may be of satistaction which the
that bundle Example: Prestige, status signal, professional image
of the three. Product is
any combination It includes physical g0od or
the ot
of a lease or purchase. the product in
Duyer receives as the result color and texture), the function
tselt (its form, taste, odor, retailer s services.
ce the manufacturers and
TYPES OF PRODUCT
S E tne the label, the warranty,
package,

1. Goods are sale of the physical products from the manufacturer to the consumer
PRODUCT DESCRIPTION NECESSITIES or final and ultimate user. These are tangible products that can measure the
satisfaction with result or evidences as manifested through physical development.
in terms of
. C i t e the uniqueness of product over other existing products
characteristics, variations and the like. a. Durable goods are the physical products that are used over a long period of
time. These products are expensive because of the quality of the materials
2. Use layman's term in describing the firm's product or service. Present a product
used.
mix if the firm will be selling more than one product
Example: Steel, stainless, appliances
3. llustrate the usefulness of the product/ service. Provide substantial information
on effectiveness of marketing which includes positioning strategies. b. Non-durable goods are the physical products that are quickly and easily
be consumed or worn out, become obsolete, unfashionable or no longer
4. Presernt the nature including the content of raw materials that will be used in the These are inexpensive and can easily be damaged.
products
popular.
proposed product, and what is the source and where to find it.
Example: Products made with plastic
Example:
that satisfaction can be measured in future
2. Servi are intangible products
MGM
Apparel is a dress shop that offers different styles and variants that suits
the budget and preferences of the customers. These are some
preferences.
the enterprise, the shop ofers:
competitive advantage of
monthly theme motif, customized dress, reversible dress, Example: Relaxation in salon and spa
convertible dress, and dress with accessories. Education from school

services are the consumer rented facility of the sellers in a

a. Rented-goods
LEVELS OF PRODUCT certain period of time.

Tangibleproducts are the basic physical which can be a service or Example: Car rental, space or oficefor
rental
idea having precise specifiçations and is offered appearance
under a
or model number. given/specified description and maintenance services rendered by
b. Owned-goods services are the repair
sellers to the products of the customer.
Example: Honda Brio model the
House & lot 400 sq meters
(floor area lot area Example: Laundry business,
car wash

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of the seller;
most
common
the part 2. mpulse products are the items that the consumer does not plan to buy. Ine
service o n
CNon-good service is personal seler. Customer was attracted to buy the product for some reasons ike the vey
are the expertise and profession of
the
lawyer wil impressive promotional campaign or low price on sale items, etc.
accountant will act as bookkeeper,
Teacher will act as trutor, relation oficer.
Anple: and guest
uct as consultant, receptionist,
legal shopping products are products that the consumers acquire through further
knowledge and ininformation in order to make final purchase decision. Consumers
will exert eftort searching or looking for information because these products have
high prices and are bought infrequently and are categorized as tollows:
CUSTOMER SERVICE IN THE ENTERPRISE
1.
Define/list the customer service the company can provide: Attribute-based shopping products provide customers with information
service strengths and weaknesses
and evaluated product features, performance, options, warranties and other
W h a t are the company's factors.
customer service.
.Give strategies for improving the company's
2. Price-based shopping products enable customers to judge product attributes
to be the same and look around for the least expensive item.
CHARACTERISTICS OF SERVICES
Specialty products are the items with particular brands and stores to which
displayed, transported, stored consumers are loyal. They are willing to make a significant orspecificeffort to acquire
.Intangibility is the services that cannot be
packaged or inspected before buying. the brand desired units and will pay a higher or above the price of similar products.
2. The credibility of the service provided most of the time counts.
3. Inseparability is the service provider and services that cannot be separated.
INDUSTRIAL PRODUCTS
It cannot accomplish the purpose if one is
missing Industrial products are goods or services purchased for use/consumption
4. Variability is when the service is difficult to standardize because it varies
ofa
upon the performance of the provider. in the production/manufacturing of other goods or services, in the operation
based
business or for resale to other customers. Industrial products are categorized
on degree of decision-making involved, cost, rapidity
of consumption, role in
cONSUMER PRODUCTs product, and change in form.

These
are goods and services
destined/produced for the final consumer for These are the following
personal, family, or household use. The use of the goods or services designates it as
a consumer product. 1. Accessory equipment is selected priced portable goods which last long
moderate amount of consumer decision making.
period of time, requiring a

Example: Products normally and routinely used by consumers. materials from extractive and
2. Raw materials are unprocessed basic
source of raw
industries. Natural environment promotes a good
Convenience
products are purchased with the minimum or less effort agricultural
because the materials.
buyer has knowledge of product characteristics prior to shopping. The
consumer is not wiling to search or look for information convenience goods which
and will accept a substitute 3. Industrial operating supplies are inexpensive
or
of the
rather than visit another store categorized as follows: consumed and are necessary for the day-to-day operation
are rapidly

firm. They do not become part

of the finished product.
1. Staples are low priced items that are routinely purchased on a which undergo further
and are
products that are used every day. regular basis 4. Component materials
are semi-manufactured goods
be of the finished products. The quality of
later to a part
changes in form and of the product to the publi
Example: rice, soap, toothpaste these materials strengthens
the credibility
which are
5. Installations are very expensive materials, non-portable goods
and do not become part of the finished
used in the production process

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not change
in form.They iyinvolve a
and do
product. They last for man years RESEARCH DESIGN MAY BE QUANTITATIVE OR
high degree of consumer decision
making: QUALITATIVE
which form part
6. Fabricated parts arefinished products of other companies
in form, but given
Quantitative is employed on data that have been assigned numerical
value. Quantitative
without further changes analysis can range from the examination of simple
Othe manufactured product istribution, to the
description of events or phenomenon
frequencies
added features to make a new product. and to the using descriptive statisncs
activities that link the
investigation of correlation and causal hypotheses using various statistical
tests.
is the process or sets of multiple
arket Research intormai0n gatnering and Qualitative modeof research is not based on
through
deting organization with its precise measurement
customers
various issues present in the and
quanitative
claims. Social analysis is
to address frequently qualitative because the
ulaiysis. It specifies information required It systematically designed to collect understanding of the phenomenon under study may not require quantification or
successtul marketing of product or services. for andcareful analysis the phenomenon itself does not lend itself to
ne needed information and is made as springboard precise
measurement.
conclusions in the solution
nterpretation of marketing data which will help generate
of marketing problems.
TYPES OF RESEARCH
Example: 1. Exploratory Research can be
performed using literature search, survey of
people on their experiences about the product and some case studies. Normally,
Marketing Research
Sloven's Formula researchers used this to analyze and evaluate the reasons of the occurrence of the
event considering that cause and effect can affect the conclusion of
study merely
The proponents use Sloven's formula to determine the possible sample of the the study.
Tespondents needed for the study. The total population of Brgy.Tagapo, Sta. Rosa City,
Laguna is 10,804. 2. Descriptive Research seeks to describe issues related to future demands of a
product. It tries to determine the number of population that uses
particular
the product or predict future demand. It answers questions regarding current
Formula:n=-N conditions and focuses on determining relationships why certain situation
1+Ne happened.
Where in: 3. Causal Research seeks to find cause and effect between one or more variables
N= the number
of people who qualify in the area of the study (Population). affecting the market conditions. This involved laboratory or field experiments.
n =
number of the needed
e= margin of error (5%)
respondents (Sample).
4. Historical Design answer questions about the past, use historical approaches
in collecting and interpreting data. The focus is to determine the accuracy of
10,804 statements about past events.
Solution:n=:
1+(10,804)X.05)*
385.72 or 386 5. Experimental Research manipulates variables in controlled laboratory conditions
using randomly selected subjects. It is very useful in comparing results of two
subjects but in one topic or area of study.
Survey Questionnaire
The proponents distributed 386
the questionnaires in the area of Brgy.
criteria of the proponent's target market. Tagapo, meeting METHODs OF GATHERING DATA
The results are
interpreted and tabulated below.
1. Observation means a gathering of information for research, may be defined as

perceiving data through the senses: sight, hearing, taste, touch, and smell. The
sense of sight is the most important
and the most used among the senses. It is
most direct way and the most widely used in studying
behavior.

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a particular topic.
related to
written questions intended for registered.
2. Questionnaire is composed of to each question,
the response normative 8. All other
with space provided for indicating
reply;
commonly
used in
departments, offices, and entities of the government, and private
submission to a number of persons for organizations, entities or offices- where different kinds and classes of data and
. and in the measurement of attitudes and opu
studies information are registered.
Survey
between two
face to face
relationship
3.
nterView is defined as a purposeful asks questions
to gather
interviewer who
one of whom called the who
supplies PRODUCT LIFE CYCLE
Persons, interviewee or respondent
urormation and the other called the
the information asked for. The Product Life
Cycle concept describesa product's sales,
competitors, and marketing emphasis from its beginning until itprofits,
customers,
is removed from
the market.
SAMPLING TECHNIQUES
Stages of Product Life Cycle
the size of the population, the
These the things needed to be considered:
are
of the study population
the margin of error and the proportion I. Product Development
Suay population, whether pure random sampling
used, the type or technique of sampling used
cluster sampling or a
systematic random sampling, stratified random sampling, The
combination of two or more techniques; actual computation
of the sample and the company must think of a new product. A new product is a modification,
creation, and innovation of an existing product which makes the product more
sample. meaningful to the customer.

The product planning process involves a series of

RESPONDENTS OF THE STUDY
new
steps
1. Idea Generation - searching and looking for new product or business
These are the person who replies to something such as a survey or set of
questions. They are the sample size over the population in the study. opportunities. The employees, channel members, competitors, and customers
can be a great source.

Methods:
sOURCES OF DATA
a. Brainstorming - all the members of the group can contribute in sharing
The following are abundant sources of data or information:
ideas, comments, and suggestions.
1. The Bureau of Census and
Statistics-population, housing, industry and trade. b. Analyzing Existing Products - a successful product that captures great
2. The Land Transportation market can be analyzed as a basis in creating a new product.
jeeps etc.
Commission vehicles, cars, trucks, motorcycles,
The Department of Education and its c. Reading Trade Publications a n inspiratiornal story of a successful
regional offices, and
and universities (public and private) where all schools, colleges, entrepreneur can lead into a development of a new product.
enrolments and graduates are
-

recorded.
Facilities Supplier's raw materials can be used as a
d. Visiting Suppliers'
-

4. The Supreme Court and all lower courts of justice where records of method to innovate and modify existing product.
cases are kept. judicial
5. All police regencies and offices- where all criminal cases are recorded. e. Surveys getting feedback coming from the customers and potential
6. The Department of Health -where all births, deaths and market.
registered. pathological cases are
2. Idea Screening- ideas which are unsuitable, unattractive, or poor are junked.
7. TheSecurities and Exchange
commercial establishments anaCommission
where all with attributes are rated on the basis of a rating from 1-10.
together
otner trade, industrial and Ideas
OTganizations, profit or
non-profit, are

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marketin8, and
categories: general, 7.
Commercialization- this involves the actual marketing of the product in
rated
are on the following the
as target market. The different activities to introduce the product to the market
production characteristics. must be presented.
will now
which have passed the screening sta8e
Concept Testing - ideas measures
consumer entnusiasm by IL. Introduction
the It
r e feedback from
consumer.

statement or
oral aescription
to react toa picture,
aKng Potential consumer A new
product is introduced into the marketplace and the objective is to
of a product.
generate customer interest. The rate of sales growth depends on the desirability of
revenues, cOst
and trends. the product, competition is limited or
Dustness Analysis is a review of market factors, selected, losses are experienced because ot
high production and marketing costs. Initial and immediate customers are called
potential; sales growth;
rate of repurchase; innovators who are
willing to take risk because the in the market.
a.
Demand Projections
-

sales product is new

distribution intensity. Promotions must be informative and free samples may be desirable.
0. Cost Projections-per unit cost; raw materials cost;
cost of existing facilities III. Growth
and resources; breakeven point.
The product gains wider consumer acceptance and the objective are to
C. Competition - market share of company and competitors; strengths and
expand distribution and the range of available product alternatives. More firms
enter the profitable and tested market. Profits are high because the mass market buys
weaknesses of competitors; potential competitors.
from a limited group of firms. Basic models are modified and chosen; distribution is
d. Required Investment engineering patent search, product development,
-
expanded coupled with mass advertising to meet new goals.
testing: promotion; production; distribution.
IV. Maturity
e. Profitability - time to recover initial cost; per unit profits; distribution

intermediaries; control over price; Return on Investment. The product's sales level and companies try to maintain lower price, better
product features for as long as possible. Market is saturated, penetrated and
5. Product Development ideas are converted into tangible form.This competition is at its highest level. Company profits decline because discounting
stage
-

involves: becomes popular and high cost in advertising. Products are available at most outlets
at varying prices. Promotion is very competitive.
a. Product construction: type and quality of materials, method of
production,
production time and cost requirements per unit; plan capacity, sizes and V. Decline
colors
The product's sales falls as substitutes and new competitors enter the market.
b. Packaging: materials used in promotion or storage; cost; sizes and colors; During this stage, firms may reduce or lessen the items produced and outlets used
promotion utilized, or they can revive and renew the product by repositioning
C.
Branding: choice of new or
existing name; exclusivity; trademark repackaging or they can terminate the product.
protection;

d. Product positioning: selecting a market segment STRATEGIES FOR MATURE PRODUCTSs

e. Consumer attitude and usage testing. 1. Develop new uses or functions and new purposes for products.

6. Test Marketing- involves

2. Develop new or add latest product features.
city and
a
selling of a fully developed product in a selected 3. Find new classes of consumers or new potential markets for present products.
observing the
actualonor on the spot pertormance 4. Find new classes of consumers for modified products.
under the chosen
marketing plan. Depending the results, a firm can decide to go ahead,
5. Increase product use for new product users.
modify the product or services, modity the 6. Charnge marketing policies or strategy.
the product. marketing plan or drop or delete

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different categories.
PRICE
the buyers
even to the
service to
aetermines the value of a good or
a product o r ervice and
serv
a.
Cost-based price strategy is when the firm sets prices by computing
to acquire
c o m pIt
sellers. a is
ny i n g service. It is the
the amount ofmoney
ne e d e d in
amount oforder
money chargedbenefits
a of having
oror
service
using merchandise,
to those
services and pverhead costs then adding the desired profit
figures. After combining al the expenses incurred during the
exchange tor
the
t production of the product, the seller must also decide the best profit as part
or the sum of the values that actions to
consumers
to conceptualize of the price of a
POuct
or service. The company must
provide ways product.
attract customer patronage using the price.
b. Demand-based price strategy is when the firm sets prices after
consumer desires and makes sure the range of prices
researching
acceptable to the
The researches regarding saleability
FIVE STEPS IN DEVELOPING A PRICING STRATEGY target market. firms conduct the of the
product. If the product meets the criteria of the market, the firm can raise

1. Objective may be: sales-based, profit-based

and status-quo based. the price of the product because it assure profit based the market
can on
demand.
a. Sales Based. The firm is interested in sales growth and/or
maximizing
market share. The c o n c e r n of the company is
to increase sales by offering
items
C.
Competition-based price strategy is when the firm sets prices in
to the competitors. The entrepreneur must research the prices set by their
relation
new product
design, product lines, and promotional competitors
b. Profit-Based. The firm is interested in maximizing profit, earninga satisfactory
4. Implementing Price Strategy is the firm readiness to sell the product which
profit, optimizing the return on investment or securing an early recovery of would be effective if given an attractive price strategy listed
cash. Its thrust is to satisfy the investors/ stockholders by providing them below
mmediate return of investment.
a. Customary pricing is when one price is maintained over an extended period
of time. Normally the price of the product will not be easily changed. The
Status Quo Based. The firm seeks to avoid reasonable government actions,
minimize the effects of competitor actions, maintain good channel relations, entrepreneur must consider the price of the product which is affordable to
majority of buyers.
discourage the entry of competitors, reduce demands from suppliers and
stabilize prices. The goal of the company is to maintain good image to the
b. Variable pricing is when the price responds to costs fluctuations or differences
community by creating projects/ programs that protects its welfare and in demand. The entrepreneur must consider the law of demand and
goodwill. If there are sufficient supplies and few demands, the price will increase and
supply.
vice versa.
2 Broad Price Policy provides procedures, rules, and methods to act in one specific c. One-price policy is when the price is charged to all customers buying the
situation. It links prices with the target market, image, and other
marketing product or service under similar conditions. The entrepreneur will set one
elements. It makes sure that pricing decisions are coordinated from other sellers.
price for all products available for sale even though they differ from design.
These are the following: d. Flexible pricing is based on customer's ability to negotiate or buy power of the
a. Penetration pricing uses low prices to capture/atract the customer. Theentrepreneur must meet the needs and wants of the customer
for a product or service. The larger/ mass market so that they need to adjust the price just to ensure continuous patronage and
preference of the mass majority of the market
will be the basis of the price set. loyalty.
b. Skimming pricing h e. Odd pricing are prices set at levels below even values. The entrepreneur uses
prices to attract the market segment more odd numbers to attract customers in pricing a product.
concerned with
product quality, uniqueness or status than price.
chooses high price in order to determine who will The seller
product. really patronize the f. Price-quality association is when the consumers believed that high
and low prices represent low quality. The
price represents high quality
3. Price Strategies are ways or some actions to accomplish the goals and entrepreneur instilled to the mind of the customers that having a high price
of the company in gaining profit. PTice
strategy can be
objectives contain high quality materials.
classified into three

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I not
will; buy at prices
floors and
8 Prestige pricing is when custonmerssetprice seem too expensive. and
below those floors. Above price ceilings,
items would
the price floor
nearest buyer need to determine as a base point in distributing the
that products must follow product.
he preneur must consider

and ceiling set by the government. lerms of Payments are price agreements, including discounts, timing
to gain consumer loyalty payments anc credits agreements. Discounts are reduction o
low prices in the
Leaaer pricing is selling key items at the customers will buy regularly tocustomers for varying reasons: paying in cash, performing selling price given
certain functions,
its product line. It is hoped that
win one. The entrepreneur buying in large quantities, and off-season buying.
Priced products together with the specially priced so as they can value
to win the respect of the competitors 5. Price Adjustments
s t De aggressive
the actions that will take place.
to consumers Changes in cost, competitive conditions and onsumer demand require
offers discounts
.Multiple-unitpricing is when the entrepreneur must consider that selling changes in price. Prices can be adjusted in the list prices, escalator clauses, surcharges,
for
buying in large quantities. The entrepreneur and maintain mark-ups, markdowns, and rebates.
more produce more profits. To prevent overstocking
units will
and promote growth.
proper inventory, selling in bulk can increase profit a. List prices are
regularly
quoted prices to customers, as in catalogs, price tags
and purchase orders. The salesman must have a clear and
model of a good updated price so
. Price lining is when instead of setting one price fora single when the negotiation takes
place, a minor correction of wil be made.
price
or service, the firm sells two models of different quality and features at
different prices. b. Escalator clauses happen when the contract which allows
price increase after
the sale is concluded before delivery is made. The seller must communicate
k. Price bundling is when the firm offers a basic product, options and customer
to the buyer that there is a price adjustment due to some reasons (increase of
service for one total price. The entrepreneur will combine product and raw materials or gasoline) and must agree to the new price.
service to the price set in the product.
Surcharge is the supplementary to list prices. These are additional charges
. bundled pricing is when the firm sells by individual compone
allows customer to decide what to buy. The entrepreneur will set price of
and added to the total price. The seller can include this or disregard to better gain
customer loyalty and profitability of the company.
the product item from the other. It can be sold separately and individually.
d. Mark-ups happen when the company is raising regular selling prices
m. Geographic pricing is when the prices are set depending on the distance of the because demand is unexpectedly high, or costs are rising. The entrepreneur
buyer to the seller. Normally this activity is done if both parties are far from must be careful to increase the price of the product as it can affect customers'
each other. The two parties must agree to the price before the transaction can
take place. These are the sample transactions:
continuous loyalty.
e. Markdowns are reductions from original selling prices to meet lower prices of

»FOB factory is when the buyer pays for

competitors, overstocking, shop-worn merchandise, and increase customer
all freight charges regardless of traffic. This activity can affect profit generation.
the distance. The buyer must be
willing to pay all the expenses incurred
during the transfer of the product from one place to another.
PRICING STRATEGY
» Uniform delivered pricing is when buyers pay the same delivered price
for the same quantity of goods. The
entrepreneur shall consider the How the firm prices its product or service is a very important component of
quantity of goods in setting the price of the product. the business plan. If the firm wants to achieve its objectives, the right price for its
»Zone pricing is when product or service must be maintained. In determining the right price, the following
the buyers within the
geographic zone paya factors must be considered:
uniform delivered price.
The
entrepreneur must
of charges to one particular location. provide same measure
1. The customer's perception of value of the kind of business firm;
as overhead, storage, financing, production, and
»
Base-point pricing is when the cost of transporting the goods is 2. The costs involved such
from base point nearest buyer. In seting prices, the most computed
accessible
distribution; and
firm.
3. The profit objectives of the

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through any
of the tollowing 5.
be established
Brokers are distributors who buy directly from distributor or wholesaler and sell
Price set by the firm may
to retailers or end users.
methods:
variable and hxed, plus an
all costs, 6. Retailers are the
method covers ones who sell directly
LOst-plus pricing This to customers in the store. They Duy
-

extra increment to deliver profit. sets prices based

product without any intermediaries or middlemen.
where the firm
-This is a method of pricing market is determined.
e n a pricing to the target 7. Direct mail includes
printed materials used in a targeted campaign to
buyer desires. The range acceptable
On
This method of pricing
calls price-setting on the basis
for These are sent
directly to consumers. These include catalogs, letters, consumers.
e-mail ana
Lopetiftoe pricing- other direct appeals.
of prices charged by competitors.
in which the firm
Market pricing This is a form of cost-oriented pricing
Channel of distribution is made
-

expenses, and
merchandise costs, operating up of people or organizations involved i
Sets prices by adding per-unit the distribution process. It is any of firms or individuals who take part in the
desired profit. activity
flow of goods and services from manufacturer to final consumer or business
and
user
Each of the various methods of pricing has corresponding advantages
be the most efective. Channel members may either be manufacturers, service
In
aisadvantages. given situation, one pricing method could providers,
fitted to their wholesalers, retailers, marketing specialist or consumers.
A
COmparny can use other strategy or combine the multiple policies one company can
product and market. To attain the objectives of the organization, Middlemen act as go-between the producer and the consumer. It refers to the
needs ot organization to meet
use single or multiple strategies depending on the following: wholesalers, retailers and marketing specialist
their sales objectives.

PLACE/DISTRIBUTION
BASIC TYPES OF CHANNEL DISTRIBUTION

A place is making the products available in the right quantities and locations 1. Directchannel distributionis the transfer or movement of goods and services from
where customers want them. manufacturer to final user or customer without the intervention of independent
middleman. This is the channel or intermediaries chosen when the firm wants to
Distribution Strategy refers to the process of moving goods and services control the entire marketing program. They have close contact with consumers
from the and have limited target markets.
company to the customer. The distribution channel that will be adapted
must provide a strategic advantage to the
company. 2. Indirect channel of distribution is the transfer or movement of goods or tangibles
Common distribution channels are the following: products and services or intangible goods from manufacturer or producer to
independent intermediaries to customer. This channel is utilized by firms who
1. Direct sale is when the company/firm's plan is to want to expand their markets or end users. The end result is increase in sales
ultimate users. This is the most effective channel.
move goods directly to the
volume and growth in sales as they relinquish some channel of distribution
control and consumer contact.
2. Original equipment manufacturer sales involve selling a manufactured product
and which is later sold as a finished
product to the end user. An example is the INTENSITY OF CHANNEL COVERAGE
sound system incorporated into cars.

3. Manufacturer's representative is wholesalers employed 1. Exclusive distribution is the limited number of middleman used in a geographic
by one or several
producers and paid on commission according to quantity sold. area.It is also organized in a particular region or provinces to handle the sales
and distribution of the product. They handle the distribution of the product and
4. Wholesalers are channel members that sell to retailers or other thus lessen the expenses.
agents for further
distribution through the channel until they reach the final users.
2. Selective distribution is organizing a moderate ber of wholesalers or
combine some channel controls and
retailers. The entrepreneur uses and tries to
volumes and profits. Chosen dealers are selected on the
image with good sales
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1. Advertising is
target
market. a
paid, non-personal communication regarding goods,
basis of credibility in the distribution of the
roduct to the
oTganizations, people, places and ideas that is transmitted services,
media by business through various
of
middlemen
that are used firms, government and other non-profit organization and
large number individuals who are in
ntensive distribution is organizing a The objective is some way identified in the advertising message as the
channel acceptance. sponsor.
to obtain widesn coverage and
p r e a d market
high sales volume and profit.
Advertising is paid form of communication. The leading medium
has been the
newspapers, followed by television, radio, magazines, industry
PHYSICAL DISTRIBUTION publications and outdoor ads.
with
distribution covers the broad range of
Fhysical
activities in connection
Advertising and Promotions Strategy
of raw materials, parts,
semi-finished items, and fnished
tne
eifiaent delivery in proper conainons. i. Define the
products to designated places and designated times and key product or company strengths if a
company intends to
advertise and promote.
motor carriers, waterways, pipelines
ransportation composes the railroads,
and airways. ii. Determine the means or media that will be used. What newspaper,
television, radio, magazines, yellow pages, billboard, direct mail,
Inventory Management consists of a continuous flow of goods or tangible personal contacts, trade fair exhibits, (include frequency, budget and
products to match the quantity of goods kept in inventory as closely as possible with cost) will be suitable?
sales demand.
is. Explain or justify why media was chosen to be the most cost-effective.
Warehousing carries the physical facilities used primarily for the storage of
goods held in anticipation of sales and transfers within a distribution channel. 2. Publicity is a non-personal communication regarding goods, services,
organizations, people, places and ideas that is transmitted through various
Retailing refers to those business activities involved with the sales of goods media but not paid for by an identified sponsor.
and services to the final consumer for personal, family or household use. It is the
final stage in a channel of distribution. Retailing is important because of its impact Example: Coca cola will be thesponsorfor the family show aired in channel 7.
on the economy, its function in the distribution channel, and its relationship with
suppliers. Retailing's impact on the economy is a major source of employment with 3. Personal Selling involves oral communication with one or more prospective
high annual sales. buyers by paid representatives for the purpose of making sales. Normally, this
is done through door to door selling.
Scrambled merchandising takes place when a retailer adds goods and
services that are unrelated to each other or the original business of the retailer. 4 Sales Promotion involves paid marketing communication activities that
stimulate consumer purchases and dealer effective.
Wholesaling is buying or handling of merchandise and its subsequent
resale to organizational users, retailers and/or other wholesalers but not the sale of Example: Buy one take one, bodega sale, discount coupons.
significant volume to final consumers.
Sales promotion is any activity that offers an incentive for a limited period
to induce a desired response from target customers, company salespeople, or
PROMOTION intermediaries. It adds value to the product because the incentives are designed
to induce final customers and intermediaries to buy and to persuade company
Promotion is any form of communication which is used to salespeople, intermediaries, and their sales forces to sell.
and remind people about an organizatiorn's or individual's inform, persuade
goods, services, image,
'ideas, community involvement or impact on the society.

A promotional mix is a
combination of the strategies to
accomplish an
organization's promotion objectives. These are the following:

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PROMOTION STRATEGY PACKAGING THE PRODUCT

promoted lis an important
will be It
7OW the products or service of the company strategy
must include
ind the should be
properly designed to attract the customers. A
The promotion container or the package the
wrapper of the product. Packaging is a business function
is
component of the marketing strategy. not be that must
following: taken granted. Package gives significant and differential advantage over
for
other products in the market.
1. Advertising Aspects
Purpose of Packaging
a. Advertising budget
b. Positioning message 1. To protect the product on its way to the customer. It
C. First year media schedule prevents tampering
adulterating the product while in storage or in the warehouse.
or

of the publiaity strategy

Public Relations This will be a detailed preserntation 2. To provide protection after the product is purchased. It
Z to convey the them enclosing
of the firm. This will include a list of media that will be tapped
of special events like product
or
encasing medicines and other harmful products from protects
unnecessary use.
market. The schedule
hrm message to the target 3. It becomes part of the
launching will also be included. company's trade marketing program. It must be packaged
to meet the needs of the
used to support the sales message like
wholesaling
and retailing middlemen.
3. Sales Promotion -

These are means

trade- in, among others.
special sales, coupons, contests, premium awards, 4. It becomes part of the company's marketing program. It must identify the
product and prevent substitution from the competitor's product in the market.
4 Personal Sales present the sales strategy which includes:

a. Pricing procedures Desirable Packaging Appearance:

b. Rules on returns and adjustments
1. It should be environment
c. Methods of sales presentations
friendly.
2. It should be durable and
maintain quality after using.
d. Generation of leads 3. It must protect the design, colour, taste and smell of the
product.
e. Policies on customer services
refers to
Positioning the firm differentiates their product or service
how
f. Compensation of salesmen, and
from those of the competitors and serving a niche. It is one where the firm identifies
8. Responsibilities of the salesmen a
target segment and develops a strategy mix to address the desires of that segment.
The objective of positioning is to establish the firm's product or service identity in
the mind of the buyer.
PROMOTION MIX
Before using a positioning strategy, the following questions must first be
The Promotion Mix includes advertising,
publicity, personal selling, and considered:
sales promotion that help the organization to fully inform,
the customer about the
persuade, and remind
organization goods and services. 1. What does the customer really want to buy from the firm? Apart from product
quality, the answer could vary from fast and efficient service to clean and friendly
The Selection of Promotion Mix Depends on Several Variables: environment, to good reputation, and the like.
a

Product Life 2. How is the product or service different from the competitors? A product or
1. Cycle -

An
organization must be aware of the different stages of service may be different from competition in terms of quality, maintenance
PLC and the company status to fully design a strategy.
requirements,number of uses, and ease of operation, among others.
2, Company Characteristics-The more products
tools to serve the organization. line the company gains the better 3. What makes the product or service unique? The firm's product or service may
3 Relations with Middleman The dealer such as retailer
-
be unique in many ways. It may only be the one that is delivered free to the
impact about company etfectiveness and efficiency.
or wholesaler can give customer's or it may be the ornly product that product that provides a trade-in
option to the customer.

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PEOPLE
PRODUCT POSITIONING
the public presenting hOw
they 5usinesses can improve their ability to attract, retain and improve productivity
The entrepreneur must create an image to must be well informed
ro position the product. The customers/ target
market by applying the following five-step PRIDE process:
t makesit better that other
do, what
product what it is, what it
can
dnew P -

Provide a Pleasant Working Environment

products, and who should buy it.
a product -Recognize, Reward and Reinforce the Good Behaviour
market the different concepts -Involve and Participate in the Activities and Programs
he company must inform the
on
claimed that their
quality (Surf detergent soap they D-Develop Skills and Attitude
must be: low price and highbut high price and high quality (Ariel E Evaluate and Measure Performance
products are high in quality low in price);
it is ot high quality) and
aetergent soap claims that although their product pricey,
is
low price and low quality. Networking involves socioeconomic business activity by which entrepreneurs
and busirness people meet to form business relationships to recognize, create, or
act upon business oPportunities, share information and seek potential partners for
business ventures. The following tips can help someone to become successful in
MARKET POSITIONING
networking career:
1. Innovator/Leader vs. Follower
1. Be confident when dealing to others but be humble also.
e
at the company can be considered as an innovator/ leader means
idea 2. Both of you are important in the meeting
being an initiator in selling a new product to the market. The product is new and 3. Make the first meeting successful remember first impression last.
stranger to the market; still, the firm creates strategies to sell it.
4. Share information to create understanding
The idea that the company is considered as a follower or imitator means 5. Praise other people, avoid being arrogant.
that the product is just being copied from the innovator. No new ideas are being conversation.
developed or created. 6. Let other people share, do not monopolize a
7. Thank someone.
2. Domestic vs. International/Global 8. Ask for referrals
ideas
A domestic firm produces only for local consumption. There is no vision for 9. Bring the best ideas, avoid talking nornsense or junk
larger market and focuses only on the minority of markets in the country. 10. Ask for referrals
11. Bring the best ideas, avoid talking
nonsense or junk ideas
It is also the idea that international/global
market expands its product line to
12. Be conscious in time, some people are busy.
meet the market located beyond the boundaries of one
country. The firm conquers
cultural differences, social restrictions, and ethics definitions.

3. Quality vs. Price

The idea that Quality must be the

priority in selling the product not
considering how much it will cost, it describes how the firm prioritizes the materials
being used and how it will create satisfaction to the market.

On the other hand, Price

must be the first
consideration in producing the
product-how much it will cost to the market, and how to make the product become
affordable to the market.

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CASE6
MATTHEw sCHOOL PROMO

Many children of high income families in Cabanatuan City and Nueva

are sent by their parents to study in exclusive schools in Manila. Unmindful ofEcijathe
costs, the parents maintain the view that real education has a
high price tag
The
publicelementary schools as well as the public high schools are perceived,
rightly or wrongly, as not being able to deliver the quality of educational services
needed. Even it this is so, enrolment
in public schools have swelled to more
60 students per class. The rule in than
public schools, except college,is to accommodate
everybody.

Currently, the some

opening of Montessori and private elementary schools in
relief to parents who want quality education for their
the area has provided
children. The older private schools are now competing with the new Montessori and
private elementary schools which charge higher tuition fees.

Miss Jana Agustin is a teacher at the same time marketing officer to promote
the school. She handles subjects in the secondary School of a university and has
some five years of administrative experience in a private school. She is only 35 years
old and is currently considering opening a school that will cater to an inadequately
served market segment.

Teacher Jana feels that t high income families in the area fall within the
segment she would ike to serve. She isparticularly interested in the high school
education needs of the same segment. Presently, no high tuition private high school
is serving the area. She thinks that she should start operating a private high school
exclusively for children of high income families. She is now considering her first
moves but she wonders what these moves should be. Now her task is to think of a
better promotional strategy to capture the target market.

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CHAPTER 6: ASSIGNMENT
Name: Date:
Section:
=
Score:
Discussion and Identification.

1. Give the advantages of Sole Proprietorship, Partnership, Corporation, and

Cooperatives.

2. Elaborate the steps in Recruitment and Selection.

What are the legal requirements in establishing a business?

4. Explain the meaning of business model.

5. How does manpower requirements affect compensation?

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CHAPTER 6: ASSESSMENT
Name: Date:
Section: Score:
Discussion and Identification.

1. What is the classification of Consumer Products?

2. Give the three levels of Product.

3. Differentiate Consumer Products from Industrial Products.

4. Discuss the methods of gathering data.

5. Prepare a Product Life Cycle for advertising your favorite soft drinks.

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