Module in Marketing Management | 0

PREFACE

Marketing Management is an organizational discipline, which deals with the

practical application of marketing orientation, techniques and methods in enterprises and
organizations and with the management of a company's marketing resources and activities.
This is a brief introductory that explains the methodologies applied in the rapidly growing
area of marketing management. This will be useful for students from management streams
who aspire to learn the basics of Marketing Management. Professionals, especially
managers, aspirants of entrepreneurship, regardless of which sector or industry they
belong to, can use this to learn how to apply the methods of Marketing Management in their
respective enterprise. Activities are provided at the end of every unit in order to evaluate
the students’ comprehension and to enhance their knowledge regarding the subject.

MEPM
NCN
NCV

Module in Marketing Management | 1

 TABLE OF CONTENTS

PAGE
Preface

UNIT I
INTRODUCTION TO MARKETING CORE CONCEPTS 4
Learning Objectives 4
Setting Up 4
Lesson Proper 6
What is Marketing? 6
Ways to Differentiate Selling and Marketing 7
The Marketing Mix 8
Core Concepts of Marketing 9
Marketing Management 12
The Evolution towards the Marketing Concept 13
References 15
Assessing Learning 16

UNIT II
MARKETING RESEARCH AND INFORMATION SYSTEM FOR DECISION MAKING 20
Learning Objectives 20
Setting Up 20
Lesson Proper 21
What is Marketing Research? 21
Who does Marketing Research? 21
The Role of Marketing Research 21
The Marketing Research Process 22
Marketing Information System 24
Characteristics of Marketing Information System 24
Components of Marketing Information System 25
Marketing Information System Process 27
References 27
Assessing Learning 28

UNIT III
CONSUMER BUYING BEHAVIOR 30
Learning Objectives 30
Setting Up 30
Lesson Proper 30
Consumer Classification 31
Factors Affecting Consumer Behavior 32
Consumer Decision Process 34
Factors that Influence Consumer Decision Process 36
References 36
Assessing Learning 38

UNIT IV

Module in Marketing Management | 2

THE PROMOTIONS MIX DECISIONS AND STRATEGIES 42
Learning Objectives 42
Setting Up 42
Lesson Proper 43
Different Tools in Promotion 43
References 44
Assessing Learning 45

UNIT V
DISTRIBUTION STRATEGY 48
Learning Objectives 48
Setting Up 48
Lesson Proper 49
What Is a Distribution Strategy? 49
What Are the Different Types of Distribution Strategies? 49
51
What Are Some of the Different Distribution Channels?
Elements of Physical Distribution Channels 51
References 54
Assessing Learning 55

Module in Marketing Management | 3

UNIT I. INTRODUCTION TO MARKETING CORE CONCEPTS

Overview

This unit discusses about the core concepts of marketing. It has been said that
marketing is everywhere and all around us. The essential ingredient in our daily lives, either
at home, in the workplace or in our journey to experience the wonders of nature. It tells that
it is the lifeblood of every successful organization, groups or individuals are it in the
domestic or international markets for goods and services.

Learning Objectives

At the end of the unit, I am able to:

1. Define marketing and discuss its core concepts;
2. Differentiate selling and marketing;
3. Define marketing management; and
4. Compare the different marketing management concepts.

Setting Up

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________

Direction: TRUE or FALSE. Write Marketing if the statement is correct and Management if
wrong on the space provided before each numbers.

____________________1. Marketing must be understood not in the old sense of making a sale
but rather in the new sense of satisfying customer needs.
____________________2. The marketing concept is management philosophy stating that an
organization should strive to satisfy the needs of consumers.
____________________3. Marketing is viewed as the performance of office personnel that
affects the flow of goods and services.
____________________4. The key objectives of each 3C’s of marketing must be attained to be
called the key results areas.
____________________5. In marketing, management is sales-volume oriented.
____________________6. Decision making are also needed regarding product quality, design,
features, branding and packaging.
____________________7. In pricing, management must determine the right profit for its
products.
____________________8. Wants become demands when supported by purchasing power.
____________________9. People satisfy their needs and wants with quality and design of the
products.
____________________10 The marketer can be a seller or a buyer.
.

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Multiple Choices. Write the letter of the correct answer on the space provided before the
number.

_____ 1. This refers to what the business offers for sale.

a. Product
b. Price
c. Place
d. Promotion
_____ 2. These are the desires that satisfies the needs.

a. Needs
b. Wants
c. Demands
d. Satisfactions
_____ 3. This are goods that are meant for final consumption by the ultimate consumers.

a. Consumer goods
b. Tangible goods
c. Intangible goods
d. Industrial goods
_____ 4. It refers to the group of consumers or organizations that is interested, has the
resources to purchase, and is permitted by law to acquire the product.

a. Networks
b. Prospects
c. Market
d. Stockholders
_____ 5. This usually happens because of changing preferences and taste of consumers.

a. Full demand
b. Declining demand
c. Irregular demand
d. Negative demand
_____ 6. In a strategic marketing concept which of the following variables is not included to
develop an effective marketing strategy.

a. Customer
b. Competitors
c. Company
d. Costs
_____ 7. It refers to the contract or agreement between two parties where a good or service is
exchange in return for a monetary value.

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 a. Exchange
b. Transaction
c. Communication
d. Promissory
_____ 8. A type of market who legally are permitted to buy the product.

a. Potential market
b. Available market
c. Qualified available market
d. Target market
_____ 9. It holds the belief that customers primarily want products that are affordable and
accessible.

a. Production concept
b. Product concept
c. Selling concept
d. Marketing concept
_____ 10. This concept holds the companies belief that the consumer should be place at the
center of the organization.

a. Production concept
b. Product concept
c. Selling concept
d. Marketing concept

Lesson Proper

What is Marketing

Marketing has been defined in various ways by different authors of marketing

textbooks, marketing educators, as well as marketers, and marketing practitioners. These
definitions may be attributed to their close association with marketing and business
professionals or perhaps their experiences in their respective businesses as readings of
related literature and studies, whether foreign or local.

The American Marketing Association, the official organization for academic and
professional marketers, defines marketing as: 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 objectives.

For Philip Kotler, (an American marketing author, consultant and professor),
Marketing is a social and managerial process by which individuals and groups obtain what
they need and want through creating, offering, and exchanging products of value with others.

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 This definitions of marketing rests on the following core concepts:
need/want/demand; product (goods/services/ideas); value/cost/satisfaction;
exchange/transaction; relationship/network; markets; and marketers/prospects.

Josiah Go, (chairman of 12 corporations and author of record-breaking best-selling

marketing books), define marketing based on the strategic 3C’s of Marketing: Customers,
Competitors, and Company.

The 3 C’s of marketing, a strategic marketing concept takes into consideration 3

variables to develop an effective marketing strategy. These variables are dynamic and
interdependent on each other, thus if one changes, the other has to change.

According to Go, the key objectives of each 3C’s of marketing must be attained to be
called marketing-oriented. The output of customers, competitors and company is
collectively called the “key result areas” namely: sales, market shares, and profit.

The Strategic 3C’s of Marketing

3 C’s Key Objectives
Customer To satisfy the needs, wants, and
expectations of target customers

Competitors To outperform competition

Company To ensure corporate health and profit

Figure 1

Ways to Differentiate Selling and Marketing

In general, we use marketing and selling as synonyms but there is a considerable

difference between both concepts. For a successful marketing manager, it is necessary to
understand the difference between Marketing and Selling.

According to Theodore Levitt, an American economist and a professor at the

Harvard Business School, the difference between selling and marketing is more than
semantic. A truly marketing-minded firm tries to create value satisfying goods and services
which the consumers will want to buy. What is offers for sale is determined not by the seller
but by the buyers. The seller takes his cues from the buyer and the product becomes the
consequence of the marketing effort, not vice versa. Selling merely concerns itself with the
tricks and techniques of getting the customers to exchange their cash for the company’s
products, it does not bother about the value satisfaction that the exchange is all about. On
the contrary, marketing views the entire business as consisting of a tightly integrated effort
to discover, create, arouse and satisfy customer needs.

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 Selling vs Marketing
Selling Marketing
1. Emphasis is on the product Emphasis is on consumer needs and wants

2. Company manufactures the Company first determines customers need

product first and wants and then decides out how to
deliver a product to satisfy these wants

3. Management is sales volume- Management is profit-oriented

oriented

4. Planning is short-run oriented Planning is long-run-oriented in terms of

in terms of today’s products today’s new products, tomorrow’s markets
and markets and future growth

5. Stresses needs of sellers Stresses needs and wants of buyers

6. Views business as a good Views business as producing consumer

producing process satisfying process

7. Emphasis on staying with Emphasis on innovation on every existing

existing technology and technology and reducing every sphere, on
reducing costs providing better costs value to the customer
by adopting a superior technology

8. Different departments work as All departments of the business work in

in a highly separate water- integrated manner, the sole purpose being of
tight compartments consumer satisfaction

9. Cost determines price Consumer determine price, price determines

cost

10. Selling views customer as a last Marketing views the customer as the very
link in business purpose of business
Figure 2

The Marketing Mix

The term marketing mix is a foundation model for businesses, historically centered
on product, price, place, and promotion (also known as the 4 Ps). The marketing mix has
been defined as the “set of marketing tools that the firm uses to pursue its marketing
objectives in the target market.”

Product refers to what the business offers for sale and may include products or
services. Product decisions include the "quality, features, benefits, style, design, branding,
packaging, services, warranties, guarantees, life cycles, investments and returns".

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 Price refers to decisions surrounding "list pricing, discount pricing, special offer
pricing, credit payment or credit terms". Price refers to the total cost to customer to acquire
the product, and may involve both monetary and psychological costs such as the time and
effort spent in acquisition.

Place is defined as the "direct or indirect channels to market, geographical

distribution, territorial coverage, retail outlet, market location, catalogues, inventory,
logistics and order fulfillment". Place refers either to the physical location where a business
carries out business or the distribution channels used to reach markets. Place may refer to a
retail outlet, but increasingly refers to virtual stores such as "a mail order catalogue, a
telephone call center or a website".

Promotion refers to "the marketing communication used to make the offer known
to potential customers and persuade them to investigate it further". Promotion elements
include "advertising, public relations, direct selling and sales promotions."

The original marketing mix or 4 Ps, as originally proposed by marketer and

Professor Edmund Jerome McCarthy, provides a framework for marketing decision-making.

Core Concepts of Marketing

Philip Kotler defines Marketing Management as a social and managerial process by

which individuals or firms obtain what they need or want through creating, offering,
exchanging products of value with each other. The following are the key and core concepts
of marketing:

Needs, Wants, and Demands

Needs are the feelings of deprivation of some satisfaction. People need food, air,
water, clothes and shelter for their survival. Marketers identify what type of products are
needed by society and their customers. By determining those needs, the marketers then
brings the products in the market that will fulfill the customers and the society’s needs at
large.

Wants are those desires that satisfy the needs. Wants are shaped by the persons
themselves and continuously changes according to time. There are only a few needs of
human but the wants are too many.

Demands are the wants of people for some specific products or services that are
backed by an ability and willingness to buy them. Wants become demands when supported
by purchasing power. Marketers focus on the increasing demand of those products in the
market by making it designable, attractive, and unique and also by keeping it in mind that
the product would be easily available in the market at an affordable price.

Products (Goods, Services, and Ideas)

A product, as defined by Kotler is anything that can be offered to satisfy a need or

want. He also uses other terms for products such as offerings, satisfiers or resources that
are capable of delivering satisfaction of a want or need.

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 Types of Products

Products are basically of two types, tangible product and intangible product.

1. Tangible Product is a physical object that can be perceived by touch such as a

building, vehicle, gadget, or clothing.
2. Intangible Product is a product that can only be perceived indirectly such as an
insurance policy. Intangible data products can further be classified into Virtual
Digital Goods that are virtually located on a computer and are accessible to
users as conventional types, such as jpeg and mp3 files, without requiring
application process or transformational work by programmers.

Products or goods can be classified into broad categories depending upon the
use for which they are meant.

1. Consumer Goods – are meant for final consumption by the ultimate consumers.
Bread, butter, TV sets, cosmetics and garments are all consumer goods.
2. Industrial Goods – are those meant for use in making other products or for
rendering a service in the operation of a business organization.

Value, Cost and Satisfaction

Value, cost, satisfaction: These three intertwined concepts constitute consumers’

product choice set. Generally speaking, value is the difference between the perceived
benefits gained from having or using the product and the cost of obtaining it. Customers
tend to maximize the value of any market offering within the bounds of search costs and
limited mobility, knowledge and income. A consumer’s satisfaction i.e., the level of his/her
felt state resulting from comparing a product’s perceived performance or outcome in
relation to his/her expectation, is linked to his perceived value of the offering. Marketers,
are however, more interested in the ‘customer perceived value’ defined as ‘the customer’s
evaluation of the difference between all the benefits and all the costs of a market offering
relative to those of competing offers’. This relates to the notion of exchange that underlies
the precepts within this course.

Customer satisfaction implies that forcus to mer value to occur the customer’s
expectations must be exceeded. Satisfied customers are likely to be repeat buyers and who
are likely to use favorable ‘word‐of‐mouth’ (WoM) about their good experiences with the
offering. Dissatisfied customers tend to switch to competitors and spread bad words about
the product to others.

Exchange and Transaction

Transaction and exchange are two terminologies that are often used
interchangeably due to the similarities between them. Furthermore, both these terms are
used in various contexts and subject matter where their meanings are different depending
on the circumstances in which they are used.

The key difference between transaction and exchange is that a transaction is a

contract or agreement between two parties where a good or service is exchanged in return

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for a monetary value whereas an exchange is a swap of a good or a service between two
parties. Transactions and exchanges happen in both personal and commercial contexts.
For exchange potential to exist, five conditions must be satisfied:
1. There are at least two parties involved
2. Each party has something that might be of value to the other party
3. Each party is capable of communication and delivery
4. Each party is free to accept or reject the exchange
5. Each party believes it is appropriate or desirable to deal with the other party

Relationships and Networks

Relationship marketing is a facet of customer relationship management (CRM) that

focuses on customer loyalty and long-term customer engagement rather than shorter-term
goals like customer acquisition and individual sales. The goal of relationship marketing (or
customer relationship marketing) is to create strong, even emotional, customer connections
to a brand that can lead to ongoing business, free word-of-mouth promotion and
information from customers that can generate leads.
Marketing network consists of the company and all of its supporting stakeholders:
customers, employees, suppliers, distributors, retailers, and advertising agencies, among
other with whom it has built mutually profitable business relationships.

Market

In marketing, the term market refers to the group of consumers or organizations

that is interested in the product, has the resources to purchase the product, and is
permitted by law and other regulations to acquire the product.
Beginning with the total population, various terms are used to describe the market
based on the level of narrowing:
 Total Population
 Potential market – those in the total population who have interest in acquiring the
product
 Available market – those in the potential market who have enough money to buy the
product
 Qualified available market – those in the available market who legally are permitted
to buy the product
 Target market – the segment of the qualified available market that the firm has
decided to serve (served market)
 Penetrated market – those in target market who have purchase the product
The size of the market is not necessarily fixed. For example, the size of the available
market for a product can be increased by decreasing the product’s price, and the size of the
qualified available market can be increased through changes in legislation that result in
fewer restrictions on who can buy the product.

Marketers and Prospects

When one party is more actively seeking an exchange than the other party, we call
the first party a marketer and the second party a prospect. A marketer is someone seeking
one or more prospects who might engage in an exchange of values. A prospect is someone

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whom the marketer identifies as potentially willing and able to engage in an exchange of
values.

Marketing Management

The American Association of Marketing define marketing management as the

process of planning and executing the conception, pricing, promotion, and distribution of
ideas, goods and services in order to create, exchange and satisfy individual and
organizational objectives.

The definition above recognizes that marketing management is a process involving

analysis, planning, implementation, and control; that it covers goods and services, and
ideas; that it rests on the motion of exchange; and that the goal is to produce satisfaction for
the parties involved.

The following are the 8 types of demand which are necessary for fulfilling the
customer value.

Demand State Definition Marketing Tasks

Negative demand This is created when  Try to create awareness
customers have disliked the rather than promotion
product but the product is  Inform the customers
actually useful to them. The about the importance of
customers try to avoid the the product
product and merely do not
want it.
Non-existent demand Target consumers are  Marketers should first
unaware of the product or create awareness
they know about the product  Find ways to connect the
but they are not interested benefits of the product
to buy. This may be with the person’s
happening because of natural needs and
culture or the customers interest
think that buying the  Aggressive promotion is
product is merely a wastage needed
of money.
Latent demand Many consumers may share  Producers need to
a strong need that cannot be understand the latent
satisfied by any existing demand of the customer
product.  Try to collect feedback
from the customer to
know what they want or
if they have any
complaints
Declining demand Declining demand happens  Reverse the declining
because of changing demand through
preference and taste of  Re-marketing
consumers, and the radical  Re-branding
technological development  Re-positioning

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Irregular demand This is created because of  Synchromarketing – which
usage rate based on intends to shift the pattern
seasonal, monthly, weekly, of demand to dampen
daily, hourly basis, seasonal, irregular, or
inconsistent demand
levels in order to
synchronize the demand
better to the ideal pattern
of supply.
Full demand The products have the same  Maintain the current level
demand all over the year. of demand in the face of
changing consumer
preferences and
increasing competition
 The organization must
maintain or improve the
its quality and continually
measure consumer
satisfaction to make sure
it is doing a good job
Overfull demand Suddenly people are likely  Demarketing – (unselling
buying more products that or marketing in reverse)
creates the shortage of an attempt by the firm to
supply and an increase in discourage all or some of
prices. its customers from making
purchases either
temporarily or
permanently.
Unwholesome demand People are aware of the bad  To get people who like
effect of the product but they something to give it up,
are still attracted to this. using tools such as fear
messages, price hikes and
reduced availability

The Evolution towards the Marketing Concept

There are five distinctive marketing concept types or approaches to achieving

effective marketing. Not all these type of marketing concept work for all industries, because
differ in function. Every marketing concept was created depending on the need of the
market. As markets changed, so did the concepts.

The Production Concept

Companies that use the production concept have the belief that customers primarily
want products that are affordable and accessible. The production concept is based on the
approach that a company can increase supply as it decreases its costs. Moreover, the
production concept highlights that a business can lower costs via mass production. A
company oriented towards production believes in economies of scale (decreased

Module in Marketing Management | 13

production cost per unit), wherein mass production can decrease cost and maximize profits.
As a whole, the production concept is oriented towards operations.

A working example of the production concept is a company that produces their

goods overseas. Producing retail goods abroad lowers costs and the resulting savings can be
passed on to the consumer. These lower prices could be a good incentive to attract new
consumers.

The use of the production concept is only effective when demand is greater than
supply. The biggest disadvantage of this concept is that it is not always the case that your
customer chooses to buy the most affordable and easily accessible product.

The Product Concept

Companies that focus on the product concept believe that the most significant
priorities for a customer are quality and functional characteristics of a product. What this
indicates is that a customer looks for innovative alternatives and always searches for the
best of what is currently available in the market. In addition, within this concept, it is
assumed that consumers stay loyal if they receive more product options and benefits.

Companies who keep this philosophy intact direct their marketing efforts in raising
their product quality. With this in mind, it is not surprising that many companies in
technology use the product concept. These companies always update and release their new
products. It is then important for these technology companies to create strong decisions on
how often they should release their new products.

The disadvantage of the product concept is that companies must recognize

that superior quality of a product does not make it sell automatically. Superior products will
sell only if they satisfy a consumer’s needs and wants. Moreover, consumers are not
attracted to goods simply because of its quality. They also factor in other variables, such as
a product’s price, availability, and the like. A quality product yet with a high price can dent
the budget of a consumer.

The Selling Concept

The selling concept involves companies that are sales oriented. What this means is
that they can make a product and then sell it to their target market without consideration of
their consumers’ needs or wants. The selling concept highlights that customers would buy a
company’s products only if the company were to sell these products aggressively.

The selling concept pays little attention to whether or not a product was truly
needed by consumers. The objective was to beat the competition merely in sales, with few
regarding the satisfaction of a consumer. Nowadays, this is called “hard selling,” wherein
goods are not bought – they are sold. This concept is based on the belief that consumers
may be attracted; hence, companies can focus their efforts in attracting and educating
consumers.

Although it may be effective for some time – that repeated efforts can sell anything –
this cannot be sustained for a long period of time. If a company is able to entice a consumer

Module in Marketing Management | 14

once, he or she cannot be won each and every time. Actually, this may even damage the
reputation of a business. Thus, this concept offers only short-term gains but not long-term
benefits.

The Marketing Concept

A company that believes in the marketing concept places the consumer at the center
of the organization. All activities are geared towards the consumer. A business, oriented
towards the market, aims to understand the needs and wants of a customer and executes
the marketing strategy according to market research beginning from product conception to
sales. As sales begin, further research can be implemented to figure out what customers
think about a product and whether improvements are needed. While markets change
continuously, product development and market research is always ongoing for a company
that concentrates on the market.

By focusing on the needs and wants of a target market, a company can deliver value,
more than its competitors. The marketing concept highlights the pull strategy, wherein a
brand is so strong that customers would always prefer your brand to others’. The main
concerns of a company that was focused on the marketing concept were the wants of
consumers, if they could develop the product while the consumers still wanted it, and how
they could keep customer satisfaction.

Companies who believe in the marketing concept opine that they can be successful
only through the satisfaction of their customers. This thinking is based on the belief
that goods and services are only made available only if consumers need or want them. A
small problem with the marketing concept is that there is no focus given towards societal
welfare.

The Societal Marketing Concept

The societal marketing concept is a relatively new marketing concept. While the
societal marketing concept highlights the needs and wants of a target market and the
delivery of better value than its competitors, it also underscores the importance of the well-
being of customers and society as a whole (consumer welfare or societal welfare).

The societal marketing concept goes one step further than the marketing concept.
Case in point, if a company creates a car that uses less fuel but has more pollution, this
would merely increase customer satisfaction, but not societal welfare. Companies who
believe in the societal marketing philosophy direct their marketing towards giving
customer satisfaction and social welfare.

With this last concept of marketing, companies receive long-term profit, not only
from the viewpoint of the consumer, but also of society.

References

Alminar-Mutya, Ruby F. Elements of Marketing: 3rd Edition. National Book Store,

Mandaluyong City, 2000

Module in Marketing Management | 15

Go, Josiah. Grow and Sustain your Network Marketing Distributor Business. Design Plus,
Quezon City, 2000

Go, Josiah. Fundamentals of Marketing in the Philippine Setting. Design Plus, Quezon City,
2001
Lao, Felix M. Jr. Principles of Marketing: 1st Edition, Anvil Publishing, Inc. Pasig City, 2001

Medina, Roberto G. Principles of Marketing: Revised Edition. Rex Book Store, Manila, 2008

https://mu-bit.com/blog/selling-and-marketing/#:~:text=Selling%20is%20an%20action
%20which,distributing%20the%20product%20or%20service
https://creately.com/blog/diagrams/elements-of-marketing-mix/

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 1-1

Directions: Identify which word or words that do not belong to the group. Write the letter of
the correct answer.

__________1. a. Full Demand c. Wholesome Demand

b. Overfull Demand d. Unwholesome Demand
__________2. a. Marketing concepts c. Product Concept
b. Basic Concepts d. Production Concept
__________3. a. Means c. Materials
b. Money d. Methods
__________4. a. Raw Materials c. Manufacturing Process
b. Machines and Equipment d. Finished Products
__________5. a. Brand Broadening c. New products
b. Product Growth d. Product innovation
__________6. a. Factory c. Target Market
b. Products d. Sales Volume
__________7 a. Felt Needs c. Real Needs
b. Delight Needs d. Secret Needs
__________8. a. Economy c. Flavor
b. Color d. Scent
__________9. a. Target Market c. Integrated marketing
b. Customer Needs d. Selling and Promotion
__________10. a. Profitability c. Customer Needs
b. Sales Volume d. Integrated Marketing

Activity 1-2

Module in Marketing Management | 16

Direction: TRUE or FALSE. Write Marketing if the statement is correct and Management if
wrong on the space provided before each numbers.

____________________1. Marketing must be understood not in the old sense of making a sale
but rather in the new sense of satisfying customer needs.
____________________2. The marketing concept is management philosophy stating that an
organization should strive to satisfy the needs of consumers.
____________________3. Marketing is viewed as the performance of office personnel that
affects the flow of goods and services.
____________________4. The key objectives of each 3C’s of marketing must be attained to be
called the key results areas.
____________________5. In marketing, management is sales-volume oriented.
____________________6. Decision making are also needed regarding product quality, design,
features, branding and packaging.
____________________7. In pricing, management must determine the right profit for its
products.
____________________8. Wants become demands when supported by purchasing power.
____________________9. People satisfy their needs and wants with quality and design of the
products.
____________________10 The marketer can be a seller or a buyer.
.

Activity 1-3

Directions: Answers the following.

1. Differentiate marketing and marketing management. Give and explain their importance to
the following: a) individual persons (consumers), b) business organizations and c) economy
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
________________________________________________________________________________________________

2. How can the organization attain its long-term objectives and gain competitive advantage
through the marketing mix strategy/
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
__________________________________________________________________________________________________

3. Explain the five competing concepts under which the organization can choose to conduct
their marketing entities.

Module in Marketing Management | 17

_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
________________________________________________________________________________________________

Module in Marketing Management | 18

UNIT II. MARKETING RESEARCH AND INFORMATION SYSTEM FOR
DECISION MAKING

Overview

This unit gives you an idea about the company’s ways of determining which product
will be patronized by different types of consumers or demographic and also to decide
whether to continue producing and selling the product or to pull it out from the market.

Learning Objectives

At the end of the unit, I am able to:

1. define marketing research;
2. discuss the marketing research process;
3. define marketing information system; and
4. differentiate marketing research and marketing information system.

Setting Up

Name : ____________________________________ Date: _______________

Course/Year/Section: ____________________

Direction: TRUE or FALSE. Write Marketing if the statement is correct and Research if
wrong on the space provided before each numbers.

____________________1. Marketing managers require current, reliable and useful information

to make effective decisions.
____________________2. Marketing managers often commission production development,
formal study of specific problems and opportunities.
____________________3. The marketing research makes decisions and because of that, it
substantially increases the success of any undertakings in the
marketing department.
____________________4. The marketing plan reduces the risks associated with managing
marketing strategies.
____________________5. Management must work together in defining the problem neither too
broad nor too narrow.
____________________6. Once the specific research questions have been agreed upon, a
research can now be developed.
____________________7. When a firm wishes to carry out a research project, the job can be
done by the company personnel or by an outside organization.
____________________8. Marketing researchers have steadily expanded their activities and
techniques over the years.
____________________9. Marketing managers may approve a research plan even before they
may know the cost involve of the research project.
____________________10 Survey is done by gathering six to ten peole who are invited to spend
. a few hours with skilled moderator to discuss a product or other

Module in Marketing Management | 19

 marketing entity.

Directions: The following grid contains terms associated with marketing research. Find and
encircle them. The words may be hidden in any direction.

L P Q E S U R V E Y A
A B U S T U D Y E R P
E N E M R O S E P T U
X S S B O O K S L I B
P K T S P K R A M M L
E I I G E L F B A I I
R J O U R N A L S N C
I O N O E M I R E G A
M A N Y F O R T R A T
E P A E D R I A N P I
N O I T A V R E S B O
T A R I T R O T S E N
M W E R A S E R S O N

Lesson Proper

What is Marketing Research?

Kotler defined marketing Research as the systematic design, collection, analysis, and
reporting of data and findings relevant to a specific market situation facing the company.

Marketing may also be described as the systematic and objective identification,

collection, analysis, and dissemination of information for the purpose of assisting
management in decision making related to the identification and solution of problems and
opportunities in marketing.

Who does Marketing Research?

When a firm wishes to carry out a research project, the job can be done by the
company itself, or by a third-party company that specializes in market research. It can be
done through surveys, product testing, and focus groups. Test subjects are usually
compensated with product samples and/or paid a small stipend for their time.

The Role of Marketing Research

The purpose of marketing research is to provide management with relevant,

accurate, reliable, valid, and up-to-date market information. Competitive marketing
environment and the ever increasing costs attributed to poor decision making require that

Module in Marketing Management | 20

marketing research provide sound information. Sound decisions are not based on gut,
feeling, intuition, or even pure judgment.

Managers make numerous strategic and tactical decisions in the process of

identifying and satisfying customer needs. They make decisions about potential
opportunities, target market selection, market segmentation, planning and implementing
marketing programs, marketing performance, and control. These decisions are complicated
by interactions between the controllable marketing variables of product, pricing,
promotion, and distribution. Further complications are added by uncontrollable
environmental factors such as general economic conditions, technology, public policies and
laws, political environment, competition, and social and cultural changes. Another factor in
this mix is the complexity of consumers. Marketing research helps the marketing manager
link the marketing variables with the environment and the consumers. It helps remove
some of the uncertainty by providing relevant information about the marketing variables,
environment, and consumers. In the absence of relevant information, consumers' response
to marketing programs cannot be predicted reliably or accurately.
Ongoing marketing research programs provide information on controllable and non-
controllable factors and consumers; this information enhances the effectiveness of
decisions made by marketing managers.

Traditionally, marketing researchers were responsible for providing the relevant

information and marketing decisions were made by the managers. However, the roles are
changing and marketing researchers are becoming more involved in decision making,
whereas marketing managers are becoming more involved with research. The role of
marketing research in managerial decision making is explained further using the
framework of the decide model.

The Marketing Research Process

To begin with the marketing research, following steps has to be followed:

Step 1. Define the Problem

The foremost decision that every firm has to undertake is to find out the problem for
which the research is to be conducted. The problem must be defined adequately because it
is too vague, then it may result in the wastage of scarce resources and if it is too narrow,
then the exact conclusion cannot be drawn. In order to define the problem appropriately,
each firm must have a clear answer to the questions. What is to be researched? (Content
and the scope) and why the research is to be done? (Decisions that are to be made).

Step 2. Develop the Research Plan

This step involves gathering the information relevant to the research objectives. It
includes:

 Data Sources: The researcher can collect the data pertaining to the research
problem from either the primary source or the secondary source or both the
sources of information. The primary source is the first-hand data that does not exist
in any books or research reports whereas the secondary data is the second-hand

Module in Marketing Management | 21

 data which is available in the books, journals, reports, government publications, and
commercial data.

 Research Approaches: The secondary data are readily available in books, journals,
magazines, reports, online, etc., but the primary data have to be collected and to do
so, the following research can be conducted:

Observational Research: The researcher can collect the information by just

observing the happenings in the market and sometimes having a friendly
conversation with the customers to know about their purchase experiences.

Ethnographic Research: it is one of the forms of an observation research where the

researcher studies an individual in the real life situation and not under any market
set-up or a laboratory. The purpose of this research is to know the way people live,
what they do to earn their living, how they consume goods and services, what they
need in their personal and professional lives, etc.

Focus Group Research: It is a form of group discussion wherein six to ten people
gather and discuss the common topic given by the moderator. A moderator is a
person who conducts the group discussion and is skilled in group dynamics. He also
keeps the discussion focused on the topic so that relevant information can be
obtained from the group members.

Survey Research: These are the descriptive research generally conducted to know
about the customer’s knowledge about the product, their preferences, and
satisfaction level. The best way to conduct survey is through the Questionnaires.

Behavioral Data: The customer’s actual purchases at the store reflects its behavior
and the choice of product. Thus observing what customers are buying gives more
accurate information about the customer rather than the planned answers given by
them in the surveys.

Experimental Research: This is done to find out the cause and effect relationships.
This research is undertaken to study the effects of change in the customer’s
behavior due to the change in the product’s attributes.

 Sampling Plan: Once the research approach is decided, the researcher has to design
a sampling plan and have to decide on the following:

The sampling unit – e.g. Whom shall we survey?

The sample size – e.g. How many units in the population shall be surveyed?

The sampling procedure – e.g. How the respondents shall be chosen?

 Contact Methods: The researcher has to choose the medium through which the
respondents can be contacted. The respondents can be reached via emails,
telephone, in person or online.

Step 3. Collect the Information

Module in Marketing Management | 22

 This is one of the most expensive methods of marketing research. At this stage, the
researcher has to adopt the methods to collect the information. He may find it difficult to
gather the correct information because of the respondent’s biasedness, unwillingness to
give answers, or not at home.

Step 4. Analyze the Information

Once the information is collected, the next step is to organize it in such a way that
some analysis can be obtained. The researchers apply several statistical techniques to
perform the analysis, such as they compute averages and measures of dispersion. Also,
some advanced decision models are used to analyze the data.

Step 5. Present the Findings

Finally, all the findings and the research are shown to the management level –
managing director, CEO, or board of directors to make the marketing decisions in line with
the research.

Step 6. Make the Decision

This is the last step of the marketing research. Once the findings are presented to
the top level management, it is up to them either to rely on the findings and take decisions
or discard the findings as unsuitable.

Marketing Information System

The Marketing Information System refers to the systematic collection, analysis,

interpretation, storage, and dissemination of the market information, from both the internal
and external sources, to the marketers on a regular, continuous basis.

The marketing information system distributes the relevant information to the

marketers who can make the efficient decisions related to the marketing operations –
pricing, packaging, new product development, distribution, media promotion, etc.

Characteristics of Marketing Information System

The marketing information system is presently used by all kinds of organizations to

attain a competitive edge and success in their business.

The following are the characteristics of marketing information system:

Computer-Based System: In the marketing information system, all the information is

gathered, analyzed, and communicated through a computer device, and the useful
marketing information is stored in microfilms.

Quick, Selective, and Accurate Information: The organization can maintain relevant
marketing database through marketing information system which can be immediately and
accurately accessed anytime.

Module in Marketing Management | 23

Easy Accessibility: The information maintained with the help of the marketing information
system can be easily viewed and utilized through a computer system.

Interrelated Components: In marketing decisions and communication, all the four

components are inter-linked, e.g. the information provided by one element is useful for the
functioning of the other aspects.

These interconnected components include internal report, marketing research,

marketing intelligence, and marketing decision support systems.

Future-Oriented: The marketing information system initiates strategy formulation and

planning for future marketing operations.

Supports Decision Making: Since this system provides an accurate marketing database, it
can be certainly used for instantaneous decision making, by the marketing managers.

Consistent Information: marketing information system enables the management and

decision-makers to assess relevant, updated and valuable marketing information.

Applicable at All Levels of Management: Every manager uses the marketing information
system to decide marketing strategies, plans, policies and procedures prepared at all
managerial levels.

Components of Marketing Information System

The marketing information system integrates data collection, processing, analysis,

and reporting for restructuring marketing activities using the four primary components.
These components function within a framework of marketing decisions and
communication.

Internal Reporting System

The company can collect information through its internal records comprising of
sales data, customer database, product database, financial data, operations data, etc.

The information can be collected from the documents such as invoices, transmit
copies, billing documents prepared by the firms once they receive the order for the goods
and services from the customers, dealers or sales representatives.

The current sales data should be maintained on a regular basis that serves as an aid
to the marketing information system. The reports on current sales and the inventory levels
help the management to decide on its objectives, and the marketers can make use of this
information to design their future sales strategy.

The companies maintain several databases such as:

Customer database wherein the complete information about the customer’s name,
address, contact number, frequency of purchase, financial position, etc. is saved.

Module in Marketing Management | 24

 Product database wherein the complete information about the products price,
features, variants is stored.

Sales person database wherein the complete information about the sales person, his
name, address, contact number, sales target, etc. is saved.

The companies store their data in the data warehouse from where the data can be
retrieved anytime the need arises. Once the data is stored, the statistical experts mine it by
applying several computer software and techniques to convert it into meaningful
information that gives facts and figures.

Marketing Intelligence System

The marketing intelligence system provides the data about the happenings in the
market, e.g. data related to the marketing environment which is external to the
organization. It includes the information about the changing market trends, competitor’s
pricing strategy, change in the customer’s tastes and preferences, new products launched in
the market, promotion strategy of the competitor, etc.

In order to have an efficient marketing information system, the companies should

work aggressively to improve the marketing intelligence system by taking the following
steps:

 Providing the proper training and motivating the sales force to keep a check on the
market trends, e.g. the change in the tastes and preferences of customers and give
suggestions on the improvements, if any.
 Motivating the channel partners – dealer, distributors, retailers who are in the
actual market to provide the relevant and necessary information about the
customers and the competitors.
 The companies can also improve their marketing intelligence system by getting
more and more information about the competitors. This can be done either by
purchasing the competitor’s product, attending the trade shows, reading the
competitors published articles in magazines, journals and financial reports.
 The companies can have an efficient marketing information system by involving the
loyal customers in the customer advisory panel who can share their experiences and
give advice to the new potential customers.
 The companies can make use of the government data to improve its marketing
information system. The data can be related to the population trends, demographic
characteristics, agricultural production, etc. that help an organization to plan its
marketing operations accordingly.
 Also, the companies can purchase the information about the marketing environment
from the research companies who carry out the researches on all the players in the
market.
 The marketing intelligence system can be further improved by asking the customers
directly about their experience with the product or service via feedback forms that
can be filled online.

Marketing Research

Module in Marketing Management | 25

 The marketing research is the systematic collection, organization, analysis, and
interpretation of the primary or the secondary data to find out the solutions to the
marketing problems. Several companies conduct marketing research to analyze the
marketing environment comprising of changes in the customer’s tastes and preferences,
competitor’s strategies, the scope of new product launch, etc. by applying several statistical
tools. In order to conduct the market research, the data is to be collected that can be either
primary data or the secondary data.

A marketing research contributes a lot in the marketing information system as it

provides the factual data that has been tested several times by the researchers.

Marketing Information System Process

Step 1. Since every piece of information involves some opportunity cost as well as a
real cost, it is essential to wisely select the subject or area requiring the application of a
marketing information system and deciding a suitable metrics, accordingly.
Step 2. Next comes the collection of required data as per the selected metrics from
various internal sources (books of account, sales record, sales reports, and analytics) and
external sources (customer surveys, economic or financial metrics, social media insights,
and competitor results).
Step 3. Then, the gathered data needs to be organized and plotted systematically on
a graph to facilitate comparative analysis, future prediction, and interpretation.
Step 4. The fourth step is to communicate the graphical information to the various
departments for a better interpretation and analysis of the available data and the
determination of multiple alternatives (decisions) as per organizational goals.
Step 5. The last step is to decide the best possible course of action of the marketing
metrics and applying it to the business to enhance the marketing results.

References

Alminar-Mutya, Ruby F. Elements of Marketing: 3rd Edition. National Book Store,

Mandaluyong City, 2000

Go, Josiah. Grow and Sustain your Network Marketing Distributor Business. Design Plus,
Quezon City, 2000

Go, Josiah. Fundamentals of Marketing in the Philippine Setting. Design Plus, Quezon City,
2001
Lao, Felix M. Jr. Principles of Marketing: 1st Edition, Anvil Publishing, Inc. Pasig City, 2001

Medina, Roberto G. Principles of Marketing: Revised Edition. Rex Book Store, Manila, 2008

https://www.economicsdiscussion.net/marketing-management/what-is-marketing-
research/31835#:~:text=The%20main%20objective%20of%20marketing,customer
%20toward%20the%20firm's%20product.

https://www.mymarketresearchmethods.com/the-market-research-process-6-steps-to-
success/

Module in Marketing Management | 26

https://businessjargons.com/marketing-research.html

https://businessjargons.com/marketing-information-system.html

https://theinvestorsbook.com/marketing-information-system.html

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 2-1

Directions: Identify what is being described in each of the following statements. Write your
answer on the space provided before the number.

___________________________1. A systematic design, collection, analysis and reporting of data

and findings relevant to a specific situation facing the
company.
___________________________2. The first step in the research process.
___________________________3. Designing this, calls for decisions on the data sources, research
approaches, research instruments, sampling plan, and contact
methods.
___________________________4. The data that were collected for another purpose and already
exist somewhere else.
___________________________5. A process, by which information about the environment is
generated, analyzed and interpreted for use in marketing
decision making.
___________________________6. This provides a starting point for research and offers the
advantages of low cost and readily availability.
___________________________7. According to Kotler, questionnaires and mechanical devices
are two types of what?
___________________________8. These are the most common forms used in survey as well as in
experiments because of its flexibility
___________________________9. An interacting structure of people, equipment, methods and
controls which is designed to create an information flow that is
capable of providing an acceptable base for management
decisions in marketing.
___________________________10 An organized way of continually gathering and analyzing data
. to get information to help marketing managers make decisions.

Activity 2-2

Module in Marketing Management | 27

Direction: TRUE or FALSE. Write Marketing if the statement is correct and Research if
wrong on the space provided before each numbers.

____________________1. Marketing managers require current, reliable and useful information

to make effective decisions.
____________________2. Marketing managers often commission production development,
formal study of specific problems and opportunities.
____________________3. The marketing research makes decisions and because of that, it
substantially increases the success of any undertakings in the
marketing department.
____________________4. The marketing plan reduces the risks associated with managing
marketing strategies.
____________________5. Management must work together in defining the problem neither too
broad nor too narrow.
____________________6. Once the specific research questions have been agreed upon, a
research can now be developed.
____________________7. When a firm wishes to carry out a research project, the job can be
done by the company personnel or by an outside organization.
____________________8. Marketing researchers have steadily expanded their activities and
techniques over the years.
____________________9. Marketing managers may approve a research plan even before they
may know the cost involve of the research project.
____________________10 Survey is done by gathering six to ten peole who are invited to spend
. a few hours with skilled moderator to discuss a product or other
marketing entity.

Activity 2-3

Directions: Answers the following.

1. What is marketing research? Discuss its role or importance to any business organization?
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________

2. Why is there a need for concrete process in conducting marketing research?

_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________

Module in Marketing Management | 28

UNIT III. CONSUMER BUYING BEHAVIOR
Overview

This unit discusses about the action that a person takes place in purchasing a product a way
in which a company learns the different information that it needs to know about its target
market.

Learning Objectives

At the end of the unit, I am able to:

1. classify the consumer’s characteristics in buying; and
2. identify the factor that can influence consumer behavior.

Setting Up

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________

Direction: TRUE or FALSE. Write Consumer if the statement is correct and Behaviour if
wrong on the space provided before each numbers.

____________________1. The sustainability of operations of business depends on how well

consumers patronize their products or services.
____________________2. Marketing’s purpose is the never ending quest to learn about the
consumers, where to locate them and reach them.
____________________3. Consumer needs must always be the focus of every responsible
marketer.
____________________4. Many marketers have found that family cycle can prove a valuable
instrument for market segmentation and for developing marketing
campaigns.
____________________5. Marketers can be able to adapt their strategies and become
successful in their marketing efforts by studying the reference
groups that affects consumers.
____________________6. The marketer needs to develop strategies that assist the buyer in
learning about the product’s attributes and their relative importance.
____________________7. Sometimes the consumer is highly involved in a purchase but sees
little in the brands.
____________________8. This is usually the case, when the product is expensive it is bought in
frequently, it is risky and self-expressive.
____________________9. Those with decreasing income spend a good percentage of their time
leisure and recreation.
____________________10 According to lao, consumer decision making varies with the type of
. buying decisions.

Lesson Proper

Module in Marketing Management | 29

Consumer Classification

When it comes to marketing, there is one aspect every business should be aware of:
not all consumers are created equal. Just like there are different types of goods, services,
and products, there are different types of consumers. They have different motivations for
purchasing, different modes of engaging and different mindsets. In order to market a brand
successfully, a business needs to understand the different type of consumer and how to
adapt effective marketing strategy for them

Loyal Consumers

Loyal consumers are likely to comprise a small segment of your consumer base.
However, because of their loyalty, they are valuable to every business. Once they have found
the right company to do business with, they will remain loyal, often becoming a promoter of
the brand by sharing their experience with their friends, family and extended social
network.

According to recent study, only between 12 and 15 percent of consumers are loyal
to a single retailer. However, that small group tends to generate between 55 to 70 percent
of brand sales. How can a brand successfully market to a loyal consumer? The keys are:
personalization, individualized attention, and repeated marketing contact. These kinds of
marketing strategies will yield the biggest return on investment.

Discount Consumers

Discount consumers are always on the hunt for discounts. Like loyal consumers,
they also have a tendency to frequent patronize the same organizations and brands.
However, they only make purchases when there is some kind of sale or discount. To market
to the discount consumer, the company need to advertise their offers and specials. Social
media is a great way to share sales and ongoing promotions, as are personalized emails or
brochures.

Impulsive Consumers

Impulse consumers are the most difficult when it comes to maximizing marketing
strategies. These consumers often do not shop with a specific product or service in mind.
Rather, they may purchases unpredictably, buying when something strikes their fancy.
Considering the unusual nature of impulsive consumer purchasing habits, vast majority of
purchases are actually impulse purchases.

When brands figure out how to effectively market to impulse consumers, they can
drive up their sales. Keep in mind that impulse buying tends to be emotionally driven as
opposed to logically driven. This is distinct from more rationally driven consumer types,
such as discount consumers (driven by a desire to save money), and loyal consumers
(driven by loyalty to a specific brand). The key is to tap into the impulsive consumer’s
emotions.

Need-Based Consumers

Module in Marketing Management | 30

 Need-based consumers purchase to fulfill a need. Maybe they have run into financial
trouble and need advice. Perhaps they are going on vacation and need a new set of luggage.
They could be approaching a milestone in their life and are seeking legal advice. In order to
market to a need-based consumer, your marketing strategy needs to anticipate these needs
effectively. That means utility-centric marketing, across multiple channels, including print,
online and social media. You need to segment your consumers by needs and adapt a
marketing strategy to each of those needs, outlining how you can help in a particular
situation or promoting a specific service.

Factors Affecting Consumer Behavior

Consumer behavior refers to the selection, purchase, and consumption of goods and
services for the satisfaction of their wants. There are different processes involved in the
consumer behavior. Initially, the consumer tries to find what commodities he would like to
consume, then he selects only those commodities that promise greater utility. After
selecting the commodities, the consumer makes an estimate of the available money which
he can spend. Lastly, the consumer analyzes the prevailing prices of commodities and takes
the decision about the commodities he should consume. Meanwhile, there are various
factors influencing the purchases of consumers such as social, cultural, personal, and
psychological.

Cultural Factors

Consumer behavior is deeply influenced by cultural factors such as: buyer culture,
subculture and social class.

Culture. Basically culture is the part of every society and is the important cause of
person wants and behavior. The influence of culture on buying behavior varies from
country to country therefore marketers have to be very careful in analyzing the culture of
different groups, regions or even countries.

Subculture. Each culture contains different subcultures such as religions,

nationalities, geographic regions, racial groups, etc. Marketers can use these groups by
segmenting the market into various small portions. For example, marketers can design
products according to the needs of a particular geographic group.

Social Class. Every society possesses some form of social class which is important to
the marketers because the buying behavior of people in a given social class is similar. In this
way, marketing activities could be adapted according to different social classes. It should be
noted that social class is not only determined by income but there are various other factors
such as: wealth, education, occupation, etc.

Social Factors

Social factors also impact the buying behavior of consumers. The important social
factors are: reference groups, family, role, and status.

Reference group. Reference groups have potential in forming a person attitude or

behavior. The impact of reference groups varies across products and brands. For example: if

Module in Marketing Management | 31

the product is visible such as dress, shoes, car, etc. then the influence of reference groups
will be high. Reference groups also include opinion leader (a person who influences other
because of his special skill, knowledge or other characteristics).

Family. Buyer behavior is strongly influenced by the member of a family. Therefore

marketers are trying to find the roles and influence of the husband, wife and children. If the
buying decision of a particular product is influenced by wife, then the marketers will try to
target the women in their advertisement. It should be noted that buying roles change with
change in consumer lifestyles.

Roles and Status. Each person possesses different roles and status in the society
depending upon the groups, clubs, family, organization, etc. to which he belongs. For
example: a woman is working in an organization as a finance manager – she is playing two
roles, one of finance manager and other of mother. Therefore her buying decisions will be
influenced by her role and status.

Personal Factors

Personal factors can also affect the consumer behavior. Some of the important
personal factors that influence the buying behavior are: lifestyle, economic situation,
occupation, age, personality, and self-concept.

Age
Age and life-cycle have potential impact on the consumer buying behavior. It
is obvious that the consumers change the purchase of goods and services with the
passage of time. Family life-cycle consists of different stages such young singles,
married couples, unmarried couples, etc. which help marketers to develop
appropriate products for each stage.

Occupation
The occupation of a person has significant impact on his buying behavior.
For example: a marketing manager of an organization will try to purchase business
suits, whereas a low level worker in the same organization will purchase rugged
work clothes.

Economic situation
Consumer economic situation has great influence on his buying behavior. If
the income and savings of a customer is high, then he will purchase more expensive
products. On the other hand, a person with low income and savings will purchase
inexpensive products.

Lifestyle
Lifestyle of customers is another important factor affecting the consumer
buying behavior. Lifestyle refers to the way a person lives in a society and is
expresses by the things in his/her surroundings. It is determined by customer
interests, opinions, activities, etc. and shapes his whole pattern of acting and
interacting in the world.

Personality

Module in Marketing Management | 32

 Personality changes from person to person, time to time and place to place.
Therefore, it can greatly influence the buying behavior of customers. Personality is
not what one wears, rather it is the totality of behavior of a man in different
circumstances. It has different characteristics such as dominance, aggressiveness,
self-confidence, etc. which can be useful to determine the consumer behavior for
particular product or service.

Psychological Factors

There are four important psychological factors affecting the consumer buying
behavior. These are:

Motivation
The level of motivation also affects the buying behavior of customers. Every
person has different needs such as physiological needs, biological needs, social
needs, etc. The nature of the needs is that, some of them are most persuasive while
others are least persuasive. Therefore, a need becomes a motive when it is more
persuasive to direct the person to seek satisfaction.

Perception
Selecting, organizing, and interpreting information in a way to produce a
meaningful experience of the world is called perception. There are three different
perceptual processes which are selective attention, selective distortion, and
selective retention. In case of selective attention, marketers try to attract the
customer’s attention. Whereas, in case of selective distortion, customers try to
interpret the information in a way that will support what the customers already
believe. Similarly, in case of selective retention, marketers try to retain information
that supports their beliefs.

Beliefs and Attitudes

Customer possesses specific belief and attitude towards various products.
Since such beliefs and attitudes make up brand image and affect consumer buying
behavior therefore, marketers are interested in them. Marketers can change the
beliefs and attitudes of customers by launching special campaigns in this regard.

Consumer Decision Process

The buying behavior model is one method used by marketers for identifying and
tracing the decision making process of a customer from the start to the end. The process is
categorized into five different stages.

Need Recognition

Need recognition occurs when a consumer exactly determines their needs.

Consumers may feel like they are missing out something and needs to address this issue so
as to fill in the gap. When businesses are able to determine when their target market starts
developing these needs or wants, they can avail the ideal opportunity to advertise their
brands.

Information Search

Module in Marketing Management | 33

 The information search stage in the buyer decision process tends to change
continually as consumers require obtaining more and more information about products
which can satisfy their needs. Information can also be obtained through recommendations
from people having previous experiences with products.

At this level, consumers tend to consider risk management and prepare a list of the
features of a particular brand. This is done so because most people do not want to regret
their buying decision. Information for products and services can be obtained through
several sources like:

Commercial sources: advertisements, promotional campaigns, sales people or

packaging of a particular product

Personal sources: The needs are discussed with family and friends who provided
product recommendations

Public sources: Radio, newspaper, and magazines

Experiential sources: The own experience of a customer of using a particular brand

Evaluation of Alternatives

This step involves evaluating different alternatives that are available in the market
along with the product lifecycle. Once it has been determined by the customer what can
satisfy their need, they will start seeking out the best option available. This evaluation can
be based upon different factors like quality, price or any other factor which are important
for customers. They may compare prices or read reviews and then select a product which
satisfies their parameters the most.

Purchase Decision

When all the above stages have been passed, the customer has now finally decided
to make a purchasing decision. At this stage, the consumer has evaluated all facts and has
arrived at a logical conclusion which is either based upon the influence from marketing
campaigns or upon emotional connections or personal experiences or a combination of
both.

Post Purchase Behavior

The purchase of the product is followed by post-purchase evaluation which refers to

analyzing as to whether the product was useful for the consumer or not. If the product has
matched the expectations of the customer, they will serve as a brand ambassador who can
influence other potential consumers which will increase the customer base of that
particular brand. The same is true for negative experiences, however, it can halt the journey
of potential customers towards the product.

Factors that Influence Consumer Decision Process

Module in Marketing Management | 34

Economic Factor

This is one of the main foundation of any purchasing decision. People cannot buy
what they cannot afford. The need of a product also does not pay a role here, but the most
important thing is affordability.

Functional Factor

This factor also plays a very important role in the buying decision. The factor is
totally about needs, backed by a logic that what makes sense and also fits in the best
interest of the customer.

Marketing Mix Factors

The four components in the marketing mix (product, pricing, promotion, and place)
have a direct or indirect impact on the buying process of the consumers. The consumer
considers various things like the characteristics of the product, priced charged, availability
of the product at the required location and much more.

Personal Factors

The personal factors include age, occupation, lifestyle, social and economic status
and the gender of the consumer. These factors can individually or collectively affect the
buying decisions of the consumers.

Psychological Factors

When it comes to the psychological factors, there are four important things affecting
the consumer buying behavior: perception, motivation, learning, beliefs and attitudes.

Social Factors

Social factors include reference groups, family, and social status. These factors in
turn reflect an endless and vigorous inflow through which people learn different values of
consumption.

Cultural Factors

Since each individual lives in a complex social and cultural environment, the kinds of
products or services they intend to use can be directly or indirectly be influenced by the
overall cultural context in which they live and grow. These cultural factors include race and
religion, tradition, and moral values.

References

Alminar-Mutya, Ruby F. Elements of Marketing: 3rd Edition. National Book Store,

Mandaluyong City, 2000

Module in Marketing Management | 35

Go, Josiah. Grow and Sustain your Network Marketing Distributor Business. Design Plus,
Quezon City, 2000

Go, Josiah. Fundamentals of Marketing in the Philippine Setting. Design Plus, Quezon City,
2001
Lao, Felix M. Jr. Principles of Marketing: 1st Edition, Anvil Publishing, Inc. Pasig City, 2001

Medina, Roberto G. Principles of Marketing: Revised Edition. Rex Book Store, Manila, 2008

https://courses.lumenlearning.com/boundless-marketing/chapter/the-consumer-decision-
process/

Module in Marketing Management | 36

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 3-1

Directions: Identify what is being described in each of the following statements. Write your
answer on the space provided before the number.

___________________________1. This term entails recognition of a shortage of a product or

services or unfulfilled desire.
___________________________2. This consumer decision process is performed after the
consumer decides that the shortage or unfulfilled desire is
worth further consideration.
___________________________3. This type of buying behavior occurs for the sake of variety
rather that dissatisfaction.
___________________________4. Marketing communication should aim at supplying beliefs and
evaluations that help the consumer feel good about his or her
what?
___________________________5. What is an example of low-involvement products?
___________________________6. When consumers are highly involved in a purchase and aware
of significant differences among brands, they engage in what
we call as what?
___________________________7. This term refers to the ranking of people within the culture.
___________________________8. Refers to a group of people sharing a distinctive heritage, such
as Filipinos or Americans.
___________________________9. A descriptive thought that a person holds about something
___________________________10 This term is anchored on how a person carries out his or her
. roles as worker, family member, citizen and friend.

Module in Marketing Management | 37

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 3-2

Direction: Categorize the following products or services into three types of buying
decisions.

Category 1: It requires little time and effort to make a buying decision. „

Category 2: It requires a moderate amount of time and effort to make a buying
decision. „
Category 3: It requires a considerable amount of time and effort to make a
buying decision.

 vegetables
 flash drive
 university courses
 television
 facial services
 sports shoes
 houses
 cars
 tissue packs
 candies
 magazines
 luxury goods (e.g. jewelries, Hermes hand bags)

Category 1 Category 2 Category 3

Module in Marketing Management | 38

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 3-3

Direction: Answer the following.

1. Why consumers are important?

_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________

2. Why is there a need to study the buying behavior of the consumers?

_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________

3. Why is social class an important factor in consumer buying behavior?

_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________

Module in Marketing Management | 39

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 3-4

Direction: Suggest examples explaining how the following factors affect consumer behavior.

1. A person’s occupation, age, lifestyle, and family life-cycle stage

2. A person’s national culture, peer group influences, and attitude

Module in Marketing Management | 40

UNIT IV. THE PROMOTIONS MIX DECISIONS AND STRATEGIES

Overview

This unit discusses the one component of marketing mix, the most pervasive and the
most influential element. It is also discusses in this unit the tools that is typically used in
promotions.

Learning Objectives

At the end of the unit, I am able to:

1. enumerate the elements of promotional mix
2. compare the different tools in promotions

Setting Up

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________

Direction: TRUE or FALSE. Write Promotion Mix if the statement is correct and Management
if wrong on the space provided before each numbers.

____________________1. The fundamental purpose of advertising is to persuade customers to

buy.
____________________2. Once a company decides to advertise, management develops an
advertising campaign.
____________________3. Management should create an advertising agency as part of the firm’s
total promotional program.
____________________4. Good public relations can be achieved by supporting charitable
projects.
____________________5. Sales promotion should not be included in a company’s strategic
marketing plan along with advertising and personal selling.
____________________6. Promotion is not only confined to marketing but is also used in other
institutions.
____________________7. Among the components of marketing mix, promotion has become the
least visible and least influential element.
____________________8. No matter how ideal is the promotion mix design, what finally
determines the type of promotion to be used is the amount of funds
that a firm can afford to spend.
____________________9. The degree of product differentiation also dictates the type of
promotion to be used.
____________________10 Promotion tends to be very intensive when product reaches maturity
. stage.

Module in Marketing Management | 41

Lesson Proper

The promotion element of marketing mix is concerned with activities that are
undertaken to communicate with customers and distribution channels to enhance the sales
of the firm.

The promotional communication aims at informing and persuading the customer to

buy the product and informing him about the merits of the products.

Promotion Mix

It refers to all the decisions related to promotion of sales of products and services.
The important decisions of promotion mix are selecting advertising media, selecting
promotional techniques, using publicity measures and public relations etc.

There are various tools and elements available for promotion. These are adopted by
firms to carry on its promotional activities. The marketer generally chooses a combination
of these promotional tools.

Following are the tools or elements of promotion. They are also called elements of
promotion mix:

1. ADVERTISING
Advertisement can be defined as the “paid form of non-personal presentation and
promotion of idea, goods or services by an identified sponsor”.

It is an impersonal presentation where a standard or common message regarding

the merits, price and availability of product or service is given by the producer or marketer.
The advertisement builds pull effect as advertising tries to pull the product by directly
appealing to customer to buy it.

From the above definition we can find that the three distinct features of advertising
are:

1. Paid Form:
The sponsor has to pay for advertising he has to bear a cost to communicate with
customers.

2. Impersonality:
There is no face to face contact between customers and advertiser. It creates a
monologue and not a dialogue.

3. Identified Sponsor:
Advertisement is given by an identified company or firm or individual.

Module in Marketing Management | 42

Features of Advertising and Advantages/Merits of Advertisement

1. Reach
Advertising can reach a large market. As through various media of advertising
there is benefit of mass reach for example, any message given on All India Radio or TV
can reach in different corners of the country wherever TV and Radio network is
available.

2. Choice
There is wide variety of media available for advertising for video, audio, visual
audio, print media etc. Under each category large variety is available for example, in
print media we can select from magazines, newspaper, banner etc. This variety or
choice helps the marketer to select the media, keeping in mind the target customer.

3. Legitimacy
In advertisement the messages regarding the product or service are given
publicly to customers so there is always a proof for it and customers believe that
publicly the company will not give false information of the product. The customer feels
comfortable to buy a product which is widely advertised.

4. Expressiveness
Advertising provides enough opportunities to marketers to dramatize the
message with the help of drawings, colours, pictures, music, dance
etc. They can easily express the use of product through various techniques, and can add
multimedia effect also.

5. Economy
It is always felt that advertising increases the cost of product or service but
advertising is considered economical as compared to other promotional techniques
because it reaches masses and if we calculate cost per customer it is very low or
nominal.

6. Enhancing Customer Satisfaction and Confidence:

Customer feel more assured about quality and feel more comfortable if sponsors
claim these benefits in advertising.

Disadvantages of Advertising
1. It is an Impersonal Communication/Less Forceful
In advertising there is no direct communication between the customer and
marketer. The marketer assumes that the message is communicated but the audience or
customers do not pay any attention to impersonal messages conveyed through
advertising. The response of customer cannot be known in advertising.

2. Advertising is less effective

In advertising there is only one way communication i. e., communication from
seller only, but two way communication is always more effective as in two way

Module in Marketing Management | 43

 communication the customer gets chance to clarify his or her queries. Sometimes
customers have many doubts regarding the use of product, these doubts can be clarified
only when there is two way communication.

3. Difficulty in Media Choice

In advertising various media are available. Each media have its own advantages
and disadvantages. So the effectiveness of advertisement depends to a great extent on
the right choice of media. When choice of media is faulty or wrong no matter how good
the advertisement is it will not reach the target customer.

4. Inflexibility
It is very difficult to change advertisement as companies use standardized
messages which cannot be changed according to the need of customers.

5. Lack of Feedback
The evaluation of effectiveness of advertisement is very difficult as there is no
immediate and accurate feedback given by the customers.

Objections to Advertising or Criticism of Advertising

Advertising has been subject to lot of criticisms. The following are main objections
raised on advertisements by a group of people. Along with objections the answers to these
objections are also mentioned below:

1. Effect of Advertising on Values, Materialism and Life Styles

The major objection on advertisement is that it promotes materialism. The
advertisements inform people about more and more products, the use of existing
products and the new products are shown dramatically to attract the customers.

This knowledge about more and more products induces the customers to buy
more and more products. They start demanding the products which they don’t even
require. If there was no advertising we would be less aware of material things and we
can be more contented.

We do not agree with this objection as it is wrong to say that a person who is
least informed is most contented or satisfied. The advertisement increases the
knowledge of customers by informing them about various products along with their
utilities.

The advertisement only informs the customers, the final choice of buying or not,
lies with the customers only.

2. Advertising Encourages Sale of Inferior and Dubious Products

The advertisements show all types of products irrespective of their quality. With
the help of advertising anything can be sold in the market.

The objection to sale of inferior goods is not correct because what is inferior and
what is superior depends upon the economic status and preference. Every one cannot
afford to buy superior quality expensive products but it does not mean they should not
use the product.

Module in Marketing Management | 44

 The lower income group people satisfy their needs with low cost inferior goods
for example; those who cannot afford to buy shoes of Nike or Reebok have to satisfy
with local brand only. So it is not advertisements which encourage sale of inferior
goods; it is one’s pocket or financial capacity which decides this.

The real criticism of advertisement is that it encourages sale of duplicate

products. Some producers exaggerate the use of products and innocent consumers get
trapped in and buy duplicate products.

3. Advertising Confuses Rather than Helps

The number of advertisements shown in TV and Radio are increasing day by day
for example, if we take TV, there are so many advertisements of different companies
shown such as LG, Sony, Panasonic, Samsung, Videocon etc. each brand claiming they
are the best. These claims by different companies confuse the customer and it becomes
very difficult for him to make choice.

We do not agree with this objection because advertisements give wide choice to
customers and today’s customer is smart enough to know and select the most suitable
brand for him.

4. Some Advertisements are in Bad Taste

Another objection to advertisements is that advertisements use bad language,
the way they are speaking may not appeal everyone, sometimes women are shown in
the advertisements where they are not required for example, a woman in after shave
lotion and in advertisements of suiting etc. Some advertisements distort relationship
between employer-employee, mother-in-law and daughter-in-law etc. for example, in
advertisement of Band Aid, Detergent Bar, etc.

Although those types of advertisements should be avoided but it can’t be an

objection because good or bad taste differs from person to person. It is a matter of
personal opinion as to what was not accepted by yesterday’s generation is accepted by
today’s generation and they may not find it of bad taste.

5. Advertisement Costs are passed on to the Customers in the Form of Higher

Price:
The most serious objection to advertisement is that it increases the price of
product because the firms spend a huge amount on advertisement and these expenses
are added to cost and consumer has to pay a higher price for the product or service.

This objection is also not correct because with advertisements the demand for
product increases which brings increase in sale and this leads to increase in production.
With increase in production the companies can get the economies of scale which
reduces the cost of production and thus the increase in cost due to expenses on
advertisements gets compensated. So if advertisement is used properly it brings
reduction in cost the in long run.

Module in Marketing Management | 45

2. SALES PROMOTION
Sales promotion refers to short term use of incentives or other promotional
activities that stimulate the customer to buy the product. Sales promotion techniques are
very useful because they bring:

(a) Short and immediate effect on sale.

(b) Stock clearance is possible with sales promotion.

(c) Sales promotion techniques induce customers as well as distribution channels.

(d) Sales promotion techniques help to win over the competitor.

Sales Promotion Techniques for Customers

Some of the sales promotion activities commonly used by the marketer to increase the sale
are:

1. Rebate
It refers to selling product at a special price which is less than the original price
for a limited period of time. This offer is given to clear off the stock or excessive
inventory for example; coke announced 2 liter bottles at P35 only.

2. Discounts
This refers to reduction of certain percentage of price from list price for a
limited period of time. The discounts induce the customers to buy and to buy more.
Generally at the end of season big companies offer their products at discounted price to
clear off the stock e.g., season’s sale at WalterMart, SM Department Store, Robinsons
Mall etc.

3. Refunds
This refers to refund or part of price paid by customer on presenting the proof
of purchase for example, P2 off on presentation of empty pack of Lays.

4. Premiums or Gifts/or Product Combination

These are most popular and commonly used promotion tool. It refers to giving a
free gift on purchase of the product. Generally the free gift is related to product but it is
not necessary for example, Mug free with Starbucks Coffee, Tumbler free with juice,
Toothbrush free with Toothpaste, etc.

5. Quantity Deals
It refers to offer of extra quantity in a special package at less price or on extra
purchase some quantity free for example, buy three get one free e.g., this scheme of buy
three get one free scheme is available on soaps.

6. Samples
It refers to distribution of free samples of product to the customers. These are
distributed when the seller wants the customer must try the product. Generally when a

Module in Marketing Management | 46

 new product is launched for example, coffee new variant distributed the samples as it
wanted the customers to try it.

7. Contests
It refers to participation of consumers in competitive events organized by the
firm and winners are given some reward for example, Milo organizes marathon
competition, and some companies organize contest of writing slogans and best slogan is
awarded prize.

8. Instant Draws and Assigned Gifts

It includes the offers like ‘scratch a card’ and win instantly a refrigerator, car, T-
shirt, computer etc.

9. Lucky Draw
In this draws are taken out by including the bill number or names of customers
who have purchased the goods and lucky winner gets free car, computer, A.C., T.V., etc.
Draw can be taken out daily, weekly, monthly, etc.

10. Usable Benefits

This includes offers like ‘Purchase goods worth P5000 and get a holiday
package’ or get a discount voucher, etc.

11. Full Finance at 0%

Many marketers offer 0% interest on financing of consumer durable goods like
washing machine, T.V. etc. e.g., 24 easy installments 6 paid as front payment and
remaining 18 with post-dated cheques. In these types of scheme customers should be
careful about the file charges etc.

12. Packaged Premium

In this type of sales promotion the free gift is kept inside the pack. The gift is
kept in limited products but the excitement of getting the gift induces the customer to
buy the product for example, gold pendant in soap, gold coin in Tata tea etc.

13. Container Premium

This refers to use of special container or boxes to pack the products which could be reused
by the customer for example, Pet Bottles for Cold Drinks. This bottles can be used for
Steering Water, Plastic Jars for coffee, etc. which can be reused by the housewives in
kitchen.

Module in Marketing Management | 47

Merits of Sales Promotion

1. Attention Value
The incentives offered in sales promotion attract attention of the people.

2. Useful in New Product Launch

The sales promotion techniques are very helpful in introducing the new product as
it induces people to try new products as they are available at low price or sometimes as free
sample.

3. Synergy in Total Promotion Efforts

Sales promotion activities supplement advertising and personal selling efforts of the
company. Sales promotion adds to the effectiveness of advertisement efforts.

4. Aid to other Promotion Tools

Sales promotion technique makes other promotion techniques more effective.
Salesmen find it easy to sell products on which incentives are available.

Module in Marketing Management | 48

Demerits of Sales Promotion

1. Reflect Crisis
If firm is offering sales promotion techniques again and again it indicates
that there is no demand of product which can create crisis situation.

2. Spoil Product Image

Use of sales promotion tool may affect the image of product as buyer feel
that product is of low quality that is why firm is offering incentives.

3. PERSONAL SELLING
Personal selling means selling personally. This involves face to face interaction
between seller and buyer for the purpose of sale.

The personal selling does not mean getting the prospects to desire what seller wants
but the concept of personal selling is also based on customer satisfaction.

Features of Personal Selling

1. Personal Interaction
In personal selling the buyers and sellers have face to face interaction. This
closeness allows both the parties to observe each other’s action closely.

2. Two Way Communication

In personal selling the sellers give information about the product, at the same
time the buyer get a chance to clarify his doubts. It is suitable for sale of complex
products where buyer wants to interact with the manufacturer.

3. Better Response
When seller is personally explaining the utilities of product to the customers
then customer do pay some attention and listen to the information.

4. Relationship
When the seller and buyer come together this may improve relation between
the customer and seller. Salespersons normally make friendly relations with the
customers.

5. Better Convincing
Personal selling is most effective form of promotion because with this the sales
person can convince the buyer by demonstrating the use of product and making
changes in the product according to the need of customer.

Qualities of a Good Salesman

The qualities which are commonly found among effective salesman are described below:

Module in Marketing Management | 49

1. Physical Qualities
A salesman must have good health and pleasing personality. He must be well built
and free from physical defects. A pleasing and charming personality boosts self-confidence.
Good grooming, appropriate dress, clean and tidy appearance and a good posture will go a
long way in creating a first impression. More importantly, a salesman must always have a
cheerful smile on his face.

2. Social Qualities
A salesman must have good manners, courtesy in dealing with customers. The
practice of greeting and thanking customers, using polite expression are necessary for
success in personal selling. He should not be shy or reserved but an extrovert and a good
listener. He must have the ability to say the proper things and do the right thing without
offending others.

3. Mental Qualities
A good salesman must have a high degree of intelligence, initiative and foresight. He
must be intelligent and imaginative enough to understand the customer quickly and read
his mind accurately.

Salesman must have two basic qualities i.e., empathy and ego drive. Empathy means
he must have ability to understand the problem from customer’s point of view. Ego drive
means salesman must pursue sale not just for money but for recognition and personal
success. A good salesman must have presence of mind and good common sense.

4. Technical Quality
The salesman must have full technical knowledge about the product.

5. Other Qualities
Other qualities, a salesman must possess, are:

a. A salesman must have a good power of memory and observation.

b. A salesman must be honest and should not try to win the customer through false
and misleading representation.

c. A salesman must be a man of sound character, loyal and dependable. He must

perform his duties sincerely.

d. The salesman must have wide knowledge about the product he is selling and
company he is representing.

e. He must have capacity to inspire trust.

Role of Personal Selling

Personal selling plays a very important role in marketing of goods and services. It is
important tool for businessmen, customers and society.

1. Importance to Businessmen

Module in Marketing Management | 50

 Personal selling is an important tool to increase the sale. It is important for businessman
due to following reasons:

a. Effective Promotion Tool

Personal selling is an effective tool to increase the sale of product. Salesmen
explain the merits of products to customers.

b. Flexible Tool
Personal selling efforts can be changed according to the type of customer
salesmen are attending. They may change the offer in varying purchase situations.

c. Minimum Wastage of Efforts

As compared to other methods of promotion in personal selling the wastage of
efforts is minimum.

d. Consumer Attention
Through personal selling it is easy to get the attention of customer as there is
face to face interaction between salesman and customers.

e. Relationship
Personal selling helps to create lasting relationship between customers and
sales-persons which help in increasing sale.

f. Personal Support
Through personal selling salesmen can create personal support with the
customers. This can improve competitive strength of organisation.

g. Very Effective to Introduce New Product:

Personal selling is very effective to introduce a new product as salesman can explain the
merits, show the demonstration and clarify the doubts of customers.

2. Importance to Customers
Personal selling is very important from customer’s point of view, as customers can
get required information about the product from customers. Customers are benefits by
personal selling in the following ways:

a. Helps in Identifying Needs:

Salesmen help the customers to discover their needs and wants and they also
help customers to know how these needs and wants can be satisfied.

b. Latest Market Information

In personal selling salesmen provide information regarding the new products
available in market, uses of those products etc.

c. Expert Advice

Module in Marketing Management | 51

 Customers can get expert advice and guidance in purchasing various goods and
services.

d. Induces Customers
Personal selling induces customers to buy products for satisfying their needs.

3. Importance to Society
Personal selling brings following positive effects for society

a. Converts Latest Demand into Effective Demand

Personal selling creates effective demand which results in increasing sale and
more income. With more income there will be more products and services which in turn
bring economic growth.

b. Employment Opportunities
Unemployed youth can work as salesman and earn their livelihood.

c. Career Opportunities
Personal selling offers attractive career with job satisfaction and security.

d. Mobility of Sales Persons

Sales people move from one place to other, this promotes travel and tourism
industry.

e. Product Standardization
With the help of personal selling there can be uniformity of consumption by
supplying standardized products.

4. PUBLIC RELATIONS
Apart from four major elements of marketing mix, another important tool of
marketing is maintaining Public Relations. In simple words, a public relations means
maintaining public relations with public. By maintaining public relations, companies create
goodwill.

Public relations evaluate public attitudes; identify the policies and procedures of an
organization with the public interest to earn public understanding and acceptance.

Public does not mean only customers, but it includes shareholders, suppliers,
intermediaries, customers etc. The firm’s success and achievement depends upon the
support of these parties for example, firm needs active support of middle men to survive in
market, it must have good relations with existing shareholders who provide capital. The
consumers’ group is the most important part of public as success of business depends upon
the support and demand of customers only.

Role, Significance, advantages of public relations

Public relations are significant in the following ways:

Module in Marketing Management | 52

1. Help to convey the policies and programmes of the organization.

2. Help to collect information about public opinion about the organization, management
activities etc.

3. To overcome the complaints and dislikes of public.

4. To mould people’s attitude in favour of organization.

5. To maintain goodwill and understanding between organization and public.

6. To build an image of the organization.

Ways/Methods and Tools of Public Relations

The companies can use the following tools to improve their relations with public:

1. News
Sometimes companies get involved in such kind of activities or make such policies
so that they get some positive coverage in news. For example, a company’s name may be
covered in news for reservation of jobs for women or for introducing new technology etc.

2. Speeches
The speeches given by the leaders of corporate sectors influence various members
of public specially banks, shareholders etc. Public relations department creates occasion
when the speeches are delivered by the leader of company.

3. Events
Events refer to organizing press conferences, multimedia presentation, matches,
stage shows etc.

4. Written Materials
Sometimes written materials such as Balance Sheet, Annual Reports, Special
documents, Brochures etc. are circulated to various parties to improve and maintain public
image of the company.

5. Public Service Activities

Big business houses often associate themselves with various social service projects
such as women welfare programmes, charity shows, up-keeping of parks, planting trees on
road side, training schools, running schools, colleges, hospitals etc.

Module in Marketing Management | 53

Reference

Alminar-Mutya, Ruby F. Elements of Marketing: 3rd Edition. National Book Store,

Mandaluyong City, 2000

http://blog.amazingmail.com/blog/promotional-mix

https://www.yourarticlelibrary.com/marketing/4-most-important-elements-of-
promotion-mix-business-marketing/8796

Module in Marketing Management | 54

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 4-1

Directions: Identify what is being described in each of the following statements. Write your
answer on the space provided before the number.

___________________________1. It literally means to advance or move forward.

___________________________2. It is the fourth “P” in the marketing mix.
___________________________3. These are incentives and discounts marketers use to
achieve near-term or immediate results such as a sale to
boost revenue performance at the end of a quarter or
year.
___________________________4. It tends to promote a company’s goodwill.
___________________________5. It is the most visible marketing activity and the range of
options to promote your business, products and services
has grown exponentially with technology.
___________________________6. For example, “Buy 2 and get 1 Free” or “Buy now and
receive a 30% discount.”
___________________________7. It is a form of marketing communication directed towards
a consuming audience produced with the intent of raising
awareness or attention towards a product, service or
cause for a business or organization.
___________________________8. The communication tends to be personal, and in most
cases, the goal is for the recipient to respond directly to
an offer presented.
___________________________9. It is a function of marketing and salespeople execute the
marketing plan by informing, advising, offering, accepting
and completing transactions.
___________________________10 It is subtle and intends to enhance the public’s favor
. towards a company or organization.

Module in Marketing Management | 55

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 4-2

Directions: Answers the following.

1. What do we mean by promotion?

_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________

2. Explain why promotion is the most visible, most pervasive, and most influential element
among the components of the marketing mix?
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________

2. What are the major reasons why firms advertise?

_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_______________________________________________________

Module in Marketing Management | 56

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 4-3

Direction: Research the following on the internet.

1. Advertising rates charged by any of the following:

a. television (e.g. ABS-CBN, GMA…)
b. radio
c. newspapers
d. magazines

2. Sales promotion methods used by your favorite online seller.

3. List of 10 business firms that advertise as a means of promotion nationwide

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UNIT V. DISTRIBUTION STRATEGY

Overview

This unit discusses the marketing channels that serve as a host of marketing
intermediaries in performing a variety of functions, the elements and the types of
distribution channels.

Learning Objectives

At the end of the unit, I am able to:

1. discuss what distribution is;
2. enumerate the elements of distribution strategy

Setting Up

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________

Direction: TRUE or FALSE. Write Distribution if the statement is correct and Strategy if
wrong on the space provided before each number.

____________________1. Franchising is an entirely different way of distributing products.

____________________2. Extensive distribution hinges on making a large number of goods
available in multiple locations.
____________________3. Transportation has a role of supplying goods in proper quality and
quantity.
____________________4. Order processing a predefined standard of customer satisfaction,
which a retailer plans to provide to its customers.
____________________5. Inventory control is a major component of a retail organization’s
physical distribution system.
____________________6. Materials handling implies the movement of goods inside the retail
organization, warehouses and retail stores/outlets.
____________________7. Selective distribution works especially well for highly coveted,
exclusive items.
____________________8. Warehousing enables channel members like producers, wholesalers,
retailers to make goods and services available at the customers’
place of purchase or at his doorstep.
____________________9. The role of the distributor is to obtain and transport items from
manufacturers to retailers or other endpoint locations.
____________________10 Retailers are the final step in the distribution channel before
. customers purchase an item.

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Lesson Proper

What Is a Distribution Strategy?

A distribution strategy is a method of disseminating goods or services to end-users.

Implementing the most efficient distribution method for your business is key to obtaining
revenue and retaining customer loyalty. Some companies opt to use multiple distribution
methods to adhere to different consumer bases. For example, if you’re selling a leather futon
and want to cater to people ages 60 and above, you might choose to directly sell products
via catalog. For a younger customer base, you might decide to indirectly sell products by
working with a retailer.

At its core, distribution strategy should be based on your ideal customer — how
does the average client buy goods? How could you, as a producer, make the purchasing
process easier? Is it an extensive purchase where buying the item directly from the
manufacturer could be worth the potential hassle, or is it a routine item where the customer
would rather receive the product quickly and on-demand through a retailer? The role that
an item will play in a client’s life and the type of purchase decision associated with a
product are important aspects to consider when determining a strategy.

What Are the Different Types of Distribution Strategies?

As mentioned above, the two main types of distribution strategies are direct and
indirect. There are also more types of distribution that fall into these categories —
intensive, selective and exclusive distribution. But what exactly do these methods entail?
Let’s examine some of the factors that go into each of these cutting edge distribution
strategies so you can determine which practice is best for your primary customer base.

Direct Distribution

Direct distribution is a strategy where manufacturers directly sell and send

products to consumers. There are a few different ways to implement this method. Some
organizations may opt to take a more modern approach and use an e-commerce website
where users can make a purchase online. This is an effective option for companies with a
client base that’s moderately knowledgeable about technology, requests a specific solution
to meet needs or is devoted to a particular brand.

Another direct distribution method is through catalogs or phone orders. This option
may target an older customer base or users in specific industries that are attuned to placing
orders this way.

One important factor to consider when implementing a direct distribution strategy

is the amount of investment required. For example, manufacturers will need to add
warehouses, vehicles and delivery staff to their portfolio to effectively distribute goods on
their own.

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Indirect Distribution

The term “middleman” often gets a bad reputation, but in the case of distribution,
these organizations can be helpful in getting goods to consumers. Indirect distribution
strategies involve intermediaries that assist in the logistics and placement of products so
that they reach customers swiftly and in an optimal location based on consumer habits and
preferences.

We will discuss the different types of intermediaries and their specific benefits later
in this article, but business needs, targeted clients and type of product are typically behind
the reasoning for using this strategy. Low commitment or routine purchases are often
something that customers grab absentmindedly in a department store without any specific
brand loyalty. A tube of toothpaste is a good example of a routine purchase. For these types
of products, an indirect distribution method that places a large number of items in multiple
retail locations may be a company’s best bet.

Intensive Distribution

Products are put into as many retail locations as possible with the intensive
distribution strategy. For example, gum is a product that typically uses this strategy. You
can find gum at gas stations, grocery stores, in vending machines and at retail locations like
Target. This method hinges on making a large number of goods available in multiple
locations. These items don’t typically necessitate an involved purchase decision where the
customer does research before making a purchase. Rather, these items are routine
purchases that involve very minimal effort to sell.

Exclusive Distribution

When manufacturers opt for exclusive distribution, they make a deal with a retailer
to sell a product through that specific storefront only. Businesses may also sell goods
directly through their own branded stores, which is another example of exclusive
distribution. For example, customers can’t buy a Lamborghini at any location — they need
to go to a Lamborghini dealership to purchase new luxury vehicles.

An example of an exclusive distribution deal where a manufacturer and a retailer

teamed up is the previous agreement that Apple had with AT&T in distributing iPhones.
This agreement caused people to forgo their phone plans with other companies so they
could get their hands on this exclusive product. This distribution strategy works especially
well for highly coveted, exclusive items.

Selective Distribution

Selective distribution is a middle-ground option between intensive and exclusive

distribution. With this strategy, products are distributed in more than one location, but not
as many as with an intensive distribution strategy. For example, clothing from different
brands may be offered selectively. A brand like Gucci may choose to distribute its items to
its own stores in addition to a few selected department stores rather than placing its
products in a range of locations. This can help craft an implicit high-end brand message
while also increasing the opportunity for shoppers to purchase one of its products.

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What Are Some of the Different Distribution Channels?

For companies that do opt to go with an indirect distribution method, there are a
variety of ways to get products into the hands of customers. Here are some of the
intermediaries that businesses use to fulfill distribution strategies.

Wholesaler

The role of a wholesaler is to source products in bulk from manufacturers and then
sell them to retailers. They usually seek to obtain items for a relatively low cost so that they
can mark them up and gain profit when selling them to retailers, who then further mark up
item cost to make their own revenue. Wholesalers generally have their own warehouses
and a catalog of purchased items that retailers can select from when making purchasing
decisions. Many wholesalers also require retailers to buy a set amount of product, meaning
that goods are obtained in bulk.

Retailer

With the indirect distribution strategy, retailers are the final step in the distribution
channel before customers purchase an item. Retailers can buy goods either directly from a
manufacturer or from a wholesaler. Retailers typically purchase products at a low price that
is then marked up to gain a profit. Retailers aren’t always storefronts — they can also
operate through the phone, online and even via catalog. With the proliferation of the
internet, many retailers decide to manage an e-commerce website instead of a brick and
mortar store to make sales.

Franchisor

Franchising is an entirely different way of distributing products. You’re likely

familiar with the idea of franchising — your local McDonald’s restaurant may be owned by a
franchisor who is licensed by the McDonald’s corporation to sell goods in the company’s
name.

Distributor

The role of a distributor is to obtain and transport items from manufacturers to

retailers or other endpoint locations. The benefit of using a dedicated distributor is that
manufacturers don’t have to deal with the logistics of transport or the cost of maintaining
shipping staff and materials. Distributors may also be able to package diverse goods into
one entity for sale to a retailer. For example, your company may produce television
remotes, while a different organization creates batteries. By packaging these items together,
the distributor can create a more attractive, comprehensive product and improve the
likelihood of a sale.

Elements of Physical Distribution Channels

The various elements of a physical distribution system are:

1. Customer service

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 Customer service is a predefined standard of customer satisfaction, which a retailer
plans to provide to its customers. Without defining and setting ‘standards of customer
service’, retailers cannot achieve competitive advantage over their competitors.

These days, specialized software packages are being used by modern retailers to track the
merchandise during its transportation to ensure fastest, cost-effective deliveries on time.

Customer service levels may be improved by following steps too:

 By ensuring product availability all the time.
 By improving order cycle time – it implies reducing the gap between placing the
order and its delivery time.
 By providing proper training to sales persons and employees engaged in
transportation.
 By having separate plans for
 quick deliveries in case of urgent orders
 in case of natural/unforeseen problems
 loss in transit etc.

2. Order Processing:

Order processing, alternatively known as order fulfillment is the handling of

customer orders within the distribution center (may be warehouse, retail store itself)
involving the keying of customer and order details into the computer system in order to
produce the invoices for picking. The basic idea is to deliver the orders as per customers’
wants of place and timing.

Therefore, action should be taken quickly as an order has been placed and the
customer must have fast confirmation of the order’s receipt and the exact delivery time. In
today’s high tech world, computers are used to check the customer’s credit rating, stock
levels, and delivery promptness so that management can obtain an accurate picture of
distribution status. Accuracy plays a vital role in successful order processing, as are
procedures that are designed to lessen (shorten) the order processing cycle.

The task of order processing begins with the receipt of an order from a customer
through telephone, personal visit or by fax or email.

The basic areas for improving order processing tasks relate to following questions:

 What a sales person does when he receives an order?

 What happens when such an order is received by the order department directly?
 How much it takes to ensure inventory status?
 What methods are in practice for checking inventory?

The intelligent retailer would take proper steps to minimise the gaps in above-
mentioned situations to fulfill the customer order. Plugging these gaps certainly will result
in high customer service levels.

3. Inventory Control:

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 Inventory control is a major component of a retail organization’s physical
distribution system. It includes money invested in inventory, wear and tear and possible
obsolescence of the goods with the passage of time. In a retail organization, where finance
executives seek inventory minimization, marketing executives advocate large inventories to
prevent stock outs. Therefore, retailers should to try minimize optimum level of inventory
to meet the customers’ demand close to customer service standards of 100%.

The companies offering wide merchandise assortments find it difficult to have all
the probable items in large quantities that a customer might order.

For them, it is suggested to segregate patterns as:

 Fast moving items, and
 Slow moving items.

A high customer service standard is then applied to fast moving items but a much
lower standard is used for those moving slowly or have less demand. Inventory control
experts have developed a number of methods, which can help retailers control inventory
effectively. The widely used method is economic Order Quantity (EOQ) model. Besides this,
ABC analysis is also applied throughout the globe.

4. Warehousing:

It involves all the activities required in storage of goods between the time these are
procured and the time these are transported to the customer upon receipt of order. This
function basically involves receiving the merchandise, breaking bulk, storing and loading for
delivery to customers as per their details. Storage warehouses usually keep goods for long
periods while distribution centers operate as central/middle locations for quick movements
of goods to retail stores.

Further, retail organizations use regional distribution centers where wholesalers

dump the products in high volume. At regional distribution centers, these consignments are
broken down to small loads that are then quickly transported to retail outlets as per the
outlet’s requirements.

These activities and related information are controlled by the computers using
special software packages those gather goods and load them to their places of
requirements. This system is used by large suppliers who have retail outlets spread
throughout the country and/or abroad. Levels of customer service will increase with
increase in the number of warehouse locations, but cost will go up accordingly.

5. Transportation Mode:

Transportation is indispensable for physical distribution of goods and services.

Transportation mode enables channel members like producers, wholesalers and retailers to
make goods and services available at the customers’ place of purchase or at his doorstep.

Following aspects signify the increased role of transportation:

 To supply goods in proper quality and quantity
 To supply goods at right time and at right place
 To satisfy customers’ demands

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  Quick and easy availability of goods
 Cost considerations

Due to technological developments and variety of transportation modes available, a

retail organization can use anyone or a combination of following modes of transport:
 Rail,
 Airway,
 Roadways,
 Water ways, and
 Pipelines

6. Materials Handling:

Materials handling implies the movement of goods inside the retail organization,
warehouses and retail stores/outlets. In case of chain stores, the raw materials, finished
goods etc move from a common warehouse to various store locations. Similarly, in case of
multistory or even single-story storage houses, movements of goods take place.

Some items or materials may be light weight but few may be heavy, which may
require proper handling and utmost care. In modern storage facilities, material handling is
through equipments meant for moving/transferring goods. These handling equipments also
vary with method of loading and modes of transport used like railways, water ways,
airways etc.

Type of handling equipment used will depend upon the following reasons:
 Mode of transport: rail, air, water, road and others.
 Nature & size of goods (materials: heavy, light, solid, liquid or gases).
 Place of operation: warehouse & selling floor.

Reference

https://www.yourarticlelibrary.com/marketing/distribution-channels/top-6-elements-of-
physical-distribution-channels-with-diagram/48313

Module in Marketing Management | 64

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score:________________

Activity 5-1

Directions: Identify what is being described in each of the following statements. Write your
answer on the space provided before the number.

___________________________1. It is indispensable for physical distribution of goods and

services.
___________________________2. It is a strategy which businesses may also sell goods directly
through their own branded stores
___________________________3. It is a method of disseminating goods or services to end-users.
Implementing the most efficient distribution method for your
business is key to obtaining revenue and retaining customer
loyalty.
___________________________4. It implies the movement of goods inside the retail organization,
warehouses and retail stores/outlets.
___________________________5. It is a strategy which products are put into as many retail
locations.
___________________________6. It includes money invested in inventory, wear and tear and
possible obsolescence of the goods with the passage of time.
___________________________7. It is a strategy where manufacturers directly sell and send
products to consumers.
___________________________8. This function basically involves receiving the merchandise,
breaking bulk, storing and loading for delivery to customers as
per their details.
___________________________9. It is licensed by a corporation to sell goods in the company’s
name.
___________________________10 It involves intermediaries that assist in the logistics and
. placement of products so that they reach customers swiftly
and in an optimal location based on consumer habits and
preferences.

Directions: Enumerate the following. Write your answer on the space provided.

A. Different Types of Distribution Strategies

11.
12.
13.
14.
15

B. Different Distribution Channels

16.
17.
18.

Module in Marketing Management | 65

 19.

C. Elements of Physical Distribution Channels

20.
21.
22.
23.
24.
25.

Module in Marketing Management | 66

Assessing Learning

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score:________________

Activity 5-2

Direction: Answer the following questions.

1. Why is distribution considered to be a very important marketing activity?

2. What is the consequence of too much or too little inventory?

3. What do you think is the best transportation mode for transporting goods?

4. What are the objectives of the materials handling system?

5. Which kinds of products are more likely to be distributed using exclusive marketing
strategies?

Module in Marketing Management | 67