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Accountancy Business and
Management (ABM)
PRINCIPLES OF MARKETING
Quarter 3 – Week 1 Module
Understanding Marketing, Goals,
and Approaches – Part 1

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ABM 11 – PRINCIPLES OF MARKETING
Alternative Delivery Mode
Quarter 3 – Week 1 Module: Understanding Marketing, Goals, and Approaches – Part 1
First Edition, 2020

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 What I Need to Know
This module was designed and written with you in mind. It is here to help you master
the Understanding Marketing, Goals, and Approaches. The scope of this module
permits it to be used in many different learning situations. The language used recognizes
the diverse vocabulary level of students. The lessons are arranged to follow the standard
sequence of the course. But the order in which you read them can be changed to
correspond with the textbook you are now using.

Content Standard
The learners demonstrate an understanding of the marketing principles, goals, and
traditional and contemporary approaches to marketing.

Performance Standard
The learners shall be able to plot marketing goals and approaches for product or
service.

Most Essential Learning Competencies

Apply different principles in various types of business industries.

After going through this module, you are expected to:

1. Have a clear definition and understanding of Marketing
2. Identify the different functions of Marketing
2. Have a framework for comprehending the Principles of Marketing

What I Know
Activity 1.
Before you proceed, let us try to test what you know about the lesson.

DIRECTION: Write TRUE if the statement is correct and FALSE if wrong:

1. Marketing is the creation and maintenance of satisfying exchange relationships.

2. When people hear the word marketing they think of only advertising and selling

3. Everything that goes on sale is marketed. But not everything that goes on sale
follows the principles of marketing.

4. Satisfaction of both the business and the customer is an important goal of

marketing.

5. Marketing now includes customer research and product development activities.

6. Customers develop a positive view of marketing when they see companies use
marketing practices that take advantage of customers or mislead them without
satisfying their need.

7. Marketing is necessary in every business. Some people believe that if a business

offers a good product, marketing is necessary.

8. While a customer maybe encouraged to buy a product through advertising,

selling, or low pricing, the product must be viewed as satisfying a need.

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 9. Business and other organizations use mediocre marketing to provide satisfying
exchange of products and services with customers.

10. Business executives know that marketing activities must be carefully planned
and coordinated with other business activities.

Lesson
Understanding Marketing,
1 Goals, and Approaches

What’s In
Activity 2.
Some of you may believe that you already have some idea about what marketing is all
about. That is good. Our purpose here is to build up and work with what you know,
so that we can integrate everything into a clear and cohesive framework that maps out
what marketing is really all about.

At this point, what is marketing to you? Perhaps some of the following will come to mind:

To a layman, marketing will indeed be all about selling a product. But to a marketing
professional, marketing is a process. It is a process that begins right at the moment
when an aspiring entrepreneur or business development manager realizes that there is
an opportunity to build up a business.

What’s New

Starbucks: Why it is in the Real Estate Business

You can go to a Starbucks café and just sit down for the entire day without ordering
anything. Nobody will stop you from doing that. But the surprising thing is practically

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everybody who stops by a Starbucks does in fact order something even if they are not
required to.
Perhaps it is part of peer pressure – you will feel embarrassed if you stay in Starbucks
for a long while and not have an order visible on your table. But it is also partly due to
our internal concept of fair exchange. Simply put, a customer feels that it is only fair to
pay for a cup of coffee in exchange for the use of a Starbucks sitting area.
To this end, you get to realize that Starbucks is not only in the business of making
coffee. It is actually in the real estate business too! They make use of their money by
relying on you to pay for the use of your own little space in their shop, whether it is an
“office space” that you can work in, a “study space” where you can quietly read your
books, or a “meeting space” where you can meet with clients or workmates.
Next time you are at a Starbucks, observe the crowd and study what they buy. One
thing you may notice is that the longer they stay, the higher the value of what they tend
to buy (or the greater their urge becomes to buy additional items), which is
commensurate with the premise that they are actually paying Starbucks “rent” for the
use of their space.
Customers benefit from having a pleasant atmosphere to stay in, while Starbucks
benefits from the profits it generates through its operations.

“Marketing is all about creating value

through the exchange process.”

What is It
Peter Drucker once said that the aim of marketing is to “make selling superfluous”
(Drucker, 1973). In other words, he believed that marketing is all about making
products somehow sell themselves, so that getting products to move becomes easier.

A. DEFINITIONS OF MARKETING
We begin with a definition of marketing as presented by the American Marketing
Association (n.d.):
“Marketing is the activity, set of institutions, and process for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners,
and society at large.” It is also described as “the performance of the business activities
that direct the flow of goods and services from producer to consumer to user.

Marketing is also about communication; others refer to it as “marketing

communications.” This reflects the fact that a selling a product is really about properly
communicating a product to the market and the world.

Marketing is an organizational function because it is a core task that is expected of a

modern organization, whether or not it operates for profit. While marketing is now
considered as an imperative for commercial enterprises, even non-commercial sectors
benefit from a marketing orientation. For instance, in the Pandemic season when the
Department of Health directed the public to observe health protocols by wearing face
mask, face shield, and consciously washing of hands to minimize the spread of COVID
19 infection, it was actually engaging a marketing campaign. Aside from selling a

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tangible product, it was selling a preventive and healthier lifestyle.

A key takeaway that we can infer from the above definition is that there is a give-and-
take relationship that lies at the heart of marketing. Marketers seek to provide valuable
products and services to customers. In return, they also need to benefit from it. This
generally happens through the revenues that companies receive from customers (in the
case of profit-oriented enterprise).

Different functions of Marketing

Marketing is not only about advertising and selling, there are other activities that need
to be completed before a product or service is ready to be advertised and sold. Those
activities can be grouped within major marketing functions or related activities designed
to accomplish an important marketing goal.

1. Market Planning. Identifying and understanding the markets a company wants

to serve and developing effective marketing strategies for each market.

2. Product and Service Management. Assisting in the design and development of

products and services to meet the needs of prospective customers.

3. Distribution. Determining the best methods and procedures to be used so

prospective customers are able to locate, obtain, and use the products and
services of an organization.

4. Pricing. Establishing and communicating the value of products and services to

prospective customers.

5. Promotion: Communicating information to prospective customers through

advertising and promotional methods to encourage them to purchase the
organization’s products and services.

6. Selling: Direct, personal communications with prospective customers in order

to assess needs and satisfy those needs with appropriate products and services.

7. Marketing Information Management: Obtaining, managing, and using market

information to improve decision making and the performance of marketing
activities.

8. Financing: Budgeting for necessary financing and providing financial assistance

to customers to assist them with purchasing products and services.

9. Risk Management: Provides security for products, personnel, and customers

and reducing the risk associated with marketing decisions and activities.

Each of the mentioned functions occurs every time a product or service is developed and
sold. The performance of the activities described in the functions is the responsibility of
marketers. Hence, you can see that marketing is a very complex part of business and
is very important to the success of businesses and to the satisfaction of customers.

When you understand the marketing functions, you will be able to recognize the
activities that companies perform as they develop new products, improve marketing
procedures, and respond to customer needs.

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Principles of Marketing Strategy

You cannot prepare a strategy ignoring your competition and without knowing their
intensions and their plans. Something to learn from military strategy is “No strategy can
be made independent of the enemy”. Likewise, no strategy in business can be made
without keeping the competition in mind.

These 4 guiding principles if implemented properly as part of your marketing strategy

can lead to phenomenal business growth. Let us try to understand each one of them
better.

Specialization:
The first thing to determine is where you are going to specialize. What is your
domain, product, service, customer, market where you want to focus? For instance,
a Subway customer is someone who wants to eat quickly and healthy at the same
time. He wants cleanliness, efficiency and value. So, subway constantly looks for
products that appeal to these customers and continues to offer them. They would
never do something that does not go with their specialization.

Differentiation:
What is your competitive advantage? How is it that you are different and better than
the competition? Customers want a reason to buy from you and not the competition.
Customers always want to get the best deal, there is nothing personal here.

They just want the highest quality at the best price. If you ask businesses what is
their unique selling point (USP), also called a unique selling proposition, (the essence
of what makes your product or service better than competitors), 9 out of 10 times
you will hear “Quality Service, Quality Service, and Quality Service!” What people
don’t understand is that this is an answer only if your competitor offers Zero quality
or Zero service. Anyone who says “Quality Service” actually has no idea about why
someone should buy from him and probably is a danger to your company if he is an
employee.

If you have no USP or offer something that everyone does, then what could be your
USP? The answer is yourself! Your personality, your confidence, your charm, your
contacts, your way of doing things!

Segmentation:
All marketing today is segmentation. Segmentation means looking at who are those
specific customers in the market who value my differentiation and will pay more for
your area of specialization. We need to segment and identify those customers who
are most likely to buy from you and the fastest. Few questions to ponder here – who
are the customers who most appreciate your area of superiority? What are their
demographics? Their Psychographics? How would you describe your perfect
customer?

Concentration:
Once you have determined your very best market segments for what you do really
well, you focus all your energies, resources, budgets and time on acquiring
customers from these markets and retaining them.

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 What’s More
Activity 3.

4 Principles of Marketing Strategy

http://goo.gl/KC7FTm

This is a 25-minute talk by management guru Brian Tray about the

principles of specialization, differentiation, segmentation, and concentration
and how thy help create marketing strategy.

What I Have Learned

Activity 4.

Define marketing based on your

understanding?
Give three examples of products that
you regularly see around you and
describe how they are “marketed.
a.

b.

c.

What Can I Do

Activity 5.
Knowing what you know by now …..
1. What kind of communications do a marketing entity generate? For instance, imagine
a Starbucks coffee shop. What are the detailed elements that communicate messages
to the buyer and what are those messages?

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2. Consumers do not directly pay social networks, such as Facebook or YouTube, in
exchange for surfing their network. Describe how the internet marketing works in
this industry.

3. Marketers charge consumers for the cost of their goods plus a markup for profit and
overhead. Consumers are therefore paying more than the actual cost of a good.
How do you feel about this? Do you think that there are any moral implications to
this?

Assessment
Activity 6.
MULTIPLE CHOICE: Read the statement carefully and choose the correct answer:
1. Which of the following statements are TRUE?
a. Marketing is described as “the performance of the business activities that
direct the flow of goods and services from producer to consumer to user.
b. Marketing now includes customer research and product development.
c. Marketing is the creation and maintenance of satisfying exchange
relationships.
d. All of the above

2. The following statements are true EXCEPT:

a. The ways of marketing have changed over the years, but the need for
marketing has not changed.
b. Because of the many functions and activities that are part of marketing, it is
easy to develop a definition that effectively describes it.
c. Effective marketing needs the involvement and support of all the other fields
of management.
d. The building of customer relationship is very important in marketing.
3. To identify and understand the market a company wants to serve and to develop
effective marketing strategies for each market.
a. Distribution c. Pricing
b. Market Planning d. Promotion

4. Provides security for products, personnel, and customers and reducing the risk
associated with marketing decisions and activities.
a. Product and Service Management c. Risk Management
b. Market Information Management d. Financing

5. Determining the best methods and procedures to be used to prospective customers

are able to locate, obtain, and use the products and services of an organization.
a. Marketing-Information Management c. Market Planning
b. Promotion d. Distribution

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6. Obtaining, managing, and using market information to improve decision making
and the performance of marketing activities
a. Risk Management
b. Marketing-Information Management
c. Product and Service Management
d. Market Planning

7. It is a strategy developed by a business to focus on the production of a very limited

range of products or services for maximum productivity.
a. Specialization c. Segmentation
b. Differentiation d. Concentration

8. The purpose of this marketing principle is to identify different groups within your
target audience so that you can deliver more targeted and valuable messages for
them.
a. Concentration c. Differentiation
b. Specialization d. Segmentation

9. This marketing strategy goes hand-in-hand with developing a strong value

proposition to make a product or service attractive to a target audience.
a. Differentiation c. Specialization
b. Segmentation d. Concentration

10. It is marketing segmentation strategy in which the firm concentrates its entire
efforts and resources on serving one segment of the market
a. Segmentation c. Concentration
b. Specialization d. Differentiation

Additional Activities
Group Assignment
Sell You Money!
Present a paper bill from one of your group members. It could be a 50 peso bill, a 100
peso bill, or higher. Your group’s objective is to try to convince your classmates that
this peso bill is worth more than its face value.
Brainstorming on ways to make this possible and then present your “pitch” in front of
the class. You will then give a suggested retail price (SRP) based on how much value
you believe the bill actually holds.
Your group’s objective: after you pitch, the class will be asked for a show of hands on
how many of them will actually buying your peso bill for your SRP, which should be
higher than the face value. Presentation time: an estimate of 5 minutes per group.

References
Burrow, James L. (2017) Foundations of marketing (Philippine Edition), Abiva
Publishing House, Inc., Abiva Bldg., 851 G. Araneta Ave., 1113 Quezon City
Ilano, A.B. (2019) Principles of marketing. Rex Book Store, 856 Nicanor Reyes, Sr. St.,
1977 C.M. Recto Avenue, Manila Philippines
Linkedin (2015). 4 Principles of marketing strategy.
https://www.linkedin.com/pulse/four-fundamental-principles-marketing-
strategy-ajay-kulkarni