MODULE 5

Marketing Plan

Subject Objectives

Upon completion of this module, you will be able to:

1) Define marketing management
2) Identify 7 P’s of marketing
3) Learn the importance of packaging of a product.
4) Know different promotional elements fit for different products and services.
5) Perform computation of price of a product or service.

Introduction to Marketing Management

Marketing management is planning, organizing, controlling and
implementing of marketing programs, policies, strategies and tactics designed
to create and satisfy the demand for the firms' product offerings or services
as a means of generating an acceptable profit.

Once you have developed your marketing strategy, there is a "Seven P

Formula" you should use to continually evaluate and reevaluate your
business activities. These seven are: product, price, promotion, place,
packaging, positioning and people.

Packaging
Packaging is the activity of designing and producing container or wrapper for
the product. It must perform all the basic function and should not be
deceptive and convey any deceptive message.

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Basic Functions of Packaging
• Protects the product. Packaging helps to protect the product from heat,
light, moisture, and dust. It protects the product from breakage,
leakage, and spoilage.

• Provide customer convenience. Consumers are greatly assisted so long

as the product is in usage. Transportation, storage, and handling are
performed with ease and without wastage.

• Acts as a promotional tool. Good packaging can sell the product more
easily and quickly as it works as a promotional tool. It is the package,
size, design, color combinations and graphics that decide its ability to
attract the attention of customers or prospects.

• Transportation. It ensures easy transportation and better handling of

products in transit.

• Guidelines to customers. Packaging helps as guidelines for the

customers. From the informative literature regarding the quality and
use of the product.

Promotion
Promotion of the marketing mix is a tool that helps disseminate information,
encourage the purchase, and affects the purchase decision process.

Promotional Elements

Advertising
Advertising is the most well-known and widespread promotional element and
an efficient method to reach many people. You can use advertising to create
awareness of a new product or service, describe its features, suggest usage
situations, differentiate it from competitor’s offers, induce consumers to buy
it, and create or enhance brand image.

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Communication channels used in advertising encompass: Television, Radio,
Print, Internet, Outdoor, and Guerilla Marketing.

1. Television Advertisements
Features both audio and visual capabilities and the advantage of
communicating information about the firm’s product or service with a
combination of sound, color, and motion.

2. Radio Advertisements
Has only audio capabilities to deliver message but provides constant and
flexible coverage to a wide range of audiences with the possibility for the firm
to choose the time, day, and station to reach your target audience.

3. Print Advertisements
Magazines, Newspapers, and Direct Mail.

4. Internet Advertisements
The fastest growing advertising media to which most consumers turn for
initial or additional information. Like print advertising it offers the possibility
of visual messages but, in addition, it has audio and video capabilities and
has the unique feature of being interactive.

Online Advertising Strategies:

a) Web Design
Website is one of the most essential parts of your business. It is the business’
home online, and where many potential customers will turn information
about products and services. Site needs to be effective in attracting and
keeping user’s attention.

b) Search Engine Optimization

Involves incorporating keywords related to your products or services on your
site.

c) Social Media Marketing

Presents huge opportunities to reach and connect with your target audience.
It can also be used to run advertisements for the company.

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d) Content Marketing
You can create content in the form of blogs, videos, infographics, and virtually
any online format.

5. Outdoor Advertising
Includes billboards, service stations, signs, shelf talkers and POPs (point of
purchase materials) in supermarkets, etc. Outdoor advertising is a very
effective medium for reminding customers about a product or service.

6. Guerilla Marketing
An advertising strategy that focuses on low-cost unconventional marketing
tactics that yield maximum results; an advertisement strategy that uses
surprise and unconventional interactions in order to promote a product or
service.

Sales Promotion
refers to the provision of incentives to the end consumer (pull strategy) or to
intermediaries (push strategy) to stimulate demand for a product. It is
normally used in combination with either advertising or personal selling.

Consumer-Oriented Sales Promotional Tools are:

1) Price Promotions
2) Coupons
3) Gift with Purchase or Premiums
4) Samples or Sampling
5) Contests
6) Frequent Shopper or Loyalty Incentives

1. Price Promotions
Short-term price reductions.

2. Coupons
Offer a discounted price to the customer to encourage trial use for a product.
Most coupons have an expiration date and rate of redemption.

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3. Gift with Purchase or Premiums
Often considered to be self-liquidating because the price charged to costumer
covers the price of the item.

4. Samples or Sampling
Offering product initially for free.

5. Contests
Induce consumers to use their skills or creative and analytical abilities to win
a prize. This tool can increase consumers’ involvement with the product.

6. Frequent Shopper or Loyalty Incentives

Used to encourage and reward repeat purchases by acknowledging each
purchase made by a consumer and offering a premium as purchases
accumulate. They are effective in creating loyalty but come at a high cost to
a firm.

Personal Selling
Personal selling is the second major promotional strategy and usually involves
a face-to- face communication between the seller and the buyer to “close the
sale”.

The key advantages of personal selling include: a high level of persuasiveness,

opportunities to customize the promotional message, getting immediate
feedback. The main disadvantages are relatively high cost per contact (in the
form of salaries and sales incentives paid to sales representatives).

Public Relations and Publicity

Public relations and publicity relate to the planned and sustained efforts of a
firm to establish and maintain a favorable public image and generate publicity
aimed at a broad public audience.

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Options to develop publicity:
• Holding consumer exhibitions
• Celebrity endorsements and websites
• Co-sponsoring local sports community
• Charity events
• Donating prizes or time to local fund-raisers
• Offering internships to students in the community

Direct Marketing
Is based on the establishment of a direct relationship between a firm offering
a product or service and the end consumer, with the goal of making a sale on
the spot and eliminating the middleman.

Tools used in Direct Marketing include:

1) Direct Mail
2) Leaflet drops and handouts
3) Telemarketing
4) Direct Response Advertising
5) Email Marketing
6) Online Marketing
7) Short Messaging Service

Developing Promotional Program

Six Key Guide Questions in the Development of Promotional Program (Kerin,
2003):

1. Who is your target audience?

Identify the group of prospective buyers to whom the promotion is directed.

2. What are your promotion objectives?

Typical objectives include reaching a certain percentage of the target market,
increasing customers’ exposure to a product or service, raising awareness,
achieving a certain level of sales, etc. To fine-tune the objectives,
product/lifecycle stage of product and consumer buying decision process.

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Product/Service Lifecycle Stages:
1) Introduction (Advertising)
2) Growth (Advertising and Personal Selling)
3) Maturity (Advertising and Sales Promotion)
4) Decline

Consumer Buying Decision Process

1) Awareness (Advertising, Direct Marketing and Sales Promotion)
2) Interest
3) Evaluation (Sales Promotion)
4) Trial and Adoption (Sales Promotion, Personal Selling and Direct
Marketing)

3. What is the available budget?

Budget will depend on firm’s resources, how widely and how frequently the
firm wants to promote the product. Promotional budget can be identified thru
several methods.

4. Which promotional elements to use?

Deciding what message to convey, what feeling to create, how frequently to
advertise, what media to use and key benefits of the product and service.

5. Where should the promotion be run?

• For Advertising, consider the different media available.
• For Direct Marketing, reach decisions.
• For Public Relations & Publicity, decide what type of events to sponsor.

6. When should the promotion be run?

Seasonality and competitive promotion activities are very important factors to
take into account when scheduling your promotional program.

Place
Place strategy:
• Plays a fundamental role in the marketing mix.

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 • Outlines how and where the enterprise will place its products and
services.
• Referred to as the distribution strategy and may include stores, both
physical and online, and any other means by which company can reach
customers.

Distribution Channels
A distribution channel is a chain of businesses or intermediaries through
which a good or service passes until it reaches the final buyer or the end
consumer. Distribution channels can include wholesalers, retailers,
distributors, and even the Internet.

Distribution channels are part of the downstream process, answering the

question "How do we get our product to the consumer?" This is in contrast to
the upstream process, also known as the supply chain, which answers the
question "Who are our suppliers?"

Types of Distribution Channels:

While a distribution channel may seem endless at times, there are three main
types of channels, all of which include the combination of a producer,
wholesaler, retailer, and end consumer.

The first channel is the longest because it includes all four: producer,
wholesaler, retailer, and consumer. The wine and adult beverage industry is
a perfect example of this long distribution channel. In this industry—thanks
to laws born out of prohibition—a winery cannot sell directly to a retailer. It
operates in the three-tier system, meaning the law requires the winery to first
sell its product to a wholesaler who then sells to a retailer. The retailer then
sells the product to the end consumer.

The second channel cuts out the wholesaler—where the producer sells
directly to a retailer who sells the product to the end consumer. This means
the second channel contains only one intermediary. Dell, for example, is large
enough to sell its products directly to reputable retailers such as Best Buy.

The third and final channel is a direct-to-consumer model where the producer
sells its product directly to the end consumer. Amazon, which uses its own

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platform to sell Kindles to its customers, is an example of a direct model. This
is the shortest distribution channel possible, cutting out both the wholesaler
and the retailer.

Price
Pricing strategies are based on the perceived value of your products and
services, your cost of doing business, your marketing goals, and expected
competitive actions. A wide-range of pricing strategies are available, from
simple rules of thumb to sophisticated approaches that involve carefully
measuring the value delivered by your firm to your target market.

Full Cost Pricing Method

Full-cost plus pricing is a price-setting method under which you add together
the direct material cost, direct labor cost, selling and administrative cost, and
overhead costs for a product and add to it a markup percentage in order to
derive the price of the product.

Pricing formula = Total production costs + Selling and administration costs +

Markup / Number of units expected to sell

Pricing Strategies for Firms with Market Power

1) Price Discrimination- practice of charging different prices to consumer
for the same good to achieve higher prices.
• Second-degree price discrimination- practice of posting a discrete
schedule of declining prices for different quantities.
• Third-degree price discrimination- practice of charging different
groups of consumers different prices for the same product.
(student discounts, senior citizen discount)

2) Two-part pricing- consists of a fixed fee and a per unit charge.

(memberships)

3) Block pricing- practice of packaging multiple units of an identical

product together and selling them as one package.

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 4) Commodity bundling- bundling two or more products together and
charging one price for bundle.

5) Peak-load pricing- when demand during peak times is higher than the
capacity of the firm, the firm should engage in peak-load pricing.
Charge a higher price during peak times and charge a lower price
during off-peak times.

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 References
Scarborough, N (2012). Effective Small Business Management: An
Entrepreneurial Approach Tenth Edition. Pearson Education, Inc., publishing
as Prentice Hall, One Lake Street, Upper Saddle River, New Jersey 07458

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