MANAGING THE

MARKETING
FUNCTION
CHAPTER – 11
 CONTENTS:
◼ WHAT IS THE MARKETING CONCEPT?
◼ THE ENGINEER AND THE FOUR P’s OF
MARKETING
◼ STRATEGIC MARKETING FOR ENGINEERS
◆ SELECTING A TARGET MARKET
◆ DEVELOPING A MARKETING MIX
What is the Marketing concept?
Marketing - is a group of activities designed
to facilitate and expedite the selling of
goods and services.
“The marketing concept states that the
engineer must try to satisfy the needs of
his clients by means of a set of
coordinated activities”
The Engineer and the Four P’s of
Marketing
➢ The Product (or Service)
➢ The Price
➢ The Place, and
➢ The Promotion
The Product
The term “Product” includes the tangible
(intangible) item and its capacity to
satisfy a specific need.
The Price
Price refers to “The money or
other considerations exchanged
for the purchase or use of the
product, idea or service.
The Place
❖ It is very important for companies to locate
in places where they can be easily reached
by their customers
❖ When a company cannot be near the
customers, it uses other means to eliminate
or minimize the effects of the problem.
Some of these means are:
✓ Hiring sales agents to cover specific areas;
✓ Selling to dealers in particular areas;
✓ Establishing branches where customers are
located;
✓ Establishing franchises in selected areas.
The Promotion
◼ Mc Carthy and Perreault define promotion
as “communicating information between
seller and potential buyer to influence
attitudes and behavior.
◼ There are promotional tools available and
the engineer manager must be familiar with
them if he wants to use them effectively.
◆ Advertising
◆ Publicity
◆ Personal Selling
◆ Sales Promotion
Advertising
Nylen defines advertising as “a paid message
that appears in the mass media for the
purpose of informing or persuading people
about particular products, services,
beliefs, or actions.”
The mass media referred to include:
➢ Television
➢ Radio
➢ Magazine
➢ News papers
Publicity
The promotional tool that publishes
news or information about a
product, service, or idea on behalf
of a sponsor but is not paid for the
sponsor.
Personal Selling
A more aggressive means of promoting
the sales of a product or service.

“Oral presentation in a
conversation with one more
prospective purchasers for
the purpose of making a sale”
Sales Promotion
Any paid attempt to communicate with the customers other
than advertising, publicity, and personal selling, may be
considered sales promotion.
Includes:
◆ Display
◆ Contest
◆ Sweepstakes
◆ Coupons
◆ Trading stamps
◆ Prizes
◆ Samples
◆ Demonstration
◆ Referral gifts, etc.
Strategic Marketing for Engineers
1. Selecting a target market
2. Developing a marketing mix
Selecting a Target Market
STEPS:
❑ Divide the total market into groups of
people who have relatively similar
product or service needs.
❑ Determine the profit potentials of each
segments.
❑ Make a decision on which segment or
segments will be served by the
company.
Selecting a Target Market
Factors Used in Selecting a Target
Market - a target market must have
the ability to satisfy the profit
objectives of the company.
1. The size of the market, and
2. The number of competitors serving
the market.
Selecting a Target Market
The total demand for the product or
service in a given area must be
determined first if the company
wants to serve that particular market.
If there are existing business serving
the market, the net demand must be
considered.
Developing a Market Mix
• After the target market has been
identified, market mix must be created
and maintained.
• The marketing mix consist of four
variables:
• Product
• Price
• Promotion
• place( or distribution)
Chapter 12:
Managing The Finance
Function
 CONTENTS:
WHAT THE FINANCE FUNCTION IS
THE DETERMINATION OF FUND
REQUIREMENTS
SOURCES OF FUNDS
THE BEST SOURCE OF FINANCING
THE FIRM’S FINANCIAL HEALTH
INDICATORS OF FINANCIAL HEALTH
RISK MANAGEMENT AND
INSURANCE
WHAT THE FINANCE FUNCTION IS
A management responsibility that deals
with the “procurement and
administration of funds with the view of
achieving the objectives of business”
The Finance Function: A
Process Flow
THE DETERMINATION OF FUND REQUIREMENTS
1. To finance daily operation
2. To finance the firm’s credit
services
3. To finance the purchase of
inventory
4. To finance the purchase of
major assets
Financing Daily Operations
1. Wages and Salaries
2. Rent
3. Taxes
4. Power & lights
5. Marketing expenses like those for
advertising, entertainment travel
expenses, telephone & telegraph,
stationery & printing, postage, etc.
6. Administrative expenses like those for
auditing, legal services etc.
Financing the Firm’s Credit
Services
“Oftentimes unavoidable for
firms to extend credit to
customers”
Financing the Purchase of Inventory
• Maintenance of adequate
inventory is crucial to many
firms
• Many firms cannot cope with the
delays in the availability of the
required material inputs in the
production process, so these must
be kept ready whenever required
Financing the Purchase of
Major Assets
• When top management
decides on expansion, there
will be a need to make
investment in capital assets
like land, plant, and
equipment
 The Sources of Funds
1. Cash Sales
2. Collection of Accounts Receivables
3. Loans & Credits
4. Sales of Assets
5. Ownership Contribution
6. Advances from Customers
Short-term Sources of Funds
Advantages:
1. Easier to obtain
2. Short-term financing is often less costly.
3. Short-term financing offers flexibility to
the borrowers
Disadvantages:
1. Short-term credits mature more
frequently.
2. Short-term debts may, at times, be more
costly than long term debts
 Supplies of Short-term Funds
1. Trade creditors – refer to suppliers extending
credit to a buyer for use in manufacturing,
processing, or reselling goods for profits.
Instruments used:
a. Open-book credit
b. Trade Acceptance
c. Promissory Notes
 Supplies of Short-term Funds
2. Commercial banks – are institutions which
individuals or firms may tap as source of
short-term financing.

Two types of Short-term loans:

a. those which requires collateral
b. those which do not requires collateral
 Supplies of Short-term Funds

3. Commercial paper houses – are those that

help business firms in borrowing funds from
the money market.
 Supplies of Short-term Funds

4. Business Finance companies – are financial

institutions that finance inventory and
equipment of almost all types and sizes of
business firms
 Supplies of Short-term Funds
5. Factor Companies- are institutions that
buy the accounts receivables of firms,
assuming complete accounting and
collection responsibilities
6. Insurance companies – are also possible
sources of short-term funds.
Long Term Sources of Funds
Classified:
1. Long-term debts
Long-term Debts Sub-classification
1. Term loans = commercial or industrial loan from
a commercial banks, commonly used for plant
& equipment, working, capital, or debt
repayment.
2. Bonds = is a certificate of indebtedness
issued by a corporation to a lender. It is a
marketable security that the firm sells to raise
funds
TYPES OF BOND AND FEATURE
1. Debentures – no collateral requirements
2. Mortgage bond – secured by real estate
3. Collateral trust bond – secured by stocks &
bond’s owned by the issuing corporation
4. Guaranteed bond – payment of interest or
principal is guaranteed by one or more
individuals or corporations.
TYPES OF BOND AND FEATURE
5. Subordinated debentures – with an
inferior claim over other debts
6. Convertible bonds – convertible into
shares of common stock
7. Bonds with warrants – warrants are
options which permit the holder to buy
stock of the issuing company at a
stated price.
8. Income bonds – pays interest only
when earned
Long Term Sources of
Classified:
Funds
2. Common stocks – represents ownership of
corporations and cheaper and more stable
sources of long-term funds.
Long Term Sources of
Funds
Classified:
3. Retained Earnings – refer to corporate
earnings not paid out as dividends.
THE BEST SOURCE OF FINANCING
Factors must be considered to
determine the best source:
❖ Flexibility
❖ Risk
❖ Income
❖ Control
❖ Timing
❖ Other factors
✓ Collateral values
✓ Flotation costs
✓ Speed
✓ Exposure
THE FIRM’S FINANCIAL HEALTH
The objectives of engineering firms are:
❑ to make profit for the owner
❑ to satisfy creditors with repayment of
loans plus interest
❑ to maintain the viability of the firm so
that customers will be assured of a
continuous supply of products or
INDICATORS OF FINANCIAL HEALTH

➢ Balance sheet – also called statement of

financial position
➢ Income statement – also called statement
of operations
➢ Statement of changes in financial
position
RISK MANAGEMENT AND INSURANCE

Risk refers to the uncertainty concerning

loss or injury
The engineering firm is faced with a long
list of exposure to risk, some of which are as
follows.
• Fire
• Theft
• Floods
• Accidents
• Non-payment of bills by customers (bad debts)
• Disability & death
• Damage claim from other parties
 TYPES OF RISK
Pure risk – is one which there is only a
chance of loss. It is insurable
and may be covered by
insurance.
Speculative risk – is one which there is a
chance of either loss or gain.
This is not insurable.
WHAT IS RISK MANAGEMENT

Risk Management – is an organized strategy

for protecting and conserving assets &
people.
METHODS OF DEALING WITH RISK

The risk may be avoided

The risk may be retained
The hazard may be reduced
The losses may be reduced
The risk may be shifted
EXAMPLES OF EFFORTS ON LOSS REDUCTION

• Physically separating buildings to minimize

losses in case of fire;
• Using fireproof materials on interior building
construction;
• Storing inventory in several locations to
minimize losses in cases
• of fire and theft;
Maintaining duplicate records to reduce
EXAMPLES OF EFFORTS ON LOSS REDUCTION

• Transporting goods in separate vehicles instead

of concentrating high values in single
shipments;
• Prohibiting key employees from traveling
together
• Limiting legal liability by forming several
separate corporation
THANK YOU