Notes in Marketing Full (Revised 2020)

Notes in
MARKETING
Prepared by:
Tzarita Marie P. Mayo, RMT, RPh, MSPharm
Chester Dave G. Arenas, BSA
Notes in Marketing
 Foreword 
This compilation of notes presents a variety of practical
application tools, skills, practices, models, approaches, and
strategies that are proving themselves effective in pharmaceutical
marketing.
This book contains an overview of marketing in the
pharmaceutical industry, analysis of company’s marketing
environment, the marketing–mix management process, product mix
strategies, pricing strategies, aspects of distribution channels &
physical distribution and elements of promotion.
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Notes in Marketing
 T A B L E O F C O N T E N T S 
Title Page
Chapter 1: An Overview of Marketing 1
Chapter Test - 1 5
Chapter 2: Marketing Environment and SWOT Analysis 6
Chapter Test - 2 11
Chapter 3: The Marketing Management Process in the
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Drug Industry
Chapter Test - 3 19
Chapter 4: Product Mix 20
Chapter Test - 4 28
Chapter 5: Price Mix 30
Chapter Test - 5 38
Chapter 6: Place Mix 40
Chapter Test - 6 52
Chapter 7: Promotions Mix 53
Chapter Test - 7 60
Bibliography 61
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CHAPTER 1: AN OVERVIEW OF MARKETING
Chapter Objectives:
At the end of this chapter, the student must be able to:
1. Define marketing;
2. Enumerate and explain the different core marketing concepts;
3. Understand the meaning and components of the marketing mix;
4. Define marketing management; and
5. Enumerate and explain the five marketing management philosophies.
Marketing is a social and managerial process by which individual and groups

obtain what they need and want through creating and exchanging products and value
with others
 Five (5) core marketing concepts

1. Needs, wants and demands
2. Products
3. Value, satisfaction, and quality
4. Exchange, transactions, and relationships
5. Markets
 Needs, Wants, and Demands

The most basic concept underlying marketing is that of human needs.
Marketing, like quality, starts with customer needs and ends with customer
satisfaction.
Needs are states of deprivation, personal requirements that motivate
behavior, and things that people cannot live without like food, clothing and
shelter. Wants, on the other hand, are the form taken by human needs as they
may differ from person to person.
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As more and more products are introduced, we realize that we have

unlimited wants. We crave for more and continuously want more that what we
already have. However, we also know that with limited resources we cannot buy
everything we want; Thus, we are constrained to choose products that will give
us most value and satisfaction for our money. The concept of demands comes in
the picture. When backed by purchasing power, or the ability to buy, wants
become demands.
 Products
People satisfy their needs and wants with products. A product is anything
offered for sale to satisfy a need or want. Tangible products are called goods.
A product may also pertain to intangibles like a haircut, massage, patient
counselling, entertainment etc. Intangible products are known as services.
 Value, Satisfaction, and Quality

Needs can be satisfied by a wide array of products that people can
choose from. Since we recognize our limited resources, one question we need to
answer is: how do we choose from among the wide array of products offered to
us to satisfy our needs and wants? The answer to this question is the third set of
the core marketing concepts – VALUE, SATISFACTION, and QUALITY.
One factor in deciding which product to buy and where to buy it is
customer value. Customer value is the difference between the value of buying,
owning and using the product, and the cost of the product. The customer
compares the cost of the product with the benefits he gains from using the
product.
Another factor in deciding which product to buy is customer satisfaction.
Customer satisfaction refers to the difference between the buyer‘s expectation
and the perceived performance of the product. Before making any purchase, a
customer would already have an expectation in mind and his/her task is to look
for a product that he thinks would perform and deliver according to his
expectations.
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Customer satisfaction is closely linked to quality. In recent years, many

companies have adopted total quality management (TQM) programs pertaining
to the continuous improvement of company products, services and marketing
processes. Quality is what the customer says it is. The decision-maker and the
final evaluator of quality is the customer. Indeed, quality must begin with
customer needs and end with customer satisfaction.
 Exchange, Transactions and Relationships

Marketing Exists when people are willing to satisfy their needs and wants
through beneficial exchanges. An exchange is the act of obtaining a desired
object by offering something in return. Exchange is said to be the core concept of
marketing.
If the exchange is the core concept of marketing, transaction is
marketing‘s unit of measurement. A transaction, an exchange or trade of values
between two parties, measures the number of exchanges that take place.
 Markets
A market refers to a set of actual and potential buyers of a product who
have a common need or want that can be satisfied through exchange. Market in
marketing does not refer to a place but to a group of people bound by a common
need or want. The size of market is measured by the number of people who
exhibit the need, have the resources to engage in an exchange, and who are
willing to offer these resources in exchange for what they want.
THE MARKETING MIX

Success in marketing is determined by four equally important factors that are
collectively known as the marketing mix. These are Product, Price, Place, and
Promotion. It is said that the success of marketing depends on the success of the
company‘s plans as far as the marketing mix is concerned.
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A high quality, top-performing product sold at a reasonable price at convenient

and accessible places backed up by intensive promotion spell MARKETING SUCCESS.
If we put marketing success into an equation, it would be:
High quality Convenient and
Marketing Success = top-performing + Reasonable + Accessible + Intensive
PRODUCT PRICE PLACE PROMOTION
Marketing Management
Marketing management is the analysis, planning, implementation, and control of
program designed to create, build and maintain beneficial exchanges with target buyers
for the purpose of achieving organizational objectives. Thus, marketing management
involves managing demand, which in return involves managing customer relationship.
Hence, marketing management is also called demand management.
Marketing Management Principles

1. Production concept. This concept holds that given a wide array of products in
the market, consumers will prefer to buy products that are widely available and
highly affordable.
2. Product Concept. This concepts holds that consumers favor products that offer
the best quality, performance and innovative features.
3. Selling Concept. This concept holds that consumers will not buy enough of the
company‘s products unless the company undertakes an extensive and large-
scale selling and promotional effort.
4. Marketing Concept. This concept holds that achieving the goals of an
organization depends on knowing the needs and wants of the target market and
delivering the desired satisfaction more effectively and efficiently than others.
5. Social Marketing Concept. This concept holds that organizations must not only
study and satisfy the customer‘s needs and wants but also deliver superior value
in a way that maintains or improves the customer‘s as well as the society‘s well-
being.
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Notes in Marketing
CHAPTER TEST - 1
Name: Score:
Course: Date:
1. Define the following:

 Marketing
__________________________________________________________________
__________________________________________________________________
 Needs
__________________________________________________________________
__________________________________________________________________
 Wants
__________________________________________________________________
__________________________________________________________________
 Products
__________________________________________________________________
__________________________________________________________________
 Marketing mix
__________________________________________________________________
__________________________________________________________________
2. True or False
Read the following statements carefully. On the space provided, write TRUE if
the statement is correct and FALSE if otherwise.
_________1. A high quality, top-performing product sold at a reasonable price at
convenient and accessible places backed up by intensive promotion spell
marketing success.
_________2. Marketing Concept holds that achieving the goals of an organization
depends on knowing the needs and wants of the target market and
delivering the desired satisfaction more effectively and efficiently than
others.
_________3. Total quality management (TQM) programs pertains to the continuous
improvement of company products, services and marketing processes.
_________4. The size of market is measured by the number of people who exhibit the
need, have the resources to engage in an exchange, and who are willing to
offer these resources in exchange for what they want.
_________5. Marketing management is also called demand management.
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Notes in Marketing
CHAPTER 2: MARKETING ENVIRONMENT AND

SWOT ANALYSIS
Chapter Objectives:
1. Realize the importance of its environment to overall company
operations;
2. Distinguish between the two types of business environment;
3. Identify and explain the forces in the microenvironment;
4. Identify and explain the forces in the macroenvironment;
5. Understand the meaning and importance of SWOT analysis; and
6. Distinguish which characteristics form the company‘s strengths,
weaknesses, opportunities, and threats.
7.
The operations of a company can never be isolated from its environment. An

environment consists of forces that are expected to affect company operations. A firm
has to sets of environment: the microenvironment and the macroenvironment.
 THE MICROENVIRONMENT
The microenvironment is also called the internal environment. It includes
forces affecting operations that are within the control of the company. Internal
environment consists of five (5) equally powerful forces, namely;
a. Management
b. Marketing
c. Finance
d. Production and Operations
e. Human Resources
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Notes in Marketing
 Management
This pertains to the organizational setup, including goals and objectives,
organizational structure, managerial composition, company philosophy, vision,
mission, policies, programs, plans, strategies, tactics, etc.
 Marketing
This includes the marketing program of the company covering the basic
marketing mix – product, price, place, and promotion.
 Finance
This includes the company‘s resources. Items covered under this force are
profitability indices, balance sheet and income statement results, assets,
liabilities, net worth, investments, capital expenditures and operating expenses.
 Production and Operations

This includes all aspects of manufacturing (pertaining to industries) or
operations (for commercial and service enterprises). Specific items falling under
this force are;
o Quality and sources of materials

o Machinery and equipment
o Production efficiency
o Service reliability
o Technical expertise
o Scheduling
o Delivery
o Sales services
o Maintenance
o Factory location
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 Human Resources
This deals with increasing the effectiveness of human performance. It
includes motivation, compensation, training and development, promotion,
recruitment, selection, placement, hiring policies and procedures, fringe benefits,
performance appraisal, grievance
 THE MACROENVIRONMENT
The macroenvironment is also called the external environment. It
includes forces that are beyond a company‘s control. The macroenvironment
includes the economic, the sociocultural, the political-legal, the technological, and
the natural environment.
 Economic Environment
This environment includes such forces as balance of payments, foreign
exchange, import-export situations, competitive situation, taxation, energy and
oil prices, employment and other measures of economic performance.
 Sociocultural Environment
This environment pertains to people and their culture. Examples of forces
under this type of external environment are education, customs and traditions,
religious affiliations, perception, cultural values, demography, ethnic and racial
diversity, etc.
 Politico-legal environment.
Politico pertains to government while legal pertains to law. This
environment includes legislation regulating business, legal restrictions, elections,
political stability, presidency, peace and order situation, armed forces, etc.
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Notes in Marketing
 Technological environment.
This refers to the advancement of science and technology and includes
new invention or discoveries, technological breakthroughs, research and
development, information technology, scientific experiments, etc.
 Natural environment.
This includes typhoons, earthquakes, the El Nino and La Nina
phenomena, pollution, ozone depletion, deforestation, preservation and
extinction of animal species, etc.
 The SWOT Analysis

After thoroughly studying the microenvironment and the macroenvironment of the
firm, the company gets a clear picture of what it has and what it lacks; what to expect
and what not to expect. This leads to a very powerful tool in marketing—the SWOT
analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
 STRENGTH
A strength is something that a company is good at doing. It is a quality that
produces a competitive advantage for the company. A characteristic is said to be a
strength if it belongs to the internal environment and is expected to affect company
operations in a positive manner. High technical expertise, superior financial resources,
good management-labor relations, a well-developed and carefully thought out vision-
mission, effective advertisements, clean corporate image and reputation, and
outstanding leadership are good examples of strengths that a company may possess.
 WEAKNESSES
The opposite of strength is weakness. A weakness is something that a company
lacks. It is a quality that puts the company at a disadvantage. A quality is said to be a
weakness if it belongs to the internal environment and has a detrimental effect on
company operations. Below-par financial performance, poor product quality and
availability, uncooperative workers, low employee morale, duplication of work, frequent
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Notes in Marketing
machine breakdowns, inconsistent policies, and poor planning are examples of

weaknesses.
 OPPORTUNITIES
An opportunity is a factor in the external environment that is expected to work
favorably towards company operations. Improvements in the economy, high barriers to
entry, high population growth rate, increase in purchasing power, stable political
leadership, and strong confidence of investors are some examples of opportunities.
 THREATS
A threat, on the other hand, is a factor in the external environment that is expected
to have a negative effect on company operations. Political unrest, presence of substitute
products, dumping of low-priced items from Asian neighbors, piracy, and a pending oil
price hike are examples of threats.
The two-part questions for SWOT analysis:

1. Is the factor within the control of the company or is it beyond the company‘s
control? If your answer is within, then it belongs to the internal environment. If
beyond, it is part of the external environment.
2. Is the factor expected to affect company operations positively or negatively? If

positively, it may be either a strength or am opportunity. If negatively, it can be a
threat or weaknesses.
E EFFECT ON OPERATIONS
N
V Positive Negative
I
R Internal Strength Weakness
O
N
M External Opportunity Threat
E
N
T
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Notes in Marketing
CHAPTER TEST - 2
Name: Score:
Course: Date:
SWOT ANALYSIS
Suppose you are a Marketing Manager of a community pharmacy which is a
known retail drugstore in the Philippines. You are tasked to perform a SWOT analysis to
know what are the factors expected to affect the company‘s operations.
Examine each situations and identify whether it is a Strength, a Weakness, an
Opportunity or a Threat to your company.
Answer;
S. If the situation refers to a Strength
W. If the situation refers to a Weakness
O. If the situation refers to an Opportunity
T. If the situation refers to a Threat
X. If it will not affect the company at all
___________1. Constant growth of the number of people taking medicine
___________2. Excellent staff who are highly trained and very customer attentive
___________3. Risk of unsuccessful new products
___________4. Business taxes will increase by 3% next year.
___________5. The present promotional activities have a great appeal to customers
___________6. High cost of merchandise, which contradicts to the company‘s
positioning of ―Effective medicines at an affordable price‖
___________7. Many of the drugs prescribed by the physicians in the hospitals are
not available in the hospital pharmacy which prompt patients to go
and avail drug regimen from a drugstore.
___________8. Counter of the store is very attractive and ventilation is good for the
convenience of the customers
___________9. Some employees have problems on dealing with arrogant customers
who give out unfavorable comments.
___________10. Sometimes overlook financial issuance of check and deposited cash.
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Notes in Marketing
CHAPTER 3: THE MARKETING MANAGEMENT

PROCESS IN THE DRUG INDUSTRY
Chapter Objectives:
1. Explain the steps in marketing management process;
2. Perform market targeting, market segmentation and market
positioning;
3. Understand the four marketing management functions.
The marketing management process, consists of the following: (1) analyzing

marketing opportunities, (2) selecting target markets, (3) developing the marketing mix
and (4) managing the marketing effort.
1. ANALYZING MARKET OPPORTUNITIES
Drugstore-owners, community pharmacists, hospital chief pharmacists, hospital

administrators and marketers in the drug industry, throughout the marketing
management process, undoubtedly, needed resources to strongly build a data bank of
drug industry information, to appropriately and significantly analyze pharmaceutical
market opportunities such as the attitudes, perceptions, feelings, impressions, or buying
motivations of consumers or end-users for drug products; likewise, the need for up-to-
date information pertaining to the external and internal environment likely to affect the
pharmaceutical business. The former includes the socio-political-economic-
technological and cultural forces, competitors, suppliers, resellers and publics in the
drug industry. On the other hand, the internal environmental sources refers to the
company's internal records, pharmaceutical marketing research, marketing intelligence,
and management information system in the Total Health Care Delivery System. All
these environmental forces in one way or the other, affect the pharmaceutical and its
consumers, either favorable or otherwise. We cannot therefore afford to be complacent
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Notes in Marketing
or mediocre in our expectations, attitudes and overall performance, particularly on our

present drug products, services and markets, in a highly volatile environment constantly
bombarded with threats and countless problems from within and without, and it is in this
regard, that we in the drug industry go to the trouble of transforming all these seemingly
endless obstacles into opportunities, or at least minimizing the threats, or turning
possible weaknesses into strengths or optimizing available resources to continually
search for new ideas or ways of doing the right things right, the first time, anytime and
all the time, offering better value or maximum satisfaction to target markets.
Marketing opportunities in the drug industry are in abundance for us to make use
of, to the fullest for purposes of growth, leadership, and survival. We need to promptly
identify new market opportunities for our present products, markets, and respective
businesses, so that we can best realize timely and accurate information about
customers, competitors, distributors, and dealers, suppliers and other forces in the
marketplace to improve significantly our position or standing in the drug industry. We
need vital information to generate more responsive marketing techniques in the light of
keen competition and adverse situations that hinders us from achieving desired results.
We need such information to test or validate the effectiveness of our marketing tools;
more than ever, we need timely information to favorably develop a confidence in many
of our major decisions both in the short term and future goals, as we plunged into a
series of calculated risks towards aggressively implementing a well-balanced marketing
program to intelligently propel our businesses to greater heights of success. To ably
meet the challenge, we therefore need to carefully design and install a marketing
research and marketing information system, to solidly back-up marketing decisions
critically vital and urgent as called for, by the need of the times. Information is power,
and the company that creatively crystallizes them into meaningful outputs, in a normal
or crisis atmosphere, undoubtedly, are several steps ahead of competition, more
powerful and on firm ground, all the time and always.
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Notes in Marketing
2. SELECTING TARGET MARKETS
Many drug companies and drug outlets, are servicing different kinds of
pharmaceutical consumers with too many different kinds of needs and wants. While it
may not be completely possible to optimally satisfy all these consumers or segments or
sub-segments of the market at any given time, place and resources allocated, so
therefore, it is but fitting and proper, that we clearly identify and choose only the specific
segments that can profitably be served better than direct competitors. Kotler,
enumerated four steps to address the issues at hand, namely: (a) demand
measurement and forecasting; (b) market segmentation, (c) market targeting, and (d)
market positioning.
A. DEMAND MEASUREMENT AND FORECASTING
Drug companies are able to make a careful estimate of the current market size of
the drug industry, its various market segments and sub-market segments, the
competing products, their current sales, and market potential through the IMS, SEC
records, and other research agencies and developments in the marketplace. The future
market growth for OTC or proprietary drug products, for example, may be related to the
growing tendencies for health-conscious people towards self-diagnosis and self-
medication practices. It is highly imperative that in today's computer-based marketing
environment, we are able to measure and forecast the immediate impact of these
practices into quantifiable terms with respect to product demands and market growth
potential for OTC drugs so that timely and appropriate marketing decisions could be
implemented in full force. Drug companies periodically prepare product forecasts in
units and absolute amounts, annually broken-down into semestral, quarter and monthly
targets, based on several factors in the external and internal environment. These
forecasts or targets are further divided into therapeutic segments and sub-segments, by
region, area, territory, and by type of outlets or customer segments. Drug outlets do the
same in forecasting demand for drug products that are fast-moving, slow or moderate,
non-moving or non-saleable lines and implement marketing approaches to significantly
meet forecasted demands.
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B. MARKET SEGMENTATION
Market Segmentation is the process of classifying customers into groups with

different needs, characteristics or behavior. This is the process of breaking down a large
market into smaller manageable units. This process of segmenting markets is based on
the principle that is virtually possible to serve all markets at the same time. Marketing
success is spelled by the way a company chooses a market, which it can serve most
effectively and efficiently.
Consumers or end-users of drug products can be grouped in my ways based on,
Demographic factors Psychographic Factors Geographic Factors

 Age  Usage rates  Cities
 Sex  Frequency and  Towns
 Income motivations for buying  Municipalities
 Education  Barangays
 Income  Sitios
C. MARKET TARGETING
Most drug companies and trade outlets participate actively in several related or
non-related market segments, and offer a complete range of product lines.
Market targeting is a process of selecting the target market from the entire
market. Target market consists of group/groups of buyers to whom the company wants
to satisfy or for whom product is manufactured, price is set, promotion efforts are made,
and distribution network is prepared.
PRODUCTS MARKET TARGETS

1. Drug Products in Several Formats
a. Drop formats a. Pediatrics market
1-9 months old.
b. Liquid or suspension b. Pediatrics market
1-12 months old.
c. Tablets or capsules format c. Adults market
13 years old and above
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2. Health food products All age groups.

Male and Female markets
Upper Class Income brackets
3. Cosmetic Products Female Markets
Young Adults
18 years old and above
Table 1. Sample Market Targeting of a Pharmaceutical Company
Figure 1. Stages in target marketing strategy development

(https://www.smartinsights.com/digital-marketing-strategy/customer-segmentation-
targeting/segmentation-targeting-and-positioning/)
D. MARKET POSITIONING
A product‘s position is the place the product occupies in consumer‘s minds
relative to competitors. If a product is perceived to exactly like another product on the
market – ―copycat‖, or ―me-too‖ or ―look-alike‖ or imitation consumers would have no
reason to buy it.
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Market positioning is arranging for a product to occupy a clear, distinctive and

desirable place relative to competing products in the minds of target consumers.
Marketers therefore, plan positions that distinguish their products from competing
products and that give them greatest advantage in their target markets.
Best Competitive Advantage

Finding the best competitive advantage may be classified into four (4) areas:
1. Technology, in the area of Bioavailability and Bioequivalence Tests
2. Cost; of raw materials from own chemical plant.
3. Quality, of drug products within international and BFAD requirements.
4. Service, beyond the 4 P‘s of marketing mix.
A drug company therefore, may focus on superiority in service over those
competitions and capture a bigger share of the market in this area, or any of the
aforementioned, or all of the competitive edge factors.
3. THE MARKETING MIX

Marketing Mix is the set of controllable marketing variables that the firm blends
to produce the response it wants in the target market. It revolves around the four groups
of variables popularly known as the 4 P’s of marketing mix namely: Product, Price,
Place, and Promotion.
 Product stands for the ―goods and services‖ combination the company offers to
the target market.
 Price stands for the amount of money customers have to pay to obtain the
product.
 Place stands for company activities that make the product available and visible
to target customers at the right place, right time, right quantity, right cost, and
right condition.
 Promotion stands for the activities that communicate the merits of the product
and persuade target customers to buy it.
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Notes in Marketing
4. MANAGING THE MARKETING EFFORTS TO MEET THE CHANGING

CONDITIONS IN THE HEALTH CARE BUSINESS
An effective marketing program blends all of the marketing mix elements into a
coordinated program designed to achieve the company's marketing objective. All of the
marketing variables may not be allocated equal marketing effort, but to a large degree,
rely on available marketing opportunities, specific target markets, desired market
segments and sub-market segments the company wishes to enter in order to attract and
satisfy the needs and wants of these segments. Companies normally base their
marketing strategies on specific consumer needs, on the company's industry position,
and available resources relative to competitor's products, prices, channels, and
promotion. All these marketing programs and actual results are continuously monitored,
evaluated, and measured against standards or goals set for a period of time and place.
Market leader strategies

A market leader is a company with the largest market share in an industry that
can often use its dominance to affect the competitive landscape and direction the
market takes. Such a company may be the first to develop a product or service, which
would allow it to set the tone for messaging, define the ideal product characteristics, and
to become considered by the market as the brand that consumers associate with the
offering itself.
Market challengers
Market challengers on the other hand, are runner-up companies that
aggressively attack competitors to get more market share. The challenger might attack
the market leader, other firms its own size or smaller local and regional competitors.
Market followers
These are runner-up companies who choose to follow rather than challenge the
market leader. These firms seek stable market shares and profits by simply following
competitor‘s product offers, prices, and marketing programs.
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CHAPTER TEST - 3
Name: Score:
Course: Date:
Briefly explain the following:

1. Marketing Management Process
2. Market Segmentation
3. Market Targeting
4. Market Positioning
5. The Marketing Mix
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Notes in Marketing
CHAPTER 4: PRODUCT MIX
Chapter Objectives:
1. Define product, product lines, and product mix;
2. Explain the three levels of a product;
3. Know the various product mix strategies; and
4. Describe the product life cycle.
 WHAT IS A PRODUCT?
A product is anything that can be offered to a market for attention, acquisition,
use, or consumption that might satisfy and delight a need or want of the target
clientele. It is a set of tangible and intangible attributes, including packaging, color,
price, quality and brand, plus the seller‘s services and reputation.
 CLASSIFICATION OF PRODUCTS:
o According to Durability:
 Durable goods – are consumer goods that are used over an
extended period of time.
 Nondurable goods – are consumer goods that are quickly
consumed, worn-out, or outdated.
o According to Type of end-user or the purpose for which the product
is to be used:
 Consumer goods – are goods that are bought by household
consumers for their own final consumption
 Industrial goods – are goods bought buy business for resale, for
further processing or for use in producing other products.
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Notes in Marketing
 THREE LEVELS OF PRODUCT

o Product planners think about the product on three levels. The most basic
is the core product, which answers the question: What is the buyer really
buying? Every product is really a package of problem-solving processes.
In other words, marketers must uncover the needs hiding under every
product and sell benefits not features. The core product stands at the
center of the total product as in the Three Levels of Product (see figure 1)
o Kotler says that the product manager has to turn the core product into a
tangible product, which may have as many characteristics like features,
styling, brand name, packaging, and quality level.
o Finally, the product planners may offer additional services and benefits
that make up an augmented product, by looking at the buyers‘ total
consumption system.
Figure 1. Three Levels of Product
 PRODUCT LINE
o A product line is a group of products that are fairly closely related. It is a

broad group of products, intended from essentially similar uses and having
similar physical characteristics.
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 PRODUCT FORMATS
o All drug products that are available in both the traditional and non-
traditional markets and manufactured by either the local or multinational
drug companies, comes in several product formats catering to specific
market segments.
o The decisions to make the drug product available in one, two, or multiple
formats is a crucial issue in satisfying the needs and wants of the target
consumers.
The product formats available in the marketplace for different types of consumers are:
 Capsules  Soft gel  Spray

 Tablets  Powder  Inhaler
 Suspension  Granules  Vaporizer
 Liquid  Gelatin  Medicated
 Drops  Lotion  Frozen
 Concentrate  Balm  Refrigerated
 Vials  Ointments  Non-refrigerated
 Ampules  Creams  Pellets
 PRODUCT MIX
The set of all product lines offered for sale by the company is called product mix.
 PRODUCT MIX STRATEGIES
1. Product Positioning
Product positioning is a marketing strategy that helps place a product
perceptually in the minds of consumers. Positioning typically requires creating
differences between your products or services and your competitors' offerings, but can
be extended to your own products if they are marketed under different brands.
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Notes in Marketing
Figure 2. Product Positioning Map
 Positioning Strategies:
a) On specific product attribute
b) On the needs they fill or the benefits they offer
c) According to usage occasions
d) For certain classes of users
e) Directly against a competitor
f) Away from competitors
g) Combination of Positioning strategies
2. Brand or Generic Name Decisions

 A brand is a name, term, sign, symbol, design, or combination of these,
intended to identify the goods or services of one seller or group of sellers
and to differentiate them from those competitors.
 A brand name is the part of a brand that can be vocalized. It is the verbal
part of the brand.
 A brand mark is is the part of the brand that appears in the form of a
symbol, design, distinctive coloring, or lettering. It is recognized by sight but
cannot be uttered or vocalized.
 A trademark is a brand or part of a brand that is given legal protection. It

protects the seller‘s exclusive rights to use the brand name or brand mark.
23
Notes in Marketing
Examples:
UNITED LABORATORIES, INC.
 Blanket Family Name

 Blanket Family refers to the use of same brand name for all products. This
strategy offers certain advantages such as the development cost is less
because there is no need for name research or heavy advertising
expenditures to create brand name recognition.
 Selecting a Brand Name for a Drug Product

 Some drug companies follow brand name selection process through its
Product Management Group, by carefully reviewing the drug product and
its benefits, the target market and proposed marketing mix strategy, then
screening hundreds of potential brand names suggested from various
sources, and selecting the best one based consumers‘ reactions and the
advice of company marketing people and through the services of
advertising and research agencies and outside brand new consultants.
 Physicians, dentists, and pharmacists are being consulted for the proposed
brand name of a drug product that will be launched via the ethical or
proprietary way.
 These are among the desirable qualities for a brand name:

1. It should closely suggest something about the product’s benefits and
qualities that the intended markets could associate with easily
2. It should be easy to pronounce, recognize, and remember.
24
Notes in Marketing
3. It should be distinctive to readily arrest attention.

4. Adaptable to new products that may be added to the product line.
5. Capable of being registered and legally protected
 Protecting a Brand Name

o Sometimes, brands become so well-accepted that the brand name is
substituted for the generic name of the product. To prevent the loss of the
distinctive character of the brand name and avoid its falling into a generic
name, three strategies could be used.
 Ensure the words ―trademark‖ of the letters ―TM‖ appear adjacent
to the brand name.
 Use two names; the company‘s name together with the brand
name of the brand name together with the generic name.
 Incorporating into the brand name a distinctive signature or a
logo.
3. Packaging
 Packaging is a marketing activity of creatively designing and producing
the appropriate container or wrapper for a drug product suitable to target
markets relative to competition‘s products.
 The primary package is the product‘s immediate container.
 The secondary package is the packaging material that protects the
primary package and that is thrown away when the drug product is about
to be used by the target consumer.
 The shipping package is used primarily to store, identify, and ship the
product to target markets.
 Packaging is a highly important and valuable marketing tool for drug
products.
 Purposes of Packaging:
 For safety and utilitarian purposes
 For company‘s marketing program
 For increased profit and sales volume
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Notes in Marketing
4. Other Image-Building Features

 Some additional product attributes are product design, color, product quality,
warranty, and after-sales service.
 Product design. A distinctive design may be the only feature that
differentiates a product from its competitors. A good design also improves
the salability of a product by making it easier to handle and operate.
 Color. Color is very significant component in a customer‘s acceptance or
rejection of a product.
 Product Quality. The quality level of a product should be compatible with
its intended use. Successful management of quality is maintaining the
quality of a product even when production increases.
 Warranties. The purpose of a warranty is to assure buyers that they would
be compensated in case the product does not perform according to
expectations.
 After-sales service. Firms offer post-sales services such as maintenance
and repair not only to satisfy customers but also to increase revenues and
build relationships.
 Product Life Cycle
Figure 3. The Product Life Cycle Mode
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Notes in Marketing
 Introductory Stage – at this stage, the product is launched full-scale into the
market. It is a period of very low sales performance during the first few months
to one year or more.
 Growth Stage – if the product earns market acceptance, it should at some point
enter a period of comparatively rapid growth.
 Maturity Stage – as the product approaches the end of its growth period, sales
begin to decline. This is to be expected as competing firms try to operate within
a slow-growth market.
 Decline Stage – the decline stage is characterized by falling scales and falling
profits. Most competitors have withdrawn from the market. Survivor firms
compete within an even smaller market, driving profit margins lower still.
27
Notes in Marketing
CHAPTER TEST - 4
Name: Score:
Course: Date:
IDENTIFICATION
Identify the term being described in each item.
___________1. It is anything that can be offered to a market for attention, acquisition,
use, or consumption that might satisfy and delight a need or want of
the target clientele.
___________2. It refers to consumer goods that are quickly consumed, worn-out, or
outdated.
___________3. It refers to a group of products that are fairly closely related. It is a
broad group of products, intended from essentially similar uses and
having similar physical characteristics.
___________4. It is a marketing strategy that helps place a product perceptually in the
minds of consumers.
___________5. It is the part of a brand that can be vocalized. It is the verbal part of the
brand.
ENUMERATION
A. Two (2) Classification of products according to durability
B. Two (2) Classification of products according to type of end-user or the purpose for
which the product is to be used
C. Three (3) Purposes of Packaging
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Notes in Marketing
CHAPTER TEST - 4
Name: Score:
Course: Date:
D. Four (4) Stages of Product Life Cycle
E. Four (4) Main Product Mix Strategies
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Notes in Marketing
CHAPTER 5: PRICE MIX
Chapter Objectives:
1. Define price;
2. Identify the major considerations in setting price;
3. Realize the goals of pricing;
4. Identify and define the different cost-based pricing strategies;
5. Identify and define the different value-based pricing strategies;
6. Identify and define the different product-mix pricing strategies; and
7. Identify and define the different price-adjustment strategies.
 What is a PRICE?
A price is the amount of money charged for a product or service. More broadly
price is the sum of the values consumers exchange for the benefits of having or
using the product or service.
Price is also defined in many ways as follows:
o the values placed on goods and services
o the amount of money and/or goods needed to acquire some combination
of another good and its accompanying services;
o the value expressed in terms of pesos or any other monetary medium of
exchange.
 What are the factors influencing price?
Several factors primarily determine the price of a drug product as follows:
A. The Market for the Product
1. Market Appeal
2. Market characteristics
3. Elasticity of Market Demand
4. Expandability of Market Demand
30
Notes in Marketing
5. Pattern of Income Distribution

B. Costs of the Product
1. Lower Production Costs, can be achieved in such factors as
economies of scale, better organizational capability, lower procurement
costs of raw materials component and highly able management.
2. Higher Selling Costs, occurs when initiating massive advertising and
personal selling; when costs of operations increase; when you have to
reduce price; when expanding warehouse facilities and when there is
an increase in transportation costs.
3. Joint Costs, where multi-products company prorates or allocates
costs or marketing and production.
 What are the GOALS OF PRICING?
 To maximize current profits.
 To maintain or improve target share of market.
 To pre-empt or minimize entry of competition in the specified market
segment.
 To survive in business sue to increased overhead costs, excess capacity,
stiff competition and changing consumer needs and wants.
 To attain the highest quality product in the market.
 To keep the loyalty and support of resellers or to avoid government
intervention.
PRICING STRATEGIES
 New Product Pricing Strategies
 Generally, a company offering a new product has two pricing options: to set
a high price or to set a low price. The strategy of setting a high price for a
company‘s products backed up by a strong promotional effort is called
market skimming pricing. Under this approach, the company initially sets
high prices to skim revenues layer by layer from the market. On the other
hand, the strategy of setting a low price for a company‘s products also
backed up by a strong promotional support is called market penetration
pricing. Under this approach, the company initially sets a low price in order
31
Notes in Marketing
to penetrate the market quickly and deeply, that is, to attract a large number
of buyers and capture a large market share in the process.
QUALITY
High Low
P Premium Overcharging
R High
Strategy Strategy
I
C Good Value Economy
Low
E Strategy Strategy
Figure 1. The Price-Quality Matrix
 Selling a high-quality product at a high price is called the premium pricing strategy.
 Selling a high-quality product at a low price is called the good value pricing strategy.
 Selling a low-quality product at a high price is clled the overcharging pricing
strategy.
 Selling a low-quality product at a low price is called the economy pricing strategy.
 Cost-Based Pricing Strategies
 Cost-Plus Pricing. This is the simplest pricing method that requires a
standard markup in the cost of a product. This approach is also called
markup pricing. After determining the cost of the product, a company simply
sets a price by adding a standard markup to the cost.
Price = Cost x (100% + Mark-up)
COST x (100% + MARKUP = PRICE

The amount of money The amount earned The amount of which
spent in producing a per unit of the each unit of the
unit of a product. product sold product is sold
Example:
The Best Care Pharmacy determined the total product cost of one of its product
at Php 95.00 per unit. The company decided to set a markup of 25% on cost. Determine
the final retail price per unit of product.
Solution: Price = Cost x (100% + Mark-up)

Price = Php 95.00 x (100% + 25%)
Price = Php 95.00 x 125%
Price = Php 118.75
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Notes in Marketing
 Break-even Pricing. Under break-even pricing, the selling price enables the
company to break even. Break-even refers to a condition where the
company neither earns profit nor incurs loss. In short, it is a point where net
income is nil. Three variables are needed to compute for the break-even
point, namely, the company‘s total fixed costs, the company‘s variable costs
per unit, and the company‘s selling price. The formula for break-even point,
or BEQ, is:
Where:
BEQ= Break Even Quantity to be sold
TFC= Total Fixed Costs
SP/u= Selling Price per unit
VC/u= Variable Cost per unit
( )
Example:
Chenelyn drug-store is a start-up retail drug-store offering various product
lines. One of its products is Paracetamol (Churvagesic®). Use the following
information to compute for the company‘s breakeven number of units (tablets):
 The per tablet variable costs are Php 50
 the fixed costs are Php 250,000
 Selling price per tablet is Php 100.
Solution:
Thus, the company must produce 5,000 tablets.
33
Notes in Marketing
What if the company is determining the price per tablet of Paracetamol? Use
the following information to compute for the price per tablet at breakeven point:
 The fixed costs are Php 250,000
 The company is required to produce 5,000 tablets.
Solution:
( )
( )
Thus, the company should set the price per tablet at Php 100.00 to breakeven.
 Target Profit Pricing. This pricing approach is a variation of break-even

pricing. Under this scheme, the company sets a target profit to be earned
and uses break-even analysis to meet the said target.
𝑻𝑭𝑪 𝑻𝑷
𝑻𝑷 𝑷𝒓𝒊𝒄𝒆 ( ) 𝑽𝑪
𝑩𝑬𝑸
Where:
Q= Quantity to be sold
TFC= Total Fixed Costs
TP= Target Profit
SP/u= Selling Price per unit
VC/u= Variable Cost per unit
Example:
Chenelyn drug-store is a start-up retail drug-store offering various product
lines. One of its products is Paracetamol (Churvagesic®). The company wants to
achieve a target profit of Php 50,000. How many units (tablets) will Chenelyn
produce to achieve its goal? Use the following information to arrive at your final
answer:
34
Notes in Marketing
 Selling price per tablet is Php 100.
Solution:
Thus, the company must produce 6,000 tablets of Paracetamol (Churvagesic®) to

arrive at its target profit of Php 50,000.
What if the company is determining the price per tablet of Paracetamol

(Churvagesic®)? Use the following information to compute for the price per tablet of
Paracetamol (Churvagesic®):
 The fixed costs are Php 250,000
 The company wants to achieve a target profit of Php 50,000
 The company is required to produce 6,000 tablets of Paracetamol
(Churvagesic®).
Solution:
( )
( )
Thus, the company should set the price of each tablet of Paracetamol
(Churvagesic®) at Php 100.00 to achieve a target profit of Php 50,000.
35
Notes in Marketing
 Value-Based Pricing Strategies

 Value-based pricing considers buyer‘s perception of value as the main
ingredient in pricing. In value-based approach, the starting point is the
customer‘s perception of value, not cost.
 Product-Mix Pricing Strategies

 Product line pricing. This is a pricing approach applicable to firms that
develop product lines rather than single products.
 Optional-product pricing. This approach offers to sell optional or accessory
products along with a main product.
 Captive-product pricing. Instead of offering accessories to the main
product, captive-product pricing would offer products that are essential to the
main product itself.
 By-product pricing. A by-product is a surplus product or item coming from
the main product itself.
 Product-bundle pricing. In this pricing technique, a company combines
several of its products into a bundle and offers the bundle for sale at a
reduced price.
PRICE-ADJUSTMENT STRATEGIES
 Discount pricing – this pricing strategy allows a company to reduce prices to
reward customers for certain responses like paying promptly or promoting the
company‘s products or services. Following are some common forms of discount
pricing:
 Cash discounts
 Quantity discounts
 Seasonal discounts
 Segmented pricing
 Customer-segment pricing
 Product-form pricing
 Location pricing
 Time pricing
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Notes in Marketing
 Psychological Pricing – this pricing strategy looks not only into the economics
of pricing but also on the psychology of pricing. This approach relates the effect
of pricing on people‘s minds and determines consumer reaction to the price set
by the company for its products.
 Promotional Pricing – sometimes a company decides to price some of its items

below the regular list price, or at times even below cost, to attract customer
traffic. Macro comes up with items sold at very low prices to attract buyers to the
store.
 Geographical Pricing – this pricing strategy is used by companies operating in

different areas of the country or different countries of the world. In this approach,
company sets different prices depending upon the region, state, or country where
the company sells its products.
37
Notes in Marketing
CHAPTER TEST - 5
Name: Score:
Course: Date:
Answer the following accordingly:

1. Chenelyn‘s Pharmacy is a start-up retail pharmacy offering various product lines.
One of its products is Paracetamol (Calpol®) For Kids. Use the following
information to compute for the company‘s breakeven number of units:
 The per unit variable costs are Php 100
 Selling price for each unit is Php 200.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Final Answer:__________
2. Shawn‘s drugstore wants to achieve a target profit of Php 25,000. How many
units will Shawn produce in order to achieve its goal? Use the following pertinent
information to arrive at your final answer.
 Selling price for each unit is Php 7.00
 The per unit variable costs are Php 2.00
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
3. After determining the total product cost of Php 65.00 per unit, the company
decided to set a markup of 25% on cost. Determine the final retail price per unit
of product.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
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Notes in Marketing
CHAPTER TEST - 5
Name: Score:
Course: Date:
4. Kaya ko ‗to Pharmacy is performing its break-even analysis. One of its products
is Kremil – Z ®. Under the following pertinent information, what should be the
selling price of the product at breakeven point?
 The per unit variable costs are Php 100
 No. of units expected to be sold at breakeven point: 5,000 tablets.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
5. Chuchay drugstore wants to achieve a target profit of Php 25,000. Chuchay

wants to sell 50,000 units of its product every year. What should be the selling
price of each unit of product to achieve Chuchay‘s goal. Use the following
pertinent information to arrive at your final answer.
 The per unit variable costs are Php 2.00
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
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Notes in Marketing
CHAPTER 6: PLACE MIX
Chapter Objectives:
1. Define place/distribution;
2. Distinguish between direct and indirect marketing channel;
3. Enumerate functions of distribution channels;
4. Identify the different distribution strategies;
5. Understand Economic Order Quantity and
6. Explain the Basic Aspects of Physical Distribution;
 Place means distribution channels and physical distribution. Distribution refers

to the process of making a product available for the consumption or use of the
consumer or business user. It is a very vital element of the total marketing mix
that ensures the adequate availability and visibility of the right products, in the
right target markets, at the right quantity, at the right cost, at the right condition,
and at the right time.
 A distribution channel is a set of interdependent organizations involved in

making a product or service available for use by the target market. It is the route
along which the right product flow from the manufacturer to the final
consumption.
 A company may decide to sell its products directly to consumers. This is called a
direct marketing channel.
 Most companies, however, make use of the so-called marketing intermediaries to

sell their goods and services to target markets. This is known as an indirect
marketing channel.
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Notes in Marketing
 Marketing intermediaries are companies that act as a middleman who facilitate

the transfer of products from the company to the consumer.
FUNCTIONS OF DISTRIBUTION CHANNELS

A distribution channel moves products from the producer to the consumer. Thus,
members of the marketing channel perform key marketing functions, which help
complete and fulfill completed transactions. These functions are as follows:
1. Information gathering and dissemination: performing marketing research
need for planning and aiding exchange;
2. Promotion: developing and spreading persuasive communication to attract
buyers;
3. Contact: looking and communicating with prospects;
4. Matching: shaping and fitting customer requirements with the company
activities like manufacturing, assembly, packaging, etc.;
5. Negotiation: reaching agreement with customers to make an exchange
possible;
6. Physical distribution: transporting and warehousing products:
7. Financing: acquiring and using funds to cover costs of channel work; and
8. Risk taking: assuming the risks that go with the carrying out channel work.
PHARMACEUTICAL DISTRIBUTION CHANNELS

This refers to the set of pharmaceutical firms and individuals that takes title or
assist in transferring title, to a drug product or service as it moves from the drug
manufacturer to the final consumer. The consumers or end-users in the pharmaceutical
industry basically want drug products that satisfies the following criteria:
1. Right standards of quality
2. Right specifications in terms of packaging and formulation;
3. Right commercial stock levels at all times or when needed;
4. Right savings in terms of price, efficacy, and safety; and
5. Right service warranties.
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Notes in Marketing
 Whenever a drug manufacturer performs the specific channel functions themselves,

the costs go up and correspondingly its prices tends to be higher. However, when
channel functions are relegated or assigned to middlemen, the drug products‘ costs
and prices are lower, and it will now then be up to the middlemen to adjust their
prices to cover channel work.

CHANNEL LEVELS
In the pharmaceutical industry, the number of channel levels varies in bringing
the drug products and its ownership closer to the final buyer, the end-user.
Figure 1. Channel 1
Drug Manufacturer
Local Drug
Trader
Department of Health
Gov‘t Health Units
Gov‘t Hospitals
End Users
Channel 1 consists of a drug manufacturer selling directly to the Department of

Health (DOH) or government health units and hospitals who will turn make the
medicines available to end users practically for free. A local drug trader may serve as
the intermediary level in behalf of the drug manufacturer in transacting business with
DOH.
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Notes in Marketing
Figure 2. Channel 2
Drug Manufacturer
Sales Reps
Dispensing
Physicians
End Users
Channel 2 contains two middlemen level. A sales representative of a drug

manufacturer selling to dispensing physicians who in turn sells the medicines to the
patients (end-users) charging the latter consultation fees and medicines given.
Figure 3. Channel 3
Drug Manufacturer
Independent Retailers
Distributors
End Users
Channel 3 contains only one middlemen level, either an independent distributor

or retailer, who in turn sells the drug products to end-users.
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Notes in Marketing
Figure 4. Channel 4
Drug Manufacturer
Wholesaler
Retailers
End Users
Channel 4 contains two middlemen level, namely the wholesaler and retailer
drugstore outlets who in turn sells to the end-users. In some companies, three
middlemen level when it‘s their salesmen facilitate the transactions.
Figure 5. Channel 5
Drug Manufacturer
Wholesaler
Jobbers Retailers
End Users
Channel 5 contains three middlemen level, reflecting jobbers who sell to the
smaller retailers who are generally are not served by the large wholesaler drugstore.
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Notes in Marketing
MIDDLEMEN (MARKETING INTERMEDIARIES)

Channels of Distribution in the Drug Industry
1. Wholesalers
2. Retailers
3. Jobbers
4. Manufacturer‘s Representatives (Sales Force)
5. Manufacturer‘s Branches and Franchises
6. Distributors and Dealers
7. Dispensing Physicians
8. Department of Health; Government Health Units; Government Hospitals and
Industrial Clinics
9. Non-Governmental Organizations (NGOs); Socio-Civic-Charitable Organizations
INNOVATIVE DISTRIBUTION CHANNELS

Outside of the traditional distribution channels for drugs and medicines namely
the drugstores, hospitals, pharmacies, industrial clinics, government and health units
and agencies and dispensing physician‘s clinics, new channels were found effective by
drug companies such as the following:
1. Groceries and Supermarkets
2. Trading and Sari-sari stores
3. Post office and Air cargo forwarders
4. Convenience stores
5. School Clinics, Health and Fitness Centers, Barangay Centers, Cooperative
Drugs.
DISTRIBUTION STRATEGIES
Three are three strategies in deciding on the number of middlemen to use and
these are:
1. Intensive Distribution – in this strategy, the company stock-up their product
lines in as many as sales outlet as possible, in both the traditional and non-
traditional markets. For example: Advertised drug products are sold and made
45
Notes in Marketing
available in the thousands of sari-sari stores, groceries and supermarkets all over
the country.
2. Exclusive Distribution – this distribution strategy limits the number of

pharmaceutical sales outlets given the exclusive right to distribute drugs and
related health products in a given territory, area or region. The drug manufacturer
requires the sales outlets such as hospitals and industrial clinics not to carry
competing lines in exchange of higher discounts, promotions support and other
service amenities.
3. Selective Distribution – this distribution strategy has very selected middlemen

to carry the drug manufacturer‘s product lines for better control of market
coverage and better rapport in the long run. The drug manufacturer does not
have to spread its efforts over many sales outlets in order to develop long-lasting
working relationships fast. Many small and medium-sized drug companies prefer
selective middlemen and expect a better-than average selling effort and market
coverage.
SELECTING CHANNEL MEMBERS

Drug companies when selecting channel members strongly consider the
following:
1. Profile of the middlemen in terms of years in business;
2. Product lines carried other than pharmaceuticals;
3. Overall reputation and image in the drug industry;
4. Track record with respect to sales growth and profitability;
5. Future growth potential; and
6. Store‘s customer and location
46
Notes in Marketing
PHYSICAL DISTRIBUTION SYSTEM

Pharmaceutical physical distribution involves the following: customer service,
warehousing, transportation, inventory management and control, packaging, receiving,
materials handling, and store location.
Physical distribution in the drug industry encompasses the broad range of

activities concerned with planning, implementing and controlling the physical flow of raw
materials, semifinished and finished drug products to designated places, at designated
time and in proper conditions to promptly meet the needs of customers at a profit.
The objectives of physical distribution in the pharmaceutical industry are spelled

out in terms of getting the drug products at the right places, at the right time for the least
cost possible. The major decisions involving physical distribution must be addressed on
a total system basis, by finding out what customers want and what competitors are
offering.
Basic Aspects of Physical Distribution:
The physical distribution consists of four basic aspects namely: 1.) Order
processing; 2.) Warehousing; 3.) Inventory; and 4.) Transportation.
1. Order Processing
Order processing means customer sales orders being facilitated by the
order department by way of invoices, shipping, and billing documents using
computers. Sales orders submitted by sales representatives to the
manufacturer‘s main office are being processed on schedule by the Sales and
Credit Departments. These are forwarded to the Computer Data Systems for
invoicing, then set to Warehouse for scheduled deliveries to the intended sales
outlets.
2. Warehousing
Warehousing means storage of pharmaceutical healthcare products prior
to selling the same to sales outlets or end-users. A warehouse refers to a place
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Notes in Marketing
where goods awaiting sale are stored temporarily. Warehouses receive, identify
and sort merchandise such as drugs, cosmetics, skin care lines and toiletries.
Companies use either storage warehouse or distribution centers. A
storage warehouse is designed only for storing goods for moderate to long
periods of time. Distribution centers, on the other hand, are designed to move
goods rather than just to store them.
3. Inventory
Drug companies ideally would want to carry just enough finished goods
inventory to satisfy market demands, at the right time and right quantity. Large
inventories have to be evaluated carefully if these would mean incremental sales
and profits. Inventory decisions involve two major concerns: 1.) when to order
and 2.) how much to order. This requires entrepreneurial decisions in the right
stock quantities to maintain in order not to suffer out-of-stock or over-the-stock
situations.
There are four (4) aspects of inventory management and these are:
a. Stock turnover
b. When to order
c. How much to order
d. Warehousing
Stock Turnovers
This is the balance between sales and inventory on hand, expressed by
stock turnover, the number of times during specified period that average
inventory on hand is sold. Stock turnover is calculated in units and pesos:
( )
( )
( )
( )
48
Notes in Marketing
The advantages of high inventory turnover are:

1. Inventory investments are productive;
2. Merchandise are fresh;
3. Losses from changes in styles and packaging are reduced; and
4. Cost of maintaining inventory are lessened to the minimum.
When to Reorder Inventory

The reorder point establishes an inventory level at which new sales orders
must be placed. The reorder point depends on: order lead time, usage rate, and
safety stock. Order lead time is the period form date a sales order is placed until
the date goods are ready for sale or use (received, checked and altered if
necessary). Usage rate means the average sales in units per day or the rate at
which a product is used in a production process. Safety stock is the extra
merchandise kept on hand to protect against out-of-stock conditions resulting
from unexpectedly high demand, greater-than-anticipated production volume and
delivery delays.
The Reorder Point formula is:

( )
How much to Reorder

There are two types of costs related to the maintenance of inventory in a
firm. The carrying cost refers to the cost of carrying one unit of inventory into
stock. On the other hand, ordering cost refers to the cost of placing an order for
an item. These two inventory related costs go in opposite directions. The carrying
cost is directly proportional to the number of units on stock (or the level of
inventory maintained), that is, as the number of units of stock goes up, so does
the carrying cost. Thus, more units will mean higher carrying cost. Ordering cost
and inventory level have an inverse relationship. This means that more
inventories on stock do not require frequent orders, resulting in lover ordering
costs.
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Notes in Marketing
To illustrate, see the figure below:
Figure 6. Behavior of Carrying vs Ordering Cost
The level of inventory to be maintained by a firm is that level that will put
total inventory cost at a minimum. Total inventory cost simply refers to the sum of
carrying and ordering cost. The total inventory cost at its lowest level under the
inventory level where carrying amount and ordering costs are equal. This level is
known as Economic order quantity or EOQ. It is the order volume
corresponding to the lowest sum of ordering cost and inventory holding or
carrying costs. The formula of economic order quantity is:
Where:
EOQ= economic order quantity
D= demand or requirement units for the period
O= ordering cost
C= carrying cost
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Notes in Marketing
4. Transportation
Drug companies in the light of rapidly changing trends in physical distribution are
actually engaged in transportation decisions, more specifically in the choice of
transportation carriers which have substantial bearings in the pricing of the products.
There are basically four common modes of transportation used by companies in
shipment of goods:
a. Waterways. The cost of water transportation is low for shipping bulky,
low-value and non-perishable products. However, water transportation is
also the slowest transportation mode and is always affected significantly
by weather conditions.
b. Railroads. Railroads are one of the most cost-effective models for
shipping large amounts of bulk products. Railroads normally carry heavy
items that are low in value (relative to their weight) over long distances.
Railroads ship items too heavy for trucks.
c. Truck / Motor Carriers. Trucks are highly flexible in their routing and time
schedules. They are efficient in hauling high-value merchandise over short
distances. Motor Carriers are more flexible than rail because they can
readily pick up packages at a factory or warehouse and promptly deliver
them to the customer‘s door. For all intents and purposes, trucks are
faster than rail for short distances.
d. Airways. Airways are the fastest but the air freights are much higher than
rail or truck rates. This mode of transportation is common for perishables
and high-value, low-bulk items.
51
Notes in Marketing
CHAPTER TEST - 6
Name: Score:
Course: Date:
Answer the following questions accordingly:

1. Briefly discuss the following
a. Distribution Channels and its functions
b. Pharmaceutical Distribution Channels
c. Three (3) distribution strategies.
2. Compute for the following:

a. For the year ending December 2019, Mimiyuuuh Drug Store reported cost of goods
sold of Php 525,000 and an average inventory of 5,250 units which costs Php 52,500.
Compute for the Annual Rate of stock Turnover (in Pesos).
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
b. Ganda Ka Pharma Distributors, a drug distributor, needs to find when it should place
orders for specific drug product from its manufacturer. Compute for the Reorder Point
using the following relevant information:
• Average usage: 500 units per day
• Average Lead time: 25 days
• Safety Stock: 250 units
• EOQ: 35,000 units
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
c. The demand for Paracetamol (Calpol®) For Kids at Chenelyn‘s Pharmacy is 120,000
units per annum. Chenelyn incurs a fixed ordering cost of Php 60.00 each time an order
is placed. The carrying cost of each unit of a product is Php 10.00. Compute for the
economic order quantity.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
52
Notes in Marketing
CHAPTER 7: PROMOTIONS MIX
Chapter Objectives:
1. Define promotion;
2. Distinguish the types of communication media;
3. Know the five elements of promotion; and
4. Know the promotional strategies and promotional campaigns
commonly used.
 PROMOTION is an applied marketing communication. Marketers use it to

communicate both factual and persuasive messages to prospective consumers.
In the marketing mix, promotion serves three purposes:
o To inform. Promotion provides facts about the product and places where
to avail the product.
o To persuade. Promotion encourages a buyer to buy a product or to
change his attitude about the product
o To remind. Promotion reminds consumers to regularly buy a product.
 PROMOTION MIX refers to the blend of several promotional tools used by

business to create, maintain and increase the demand for goods and services.
 GENERAL TYPE OF COMMUNICATION MEDIA

The promotional strategies use three general types of communication media:
1. Direct human communication – face-to-face basis
2. Indirect communication – e.g. radio, television, magazines and
newspapers
3. Interactive communication – e.g. Internet
53
Notes in Marketing
 ELEMENTS OF PROMOTION:
There are five elements of promotion:
 Advertising
 Direct Marketing
 Personal Selling
 Sales Promotion
 Public relations
1. ADVERTISING
Advertising is any paid form of non-personal presentation and promotion
of goods and services by the identified sponsor in the exchange of a fee.
Through advertising, the marketer tries to build a pull strategy; wherein the
customer is instigated to try the product at least once. The complete
information along with the attractive graphics of the product or service can
be shown to the customers that grab their attention and influences the
purchase decision.
 All advertisement have four features:
 A verbal and/or visual message
 A sponsor who is identified
 Delivery through one or more media
 Payment by the sponsor to the media carrying the message
 Developing an Advertising Campaign
An advertising campaign consists of all the tasks involved in
transforming a theme into a coordinated advertising program to
accomplish a specific goal for a product or brand. The steps in
developing an advertising campaign are: (1) defining objectives, (2)
establishing a budget, (3) creating a message, and (4) selecting media
 Defining Objectives
 In general, advertisers expect to accomplish four broad
communication goals. Advertisements are expected to generate
54
Notes in Marketing
attention, be understood, believed and remembered. Specific

advertising objectives are:
1. Encouraging current users to increase consumption of a
product
2. Generating more sales leads
3. Increasing brand awareness
4. Creating and maintaining a brand image or market
position
5. Supporting personal selling efforts
 Establishing a Budget
 Once a marketing communications budget has been established, it
is allocated among the various activities making up the overall
marketing communications program.
 Creating a Message
 Individual advertisements accomplish two things: (1) get and hold
the attention of the intended audience and (2) influence that
audience in the desired way. The most common approach to get
attention is to present the material in an unexpected and
unconventional manner.
 How an advertisement says something is its execution format.
Major formats include storyline, product uses and problem
solutions, slice of life, demonstration, testimonials, lifestyle,
montage and jingle.
 Selecting Media
 Developing a media strategy involves two factors: first, the media
which will efficiently get the message to the desired audience; and
second, the scheduling of these media so as not to bore people
with much repetition of the message of make them forget it. There
are some general factors that influence media choice:
1. Objectives of the advertisement
55
Notes in Marketing
2. Audience coverage
3. Requirements of the message
4. Time and location of the buying decision
5. Media cost
2. DIRECT MARKETING
Direct Marketing. With the intent of technology, companies reach
customers directly without any intermediaries or any paid medium. The e-
mails, text messages, Fax, are some of the tools of direct marketing. The
companies can send emails and messages to the customers if they need to
be informed about the new offerings or the sales promotion schemes.
3. PERSONAL SELLING
Personal Selling is one of the traditional forms of promotional tool
wherein the salesman interacts with the customer directly by visiting them. It
is a face to face interaction between the company representative and the
customer with the objective to influence the customer to purchase the
product or services. Personal selling is the most flexible means of delivering
a promotional message
 There are two kinds of personal selling:
 Inside selling involves retail-store selling.
 Outside selling involves people going to customers.
 The creative selling process
The creative selling process is a series of steps that provide guidelines for
the sales person. It is an adaptive process that begins with the
identification of potential customers and tailors the sales presentation and
product offering to each prospect‘s needs. There are seven steps in the
creative selling processes:
56
Notes in Marketing
Step One : Locating Qualified Prospects

It consists of identifying prospective customers and
qualifying them, that is, determining whether they have
the necessary purchasing power, authority to buy, and
the willingness to buy.
Step Two : Pre-approach Planning
This step involves gathering and evaluating information
about the prospect‘s situation. The salesperson needs to
know the prospects requirements and any other relevant
information that might help make the sale.
Step Three : The Approach
This step involves making an initial contact and
establishing rapport with the prospect.
Step Four : The Sales Presentation
This is the salesperson‘s attempt to persuasively
communicate the product‘s benefits and explain
appropriate courses of action to the potential buyer. An
effective sales presentation tells the product ―story.‘ This
step can be explained by the acronym AIDA that stands
for attention, interest, desire and action.
A – Attract Attention
The first task in sales presentation is to attract the
prospect‘s attention and to generate curiosity.
I – Arouse Interest
The sales representative holds the prospect‘s
attention and stimulates an interest in the product.
D – Create a Desire
Interest and desire for the product are established in
nearly simultaneous steps.
A – Call for Action
57
Notes in Marketing
After creating a desire, the sales representative now

moves into action by urging the prospect to place an
order.
Step Five : Handling Objections
A salesperson who encounters an objection can provide
an additional persuasive information, clarify the sales
presentation, or offer the basic argument for the product
in a different matter.
Step Six : Closing the Sale
In selling, the term closing indicates that the sale is being
brought to a finish. The main advantage of personal
selling over other forms of promotion is that the
salesperson is in a position to conclude negotiation by
actually asking for an order.
Step Seven : The Follow Up
During the follow-up, the salesperson makes sure that
everything has been handled as promised and that the
order was shipped promptly and received on the
schedule in good condition.
4. SALES PROMOTION
Sales Promotion is the short term incentives given to the customers to
have an increased sale for a given period. Generally, the sales promotion
schemes are floated in the market at the time of festivals or the end of the
season. With the sales promotion, the company focuses on the increased short-
term profits, by attracting both the existing and the new customers. There are two
categories of sales promotion: trade promotions, which are geared toward
members of the distribution channel and consumer promotions, which is aimed
at consumers.
58
Notes in Marketing
Sales promotions geared toward wholesalers and retailers:

1. Trade shows
2. Contests
3. Display equipment, and point-of-purchase materials
4. Cooperative advertising and promotion
5. Allowances
Sales promotions aimed at ultimate consumers

1. Product sampling
2. Coupons
3. Rebates
4. Contests
5. Premiums
6. Multiple-purchase offers
7. Point-of-purchase materials
8. Product placements
9. Sales promotion tie-ins
5. PUBLIC RELATIONS
Public Relations is a management tool designed to favorably influence
attitudes towards an organization, its products, and its policies. It consists of a wide
variety of communication efforts designed to contribute or create a positive attitudes
and opinions toward an organization and its products. The marketers try to build a
favorable image in the market by creating relations with the general public. The
companies carry out several public relations campaigns with the objective to have a
support of all the people associated with it either directly or indirectly. The public
comprises of the customers, employees, suppliers, distributors, shareholders,
government and the society as a whole. The publicity is one of the form of public
relations that the company may use with the intention to bring newsworthy
information to the public. Publicity is a special form of public relations that involves
news stories about an organization or its products or services that is not paid for.
59
Notes in Marketing
CHAPTER TEST - 7
Name: Score:
Course: Date:
TRUE OR FALSE
___________1. Promotion is an applied marketing communication. Marketers use it to

communicate both factual and persuasive messages to prospective
consumers.
___________2. Promotion provides facts about the product and places where to avail
the product.
___________3. In general, advertisers expect to accomplish four broad communication
goals. Advertisements are expected to generate attention, be
understood, believed and remembered.
___________4. Once a marketing communications budget has been established, it is
allocated among the various activities making up the overall marketing
communications program.
___________5. Personal selling is the most flexible means of delivering a promotional
message
___________6. A salesperson who encounters an objection can provide an additional
persuasive information, clarify the sales presentation, or offer the basic
argument for the product in a different matter.
___________7. Generally, the sales promotion schemes are floated in the market at the
time of festivals or the end of the season.
___________8. With the sales promotion, the company focuses on the increased short-
term profits, by attracting both the existing and the new customers.
___________9. Locating Qualified Prospects consists of identifying prospective
customers and qualifying them, that is, determining whether they have
the necessary purchasing power, authority to buy, and the willingness to
buy.
___________10. There are two categories of sales promotion: trade promotions, which
are geared toward members of the distribution channel and consumer
promotions, which is aimed at consumers.
60
Notes in Marketing
Bibliography:
 Marketing: A Simplified Approach by Zenaida S. Diola and Edgar M. Tichepco

 Pharmaceutical Marketing in the Philippine Setting, Felix M. Lao, Jr., Ph.D., Third
Edition
 https://www.investopedia.com/terms/m/market-leader.asp
 https://www.smartinsights.com/digital-marketing-strategy/customer-
segmentation-targeting/segmentation-targeting-and-positioning/
61

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Notes in

 Foreword 

This compilation of notes presents a variety of practical

application tools, skills, practices, models, approaches, and

strategies that are proving themselves effective in pharmaceutical

This book contains an overview of marketing in the

pharmaceutical industry, analysis of company’s marketing

environment, the marketing–mix management process, product mix

strategies, pricing strategies, aspects of distribution channels &

physical distribution and elements of promotion.

Chapter 1: An Overview of Marketing 1

Chapter 2: Marketing Environment and SWOT Analysis 6

Chapter 4: Product Mix 20

Chapter 5: Price Mix 30

Chapter 6: Place Mix 40

Chapter 7: Promotions Mix 53

CHAPTER 1: AN OVERVIEW OF MARKETING

Marketing is a social and managerial process by which individual and groups

 Five (5) core marketing concepts

 Needs, Wants, and Demands

As more and more products are introduced, we realize that we have

 Value, Satisfaction, and Quality

Customer satisfaction is closely linked to quality. In recent years, many

 Exchange, Transactions and Relationships

THE MARKETING MIX

A high quality, top-performing product sold at a reasonable price at convenient

Marketing Management Principles

1. Define the following:

CHAPTER 2: MARKETING ENVIRONMENT AND

The operations of a company can never be isolated from its environment. An

 Production and Operations

o Quality and sources of materials

This deals with increasing the effectiveness of human performance. It

includes motivation, compensation, training and development, promotion,

recruitment, selection, placement, hiring policies and procedures, fringe benefits,

performance appraisal, grievance

 The SWOT Analysis

machine breakdowns, inconsistent policies, and poor planning are examples of

The two-part questions for SWOT analysis:

2. Is the factor expected to affect company operations positively or negatively? If

CHAPTER 3: THE MARKETING MANAGEMENT

The marketing management process, consists of the following: (1) analyzing

1. ANALYZING MARKET OPPORTUNITIES

Drugstore-owners, community pharmacists, hospital chief pharmacists, hospital

or mediocre in our expectations, attitudes and overall performance, particularly on our

2. SELECTING TARGET MARKETS

A. DEMAND MEASUREMENT AND FORECASTING

Market Segmentation is the process of classifying customers into groups with

Consumers or end-users of drug products can be grouped in my ways based on,

Demographic factors Psychographic Factors Geographic Factors

PRODUCTS MARKET TARGETS

2. Health food products All age groups.

Figure 1. Stages in target marketing strategy development

Market positioning is arranging for a product to occupy a clear, distinctive and

Best Competitive Advantage

3. THE MARKETING MIX

4. MANAGING THE MARKETING EFFORTS TO MEET THE CHANGING

Market leader strategies

Briefly explain the following:

5. The Marketing Mix

CHAPTER 4: PRODUCT MIX

 THREE LEVELS OF PRODUCT

Figure 1. Three Levels of Product

o A product line is a group of products that are fairly closely related. It is a