A strong Partner for Sustainable Development

Entrepreneurship
2nd Quarter, 2nd semester AY: 2021-2022

College of Education
Agricultural Science High School
SENIOR HIGH SCHOOL
 Managing the Marketing Function
LEARNING OBJECTIVES
 After reading this chapter, you should be able to:
 Explain how customers make decisions
 Discuss how a new business venture can cultivate customer relationships
 Explain how a new business venture can build and manage its brands
 Describe the emerging marketing practices that new business ventures can adopt
INTRODUCTION
In Chapter 5, we discussed what comprised the marketing mix, and explained what
must be considered in coming up with strategies related to product, price, place, and
promotion. In this chapter, we tackle more specific aspects related to the execution of the
marketing strategy. First, we look into how customers make decisions. Knowing this, we
dwell into what a business can do to cultivate its relationship with the customers, and to
build and manage its brands. Finally, we look into emerging marketing practices that even
businesses with limited resources can utilize.
UNDERSTANDING HOW CUSTOMERS MAKE DECISIONS
Individuals behave differently even when they are faced by the same situation. That is
because they perceive situations in different ways. Their perceptions are influenced by their
operative needs and wants, their past experiences, and their personal values.
Entrepreneurs must recognize this. Their must acknowledge that, more than the actual
features of the product or service, it is how the consumers perceive this product or service
that will lead them to make a purchase. The challenge for an entrepreneur introducing a
new product to the market is to make the target market aware of the product and then to
create a positive image of the product in the minds of these potential buyers.
 Before a potential customer makes a purchase, he goes through several stages: (a)
recognizing a need or want; (b) seeking or retrieving information; and (c)evaluating
choices. After these, he proceeds to the next two stages:(d) making a purchase; and
(e) assessing the product or service experience. Some people,however,skip some
stages. For example, a man who runs out of disposable razors, might just run to the
closest convenience store to buy his usual brand. He does not anymore evaluate his
choices, something that he must have done in the past. In general, though, “the
buying process starts long before the actual purchase and has consequences long
afterward.”
RECOGNIZING A NEED OR WANT
When an individual recognizes a need or want, the buying process begins. This
need or want can be triggered by internal or external stimuli. When a person feels
hungry or thirsty (an internal stimulus), for example, he is compelled to satisfy his desire
for food or drink. When he sees a television commercial that features a pair of jeans or
a travel magazine article that features resorts and destinations in Bohol (external
stimulus), this could encourage him to go to the mall or to contact a travel agency to
inquire about a vacation package, respectively.
By understanding what triggers customers' needs or being conscious about these
situations, the entrepreneur can come up with appropriate marketing or promotional
strategies that could get the interest of their potential customers.
SEEKING OR RETRIEVING INFORMATION
Once the interest of a potential customer is aroused, he is inclined to search for more
information about a particular product or service. This, of course, assumes that his prior
knowledge about the product and its alternatives are not enough to make an informed
choice. The person who is considering a summer vacation in Bohol, for example, could get
more information from several sources. He could get information from a brochure provided
by a travel agency or do his own research by visiting websites about hotels, resorts,
restaurants, and other places of interest. He could ask relatives, friends, and acquaintances
who have been to Bohol. If he had been to Bohol before, then he can search for
information about other things that he has yet to experience. How strongly these sources of
information will influence the potential buyer will depend on the individual's inclinations and
the credibility of the source.
By gathering information, the consumer learns about competing products and services,
and their features. Our prospective traveler, for example, will learn about the different
airlines offering flights to Bohol, as well as different resorts in which he and his travel
companions can stay. Not all of these options, however, will be known by the consumer
(awareness set). Among those that are eventually known by the consumer, only some will
meet his initial criteria (consideration set). After gathering more information, only a few will
be up for serious consideration (choice set).
Clearly, the entrepreneur must first make sure that consumers become aware of his
product, and that his product has features that will be attractive to a segment of the market
so that it becomes part of the consumers' consideration set and choice set.
 EVALUATING CHOICES
Consumers evaluate their options differently. Some make conscious, rational decisions,
while others respond emotionally to the marketing stimuli. For products and services that
require substantial investment (e.g. car, insurance), people will conceivably take a more
rational approach; in other instances, some consumers might allow their emotions to
influence their decisions.
The rational approach assumes that the consumer is trying to satisfy a need, is looking
for certain benefits from the product, and sees each product as having a bundle of
attributes that can deliver the benefits sought to satisfy the identified need? 'These
attributes will differ depending on the product offered in the market(see Table 8.1 for
examples).
Table 8.1 Examples of Products and Their Attributes that are Important Buyers
Product Attributes that are important buyers

Shoes Quality, color, fit, price

Toothpaste Ability to clean and whiten teeth, taste, flavor, color,

price
Restaurant Location, atmosphere, cleanliness, menu quality and
variety, price
Bottled water Prize, size of bottle, safety, source of water

Chocolates Taste, richness, packaging price, origin (local or

imported)
 When evaluating product options, individuals betray their beliefs and attitudes, both
of which ultimately influence the buying behavior. A belief is "something one accepts as
true or real; a firmly held opinion or conviction.”* It is a state of mind in which a person
thinks something to be the case, with or without evidence of fact. It serves the purpose of
guiding action, and not necessarily of indicating truth. Many Filipinas, for example, believe
that having a lighter complexion makes them more beautiful. Companies that
manufacture and sell whitening soaps, lotions, and creams capitalize on this widespread
belief when advertising their products.
An attitude, on the other hand, is a settled way of thinking or feeling about someone
or something, typically one that is reflected in a person's behavior.° It puts individuals into
a certain frame of mind that could make them like or dislike something. So when a
showbiz personality endorses a particular product, say canned tuna, some consumers will
be convinced that the product must be of good quality. The same goes for medicines or
other health products that are endorsed by doctors. The consumers' positive attitude
towards charismatic or authoritative individuals spills over the product they endorse.
MAKING A PURCHASE
In the evaluation stage, a consumer becomes clearer about his preference from
among the items in his choice set. He then proceeds to make a decision not only about
what brand to buy, but also about where to buy it (supermarket), When to buy it
(weekend), how many items to buy (a bundle of six), and how to pay for it (debit card).
Frequently purchased products (eg, soap, coffee, sugar soft drinks) might involve fewer
decisions. In fact, in some cases a consumer might even dispense with evaluating each
brand.
Assessing the Product or Service Experience
After making the purchase, the consumer assesses his experience in using what he bought. If
the performance of the product falls short of his expectations he is disappointed (nadismaya); if it
meets his expectations, he is satisfied (nakontento); if it exceeds his expectations, he will be
delighted (nasiyahan). The customer's decision to buy the product again or to recommend it to
other people will depend on whether his experience is positive or not.
Take note that the consumer will gauge the performance of the product partly on the promises
made by the company when it advertised or promoted the product. Making exaggerated claims
about a mediocre product is likely to backfire. Therefore, there is logic in the slogan “Truth in
advertising.” In short, product claims must truthfully represent the product's ability to satisfy the
customer's need.
For dissatisfied customers, they might choose to return the product and ask for a replacement.
If this action does not prosper, some of them might go a step further by complaining to the
company. In an extreme case, they might take legal action. How customers react to dissatisfaction
can be classified into two: (a) the exit option-deciding not to buy the product again;(b) the voice
option-warning others not to buy the product, or seeking redress from the company that sold the
product.
For satisfied and delighted customers, there is a greater chance for them to purchase the
product or avail the service again. When the need for the same product or service arise in the
future, the customer's previous experience will form part of the information that he retrieves. A
delighted customer will probably skip some of the above-mentioned steps, and just proceed to buy
the product or avail the service again. A customer that is merely satisfied might decide to seek
further information, especially if there are other options available. The buying process is, therefore,
repeated.
CULTIVATING CUSTOMER RELATIONSHIPS
Entrepreneurs must not only aim to sell their product once, but also to get repeat sales
from satisfied or delighted customers. Thus, it is essential for companies to cultivate its
relationship with customers.
CUSTOMER EDUITY
A business must aim to produce high customer equity. Customer equity refers to the total
lifetime value (or estimated lifetime revenues less expenses) a company can generate from all
of its customers. In practical terms, a company wants a steady, if not increasing, pool of loyal
customers so that it will be able to generate continuing revenues from them. There are three
types of customer equity: (a) value equity, (b) brand equity, and (c) relationship equity: Value
equity is the customer's objective assessment of the utility of a product or service based on his
perception of what he is giving up for what he is receiving. Brand equity is “the customer's
subjective and intangible assessment of the brand, above and beyond its objectively
perceived value." Relationship equity is the customer's tendency to stick with the brand,
above and beyond his objective and subjective assessments of the same.8
To improve value equity, the business must find ways to address issues related to price,
quality, and convenience. One good example is how Agoda.com makes it easier for travelers
to book hotels at their desired price and quality levels. Prices are typically lower than if the
customer books directly with the hotel. The transaction, including revised bookings,
cancellations, or credit card payments can be completed within minutes through the internet.
To improve brand equity, the business must find ways to increase brand awareness, to
improve the customers' attitude toward the brand, and to project an ethical image to the
public. This can be done through advertising, public relations, social media campaigns, and
even free media exposure, among others. The social enterprise Bayani Brew, for instance,
experienced a big boost in its sales after it was featured in the popular daily morning show
Kris TV.
To improve relationship equity, the business can introduce loyalty programs,
community-relations programs, knowledge-building programs, among others.' This is
typically done by large multinational companies, often through their corporate foundations.
Customer Loyalty
Customers are now more demanding and harder to please, because they have more
options to choose from. Thus, it has become more difficult for businesses to retain their
customers. So how can businesses build customer loyalty? There are several ways.
One way is through frequency programs, which are designed to reward customers who
buy often and in substantial amounts, This could take different forms, such as the frequent
flyer miles offered by airlines, which travelers can convert into free flights; or free meals
offered by fast-food restaurants to customers after they buy a minimum amount for several
visits.
Another way is to personalize customer relationships. Some loyal clients, for example,
will go back to the same barbershop or parlor to have their hair cut and styled by their
favorite barber or hairdresser, who might be great conversationalists and with whom they
might have built friendships. This could also be the case with gyms whose fitness trainers are
very familiar with the health and fitness requirements of clients they have worked with over
the years.
 Another strategy is to add structural ties with the customer. Examples include multi-year
newspaper or magazine subscriptions that are offered at a large discount; or
telecommunication companies that give free mobile phones to their clients ,who have to
stick to their postpaid service for at least a year or two.
BUILDING AND MANAGING YOUR BRAND
A brand, as defined by Merriam-Webster, is a “category of products that are all made
by a particular company,” all having a particular name.10 It is also defined as a “unique
design, sign, symbol, words, or a combination of these, employed in creating an image that
identifies a product from its competitors. ”Over time, this image is associated with a level of
quality and credibility in the consumer's mind."
Brands are important because consumers can make a purchase decision based on how
products and services are branded. Consumers get to know brands through their past
experiences with products and how they are advertised or promoted. Some of these
products satisfy their needs; some do not. If they have a positive experience with the brand,
then their subsequent decision-making becomes easier. They need not spend valuable time
evaluating their options. Going for the "tried-and-tested" brand assures them of the product's
quality.
Clearly, brands associated with quality and dependability can result to customer loyalty.
This can lead to a steady demand for the firm's products. Loyal customers might also be
willing to pay a higher price for reputable brands.
 To build brand equity a business venture must undertake several key activities. First, it
must choose brand elements that will serve to identify and differentiate the brand.
Second, it must engage in marketing programs aimed at building the brand.
Choosing Brand Elements
Brand elements are those things that make a brand distinct. These include brand
names, logos, symbols, mascots, jingles, and slogans. Examples that are familiar to Filipinos
are the following: Philippine Airlines' stylized image of the national flag, which serves as its
logo; the slogan "Langhap Sarap,”which is clearly associated with Jollibee; the "swoosh“
logo of Nike; the three stripes of Adidas; the Oblation, which is identified with the
University of the Philippines; and the catchy tourism slogan “It's more fun in the
Philippines.”
Whether these brand elements could really build the brand depends on how these
are able to elicit positive thoughts and feelings from the consumers once they encounter
the brand element. For example, the mascots of school rivals La Salle and Ateneo conjure
strong images-the Green Archer “aims high,” while the Blue Eagle “soars,” both connoting
the academic and sports excellence the two schools are known for. Cebu Pacific's
slogan “It's time every Juan flies" is a witty play on words, which also highlights the budget
flights for which the airline has become known. And could it be a coincidence that a
company called Jollibee, whose mascot is a “jolly” bee, sells a meal called “Chicken
Joy”? The subtle references to happiness might be missed, but would definitely enter the
subconscious of fun-loving Filipino customers.
When choosing brand elements, companies must make sure that these elements are
memorable, meaningful, and likeable. For certain brands, Filipinos might respond to
humorous elements too.
Memorable. As a general rule, short brand names are easy to recall. Consider the
names of leading laundry detergents such as Tide, Surf, and Champion. How about
coffee places such as Starbucks and Figaro? Even their competitor Coffee Bean & Tea
Leaf is now being marketed through its acronym “CBTL.” Acronyms are also being
utilized by television shows (e.g, "MMK" for Maalaala Mo Kaya ;“OTWOL" for the hit
telenovela On the Wings of Love), partly due to the ease of attaching these to hashtags
(e.g, #MMK, #OTWOL),which are a staple of social media.
Memorable slogans are also very powerful. Nike's "Just Do It" is a classic, as is "Intel
Inside "In the Philippines, we even have slogans that have stuck to our collective
memories. Hapee toothpaste's "Kumuhuti-kutitap" for example, is cute, indigcnous, and
alliterative. And who does not remember Family Rubbing Alcohol's classic slogan "Hindi
lang pangpamilya, pang-isports pa's That it has survived decades is a testament to its
being memorable.
Meaningful. For a brand element to be meaningful, it must be credible and must also
communicate the distinction of the brand. In the Philippines, Tide has always played
around the theme of "whiteness",; thus the slogan "Kumg mukhang imposibleng
paputiin,Tide ang gamitin" which it used successfully for several years. The competing
brand Surf, on the other hand, centered its advertising on the theme of a smart
housewife, who could use her savings from buying Surf on other household needs; thus
the slogan “Wais si Misis”
Humorous. A recognizable theme in the brand building efforts of Filipino companies,
particularly micro- and small-scale enterprises, is humor. Take note of the following
business names, many of which make references to famous people and popular culture:
(a) Starducks-a balut wholesaler in Batangas;(b) Summa Cum Laundry-a laundromat in
Manila; (c) Mekeni Rogers-a restaurant in Pampanga;(d) Café Pindot-an internet café in
a slum area; (e) Bread Pitt-a local bakery; (f) Susan's Roses-a flower shop; (g)Lito Lapida-a
tombstone maker in Antipolo; (h) Pakopya ni Edgar-a copy center in Quezon City;(i) Pusit
to the Limit-a squid stall in a wet market;(j) Bangga Ka,Day?-a car repair shop.12
Clearly, brand elements play an important part in building a company's brand.
Ideally, they must be easily recognized, remembered, descriptive, suggestive, and
persuasive. It must be noted, though, that brand building attempts will be put to naught if
a product or service does not offer real value to consumers.
SUPPORT MARKETING ACTIVITIES
Customers gain knowledge or learn more about a brand through various contact or
touch points. Some of them, out of curiosity try out a new product that they see in a
supermarket; others hear about the product, through word of mouth: others get to know
about a product through advertising, press releases, social marketing, trade shows, and
special events. The company must not forget, though, that an important contact point is
with its own personnel, when they attempt to sell the product to potential customers,
when they receive payments, or when they handle complaints. The company must,
therefore, try its best to manage these touch points so that the customers' experience will
be positive, thus contributing to brand equity.
 Worth noting is the attempt of some companies to personalize their marketing
programs. Experiential marketing, for example,allows consumers to be more actively
involved with the brand by creating opportunities for the company to interact with existing
or potential customers beyond the commercial transaction. It aims to create a bond
between the customer and the brand by immersing them in a fun and memorable
experience.
For example, Samsung created brand experiences around London by running the
'Samsung Studios' as part of its sponsorship of the 2012 Olympics. From July to September of
that year, those who visited the Studios played with Samsung's Olympic Games app. They
also had their photos taken on the Galaxy S3, which were instantly turned into a
personalized badge. People who returned every day to collect special pin badges also
got a chance to win an S3 and a trip around the world. No products were sold at the
Studios, but many of the visitors claimed to more likely consider a Samsung phone, as a
result of the experience. In the Philippines, the social enterprise Plush and Play organizes
toy-making activities for kids and their parents in schools, in malls, or at the GK Enchanted
Farm.
EMERGING PRACTICES
For small and medium enterprises, advertising is quite an expensive way of making
their products and services known. Fortunately for them, there are emerging marketing
practices that they could creatively utilize, in spite of their limited resources. These include
buzz marketing and social media marketing.
Buzz Marketing
Buzz marketing is "a viral marketing technique that is focused on maximizing the
word-of-mouth potential of a particular campaign or product whether that is through
conversations among consumers' family and friends or larger scale discussions on social
media platforms "A company triggers this by organizing an event around a show or stunt
of some kind, during which consumers can try the product and are encouraged to share
their experiences to others either through personal conversations or online.!"
Online buzz marketing is typically driven by "influencers, "or early adopters of a
product, who eagerly share what they think about the product and start conversations
about it. Influencers typically have established their presence online and have large
followings on social media platforms such as Facebook and Twitter. Possessing power
and influence over their follower base, these individuals can build buzz for new products
andservices.15
Social Media Marketing
A major component of buzz marketing is social media marketing. Companies do
this by maintaining a presence in social media platforms such as Facebook, Twitter,
and LinkedIn. They use these platforms to interact with their customers, receive
feedback from them, address their issues and concerns, and promote their products
and services.
To succeed in social media marketing, companies can follow some of the tips
shared by Susan Gunelius in her article “10 Laws of Social Media Marketing," published
in Entrepreneur.com. Success with social media and content marketing, she said,
“requires more listening and less talking." She suggests reading the target audience's
online content and joining discussions to learn what is important to them, before
creating content and initiating conversations “that add value rather than clutter to
their lives.” Gunelius also emphasized the need to publish relevant content to an
“online audience of quality followers" who will share this content with their own
audiences on the mentioned platforms and on their own blogs. Companies must also
recognize that directly promoting product and services on the Web might turn off
people. “Creating amazing content and developing relationships with online
influencers," she said, might be a more effective way of generating word-of mouth
marketing for one's business.16