Naga College Foundation

College of Engineering

Module for Online Learning

Course Title: CE 214 Engineering Management A Module No. 11
Credit Unit 2 units (Lecture) Period: Semi-final Period
Instructor: Engr. Francisco G. Naval Schedule: MW 4:00 – 5:00pm

MANAGING THE MARKET FUNCTION

Engineer managers are engaged in the production of tangible or intangible goods. Some of these engineer
managers are directly responsible for marketing the company’s products or services. If he is promoted general
manager, both the production and marketing functions become his overall concern.
At whatever management level the engineer manager works, he must be concerned with convincing others to
patronize his outputs. If he is the general manager of a construction firm, he must convince people with construction
needs to avail of the services of the company. If he is the staff officer of top executive, he must convince his boss to
continuously rely on him regarding the staff services he provides.
If the foregoing statements are true, the engineer manager has marketing problem. He needs to understand
certain concepts related to the marketing discipline.

WHAT IS THE MARKETING CONCEPT?

Marketing is a group of activities designed to facilitate and expedite the selling of goods and services.
The marketing concept states that the engineer must try to satisfy the needs of his clients by means of a set of
coordinated activities. When clients are satisfied with what the company offers, they continually provide business.

THE ENGINEER AND THE FOUR P’S OF MARKETING

The engineering organization will be able to meet the requirements of its clients (or customer) depending on
how it uses the four P’s of the marketing which are as follows:
1. the product (or services)
2. the price
3. the place and
4. the promotion

1. The Product
In the marketing sense, the term “product”
includes the tangible (or intangible) item and its capacity
to satisfy a specific need. When a customer buys a car,
he is actually buying the comfortable ride he anticipates
to drive from the car. This is not to mention the psycho-
logical benefits attached to the ownership of a car.
The services provided by the engineer manager will
be evaluated by the client on the basis of whether or not his or her exact needs are met. When the competitor comes
into the picture and sells the same type of service, the pressure to improve the quality of services sold will be felt.
When improve is not possible, “extras” or “bonuses” are given to clients. An example is the construction company
that provides “free estimates” on whatever inquiries on construction are received.

2. The Price
Price refers to “the money or other considerations exchanged for the purchase or use of the product, idea,
or services.” Some companies use price as competitive tool or as a means to convince the customer to buy.
When products are similar in quality and other characteristics, price will be a strong factor on whether or not
a sale selling of services and ideas. This is because of the uniqueness of every service rendered or every idea
generated.
 Figure 11.1 The Engineer Manager and the Four P’s of Marketing

When a type of services becomes standardized, price can be strong competitive tool. When a construction
firm, for instance, charges a flat 10 percent services fee for all of its construction services, a competitor may charge a
lower rate. Such action, however, will be subject to whether or not the industry will allow such practice.

3. The Place
If every factor is equal, customers could prefer to buy from firms easily accessible to them. If time is of the
essence, the nearest firm will be patronized. It is very important to the companies to locate in places where they can
be easily reached by their customers. Not every place is the right location for any company.

When the company cannot be near the customers, it uses other means to eliminate or minimize the effects
of the problem. Some these means are:
1. hiring sales agents to cover specific areas;
2. selling to dealers in particular areas;
3. establishing branches where customers are located;
4. establishing franchises in selected areas.

Manufacturing companies can choose or adapt all of the above-mentioned options. Service companies like
construction firm adapt the modified versions. An example is the engineer manager of a construction firm who gives
commissions to whoever could negotiate a construction contract for the firm.

4. The Promotion
When the engineering managers have products or services to sell, they will have to convince buyers to buy
from them. Before the buyer makes purchasing decision, however, he must first be informed, persuaded, and
influenced. The activity referred to, in this case, is called promotion.

Mc.Carthy and Perreault define promotion as

“communicating information between seller and potential buyer
to influence attitude and behavior.”

There are promotional tools available and the engineer

manager must be familiar with them if he wants to use them
effectively. These tools are as follows:
a.) advertising
b.) publicity
c.) personal selling
d.) sales promotion

a.) Advertising.
Nylen defines advertising as “a paid message that appears in the mass for the purpose of informing or
persuading people about particular products, services, beliefs, or action.” The mass media referred to
include television, radio, magazines, and newspapers. If the engineering manager wants to reach the
large number of people, he may use any of the mass media depending on his specific needs and his
budget. Each of the public advertising carriers, i.e., radio, television, magazines, and newspapers, has
their own specific audiences and careful analysis must be made if the engineering manager wants to pick
the right one.
 An example of an advertising message is shown in Figure 11.2

Figure 11.2 An Example of An Advertising Message

b.) Publicity.
The promotional tool that publishes news or information about a product, service, or idea on behalf of
a sponsor but is not paid for by the sponsor is called publicity. If the engineering manager knows how to
use it, publicity is a very useful promotional tool. His message may be presented as news item, helpful
information, or an announcement.
An example of publicity release is shown in Figure 11.3.

Figure 11.3 An Example of a Publicity Release

c.) Personal Selling. A more aggressive means of promoting the sales of a product or service is called
personal selling. It refers to the “oral presentation in a conversation with one or more prospective
purchasers for the purpose of making sale.” Personal selling may be useful to the marketing efforts of
the engineer manager. If, for instance, he is the general manager of a form manufacturing spare parts,
he may assign some employees to personally seek out spare parts dealers and big trucking companies to
carry their product lines.

e.) Sales Promotion. Any paid attempt to communicate with the customers other than advertising,
publicity, and personal selling, may be considered sales promotion. This includes displays, contests,
sweepstakes, coupons, trading stamps, prizes, samples, demonstrations, referral, etc.
STRATEGIC MARKETING FOR ENGINEERS
Companies including those managed by engineer
managers must serve markets that are best fitted to their
capabilities. To achieve this end, a very important activity
called strategic marketing is undertaken.

Under this set-up, the following steps are made:

1. selecting a target market
2. developing a marketing mix

1. Selecting a Target Market

A market consists of individuals or organizations, or both, with the desire and ability to buy a specific
product or service. To maximize sales and profits, a company has the option of serving entirely or just a portion of its
chosen market. Within markets are segments with common needs and which will respond similarly to a marketing
action. Figure 11.5 shows an example of the various segments of a given market.
An analysis of the various segments of the chosen market will help the company make a decision on whether
to serve all or some of the segments. The segments chosen become the target market.
In selecting a target market, the following steps are necessary:
1. Divide the total market into groups of people who have relatively similar product or service needs.
2. Determine the market potentials of each segment.
3. Make a decision on which the segment or segments will be served by the company.
Factors Used in Selecting a Target Market.

A target market must have the ability to satisfy the profit objectives of the company. In selecting a target
market, the following factors must be taken into consideration:
1. the size of the market, and
2. the number of competitors serving the market.

The total demand for the product or service in a given area must be determined first if the company wants to
serve the particular market. If there are existing businesses serving the market, the net demand must be considered.
Figure 11.6 illustrates an example of the relationship between demand and supply of a particular product. The
figures presented indicate that there is still room for another company in the, market for telephone line in
Cabanatuan City.

Figure 11.6 Total Demands and Net Demand as a Guide for Determining Target Market
2. Developing a Marketing Mix
After the target market has been identified, a marketing mix must be created and maintained. The marketing
mix consists of the four variables: the product, the price, the promotion and the place (or distribution).

Given a marketing environment, the engineer manager manipulates any or all variables to achieve the
company’s goals. As such, the quality of the product may be enhanced, or the selling price made a little lower, or a
wider distribution area may be covered. Any or all of the foregoing may be undertaken as conditions warrant.