DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

CHAPTER 4: MARKETING STRATEGY AND OBJECTIVES

Learning Objectives:
In this chapter you will learn about:
1. Develop strategic planning on the Four Marketing Mix
2. To develop appropriate strategies for company objectives in the implementation of business
plans

MARKETING MIX
A. PRODUCT
 DEFINITION
 Anything that can be offered to a market for attention, acquisition, use or consumption
that might satisfy a want or need.
 Products include physical object, services, events, persons, places, organizations, ideas
or mixes of these entities.
 This can be a physical item, a service or a virtual offering.
 A product is anything offered for sale by a firm to buyers to satisfy their physical, social,
symbolic, and psychological wants and needs.

 PRODUCT CLASSIFICATION
All products can be broadly classified into 2 main categories. These are:
 Tangible products: These are items with an actual physical presence such as a car, an
electronic device, and an item of clothing or a consumer good.
 Intangible products: These are items that has no physical presence but can be felt
indirectly. An insurance policy is an example of this. Online items such as software,
applications or even music and video files are also intangible products.

 KEY QUESTIONS TO ANSWER:

 Are products or services in development or existing (and on the market)?
 What makes your products or services different? Are there competitive advantages
compared with offerings from other competitors? Are there competitive disadvantages
you will need to overcome? (And if so, how?)
 Is price an issue? Will your operating costs be low enough to allow a reasonable profit
margin?

B. PROMOTIONAL STRATEGY
 DEFINITION
 Refers to any type pf marketing communication used to inform target audiences of the
relative merits of a product, service, brand or issue, most of the time persuasive in
nature.

BUSINESS PLAN PREPARATION (2022-2023) MA. JENALYN G. FLORES, MBA 1

 DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

 Inform – raising awareness of your brand and products, establishing a

competitive advantage / create an interest.
 Persuade – generating an instant response (usually driving sales)
 Remind – to maintain interest and enthusiasm for a product or service.

 KEY QUESTIONS TO ANSWER:

 How will you get the word out to customers?
 What media will be integrated in the plan? Why? How often? Get the most out of your
promotional budget.

 TYPES OF PROMOTIONAL STRATEGIES

 Personal selling - is also known as face-to-face selling in which one person who is the
salesman tries to convince the customer in buying a product. It is a promotional method
by which the salesperson uses his or her skills and abilities in an attempt to make a sale.
 Advertising - is a marketing tactic involving paying for space to promote a product,
service, or cause. The actual promotional messages are called advertisements, or ads for
short. The goal of advertising is to reach people most likely to be willing to pay for a
company's products or services and entice them to buy.
 Sales promotion is a marketing strategy in which a business uses a temporary campaign
or offer to increase interest or demand in its product or service. There are many reasons
why a business may choose to use a sales promotion (or 'promo'), but the primary
reason is to boost sales.
 Public Relation is a form of promotion designed to favourably influence as attitude
toward an organization, its products, and its policies. The purpose of public relation is to
build or maintain a favourable image for an organization with tis customers, prospects,
stockholders, employees, labour unions, the local community, and the government.
 Digital marketing, also called online marketing, is the promotion of brands to connect
with potential customers using the internet and other forms of digital communication.
This includes not only email, social media, and web-based advertising, but also text and
multimedia messages as a marketing channel.

C. PRICE
 DEFINITION
 It is the amount of money charged for a good or service or the sum of the values that
consumers in exchange for the benefit of having or using the good or service. Price is the
only element in the marketing mix which produces revenues; all other elements produce
cost. It is one of the most flexible elements of the marketing mix. Price can be changed
quickly.

 PRICING STRATEGIES
 Cost-plus pricing. Calculate your costs and add a mark-up.

BUSINESS PLAN PREPARATION (2022-2023) MA. JENALYN G. FLORES, MBA 2

 DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

 Competitive pricing. Set a price based on what the competition charges.

 Price skimming. Set a high price and lower it as the market evolves.
 Penetration pricing. Set a low price to enter a competitive market and raise it later.
 Value-based pricing. Base your product or service’s price on what the customer believes
it’s worth.
 Psychological pricing. Is the business practices of setting prices lower than a whole
number. The idea behind psychological pricing is that customers will read the slightly
lowered price and treat it lower than the price actually is. An example of psychological
pricing is an item that is priced $3.99 but conveyed by the consumer as 3 dollars and not
4 dollars, treating $3.99 as a lower price than $4.00.

D. DISTRIBUTION
 DEFINITION
 A distribution channel can be defined as the activities and processes required to move a
product from the producer to the consumer. Also included in the channel are the
intermediaries that are involved in this movement in any capacity. These intermediaries
are third party companies that act as wholesalers, transporters, retailers and provide
warehouse facilities. Identifying inventory location and warehousing system.

 TYPES OF DISTRIBUTION CHANNELS

 Direct - In this channel, the manufacturer directly provides the product to the consumer.
In this instance, the business may own all elements of its distribution channel or sell
through a specific retail location. Internet sales and one on one meetings are also ways
to sell directly to the consumer. One benefit of this method is that the company has
complete control over the product, its image at all stages and the user experience.
 Indirect - In this channel, a company will use an intermediary to sell a product to the
consumer. The company may sell to a wholesaler who further distributes to retail
outlets. This may raise product costs since each intermediary will get their percentage of
the profits. This channel may become necessary for large producers who sell through
hundreds of small retailers.
 Dual Distribution - In this type of channel, a company may use a combination of direct
and indirect selling. The product may be sold directly to a consumer, while in other cases
it may be sold through intermediaries. This type of channel may help reach more
consumers but there may be the danger of channel conflict. The user experience may
vary and an inconsistent image for the product and a related service may begin to take
hold.
 Reverse Channels - The last, most non tradition channel allows for the consumer to send
a product to the producer. This reverse flow is what distinguishes this method from the
others. An example of this is when a consumer recycles and makes money from this
activity.

BUSINESS PLAN PREPARATION (2022-2023) MA. JENALYN G. FLORES, MBA 3

 DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

TARGET MARKET
A target market is a group of potential customers that you identify to sell products or services to. Each
group can be divided into smaller segments. Segments are typically grouped by age, location, income
and lifestyle. Once you’ve defined your target audience, you’ll find it easier to determine where and
how to market your business.

 WHY HAVE A TARGET MARKET?

For your business to thrive you need to know who your customer is. Knowing your customers
will help you to target customers who are willing to pay for your product or service. This is a
much more effective and affordable way to reach your customers and generate business. You’ll
be wasting resources if you aim too broadly, or find out too late that there aren’t enough
customers for your product or service.

By understanding your market you can promote your product or service more effectively to the
right customer group. You will know:

 where they are

 which media channels they use
 what their buying habits are
 how to tailor your marketing to motivate them to buy your product or service.

1. Research your market

To define your target market effectively you’ll need to do some research. Gathering
statistics and other market research data helps you to understand your potential
customers and their needs and make better marketing decisions.

2. Segment your market

Work out if your market is large enough and accessible. Then segment the market into
groups of buyers with similar preferences and buying habits. For example, the athletic
shoe industry is broken up into several segmented groups – first by gender, then by the
activity or sport.

Once you’ve identified your market segments, you can define your ideal customer for
each segment.

3. Define your target customers

To define your target customers, ask yourself the following questions:

a.Who your customers are

 Are your target customers male or female?
 How old are they?

BUSINESS PLAN PREPARATION (2022-2023) MA. JENALYN G. FLORES, MBA 4

 DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

 Where do they live?

 What is their marital status?
 Do they have children? How old are their children?
 What is their education level?
 What do they do for a living?
 What is their average income?

b.Customer interests and buying habits

 What motivates a customer to make a purchase?
 What are your customers’ common interests?
 Who makes the buying decisions?
 How often do they purchase a product?
 Do they shop online or prefer to see their product before they buy?
 How long does it take them to make a buying decision?
 What form of media does your target rely on for information?
 How far do they travel to make a purchase?
 What other products do they buy?

Then target your marketing efforts to explain how your product and service
will fit into their lifestyle and how it best meets their needs.

 PRIMARY TARGET MARKET

The primary target audience is the group of customers that a business thinks it has the greatest
opportunity to convert. They’re the consumers on whom the company is banking to be early
adopters, brand evangelists, repeat customers or simply a good bet. For instance, the developer
may decide that the best way to attract the young, urban woman might be to have marketing
posters inside transit stations near the development, slickly teasing these passersby that, “If you
lived in brand X development, you’d be home already.”

The primary target audience won’t be the largest group, and they may not even be the most
obvious group. They’ll be a select audience that the company should identify through a process
of discussion and analysis. They’re a group that meets all the data sets as being most likely to
buy into that product or service. Marketing should be designed in a way that will ring bells with
that group.

That doesn’t mean they’re the only consumers being pursued; they’re just the first point of
attack.

 SECONDARY TARGET MARKET

BUSINESS PLAN PREPARATION (2022-2023) MA. JENALYN G. FLORES, MBA 5

 DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

The secondary target market is the next market that most appeals to the company for its
promise and potential. Consider as an example a budget-friendly laptop that’s perfect for
students and teens. Young people may be the expected end user, but the primary audience is
actually the moms who will be making the choice for which laptop to send with their kids to
school. The kids, then, are the secondary target audience.

As another example, consider one of those “grab-it” tools used to reach things high up on
shelves. The primary target audience is likely the elderly — they can’t climb up on chairs and
stools anymore. The secondary market would be wheelchair users who are confined to their
seats. Of course, they need the reaching tool as well and are quite likely to be converted to
customers, but they’re a smaller segment and will be more likely to hear about the product than
perhaps the first group who need to be introduced to it via an informative campaign.

It’s easy, though, to make a quick reference or inclusion of the secondary audience in the
primary campaign, and this is a wise plan of attack.

MARKET SEGMENTATION
Market segmentation is a process of dividing the market of potential customers into smaller and more
defined segments on the basis of certain shared characteristics like demographics, interests, needs, or
location.

The member of these groups share similar characteristics and usually have one or more than one aspect
common among them which makes it easier for the marketer to craft marketing communication
messages for the entire group.

There are many reasons as to why market segmentation is done. One of the major reasons marketers
segment market is because they can create a custom marketing mix for each segment and cater them
accordingly.

 IMPORTANCE OF MARKET SEGMENTATION

 Makes it easier for the marketer to develop a different marketing mix for each customer
segment which is more likely to bring results.
 Increases the results of the marketing efforts as each of the groups witness personalized
marketing messages according to what stimulates them to do the task.

 4 BASIS OF MARKET SEGMENTATION

BUSINESS PLAN PREPARATION (2022-2023) MA. JENALYN G. FLORES, MBA 6

 DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

1. Geographic Segmentation
Geographic segmentation divides the market on the basis of geography. This type of market
segmentation is important for marketers as people belonging to different regions may have
different requirements. For example, water might be scarce in some regions which inflates the
demand for bottled water but, at the same time, it might be in abundance in other regions
where the demand for the same is very less.

2. Demographic segment
Demographic segmentation divides the market on the basis of demographic variables like age,
gender, marital status, family size, income, religion, race, occupation, nationality, etc. This is one
of the most common segmentation practice among marketers. Demographic segmentation is
seen almost in every industry like automobiles, beauty products, mobile phones, apparels, etc
and is set on a premise that the customers’ buying behaviour is hugely influenced by their
demographics.

3. Psychographic Segmentation
Psychographic Segmentation divides the audience on the basis of their personality, lifestyle and
attitude. This segmentation process works on a premise that consumer buying behaviour can be
influenced by his personality and lifestyle. Personality is the combination of characteristics that
form an individual’s distinctive character and includes habits, traits, attitude, temperament, etc.
Lifestyle is how a person lives his life.

Personality and lifestyle influence the buying decision and habits of a person to a great extent. A
person having a lavish lifestyle may consider having an air conditioner in every room as a need,
whereas a person living in the same city but having a conservative lifestyle may consider it as a
luxury.

4. Behaviour Segmentation
The market is also segmented based on audience’s behaviour, usage, preference, choices and
decision making. The segments are usually divided based on their knowledge of the product and

BUSINESS PLAN PREPARATION (2022-2023) MA. JENALYN G. FLORES, MBA 7

 DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

usage of the product. It is believed that the knowledge of the product and its use affect the
buying decision of an individual. The audience can be segmented into –
 Those who know about the product,
 Those who don’t know about the product,
 Ex-users,
 Potential users,
 Current Users,
 First time users, etc.

People can be labelled as brand loyal, brand-neutral, or competitor loyal. They can also be
labelled according to their usage. For example, a sports person may prefer an energy drink as
elementary (heavy user) and a not so sporty person may buy it just because he likes the taste
(light/medium user).

COMPETITIVE ANALYSIS
 PROFILE CURRENT COMPETITORS
First develop a basic profile of each of your current competitors. For example, if you plan to
open an office supply store you may have three competing stores in your market. Once you
identify your main competitors, answer these questions about each one. And be objective. It's
easy to identify weaknesses in your competition, but less easy (and a lot less fun) to recognize
where they may be able to outperform you:

 Who are my current competitors? What is their market share and how successful they
are?
 What market do current competitors target? Do they focus on specific customer type?
 How will your business be different from your competitors?
 What are their strengths? Price, service, convenience, extensive inventory are all areas
where you may be vulnerable.
 What are their weaknesses? Weaknesses are opportunities you should plan to take
advantage of.
 What are their basic objectives? Do they seek to gain market share? Do they attempt to
capture premium clients? See your industry through their eyes. What are they trying to
achieve?
 What marketing strategies do they use? Look at their advertising, public relations, etc.

To gather information, you can also:

 Check out their websites and marketing materials. Most of the information you need
about products, services, prices, and company objectives should be readily available. If
that information is not available, you may have identified a weakness.
 Visit their locations. Take a look around. Check out sales materials and promotional
literature. Have friends stop in or call to ask for information.

BUSINESS PLAN PREPARATION (2022-2023) MA. JENALYN G. FLORES, MBA 8

 DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

 Evaluate their marketing and advertising campaigns. How a company advertises creates
a great opportunity to uncover the objectives and strategies of that business.
Advertising should help you quickly determine how a company positions itself, who it
markets to, and what strategies it employs to reach potential customers.

Think about your business and your industry, and if the following conditions exist, you
may face competition does the road:

 Entering the market is relatively easy and inexpensive

 The market is growing--the more rapidly it is growing the greater the risk of
competition
 Supply and demand is off--supply is low and demand is high
 Very little competition exists, so there is plenty of "room" for others to enter the
market

 COMPETITIVE ANALYSIS
YOU Competitor Strength Weaknesses
Products
Service
Price
Promotion
Co. Reputation
Location

 MARKET SHARE
 List down all competitors within the area. Primary competitors and secondary
competitors should be considered.
 Thru interview, gather data on current number of units, or approximate number of
service that they can provide in a given time. (example: CAR WASH, how many cars
could they provide service,=> average 40 car wash everyday)

MARKETING STRATEGY
 SETTING THE MARKETING OBJECTIVE
An effective way to set objectives is to follow the well-known acronym SMART. A SMART
objective is Specific, Measurable, Achievable, Realistic/Relevant and Time scaled

An objective that follows SMART is more likely to succeed because it is clear (specific) so you
know exactly what needs to be achieved. You can tell when it has been achieved (measurable)
because you have a way to measure completion. A SMART objective is likely to happen because
it is an event that is achievable. Before setting a SMART objective relevant factors such as
resources and time were taken into account to ensure that it is realistic. Finally the timescale
BUSINESS PLAN PREPARATION (2022-2023) MA. JENALYN G. FLORES, MBA 9
 DON HONORIO VENTURA STATE UNIVERSITY COLLEGE OF BUSINESS STUDIES

element provides a deadline which helps people focus on the tasks required to achieve the
objective. The timescale element stops people postponing task completion.

 EXAMPLE OF GOOD AND BAD MARKETING OBJECTIVES

Bad Objectives Good Objectives

Sales Objectives To sell better than last year To sell 50 boxes of pizza per day
Market Share Objective To be the market leader To maintain leadership in the soap
industry with 20% local market
share
Profit Objective To earn a lot this year To make 30% profit from the cost of
the product

 GOALS
For broad marketing objectives to be achieved, specific sub-objectives or goals must be attained
first. The following are the sub-objectives or goals of the business.
1. Image Rating / Positioning
The marketer may want to position the brand as dominant for a certain product attribute. (ex.
Safeguard is top in skin germ protection, Biogesic is associated with the claim “world’s safest
pain reliever”)
2. Distribution (Ex. 100% distribution in all supermarkets, 80% in groceries and 50% in sari sari
stores/ mom and pop stores) You can also target specific geographical areas. (Ex. San Fernando
for the first 2 quarters, Angels City for the next 2 quarters) or put up additional / branch.
3. Value. This value is not the worth of your product, but more accurately it is the value that your
product provides for your target customer. (ex. Tokyo Tokyo, Mang Inasal started the unlimited
rice, increasing the value of each peso that the customer pays because he gets to eat more,
Unlimited sangyupsal for
P250, etc)
4. Cost. It strongly affects profit margins, which is one of the Key areas of a marketer, an increase
in cost can wipe out one’s price advantage. (ex. Cebu Pacific Piso fare. Major challenge include
uncontrollable fuel cost which is over 50% of their operating cost)

BUSINESS PLAN PREPARATION (2022-2023) MA. JENALYN G. FLORES, MBA 10