REVIEWER

IN
PRINCIPLES OF
MARKETING
SIMANGAN, JOYCE PAOLA C.
ABM 11 – NARRA
CHAPTER 1
LESSON 1: A Framework for
Marketing
“Marketing is all about creating value through the
exchange process.”
Marketing is an art, a science, and a field of
discipline. Everything that goes on sale is
marketed. But not everything that goes on sale
follows the principles of marketing.
What is Marketing?
At this point, what is marketing to you? Perhaps
some for all) of the following will come to mind:
- Advertising
- Selling
- Sales people
- Retail stores and merchants
- More selling
- Promos and giveaways
- Press releases
- Product development
- Still more selling
To a layman, marketing will indeed be all about
selling a product. But to u marketing professional,
marketing is a process.
Effective marketing needs the involvement and
support of all the other fields of management-
operations, finance, human resources, information
systems, and even corporate planning.
Marketing is also about communication. In fact,
there is a trend toward using the term "marketing
communications" rather than just "marketing."
This reflects the fact that selling a product (.e, the
layman's definition of marketing) is really all about
properly communicating that product to the
market and to the world at large.
Peter Drucker once said that the aim of marketing
is to "make selling supellous (Drucker 1973).
A Definition of Marketing
We begin with a definition of marketing as
presented by the American Marketing Association.
"Marketing is the activity, sot of institutions, and
processes for creating, communicating, delivering,
and exchanging offerings that have value for
customers, clients, partners and society at large"
Finally, a key takeaway that we can infer from the
above definition is that there is a give and take
relationship that lies at the heart of marketing.
On a broader scale, marketing is all about changing
behavior through communications in order to
achieve objectives.
Marketing is about meeting needs profitably
(Kotler and Keller 2006).
Marketing Process
The marketing process can also be broken down
inte ita components, which are:
Strategic Marketing
-Customer segmentation
-Target Market Selection
- Value positioning
Tactical Marketing: Value Deployment
- Product design and development
- Product portfolio management
-Service development
- Pricing
- Distribution and logistics
Tactical Marketing: Value Communication
- Sales force strategies
- Sales promution strategies
- Advertising
Lesson 2: Needs, Wants and Wants
Demands Wants are the specific manifestations of needs.

Needs, Wants and Demands

We all have needs. We need food, clothing, and Demands
shelter. We need to be educated We need to be
heard, to be loved, and to be understood. Demands are wants that are backed by purchasing
power.

Needs
A need is a state of felt deprivation about
something that is deemed to be necessary.

The premise behind Maslow's Hierarchy of Needs

Theory was that the most basic needs
(represented as the lower levels of the pyramid
model) must first be met before the individual can
feel a strong desire for the higher level needs.
Thus, before you can even think about being
respected by. your peers (lovs/belonging), for
instance, you must first be assured of food,
shelter, clothing (physiological) and that nothing
untoward happens to you as you go to, from, and
around the school (safety).

Lesson 3: Marketing Origins,
Exchange and Value
The origins of Marketing
Marketing as we know it today (or as you will
know it through this cours is a fairly recent
development in the world of business. To fully
appreciate how came to being, it will be useful to
see how the stage in a market's maturity affects
how businesses can best sell to the market.
There are five kinds of economic utility that
can be offered by products and services
1. Form Utility - A product, by its very form,
saves the consumer from the effort of having to
make the product himself.
2. Place Utility - The convenience offered by
making a product available around the proximity
of the customer is also valued.
3. Time Utility - If a firm can offer a product or
service far quicker than alternative providers, the
customer will also value.

- Stage 1. Supply < Demand 4.Possession Utility - For some products, mere
ownership is already valued by the customer. This
- Stage 2. Supply < Demand, Competition is especially true for branded items that command
Growing a premium over commodity substitutes.

- Stage 3. Supply > Demand 5. Information Utility - Knowing certain things

about the product can already imbue it with value.
- Stage 4. Supply > Demand, Customer-
centric Strategies Emerge

Exchange
The objective of a marketing exchange is to receive
something that is desired more than what is given
up to get it. In other words, it involves a reward in
excess of costs. Fourth, the parties involved in the
exchange must be able to communicate with each
other in order to make their something of value
available.

Value
What is value? There is of course the literal value
that refers to, say, the suggested retail price of
goods and services in the market. But as you
would have seen from our example earlier, value is
also a very personal thing. It can be very subjective
or a function of your personal condition (such as
hunger), experiences, personal history, social
interactions, perceptions, education, and so much
more.
CHAPTER 2
 Michael Porter's classic 5 Forces Model (Porter 1979) is
Lesson 1: Analyzing the a popularly used framework for understanding the
Environment competitive structure of an industry.

The Marketing Environment

Internal Environment
The internal environment refers to the business itself:
what are you selling, how your organization is set up,
what your organization's strengths and weaknesses are,
what your resources happen to be, what your
company's core values and mission are, and essentially
anything about your company that matters.

Here is a checklist of things that you may want to assess The risk faced by a firm due to its competitors is the
in your company's internal environment: most obvious form of operational risk.

Company cash flow - How much money does it A firm also faces risks from new entrants possibly joining
have and how much does it expect to flow in over time? the industry, especially if the industry offers attractive
growth prospects.
Organizational structure - What personnel are
available and who accountable for marketing initiatives? A firm also faces risks due to substitutes that threaten to
steal market share from its industry.
Assets and other resources - What property and
equipment would it have access to? The firm's own suppliers can pose a threat as well if the
firm is too dependent on these suppliers and the
Strategic alliances - What organizations (or even suppliers know it.
influential individuals) do the business currently have
If the firm is too dependent on its buyers, the buyers
good working relations with?
may sense this.
Products and services - What are already being
The internal and the competitive environments form
offered, if any?
what is often referred to as the micro environment of a
business. But looming even larger would be the macro
Competitive Environment
environment, which is composed of environmental
variables that are typically beyond the control of any
The competitive environment, on the other hand, refers
organization.
to the immediate industry in which your company is
doing business.
One of the most popular mnemonics is PEST, which
stands for:
Here is a checklist of what to look out for in your
competitive environment:
- Political.
Competitors - Who they are and what their
- Economic
respective strengths and weaknesses may be.
- Social
Competing products and services - What these
are, what their target markets are, and what their
- Technological
respective strengths and weaknesses are.

Substitutes - What alternative products or services

your markets might be considering rather than your
core product.

Lesson 2: Market Research
Methods
The Marketing Information
System
The Market Information System (MIS) is the
people, equipment, and procedures used to
gather, sort, analyze, evaluate, and distribute
needed, timely, and accurate information to
marketing decision-makers. The components
of a market information system are:
Internal Records - This refers to
documents in the company's Order- to-
Payments cycle, such as invoices, shipping
orders, etc.
Marketing Intelligence - The set of
procedures and sources used by managers to
obtain everyday information about
developments in the marketing environment.
Market Research - The systematic design,
collection, analysis, and reporting of data and
findings relevant to a specific marketing
situation facing the company.
Research Process
Market research is primarily concerned with
understanding the nature of a market. Some
of the questions that a market research
typically seeks to answer are:
- Who are our typical buyers?
- Where do our buyers come from?
- How big is our market?
- What are our customers' aspirations?
- How do our customers shop and with
whom?
- What do our customers buy?
- Why do customers refuse to buy our
products?
The processes involved in conducting market
research can be outlined as follows:
Define the Problem and Research
Objectives. The problem should not be
defined too broadly nor too narrowly.
Develop the Research Plan. The
Research plan le composed of the following
components:
Data Sources, Secondary data -
involves the gathering of prior and related
research works since it is possible that other
parties have already developed useful findings
on the matter being studied.
Primary data - involves actually
undertaking the research itself in order to get
first-hand knowledge on the matter. interview
experts.
Research Approaches - Research can be
conducted through observation, focus groups,
survey research, behavioral data, and
experimental research.
Research Instruments - These include
questionnaires or mechanical instruments
such as video recorders.
Sampling Plan - This addresses (1)
sampling unit (Who is to be surveyed?). (2)
sampling size (How many people should be
surveyed?), and (3) sampling procedure (How
should they be chosen?).
Contact Methods - Contact with the
survey sample could be done via personal or
impersonal means. Methods include the use
of mail questionnaires, telephone surveys,
person.
sample is a small portion of a population that
tries to explain the entire population but this
sample may not perfectly represent the
population.

Collect the information - This involves

the actual gathering of the data.
Other examples of biases:

Analyze the data - Once all the data has
come in (whether in the form of surveys,
interviews, group discussions, or through
electronic means such as online ballots), the
next step involves the actual processing of the
data.
Present the findings - Once processed,
the data can now become a useful
information.
Research Methods
. Phone or online interviews -
Respondents may not take these interviews
too seriously because of the lack of actual
contact.
Mail or email surveys - Only a
particular kind of respondent may be
motivated to actually mail the surveys back.
Questions regarding income -
Respondents may either not actually know
what their incomes are or post a different
figure due to fear of divulging such a personal
bit of information.

Observation - is best to use when trying to

answer questions involving how a market
behaves.

Survey research - is best to use when

trying to determine a market's opinions.
perceptions, and basic demographic data.

Focus groups - are useful for gathering

strong opinions and beliefs from A given
target market.

Experimental research - is a means of

answering a hypothesis through the use of an
experiment.

Bias
An important issue to address in market
research is the matter of bias. Bias is normal
for researches because, by definition, a
Lesson 3: Demand Forecasting
Measuring and Forecasting Demand
The Market
The market for a product can be categorized as
follows:
Potential market - These are those who
express some level of interest in a product.
Available market - Just because someone le
interested does not mean that the person will
actually buy or can even afford to.
Qualified available market - This is a further
refinement of the available market since it may be
possible that those who have interest income, and
access, nevertheless cannot get the product due to
technical issues such as laws (eg, minimum age
requirements for liquor) ur distribution constraints
(eg, remoteness of their location).
Served market - Also known as the serviceable
available market. This is the market that the
company can actually service with its current state
of logistics.
Penetrated market - This is the subset of the
market that is already actively using the product.
The market demand for a product or service, on
the other hand, is the total volume of the sales
that is generated by a defined customer group in a
defined geographical area, time period, and
marketing environment under a defined marketing
program.
Forecasting Demand for an Existing
Product
If the firm already has an existing product in the
market, then estimating what the future demand
for the product would be will be a matter of
assessing the following:
Listening to what people say. This includes
salesforce: opinions, expert opinion, and buyers'
opinions.
Assessing what people have done. This
generally involves the statistical analysis of past-
sales data or related data.
Salesforce opinion - generally involves getting
a composite of what each sales person, sales team,
or sales unit estimates to be its possible sales
volume for the upcoming period based on past
history.
Expert opinions - regarding the potential
market size and the acceptability of the proposed
product can be taken from industry watchers or
people with experience in the industry.
Time series analysis - uses data from previous
periods to forecast the following period's sales.
Regression analysis - is a more sophisticated
statistical method for predicting an outcome based
on multiple possible factors.
CHAPTER 3

Lesson 1: Consumer Behavior
Factors that Affect Consumer Behavior
The way that we perceive, react, or are affected by
products and services is a function of a host of factors.
The following are factors that tend to have an effect on
consumer behavior.
1.Culture - culture, sub-cultures, and social classes.
This refers to the general er overall culture of a group of
people.
2. Social factors - reference groups, family, roles,
and status. This is all about the norms of behavior
among even smaller groups, namely the social groups
where a consumer belongs to.
3. Personal factors - age, life cycle stage, occupation,
and economic circumstances. Aside from external social
factors, the demographics of the individual also affect
the manner by which products and services are viewed
and treated.
4. Psychological factors - motivation, perception,
learning, beliefs, and attitudes. This is how an individual
behaves and behavior is a very intimate thing.
Income vs. Socio-Economic Class
First of all. there is income, which is a personal
demographic factor, and then there is socio-economic
class, which is a social factor. While these two may seem
to refer to the same thing, they are quite different.
Age vs. Lifecycle
Age is just a number. whereas where consumers
currently are in their lifecycles pretty much determine
what products and services they will likely spend on
Buying Roles
You buy products for yourself. But you also buy products
for other people, in which case you are merely
functioning as the buyer while someone else ends up
using it. In fact, there are five generally identified roles
in the buying process. These are:
- Initiator - This is the person who first suggests the
idea of buying a particular product or service.
- Influencers - These people's views or advices can
influence the eventual selection of what to buy.
- Decider - The person for persons) who ultimately
has the final say on what to buy.
- Buyer - The person who makes the actual purchase.
- Users - The person or persons who end up actually
using the product.
Types of Buying Behavior
The act and process of purchase is, in itself, the function
of a goal. The consumer felt a state of deprivation and
needed to address it.
Complex buying behavior - arises for important
purchases where there are so many different features
and attributes with each brand having different
manifestations of each feature.
Dissonance reducing behavior - occurs when a
consumer wants to keep life simple, and yet the risks
faced with the buying decision for an important
purchase are perceived to be high.
Variety-seeking behavior - occurs when the
product involves minimal risk. but there are so many
choices, each with its own features and attributes.
Habitual buying behavior - happens when
consumers feel that learning about the different
competing products is not worth it, so they would rather
elect the product that they are most comfortable with.
Emotional vs. Logical Decisions
We would like to think that all our purchases are the
result of rational and logical decisions on our part.
We have two brains. One is an emotion-driven brain
that we have inherited from our ancestors and it is
highly attuned to our sensory experiences. The other is
our logical brain which is rational, very objective, and
with which we hope and assume manages to control all
of our decision-making.

Systematic Segmentation
Lesson 2: Consumer Market
Segmentation
Step 1. Conduct a wide survey

Step 2. Process the data

The Premise Behind Market
Step 3. Profiling
Segmentation

Traditionally, markets were segmented according Targeting

to the following variables:
Once different possible market segments have
been identified for a particular industry, the next
Demographic - This refers to quantifiable and
step is to select the segment that can be most
factual statistics of the population, such as age,
sensibly targeted.
sex, income, occupation, and basically any piece of
information that is gathered by the National
Statistical Office.

Psychographic - This refers to how consumers

see and feel about themselves hence paycho or "of
the mind." It includes elements such as social
class, lifestyle, and personality.

Behavioral - Whereas psychographics are about

how we think about ourselves, behavioral refers to
how we behave when buying a product, whether
these actions may be conscious or unconscious in
nature.

Geographic - The physical location of a market,

including the general characteristics of the
location.

Lesson 3: Organizational Market
Segmentation
Dealing with Organizations
Characteristics of Organizational Markets
Fewer and larger buyers - You will be dealing with
private or public institutions and these tend to be few in
number for any given industry.
Close customer relationships - Your salespeople
tend to be a valuable resource when dealing with
organizational clients.
Geographic concentration - Industries tend to
locate in the same areas as this allows for economies of
industrial scale.
Derived and fluctuating demand - When dealing
with organizations, the demand for your product will
actually be a function of the demand for their products.
Potential for inelastic demand - Inelasticity refers
to a relative insensitivity of the sales of your product to
any increase or decrease in its price.
Professional purchasing - While consumer markets
are often characterized by emotionally-triggered
purchasing.
Minimizing the Risk of Purchase
An organization that practices professional purchasing
seeks to minimize its risks by implementing a set of
procedures that are designed to (1) ensure access to.
Buying Situations
Straight Rebuy -This refers to routinised purchases.
This is ideal for suppliers who, for obvious reasons, hope
to make purchases of their products a habit.
Modified Rebuy - Here, a firm has already
purchased the product in the past, so it is now familiar
with the suppliers and basic data about their wares.
New Task - At this point, a firm still has no experience
with the different suppliers in the market.
Roles in the Buying Process
- Initiators - identify problems
- Influencer - affect buying decisions
- Buyers - have formal authority to select suppliers
and arran Deciders have formal or informal power to
whet e approve final suppliers.
- Gatekeepers - control the flow of information to
others.
The Buying Process
Problem Recognition - The client organization
acknowledges the need for a particular product or
service
General Need Description - This is the start of a
formal buying process where forms are filled out
that justify the need for the purchase.
Product Specification - Technical personel are
engaged in this process in order to provide the
specific technical details for the needed product or
service
Supplier Search and/or Proposal Solicitation -
Possible suppliers are sought out or ads are placed in
order to invite potential bidders
Supplier Selection - A formal selection process is
consummated base on pre-established guidelines,
leading to the determination
Order-Routine Specification - The purchase order
is made out. If this supplying enterprise.
Performance Review - Both the product and the
relationship with the suppling are evaluated in order to
establish if there may be a need to look for alternative
suppliers on the next round
CHAPTER 3
Lesson 1: Positioning
Positioning the Product
Think about the products that you normally
consume the fast food outlets that you frequently
visit, the sneakers you wear, the soda you drink,
and even the apps on your tablet or smartphone.
Chances are, each of these products occupies
some sort of clear, personal definition in your
mind.
Points of Difference and Points of
Parity
Points of Difference or PODs - refer to
attributes or benefits that the market associates
primarily with a particular brand, to the point that
the market believes that no other brands offer
these attributes or benefits to the same degree as
that brand.
Points of Parity or POPs - on the other hand,
are market expectations about what products in a
particular product category should be or should
have.
Packaging - can in fact be an opportunity for
creating points of difference especially in highly
competitive product categories where the actual
product itself has minimal differentiation.
Category Membership
Category membership involves properly defining
what category your product belongs to.
Marketers need to be aware of the elements that
communicate a products membership to a
particular category, which includes elements such
as price, color palette, size, shape, medium of
distribution, brand, and packaging. Much of these
elements are cultural in nature. In other words,
marketers need to be attuned to: the meanings
that consumers attach to various product
elements.
Lesson 2: Positioning Maps

The Positioning Map

Marketing practitioners make use of something

called a perception map or positioning map. It is a
graphical tool that provides a picture of how
consumers perceive the different products in a
given industry.

Simple Price-Quality Positioning Map

Interpreting and Applying

Positioning Maps

Sample Positioning Map of

Automobile Industry Market strategists will strive to stake out a
position of distinction for their products. If the
product is far too close to that of a
competitor's on the map, then it implies that
these two could be direct substitutes, which
means that they would be fighting for the
same market segment.

Sample Question that Scale Answer