M211

Marketing Management
Alexander Ken Libranza
Instructor – UP Mindanao School of
Management
aplibranza@up.edu.ph

University of the Philippines

Mindanao
School of Management
 Welcome!
We encourage you to OPEN YOUR CAMERAS since this is an
interactive class.

If you have any questions, feel free to send it in the chat box or
to “Ken @ UP SOM”.

M211 - Marketing Management

UP Mindanao School of
Management
Feasibility of
Marketing Programs
M211 – Marketing Management
May 7, 2022

University of the Philippines

Mindanao
School of Management
 M211 Making Market Decisions
Framework
Phase 1: Market Understanding Phase 2: Marketing Program Phase 3: Marketing Implementation

Product
(or Service)

Place
Persona
Identify attractive (or Channel)
Define the Decide and learn
Market Customer
Marketing Ensure that the for the next round
Opportunities Value
Challenge Plans Make sense
(Benchmarking) Proposition of decisions

Retention Acquisition
and Growth
Pricing

M211 - Marketing Management

UP Mindanao School of
Management
 Live Case Session
Time Activity
3:15 - 3:30 Instructions
3:30 – 5:00 Case Analysis & Group
Preparations
5:00 – 5:15 Break
5:15 – 6:15 Presentations
(7 mins presentation)

M211 - Marketing Management

UP Mindanao School of
Management
 Main Goals for Today
1. Assess the Marketing Plan

2. Feasibility Case Study

M211 - Marketing Management

UP Mindanao School of
Management
 Main Goals for Today
1. Assess the Marketing Plan

2. Feasibility Case Study

M211 - Marketing Management

UP Mindanao School of
Management
 Marketing Plan

expresses the
marketing strategy

Marketing
Plan
implementation of
the marketing
program

M211 - Marketing Management

UP Mindanao School of
Management
 Fully Developed
Marketing Plan
WHAT the company intends to do over a specified
period (of time)

HOW it will do it and WHY it is worth doing

M211 - Marketing Management

UP Mindanao School of
Management
 Questions to ask in assessing a
good marketing program
1 Does It Make Market Sense?
2 Is It Complete and Consistent?
3 Does It Make Financial Sense?

Ask: Is there reason to believe that the target customers will respond favorably and
in sufficient numbers?

M211 - Marketing Management

UP Mindanao School of
Management
 Questions to ask in assessing
a good marketing program
1 Does It Make Market Sense?
2 Is It Complete and Consistent?
3 Does It Make Financial Sense?

Ask: Do the parts fit together well?

M211 - Marketing Management

UP Mindanao School of
Management
 Questions to ask in assessing
a good marketing program
1 Does It Make Market Sense?
2 Is It Complete and Consistent?
3 Does It Make Financial Sense?

Ask: Does it bring revenue?

M211 - Marketing Management

UP Mindanao School of
Management
 Questions to ask in assessing
a good marketing program
1 Does It Make Market Sense?
2 Is It Complete and Consistent?
3 Does It Make Financial Sense?

It is important to realize that there is no single “right” format for a marketing program
or plan.

M211 - Marketing Management

UP Mindanao School of
Management
 #1: Does It Make Market
Sense?
ü Is there reason to believe that the target customers will
respond favorably and in sufficient numbers?

ü Is there reason to believe that customers will regard the

offer as better than competitive offers?

ü Is there reason to believe that the trade (i.e., all members

of the market chain) will respond favorably?

M211 - Marketing Management

UP Mindanao School of
Management
 #1: Does It Make Market Sense?
(Case: Give % discount for 2 orders)
• What are they buying right now (AC)
• Check if the product (best seller) or not
“masyadong binibili”
Is there reason to believe that the
• Location – customer flow vs group size (will
target customers will respond
work) > savings
favorably and in sufficient
• Effective for fist time buyers (volume vs
numbers?
taste)
• Dependent on the pricing range (effective
BUY PRICE for those with high values)
Is there reason to believe that • Price sensitive customers – more savings/
customers will regard the offer as regular buyers
1 Php 50.00 better than competitive offers? • Taste/ Service (post ordering)
Is there reason to believe that the
PHP 80.00 trade (i.e., all members of the • Competitors does not adjust (LTO)
2 market chain) will respond Not easy to switch.
(20% Discount) favorably?
•

M211 - Marketing Management

UP Mindanao School of
Management
 #1: Does It Make Market Sense?
(Case: competitor has just lowered prices 10%)
BURGER XYZ

Burger XYZ BURGER ABC • Opportunity for innovation for product

What does that mean (lower and different promotion vs other
for us? products)

• Check the costing of product & sales volume

(Assess if the lowering of price affected my
volume)

• Analyze competitors (threat) – draw

From: 50.00 What are we going to assumptions on what can be done better
50.00 do?
To: 45.00 • Assess product offering
• What makes me better

M211 - Marketing Management

UP Mindanao School of
Management
 #2: Is It Complete and Consistent?
(Case: You want top become the all-around
vegetable store in the city)
• Inventory management (for stocks
and products) – customers will
always have the opportunity
• Increase awareness of our offering –
What do you need to
social media/ advertisement
become the “all-around
• Targeted customers: direct
vegetable store”?
communications (check specific
communities)
• Community – vegan eaters/
restaurants

• Customer database (personalized

What are we going to do?
discounts)

M211 - Marketing Management

UP Mindanao School of
Management
 Questions to ask in assessing a
good marketing program
1 Does It Make Market Sense?
2 Is It Complete and Consistent?
3 Does It Make Financial Sense?

It is important to realize that there is no single “right” format for a marketing

program or plan.

M211 - Marketing Management

UP Mindanao School of
Management
 Main Goals for Today
1. Assess the Marketing Plan

2. Financial Analysis

M211 - Marketing Management

UP Mindanao School of
Management
 Some Basic Sales Metrics
OPERATING METRICS

Definition Formula
Transaction Count
Number of customers -
(TC)
Average amount spent
Average Check (AC) DS / TC
by the customer
Daily Sales/ Gross
Total sales TC x AC
Sales

M211 - Marketing Management

UP Mindanao School of
Management
 Some Basic Sales Metrics
PRODUCT METRICS

Definition Formula
Number of products
Daily Quantity (DQ) -
sold

Price (P) Price of a product -

Daily Sales/ Gross

Total sales DQ x P
Sales

M211 - Marketing Management

UP Mindanao School of
Management
 Sales ≠ Profit
ABS % Contribution Margin: a cost
accounting method that allows a
1 Gross Sales 591,196 100% company to determine the
2 Variable Cost 427,096 72.2%
profitability of individual products

Contribution
3 164,080 27.8%
Margin

4 Fixed Cost 115,838 19.6%

5 Operating Income 48,222 8.2%

M211 - Marketing Management

UP Mindanao School of
Management
 Sales ≠ Profit
ABS %

1 Gross Sales 591,196 100%

2 Variable Cost 427,096 72.2% Operating Income: should

Contribution
always be greater than zero
3
Margin
164,080 27.8% to maintain the operation.

4 Fixed Cost 115,838 19.6%

5 Operating Income 48,222 8.2%

M211 - Marketing Management

UP Mindanao School of
Management
 Product Metrics: Gross Margin
ABS % Gross Margin: a specific metric
for product development that
1 Gross Sales 591,196 100% measures the cost of item vs the
2 Food Cost 133,427 22.5%
sales/ price

3 Paper Cost 100,000 16.2% Objective: Ratio the cost of

development and the potential
4 Gross Margin 61.3%
sales

Formula:
𝐺𝑀 = 𝐺𝑟𝑜𝑠𝑠 𝑆𝑎𝑙𝑒𝑠 − (𝐹𝐶 + 𝑃𝐶)
M211 - Marketing Management
UP Mindanao School of
Management
 Product Metrics: Gross Profit
ABS % Gross Profit: a specific metric for
1 Gross Sales 591,196 100% product development that measures
the cost of item with the available
2 Food Cast 133,427 22.5% discounts and transfer costs vs the
3 Paper Cost 100,000 16.2% sales/ price

4 Gross Margin 61.3% Objective: overall cost associated with

5 Discounts 12,016 2.0% the product when it is available in the
market
6 Freight 12,598 2.1%
7 Gross Profit 57.2% Formula:
𝐺𝑃 = 𝐺𝑟𝑜𝑠𝑠 𝑀𝑎𝑟𝑔𝑖𝑛 − (𝐹𝑟𝑒𝑖𝑔ℎ + 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡))
M211 - Marketing Management
UP Mindanao School of
Management
M211 - Marketing Management
UP Mindanao School of
Management
 Calculate the CM & OI of this
Product (per month)
Burger sold at Buy 1 Take 1 for Php 95.00
Daily quantity sold: 250 (low) – 400 (high)
Fixed cost to operate per month: 250K/
month (for April)

Variable Costs:
• Food Cost – 15.00/ burger
• Paper Cost – 6.00/ burger
• Discounts – 2% (low) - 5% (high)
• Freight – 15%
• Others (Marketing Expenses) – 5% of every
M211 - Marketing Management B1T1 burger sold
UP Mindanao School of
Management
 Calculate the GM & GP of this
Product (per product sold)
Price 95 95
Qty Sold 250 400
Operating Days 30 30
Gross Sales 712,500.00 1,140,000.00
Variable Cost 471,750.00 66% 789,000.00 69%
Food 225,000.00 32% 360,000.00 32%
Paper 90,000.00 13% 144,000.00 13%
Discounts 14,250.00 2% 57,000.00 5%
Freight 106,875.00 15% 171,000.00 15%
Others 35,625.00 5% 57,000.00 5%
Contribution Margin 34% 31%
Fixed Cost 250,000.00 35% 250,000.00 22%
Operating Income - 9,250.00 -1% 101,000.00 9%

M211 - Marketing Management

UP Mindanao School of
Management
 Calculate the GM & GP of this
Product (per product)
Burger sold at Buy 1 Take 1 for Php 95.00
Daily quantity sold: 250 (low) – 400 (high)
Fixed cost to operate per month: 250K/
month (for April)

Variable Costs:
• Food Cost – 15.00/ burger
• Paper Cost – 6.00/ burger
• Discounts – 2% (low) - 5% (high)
• Freight – 15%
• Others (Marketing Expenses) – 5% of every
M211 - Marketing Management B1T1 burger sold
UP Mindanao School of
Management
 Calculate the GM & GP of this
Product (per month)
Price 95
B1T1 (so divide by 2) 47.5
FC 15 32%
PC 6 13% Php 21.00 - Cost to produce each burger
Gross Margin (PER BURGER) 26.50 56% Php 26.50 – Margins for each burger
DISC 1.6625 3.5% sold (based on price)
FR 7.125 15% Php 11 - Cost get the burger to
Marketing 2.375 2.5% customers.
Gross Profit (w/ Marketing) 16.53 35% Php 16.53 – profit after all the variable
4.48 9% costs
Php 4.48 – range of cost per burger for
M211 - Marketing Management
fixed cost (investments, etc)
UP Mindanao School of
Management
 Breakeven Analysis
(CM Approach)

M211 - Marketing Management

UP Mindanao School of
Management
M211 - Marketing Management
UP Mindanao School of
Management
 I want to operate a burger
business. How much sales do I
need to be profitable?
95
1. How much sales per
Price 95
Qty Sold 250 400
Operating Days 30 30 month do I need to
Gross Sales
Variable Cost 471,750.00
712,500.00
66% 789,000.00
1,140,000.00
69%
breakeven?
Food 225,000.00 32% 360,000.00 32%
Paper 90,000.00 13% 144,000.00 13% 2. How much Daily Sales?
Discounts 14,250.00 2% 57,000.00 5%
Freight 106,875.00 15% 171,000.00 15%
Others 35,625.00 5% 57,000.00 5% 3. How much Daily
Contribution Margin
Fixed Cost 250,000.00
34%
35% 250,000.00
31%
22%
Quantity if your average
Operating Income - 9,250.00 -1% 101,000.00 9% check is Php 190?
M211 - Marketing Management
UP Mindanao School of
Management
 Return on Invested Capital
(Marketing)

Inflow (OI) - Outflow Fixed Costs/s

M211 - Marketing Management

UP Mindanao School of
Management
M211 - Marketing Management
UP Mindanao School of
Management
 Calculate ROIC or Payback for
the this Marketing Activity
The business provide a loyalty coupon for a
month. On your 10th purchase of the burger
(Minimum of 250.00), you will get a B1T1
burger (Php 95.00) for free.

Assumption:
• Produce minimum of 500 pcs of coupon @ Php
0.5
• 5/ card
• Redemption: 15 cards/ people complete the
loyalty coupon
• Costing for free product is at cost (not selling
M211 - Marketing Management price)
UP Mindanao School of
Management
 End of Class Survey (M211)
https://forms.gle/HFwmxheTHKuwNkSBA

M211 - Marketing Management

UP Mindanao School of
Management