MARKETING PRINCIPLES AND

STRATEGIES
 MARKETING DEFINED

Marketing is a form of communicating or promoting the

value of product, service, or brand to the consumers. The
“by word of mouth” may be the simplest, oldest, and most
natural way of marketing a service or a product for profit
and non profit purposes. Marketing for profit aims to
increase sales of products or services while marketing for
non profit purposes aims to communicate messages for
social purposes, such as health and public safety
information disseminated by the government.
 The American Marketing Association (AMA) defines
marketing as “the activity, set of institutions, and processes
for creating, communicating, delivering, and exchanging
offerings that have value for customers clients, partners,
and society at large.”
The key to this definition of marketing is the word
“value.” Thus, marketng can be summarized as the
creation, communication, and the delivery of value to
customers.
 Alternately, the Philippine Marketing Association (PMA)
defines marketing as a “science and a profession guided
principally by the universal principles of ethics, corporate
citizenship, and corporate social responsibility.”
This definition emphasizes an adherence to ethical
principles, corporate citizenship, and social responsibility.
Marketer must avoid offering products and services that
may be harmful to one's health and well-being or promote
violence and immortality. Products or services that serve no
purpose or contribute nothing to individual and societal well-
being should not be marketed.
Goals of Marketing

1. Understsand the market and its consumers, and satisfy

their changing needs and wants.
2. Introduce and innovate products and services that
improve human condition and the quality of life.
3. Design and implement effective customer-driven
marketing strategies.
4. Develop marketing programs that deliver superior value
to consumers.
5. Build and maintain mutually beneficial and profitable
customer relationships.
6. Capture customer value to create profits.
7. Promote value transactions with full regard to the well-
being of societies.
The marketing process
The marketing process can be illustrated in the following diagrams:

The Situation Analysis

Micro-environment Marketing Strategy Formulation
Macro-environment Market Segmentation
The Market Target Market Selection
Customers Value Proposition
Competition Product Positioning
Strengths, Weaknesses, Opportunities,
and Threats

Marketing Mix Decisions

Implementation and Control Product
Implementation Price
Monitoring Place
Marketing Mix Adjustment Promotion
 Prior to the marketing of specific products and/or
services, a marketing company conducts a thorough
analysis of the external environment, the market, its
competitors and customers, and an incisive audit of its
internal operating characterestics. This is followed by the
formulation of relevant marketing strategies coupled with a
calibrated response using using the elements of marketing
commonly known as the 4P's which stands for Product,
Place, Price, and Promotion. As soon as the marketing
strategy is implemented, regular monitoring takes place in
order to identify deviations and, if necessary, make
adjustments to any or all elements of the marketing mix.
Marketing Products

Products or goods are physically tangible items. As

such, they are generally perceivable by the human senses
and can therefore, be inspected prior to purchase.
Figure 2. Product levels
Formal Product
Features Price
Styling Color
Others

Core or Genetic
Product

Augmented Product
Credit terms Warranty
Installment terms Service
Installation Repairs and Maintenance
Others
 All products have a core or genetic product, which
houses its core or genetic functions. A product's core or
genetic function can be defined as the purpose for which
the product was created. For example, the core or genetic
function of a wristwatch would be “to tell time.” On the other
hand, for automobiles, it would be “to transport.” However,
physical products cannot be effectively marketed on the
sale basis of their core or genetic function because similar
products have the same core or genetic function. All
wristwatches can tell time, and all automobiles are capable
of transporting people.
 It would, therefore, be dificult, if not impossible, for a
marketer to convince consumers to prefer a brand of
wristwatch or automobile over another, if it were to be
marketed solely on its ability to tell time or to transport.
Product differentiation would not be possible.
The situation necessitates the creation of a second
product level to be added on to the product's core or genetic
function. This level includes factors that could effectively
differentiate automobiles manufactured by one company
over those manufactured by other with the same core or
genetic function. This second level is called the formal
product.
Car manufacturers incorporate unique styling into their
,automobile
and models, utilize different hood and grill design,
uses various paint colors, incorporate advanced features,
and charge varying selling prices, among others. All these
are undertaken with one objective in mind-to differentiate
their automobile from those manufactured by other firms.
It would usually be sufficient for the formal product of
most marketing organizations to successfully differentiate
their product offering from their competitors. However,
certain types of products/goods, particularly those that are
very expensive and have long service lives, require a third
level: the augmented product.
 An augmented product is necessary in the case of
products/goods such as condominium units, motor vehicles, and
major appliances. Because of their relative high price, most
customers may not have immediate funds available to purchase.
Therefore, it becomes necessary to offer credit or sometimes
installment terms, allowing customers to purchase these products at
a discount or spreading payment over months or years. To protect
their sizeable total payments, customers also demand waranties to
assure them of the product's durability. The lengthy service life of a
product may compel customers to demand repair, maintenace, and
service facilities. Moreover, installation may be expected for major
household appliances requiring complex plumbing and/or wiring.
When these augmented features are in place, most of the
customers may be willing and able to purchase these type of
products.
Classifications of Products/Goods
Products that are marketed can be generally classified according to use,
differentiation, type, and durability.
According to use: Figure 3.
Consumer goods Classification of
Industrial goods Products/Goods

According to
Differentiation:
Undifferentiated goods
Differentiated goods
Products/Goods
According to Durability:
Consumables
Semi-Durables
Durables

According to Type:
Convinience goods
Shopping goods
Specialty goods
Unsought goods
According to Use: Consumer and Industrial
Goods
When classified according to use, product/goods can either
be consumer goods or industrial goods.
Consumer goods are goods that are purchased for
personal consumption and/or for household use. Examples
of these are instant noodles, biscuits, milk, detergent soap,
shampoo, and other similar items.
 On the other hand, industrial goods are purchased in
order to make other goods, to serve as a raw material or
input in the production of other goods. Typical examples are
aluminum (use to manufacture kitchen equipment and cans)
and electronic cables and wires (serve as electrical conduits
for home appliances) among others.
It would not be possible to say, however, that a product
is always a consumer good or an industrial good. A good
that is ordinarily a consumer good can also be used as
industrial good, and vice-versa. For example, when a
consumer buys sugar from the supermarket and uses this
sugar to sweeten his/her coffee, the sugar in this particular
case is a consumer good.
However, if the sugar is added to to flour, chocolate syrup,
eggs, and wallnuts to make brownies and eventually sold,
the sugar in this case is an industrial good.
In other words, physical characteristics alone cannot
determine whether a product is a consumer good or an
industrial good. One should also consider how the product
is ultimately used.
According to Differentiation: Undifferentiated and
Differentiated Goods
Undifferentiated goods are products whose physical
characteristics are so identical, that it would be dificult, if not
impossible, to distinguish one purchsed from one vendor or
another. Most undifferentiated goods are products that are
sourced from nature.
A typical example of an undifferentiated good is rock
salt. When a housewife goes to the wet market to purchase
rock salt from two different vendors, determining which one
came from one vendor or the other challenge. Salt bought
from two different vendors looks, feels, and tastes identical.
 On the other hand, differentiated goods are varied in
their characteristics and features that make them
distinguishable from one another. If there are white-colored
vehicles of each model from all local car manufacturers parked
side by side, the Toyota Fortuner would still be readily
distinguishable from the Mazda 3, the Nissan Sentra, The
Honda Civic, and from the other vehicles in the parking area.
This is because each manufacturer and car model has varying
appearances and features. The appearance of Toyota Fortuner
is different from Mitsubishi's Montero Sport. They have different
grill designs, headlights, body heights, hoods, ground
clearances, etc. The ability of the manufacturers to successfully
distinguish their products from other competitors is called
branding
 Branding provides a product or service a unique
distinguishing name, logo, symbol, or image which is use to
differentiate it from other similar products and services.
Why do some manufacturers brand their products,
while others do not? The mojor reason is cost. When a
company decides to brand its products, it must recognize
that there are two responsibilities that accompany branding:
 All products carrying the brand must have quality
consistency
 The brand must be advertised and promoted
 The underlying reason why manufacturers decide to
engage in branding despite the cost is that they want the brand
to be known and to preferred by customers, eventually creating
and building brand loyalty. No customer will patronize a brand
whose quality is inconsistent. For a brand to be known, it must
be extensively advertised and promoted.
Once a brand acquires customer recognition, a positive
market reputation and goodwill, higher selling prices can be
charged, larger sales revenues are generated, and higher profit
margins are realized. This because customers begin to attach
value to the brand than to the product itself. This appreciation in
a brand's value from the point of view of customers is called
brand equity.
According to Durability: Consumable, Semi-Durable,
and Durable Goods
Based on durability, products are either consumables, semi-
durables, or durables. Durability refers to the length of time
a consumer can derive benefit from the product or good
purchased.
A consumable is a product whose benefit can only be
used by a consumer for a short period of time, sometimes
only a few minutes. For this reason,many mis-interpret
consumables to exclusively include food, drinks, and other
edible items.
Although these are consumables, non-edible items such as
detergents and toiletries are also considered consumables.
The benefit one can derive from soap, for example (for
cleaning oneself) may only last a few days.
On the other hand, semi-durables provide benefits to
the consumer for a long period of time, usually spanning
several months. Semi-durables are manufactured for
longer-term use by consumers. Examples of semi-durables
are clothes, shoes, belts, jackets, etc.
 Durables are products that are manufactured last a
long time. They are capable of providing consumers with
years of beneficial use. Durables are usually expensive,
and many, therefore, require an augmented product to
market them effectively. Example of durable goods are
automobile, houses, home appliances, customer
electronics, furnitures, sports equipment, and toys.
According to Type: Convenience, Shopping, Specialty,
and Unsought Goods
Convenience goods are products that are purchased
frequently, are usually inexpensive, and do not require much
purchase effort and evaluation. Examples are newspaper, gum,
and candy.
The key to the successful marketing of convinience goods
is its availability in as many retail outlets as possible, catering to
consumer need where and when it arises.
Shopping goods, on the other hand, are puchased less
frequently than convenience goods, are relatively more
expensive, and require some amount of information search and
evaluation prior to purchase. Consumers of shopping goods
consider features, evaluate attributes, and compare prices.
Examples of shopping goods are shoes, clothes, and
handbags. The successful marketing of shopping goods
depends on intensive advertising, well-trained salesperson, and
positioning company products as superior alternatives to
competitors' products.
Specialty goods are goods that require an unusually
large effort on the part of consumers to acquire. Consumers are
usually willing to travel great distance to where these goods can
be purchased. Examples are branded luxury merchandise, work
of art, auto mobiles, and homes. The successful marketing of
specialty goods require the promotion of strong brand image
and identities.
 Unsought goods are goods that consumers seldom
actively look for, and are usually purchased for
extraordinary reasons, such as fear or adversity, rather than
desire. Examples are investments, memorial plans, and life
insurance. These goods require advertising and aggressive
selling efforts and are usually marketed using highly-trained
and persuasive salespersons.
Activity 1.1: Classifying goods
Classify the products or goods by checking the column that corresponds to their
answer.
Examples Consumer Industrial Specialty Unsought Shopping Convenience
Goods Goods Goods Goods Goods Goods
1. clothes
2. detergent
powder
3. aluminum
4. newspaper
5. memorial
plans
6. investments
7. automobiles
8. bags
9. candy/gum
10. luxury items
Activity 1.2 Think-Pair-Share
Work with the partner to complete the data card for services or products they both use
(e.g. body soap, shampoo, hair salon, barber shop, shoes).
• Name of products/services offered

• Describe the types of individuals or businesses that use these products/services

• How do often do they use these products/services?

• Describe the benefits these products/services offer customers

• How many other providers offer similar products/services?

• How does the business you describe differ from its main competitors?
 MEET AND GREET
1. Say “Hi” to the person to your
right,
2. Describe yourself using the first
letter of your name
3. Complete the sentence “I feel
good today because…”
4. Repeat 1-3 for the person to your
left.
In your own words define the following:
1. Intangible -

2. Perishable -

3. Needs -

4. Wants -

5. Demands -
Give examples of the following:
1. Needs

2. Wants

3. Demands

4. Intangible goods

5. Perishable goods
Marketing Services
What is more difficult to market, product or services?
Services are generally considered more difficult to market
due to its four major attributes:
 Intangibility - Physical products are tangible. As such,
they can be inspected by consumers prior to purchase.
On the other hand, services are intangible. It would,
therefore, not possible to “sample, a lawyer's legal skills,
or a doctor's ability to handle a surgical operation before
one decides to retain a lawyer or a doctor. This is the first
reason that makes the marketing of services difficult.
 How do marketers address the intangible attribute of
services? Service marketers commonly resort to the
practice of making their services tangible. Although lawyers
and doctors cannot give their potential clients a preview of
their skills, they retain large luxurious offices manned by
smartly dressed staff. They maintain extensive and updated
legal and medical libraries that are readily visible to visitors.
They also display diplomas, certifications, and other
documentary evidence of their training and expertise, and
readily give out professionally prepared business cards with
Latin titles after their names. Moreover, they are always
professional in their competence and capability to render
the service required.
• Variability - Because services are performed by human
beings, no service provider can render the same service
in exactly the same way every single time. A college
professor, when giving the same lecture in two separate
sessions, cannot use the exact words and gestures for
both sessions. An obstetrician-gynecologist (OB-Gyne),
likewise, cannot perform caesarian sections in precisely
the same manner twice, even when the cases involved
may be identical. Because of variability, customers
sometimes exhibit apprehension when purchasing or
paying for services.
 If physical products were variable, it is certain that a
disturbing level of purchase anxiety would be experienced by
customers. For example, if cans of a brand vienna sausages were
to have different and unpredictable quantity of sausages inside,
customers may be unwilling to take the risk of paying the same
amount of money without the certainty of the number of sausages
in each can.
How do marketing organizations address the problem of
service variability? The problem can best be addressed by
developing and implementing standard operating procedures on
how the service should be rendered. A fast food counter clerk, for
example, follow a script in greeting customers, asking orders,
reading and confirming the order, receiving payment, etc. By
following procedure, incidences of variability are reduced.
• Inseparability - Because services are rendered by
people, the service provider must be present each and
every time the service is provided. Service are rendered
and consumed simultaneously. As a lawyer gives legal
advice to a client, legal services are being “produced,”
and simultaneously “consumed” by the client. This limits
the ability to render the service to a large number of
people, as the service provider's presence is always a
necessary component in the rendering of the service.
To maximize revenues, service companies institute a
combination of standardized systems and procedures, and
service franchising.
Mr. Quickie (a known shoes and bags repair shop in the
Philippines established in 1981 by Emiliano R. Caruncho III) for
example, is able to render handbag, and footwear repair, and
key duplication services in its hundreds of facilities throughout
the country. The firm utilizes standardized procedures and
pricing to ensure that their customers receive the same level
and quality of service in any of its many different branches.
• Perishability - Unconsumed services cannot be stored or
warehoused. When a 40-room boutique hotel with a
restaurant on its ground floor operates on a particular day,
unconsumed or unused ingredients for food production,
unsold bottles of soda, or unused coffee beans can be stored,
available for use or sale the following day.
However, if on the same day, only 32 of its 40 rooms are
occupied by the guests, the eight unsold, unoccupied rooms
cannot be stored and added to its 40-room availability the next
day. The eight unsold, unoccupied have “perished.” They
represent lost revenues for the day that can never be
recovered. Similarly, the unsold seats of a 250-seat commercial
jet airliner flying from Manila to Los Angeles “perishes” as soon
as the plane takes off from the Ninoy Aquino International
Airport.
How can marketers maximize revenues and avoid lost
service perishability? The key is the implementation of a
marketing strategy called capacity management, or achieving
a proper balance between service demand (customer needs)
and service supply (service availability).
If service demand exceeds service supply, the excess
demand cannot be accommodated by supply; potential
revenues are lost. On the other hand, if service supply
exceeds service demand, the excess supply “perishes” and
represent and represents unrecoverable revenues.
Capacity management can be implemented in various
ways. The airline industry, for example, uses algorithms that
monitor and change ticket prices for various destination
depending on the time and date of ticket booking, and
availability of seats. This results in frequent price
movements. Depending on supply and demand, ticket
prices for some destinations change in a matter of seconds.
In traditional capacity management, international long
carriers have been known to offer substantial discounts
when calls are made at odd hours (usually late nights to
early morning). This is to relieve demand during peak
hours. Concert ticket prices vary by location in order to
maximize the venue's seating capacity, thereby reducing
the entertainment service's “perishability.” Some restaurants
also offer discounted rates for patrons dining during low
capacity hours of the day.
Needs, Wants, and Demands
Consumer needs are defined as physiological
necessities required for human survival. These universal
needs include food, shelter, and clothing.
Wants, on the other hand, are more psychological,
indicating preferences that can improve the consumer's life
condition. For example, at noon, a consumer may have a
sudden and uncontrollable need to eat. This can be
satisfied with food because eating is a need. However, the
consumer will not satisfy this need with just any type of food
but will consider what kind of food he wants. He will decide
whether to have a pizza, a doughnut, a sandwhich , or a
 Demand in economics is the consumer's desire and
ability to purchase a good or service. It's the underlying
force that drives economic growth and expansion. Without
demand, no business would ever bother producing
anything.

Market and Market Demand

Market is defined as the group of individual or
organizational customers who have both the willingness
and financial capability to purchase a particular product or
service. Capability to purchase a product/service can be
variable as it can expand or contract depending on certain
When a product's or service's selling price is reduced, even
if the number of individuals willing to purchase remain
constant, the reduced price may increase the number of
individuals who can now afford to buy the product or
service.
Market demand is the total demand of all potential
customers for a specific product/service over a specific
period in a specific period in a specific market area.
Measuring Market Demand

Market demand can be either be primary or selective.

Primary Demand refers to the total demand for all brands
of a particular product or service. It is sometimes referred to
as total industry demand. Selective demand, on the other
hand, is the demand for a specific brand of product or
service.
Measuring market demand in the Philippines is
challenging because few accurate published industry
statistics are available. Because of this, companies conduct
surveys to establish an estimate of market demand.
Potential, Latent, and Current Demand
Potential demand emerges when there is no demand
for a particular product/service, but there exist a market with
sufficient financial capability to purchase.
An example of potential demand can be education
courses where there is very low demand or no demand at
all. Such cases are very hard to counter.
Latent demand results when customers in a market
are unable to satisfy specific desires because no
products/service exist in the market that can satisfy them. It
can also result when the product/service is available, but is
priced beyond their reach.
 An example of this is a smartphone brand's success
due to the company's ability to close the gap between the
current product bought and the ideal product the customer
would like to use.

In order to satisfy latent demand, marketing organization

must:
• Introduce goods currently unavailable that are desired by
customers;
• Influence and persuade customers to reallocate their
expenditures towards the company's product;
• Offer credit, installment, or similar terms to make the product
 Current demand is defined as the number of people
of a particular market at present that would actually
purchase the product or service offered. This can be
measured in several ways, the most popular of which is
through “intent to buy” survey.
An example of current demand are seasonal products
like umbrellas, air conditioners or resorts. These products
sell irregularly and sell more during peak season whereas
their demand is very low during non-seasons.
Competition

A competitor is any company in an industry or a similar

industry that offers a similar product or service.

A firm’s competition can be classified either as a

desire, generic, form, or brand competitor.
 The most basic type of competition is desire
competitors. For example, eating is a “desire” or “need”
that a customer wants to satisfy at a particular time or
occasion. This identified and established first before the
customer starts thinking of a possible destination to satisfy
his “desire” or “need”.
The customer then considers a number of available
options. There are the generic and form competitors
(sometimes called “indirect” competitors). Although these
two levels of competition serve different type and forms of
food items, they are still competitors.
If a customer select chicken sandwich instead of
hamburger, the hamburger fast food chain can no longer
generate revenue from the customer because:
1. The “desire” or “need” of the customer has already been
satisfied and he is no longer (for the moment) interested
in food.
2. If a customer is on a limited budget, he/she may have
already spent his/her monetary allocation for food.
On the other hand, brand competitors are the most
“direct” competitors because they offer the same form of
product the customer has finally decided to consume.
Levels of Competition
A firm’s competition can be classified either as a desire, generic, form, or brand competitor.

1. Desire Competitors 2. Generic Competitors

“What desire do I want to satisfy?” “What do I want to eat?”
* Eat * Sandwich
* Text * Dimsum
* Read * Pasta
* Drink * Chicken
3. Form Competitors 4. Brand Competitors
“What kind of sandwich?” “What brand of hamburger sandwich?”
* Chicken * Wendy’s
* Cheese * McDonald’s
* Hotdog * Jollibee
* Hamburger * Burger King
* Army Navy
The Concept of Market Share

The effectiveness of marketing strategies in an

industry can be measured using what is referred to as
market share. Market share, expressed in percentage, is
the share of a company’s revenues divided by the total
revenues of its industry in a particular year.
Market share is calculated using the following formula:
Company A’s Annual Revenue
Company A’s market share = x 100
Total annual revenue of Company A’s industry
 Since sales revenue is the basis for determining market
share, companies often boost sales through product
introductions and innovation, price reduction, intensive
advertising, and aggressive promotional efforts, among other
activities.
The company with the largest market share in an industry
is the industry’s market leader. Market leadership is aspired
after by many industry participants. Aside from the prestige,
market leaders usually lead the industry in price changes,
advertising and promotional intensity, and new product
introductions. More often that not, market leaders manufacture
and market the largest number of product units in an industry.
They are likewise often the most profitable due to production
scale and distribution efficiency.
Activity 1.1 Market Share
Complete the table below and show their computation.

Company Market Share Company Annual Total Revenue

Revenue Company’s
industry
1. A P600,500,000.00 P950,000,000.00
2. B P350,000,000.00 P765,000,000.00
3. C P156,000,000.00 P845,000,000.00
4. D P 65,000,000.00 P487,000,000.00
5. E P120,000,000.00 P355,000,000.00
Traditional Approaches to Marketing
Evident up to the 1960s, traditional approaches in
marketing focused on production methods, product quality,
and effective selling methods as profit drivers in marketing.
1. The Production Concept
The production concept assumes that customers
prefer products that are inexpensive, affordable, and widely
available. Efforts are concentrated toward expanding
distribution, and improving production efficiency. The
objective is to lower production costs resulting in lower
prices. However this concept is relevant only if customer
tastes and preferences are stable and product demand is
high.
2. The product Concept
The product concept assumes that customers will always
prefer and patronize products of high quality. Resources are
focused on product improvement and innovation. Product
attributes and features are continuously enhanced. While this
may be important, too much preoccupation on product quality
may neglect the customer’s changing needs.
3. The Selling Concept
The selling concept emphasizes aggressive selling and
promotional efforts. It assumes that customers are generally
timid and must be persuaded into buying. The objectives is to
sell what is manufactured rather than manufacture what the
market wants.
Contemporary Approaches to Marketing
In contrast, contemporary marketing approaches are
centered on the customer relationships, and the well being
of society.
1. The Marketing Concept
The marketing concept considers the needs of both
the customer and the product offered. The objective is to
provide a solution to the customer’s actual or perceived
problem. The key is to be more effective in the creation,
communication, and delivery of this value to customers.
2. The relationship Marketing Concept
The relationship marketing concept believes that all marketing
activities are for the purpose of establishing, maintaining, and
strengthening meaningful relationship long-term relationships with
customers. Extensive customer databases are created, maintained,
and updated. Customer profiles, purchases habits, and preferences
are tracked and monitored. This is to ensure that customers needs
are fulfilled and the relationship with them is maintained.
3. The Societal Marketing Concept
The concept is similar to the marketing concept. However,
beyond providing solution to customers, the societal marketing
concept also includes considerations that protect the customer’s
well being and interest, as well as interests of the environment and
society.
Activity 1.2
Think of a product/service your group wish to market.
Discuss about the different approaches that is best for
marketing the product/service you chose. Choose a
representative to discuss your work in front of the class.