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z Principles of Marketing I
How to do Marketing:
Marketing Strategies T
6
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Approaches to Marketing
Theories and
Concepts
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Traditional Approaches
 Traditional Marketing involvesthe marketing mix of
McCarthy (1928), as cited by Villet(2013): product,
price, place, and promotion. It focuses on identifying
the right customer and understanding their attitudes,
behaviors, and motivations to encourages
purchase(Villet,2013).

 Marketing Mix is defined a set of marketing tools

(4Ps) that a business blends to offer to the target
market and get the response it wants from them.
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 Product – This is the company

offering. This offering maybe
tangible or intangible.
 Price – This indicates the value of
an offering. This value is
represented by its monetary value.
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 Place – This refers to where the

offerings can be found. This is
represented by the location, where
the product can be bought.
 Promotion – This refers to
communicating about the other 3Ps
encourage exchange.
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To appreciate how the 4Ps can be made relevant to the consumers,
we need to look at the 4Ps from the consumer’s perspevtive.
Lauterborn (1993)names it as the 4Cs(Karl,2011)

4Ps 4Cs
Product Customer’s needs
Price Customer’s Cost
Place Customer
Convinience
Promotion Communication to
customer
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 Customer’s needs – This refers to

the needs theories were discussed
in the previous chapter.
 Customer Cost – This refers to the
value that had to be given up by the
customer to be able to acquire the
product that can satisfy his need.
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 Customer’s Convenience - This

refers to the ease of acquiring or
getting a product that can satisfy his
need.
 Communication to customer – This
refers to the information that reaches
the consumer to be aware about a
product that can satisfy his need.
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Contemporary Approaches
1. Remodeled Marketing Mix

The base P is the product, which is the value offering.

Then the other Ps are classified as the three support Ps this
is responsible for bringing the base P to the target market:

 Placement ( to make the product available)

 Pricing (to make it affordable)

 Promotion (to get the target consumer to know, want,

and buy the product.
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2. From 4Ps to the 7Ps

 In this approach the 4Ps was redefined in

1981 to the 7Ps by Booms and Bitner, as
cited by Villet (2013), by adding process,
people and physical environment to the
model.
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(Awareness, Interest,
Desire, Action.

 A relevant theory for technology and its use

is the AIDA (Awareness, Interest, Desire and
Action) model. In marketing, we use the
acronym AIDA to refer to the engagement
stages that a consumer goes through when
exposef to the communication.
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AWARENESS

INTEREST

DESIRE

ACTION
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New Business Models

 Social Matketing Approach
Cited by Remedios, this approach was
conceptualized by kotler and zaltman in 1970.This
business model consider the societal marketing
orientation that similar to the basic marketing orientation
except that more emphasisi is given on existing social
norms and abstaining from any activities that might de
detrimentak to society at large.
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Relationship Marketing Approach

This business consider, the practice of building

long term satisfying relation with key parties –
customers, supplies, distributors—to retain their long
term prefences and business.

Another contemporary approach to marketing is

the remolded marketing mix of Roberto. This remolded
marketing mix will used in our study of marketung
studies.
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Remolded Marketing Mix

One of the contemporary approaches to

marketing will used as the framework for the
distcussion of marketing strategies. This is the
remolded marketing mix. The remolded
marketing mix distinguihes the base P (Product)
from the support Ps (Price, Place, Promotion.
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Base P: Product
A product is anything that can be offered to a market that
can satisfy a need. Products may tangible or intangible.

Tangible products are those with visible or measurable

characteristics and referred to as good.

Intangible products are products that do not have

physical presence. These products take the form of:

 Ideas

 Services

 . Experiences
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To address the intangibility, it is necessary to add
tangible components to ideas, services and
experiences.

 For ideas, additional tangible components could

include idea ambassadors.
 For services delivery, additional tangible components
could include uniforms that the staff wears, and
decorum and conduct of the staff toward the cutomer.
 For experience, additional tangible components could
include ambiance,or cleanliness of the business
esrablishment.
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Product Level
Augmented
Actual Product
Core
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 Core – This is the benefit offering that satisfies

a need and want.
 Actual (Tangible and Intangible) Product –
This is the product that people will buy to get
the benefit that satisfies need.
 Augmented Product – This is the additional
benefit (physical benefit, logical benefit and
emotional benefit) that a product can offer.
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Augmented Product Examples:
 Warranty – is a guarantee that you get a defective products it can
be refunded, replaced or repaired within specific period of time.

 Delivery, Service and Installation – is an assurance that the

product will be delivered serviced and installed for free or for
reasonable fee.

 Finance – refer to availability of credit term in the purchase of the

product.

 Customer Care – is a promise that they will pay attention to your

needs as a customer and be available for consultation and
inquiries.
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Products Attributes
 Product Attributes are specific characteristics
like quality, features, and design that make up a
product.

A. Quality refers to the durability of the

product, conformance to requirment and
performance at an acceptable price
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 Brand is the identification of the maker
or seller of the product. A Brand can
appear as a symbol, as word or a
combination of a symbol and a word.

A brand that has value or worth has

“brand equity”. Brand equity can be build
through brand awareness, brand
association and brand loyalty.
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To take advantages of a company’s brand equity, there are different
strategies available. These are the following

 Line Extension defined as creating new variants to existing

products. This is done to reach other market segments. In effect,
you are doing product Line streching.

 Brand Extension defined as a expansion of the brand to new

products and new markets.

 Multi-Branding defined as a introducing more brands in

an existing product category.
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 B. Features are defined as the

physical characteristics of your product
that contribute to the benefits it offers.

 C. Design is defined as the

combination of how a product looks and
how it performs.
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CONSUMER OR HOUSEHOLD
GOODS CLASSIFICATION
 Convenience Goods

. These are products that involve frequent purchases

where buyers exert little effort. This would include regular
items you buy like fast food, grocery items, among others.
 Shopping Goods

These are products not as frequently purchased as

convenience goods. They are not usually consumable and take
a longer time to buy due to comparison shopping.
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 Specialty Goods
These are products with unique features or branding.
Thus, consumers will exert time, effort, and money to buy
these types of products.

 Unsought Goods
These are products not usually searched for
by consumers. Thus, it will be more difficult to
identify consumers of these products.
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Products Mix
 Product Mix is defined as the total assortment
of products a company sells.
 Beverages, Breakfast Cereals, Chilled Dairy, Coffee and
creamer creations, confectionery, Dairy, health, and nutrion
solution, foods, healthcare nutrition, ice cream, infant
nutrition, liquid beverages and dairy culinary.
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Four Dimension of Product
Mix
 Width
Width is defined as the number of product lines that a
company offers. The example above shows that there are
eleven product lines offer.

 Length
Lenght is defined as the number of different product in
a product line
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 Depth
Depth is defined as the different variations of a
product. For example, a detergent soap manufacturing
company may have two variation for detergent soap:
powder and soap

 Consistency
Consistency is defined as how closely related the
product are in terms of product, pricing and distribution.
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BCG MATRIX
The Boston Consulting Group (BCG)
matrix, adopted from Henderson’s Product
Portfolio in 1970, is relevant for a company
whose objective relates to market share and
industry growth rate.

The business product can be classifieds as

high or low terms of industry growth rate and in
terms of their relative market share.
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Four Classification
 Dogs

These are products of the business with low market

share in a low growth market. The companies should
consider phasing out of these products.

 Cows

These are the products of the business with high

market share in mature and slow growing industry. The
companies should make sure that are resources are
adequately allocated to cows so that market share is
maintained.
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 Stars

These are products of the business with large market

share in a fast growing industry. The companyneeds to
invest in stars to maintain and grow its market share. If
all goes well, a star will become a cash cow.

 Question Mark

These are products of the business with low market

share in high growth market. These are generally new
products, with a potentialof becoming stars if a company
invests in it.
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Product Life Cycle (PLC)
Adapted from Venon, the product life cycle described below
shows the different stages that a product goes through.
Sales

Introduction Growth Maturity Decline

 Sales
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Molecular Gastronomy
Cuisine

Introduction
Technology

Growth
Applications

Detergent
Maturity

Typewriters
Decline
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 Introduction Stage: Molecular Gastronomy Cuisine is
defined as the recipes that blends physics and chemistry
to transform the tastes and textures of foods. This is a new
and innovative products that is in the introductionstage of
the PLC.

 Growth Stage: Technology Applications are defined as an

application software designed to run in a device that
provides limited and isolated functionality such as a game.
This has been in the market for a time and has gained
popularity due to mobile technology innovation this can be
said to be in growth stages.
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 Maturity Stages: Detergents is defined as liquid or water

soluable cleaning agent. This has been in the market for a
long time and is used in most househokds. Detergwntsis
in the maturity stages.

 Decline Stage : Typewriters is defined as a mechanical or

electro-mevhanical machine foe writing in charavters by
means of keyboard operated striking a ribbon to transfer
ink or carbon impression onto papers. Typewriters are not
mainstream today : it is in the decline stage.
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Three Support Ps
(Price, Place and Promotion)

Pricing
Pricing is defined as the cost of the
product that indicates its value tthe
amount of money that the consumer
pays to own product.
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Factors to consider when Pricing

 When pricing, the following factors should be considered:

 Fixed Cost and Variable Cost

Fixed Cost are defined as a cost that does not

change with an increase or decrease in the amount of
goods or services produced.

Variable Cost are defined as cost that is dependent

on the number of units produced or rendered.
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 Target group and willingness to pay

You need to consider the value attacjed by the target market to

the product offering. That means the amouny they can afford and
the amount that they are willing to pay.

 Competition

The marketplace may offer substitues for your products and

consumer may also looking for variety.

Thus companies shoukd always make sure that they are

updated in their product offerings takin onto consideration
competition and trends in the market.
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Product Pricing Strategies

Product pricing strategies are strategies directly

related to the product.

a. Product Mix Pricing Strategies

If a product is part of a product mix, there are

strategiea to use to maximize profits, address the demand
curve and competitions. Listed beloe are the strategies.
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i. Product Line Pricing is a strategy used when a

company has more than one product in a line and woukd
like to create different value level in the minds of the
customer.

ii. Optional Product Pricing is a strategy used when a

company sells a base product at a low price but sells
complementary accessories at a higher price.

iii. Captive Product Pricing is a strategy used when a

company sells product that must be used the main product.
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iv. By – Product Pricing is a strtegy used when a

company prices by products that have no value for the
company prices by products that have no value for the
company so that disposal and storage eill not add to the
cost of the product.

v. Product Bundle pricing is a strategy used when a

company sells several products into one combined
product at a reduced price.
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B. New Product Pricing strategies
 New product pricing strategies are used for the products in the
intrduction stage of the PLC.

i. Market penetration is a strategy ehere the compnay initially

offers lower than regular market prices to enter a market. Once
sales and market share objectives are achieved, the company will
then increase the price.

ii. Market Skimming is strategy where a cimpany is first one to

market a new high end product or an innovative product. Its
objective is to have maximum revenue from the market before
competitors catch on. When the objectibes is achiebed , the
company can lower the price
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General Pricing Approaches

 In pricing a product, the price that a company will charge will

generally not be lower than the cost and not higher than the
fonsumer ‘s perception of the product ‘s value.

a. COST BASED PRICING

. This pricing approach is based on the cost of prodicing,

distributing and promoting the product.

There are two cost based pricing approaches

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i. Cost plus pricing is a pricing a product by first determining the cost and then
adding a mark up. The equation will look like this.

Mark Up = Unit Product Cost

____________
Desired Return on Sale

Note : Desired return on sale will be based on the business

objectives

Let us apply this equation to an example. Let us say you want to bake
and sell sugar cookies. You first consider your cost. Your variable will
include.
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ii. Break Even Pricing is pricing a product where there is no loss

or gain.

. Refferring to the above examples, the break even price is P

22.50.

Break Even Price = Unit Product Cost = 23.50.

B. Competition Based Pricing

This pricing approach benchmarksbon competirors price . This
is simple way of making a pricing decisions without doing market
research. The company does not risk losing market share to
competition since offers substitute priducts with relatively the same
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 C. Value Based Pricing

This pricing approach is setting a price based on

the perceived value of the products. This means
coming up with a pricethat your customer are willing to
pay. Another term for this is Oppurtunity Pricing.
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Price Adjusment Strategies

 Among the three support Ps, price isbthe most felxible.

This means that price ca n be easily changed without
much efforts.

a. Discounts and Allowance Pricing

Companies adjust prices to reward consumers quick

response and reatilers for their promotional activities.

Discounts Pricing is straight reduction in price on

purchase
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b. Segmented Pricing
Companies set different prices for a product to
consider behavioral and phychological factors even if
theres is no significant difference in production and
distribution cost.

1. Market Segments.

2. Different Location

3. Different Time
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C. Phsychological Pricing

This is defined as setting prices using customer’s emotional

reponse to encoureage sales.

 Reference Pricing

This refers to how much consumer anticipate paying for a

product in relation to competition and advertisement.

 Odd Even Pricing

This is a psychological pricing method that considers the

belief that certain prices or price ranges are more attractive to
buyers.
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D. Promotional Pricing
Promotional Pricing is adjusting prices to entice customer to buy
during the discounted price offerings periods.

 Special Event Pricing

Special events like Christmas, givea reason for promotional

pricing.

 Low Interest Financing

Financing schemes especially during lean tines after christmas,

after school, are offered for promotuonal pricing. An Example here is
the 0% installments schemes that credit card offer.
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E. Geographical Pricing
This is pricing based on geographic
Location. Examples gasoline prices in Manila
are different from the prices in the province.
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Place
 Place refers to the location where the product can be
bought. Place decisions are associated with distribution
channels. Distribution Channels are needed to get products
to consumers. Functions of a distribution channel includes .

 Providing Information – gathering and sharing

market research and reports which are important for
marketing planning and decisions.
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 Promotion – Disseminating communication about offerings.

1. Financing –acquisition and allocation of funds to cover the cost of

the distribution channel in a cost effective manner.

2. Matching – adjusting the odfer to suit a buyers needs including

grading, assembling and packaging.

3. Negotiation – reaching an agreement on quality, price and other

term of offer.

4. Physical Diatribution - transport and warehousing of goods

5. Contact – finding and communincating with prospective buyers.

6. Risk Taking- assuming natural commercial risks by operating the

channels (hoarding)
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STRUCTURE OF DISTRIBUTION
CHANNELS

Consumer
Manufacturer
(End User)

DIRECT DISTRIBUTION
 Indirect Distribution
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Manufact Wholesal
urer er

Customer
(End Retailer
User)
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Intermediaries

 Wholesaler

A wholesaler is defined as a company that sells to

businesses. They are channel members that buy large
quantity of goods from manufacturer, take care of
warehousing and resell to businesses like retailers.

 Retailers

A Retailer is defined as a company that sells to

consumers. They are channel members that buy from
wholesalers and resells to consumers
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Retailers can be classified based on
the following :

 Amount of services offered : limited service and full

services.

 Product lin offered : department store, supermarkets,

convinience, superstores and category killers.

 Relative prices offered: discount stores, warehouse

clubs and factory outlet.
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Logistics Management
 Logistics Management is defined aa the planning, execution
and control of the movement / placement of products.

1. Order processing: This is where picking, packingvand delivery

occur.

2. Warehousing : This is where storing and handling of products

happen.

3. Inventory Control: This where constant flow of products is

managed.

4. Transpotation: This is where movement of goods from one

location to another id managed.
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PULL AND PUSH STRATEGIES
 Pull and Push Strategies originated from the manufacturer and are
generally directed to the wholesaler and retailers.

 The objective of push strategies is to persude retailers and wholesalers

(intermediaries) to stock their products. Sample strategies are.

 Representation at trade shows, Business to business selling, Mail

shots to the distribution chain, Incentives for the retailers to display
the products on akey shelf in their stores,Bulk discounts, Extended
credit term for intermediaries, Contributing towards the
retailers/wholesalers promotion cost, Incentives for the
retailers/wholesalers sales team to sell yhe manufacturer’s
Products.
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Pull strategies may originate from manufacturers and are directed

to the consumer or end user.

The objective of pull strategies is to create strong demand

wherein retailers are forced into stock piling the manufacturer
product. Consumer demamd is created through a variety of
promotional mix activity including.

 Manufacturer discount coupons, Product taster sessions, Free

warranties, Loyalty schemes, Promotional E mails, Major
Event sponsorship .
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Promotion
 Promotion refers to communicating the base P
(product) and the other support Ps (price and place)
to encourage a sale.

 Through promotion, a company creates target market

awareness, interest, desire, and action (AIDA) toward
a product offering.

 There are different types of promotion activities.

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 Advertising - This is nonpersonal, paid communication

that utilizes media.

 Sales Promotion - This can be personal or nonpersonal

communication that represents all marketing activities to
boost sales in the short term.

 Personal Selling - This is personal communucation of a

sales representative with prospects and customers.
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 Public Relation (PR) Activities

These are activities that help in managing communication

between a company and its relevant publics (shareholder,
customer, government) to make sure that good relations are
maintained.

 Direct Marketing

In general, this is nonpersonal communication where

companies directly communicate with consumers.
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THANK YOU !!!