Principles of Marketing

Lesson 1

Activity: KWL CHART

Using the KWL chart. Write “What I Know”, “What I Want To know” and “What I Learned”.

Learning Objectives:

1. Define Marketing.
2. Explain Marketing Principles.
3. Understand Marketing Goals and Approaches.

What is Marketing?

Marketing is the process of continuously and profitability satisfying the target customer’s
needs, wants and expectations superior to competition.

Two Interacting Component of Marketing

Company Market

• Market is composed of people that have the need, have the ability, the willingness, and
the authority to pay for their purchases. (the above equation shows that both the
company and its market are equally important. Satisfying one without satisfying the other
is not marketing.

Two Interacting Components of Market

Customer Competition

• Customers which may either be trade intermediaries (like wholesalers or retailers) or end-
users, are people or organizations buying from you.
• Competitors are those with products or services that can offer similar benefits to your
customers.

Strategic 3Cs of Marketing and Key Objectives

• Company – To satisfy the needs, wants and expectations of target customers. (Profit)
• Competition – To outperform competition. (Sales)

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 • Company – To ensure corporate health and profit. (Market Share)

Key Result Areas (KRAs)

A. Sales – are the result of satisfying the customer’s needs and wants Profit comes from the
excess of sales over cost and expenses in gaining market shares.
1. New USERS – Who uses the product or service?
2. Extended USERS – Who can still use the product or service?
3. New USAGE – For what purpose is the product or service used?
4. More USAGE – When and in what occasions is the product or service used?
B. Market Shares – is the ratio of your brand sales versus the total sales in your market.
C. Profit – is an indispensable (necessary) component for a firm to continuously satisfy its
customers.

MARKETING PHILOSOPHY

“Being better than before, better than others and better than expected” can provide a standard
for judging marketing effectiveness.

APPROACHES TO MARKETING

1. TRADITIONAL MARKETING - A form of conventional marketing that was used before the
internet era.
2. MODERN MARKETING - Building a relationship with MIS customer and is achieved
through an integrated, corporate wide set of marketing activities

GOALS OF MARKETING

4-Step Approach to lead to a profitable lifetime relationship

STEP 1: AWARENESS
• Make your target know you.
• Inform them, persuade them and remind them so your brand can be among the top.
STEP 2: AVAILABILITY
• Make products available according to the purchase pattern of the target consumers.
• Attention should be given to coverage, placement, display, inventories, resale prices and
goodwill with customers.
STEP 3: TRIAL
• Provide a low-risk initial experience to allow target consumers and customers to form
positive impression.
• This is typically done via sampling, introductory price, money back guarantee, among
others.
STEP 4: REPEAT PURCHASE
• Form an ongoing relevant relationship by continuously satisfying needs and wants of
target consumers to be the preferred brand
• Product and service quality must therefore deliver as advertised or promised.

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Principles of Marketing
Lesson 2 Relational Marketing

Activity: Tell a story of any customer experience/s when you enter a store or establishment.
Was it a good or bad experience?

Learning Objectives:
1. Define “Relationship Marketing”.
2. Explain the value of customers.

Customer Value, Satisfaction, and Retention

Customers are the lifeblood of every business. As the marketplace becomes saturated with more
products, customers are faced with more product choices. Thus, a company must offer superior
customer value to satisfy its customers in order to turn them into loyal customers.

• Customer value is the ratio between the customer’s perceived benefits and the resources
to obtain those benefits. Customers want to get their money’s worth when they purchase
something.
• Customer satisfaction is the evaluation of the product’s performance in relation to the
expectations set by the customer.
• Customer retention is an effort made by companies in order to keep customers happy
and loyal. From the very first encounter of customers with the product, companies strive
to maintain a positive relationship with them.

Reasons why companies want loyal customers. Among these are as follows:
• Loyal customers buy more products. If a customer trusts a company, he or she will buy
more products from it, even if these products are newly launched.
• They are less price sensitive. Most customers do not mind price increases or premium
prices of a product if it meets their needs. For loyalty-driven product categories, such as
skincare products, customers tend to be loyal to a product as long as it provides a solution
to a particular skincare problem.
• They spread positive word of mouth. Loyal customers usually spread positive feedback
about a product or a brand. They may either share their positive experiences about a
product or brand to their circle of friends or post them on their social media accounts

Relationship Development Strategies

Three factors affect the rationale of the strategies of companies in keeping their
customers: core service provision, switching barrier, and relationship bonds.

Core service provision includes service foundations that are built upon delivery of excellent
service. In order to do so, the company must be able to satisfy customers by meeting their
expectations about a product. This, however, will be influenced by the perceived quality of the
product (or the subjective evaluation of a product’s worth by a customer in relation to his or her
expectations of the product) and its perceived value. For example, you decided to

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Switching barrier is the economic and psychological difficulty perceived by the customers if they
switch from one brand to another. It can also affect the loyalty of customers.

Relationship bonds are retention strategies that keep the customer buying the same brand.

This strategy has four levels:

1. Financial bond – At this level, the customer patronizes a brand because of the financial
incentives that he or she may receive from the company. These may be in the form of
discounts, lower prices, or rewards points.
2. Social bond – This type of bond focuses on the interpersonal relationship between the
company and the customer. This may be commonly observed in a customer’s relationship
with his or her hair stylist, massage therapist, or even doctors.
3. Customization bond – Customer loyalty may be encouraged when customers are allowed
to avail of tailored services to fit their individual needs. Simple customization, such as
granting a customer’s request to remove beans from his or her halo-halo or allowing a
wet market suki to choose the best parts of meat, fall under this level.
4. Structural bond – At this level, financial, social, and customization bonds are all
combined in order to deliver services that fit the need of the customer. This may apply to
business-to-business transactions.

Relationship Development Stages

A company’s relationship with various customers differs depending on how well the staff
know the customer, how long the customer has been shopping at the store, and how
knowledgeable the customer is of the company’s products, among others. Businesses deal with
customers on a daily basis.

Customers as Strangers
A company’s relationship with its customers starts as strangers. In this stage, the
customers are not familiar with the company’s products. They may have heard of the company,
but they are not entirely aware how they can benefit from it. Because the company is introducing
itself to its customers, its marketing goal is to acquire customers and earn their confidence. This
can be done through advertising, social media campaigns, sales promotions, product trials, and
other promotional activities

Customers as Acquaintances
The next stage: acquaintances. Here, the customers are trying out the products of the
company and investing a little by buying a product or two. The goal of the company is to satisfy
these new customers.

Customers as Friends
In this stage, the company and the customers become friends. The company’s goal is to
retain the customers through different marketing activities. Customers will only stay loyal if the
company’s products and services continuously satisfy them.
- Maintaining product quality and consistent customer service is important to ensure that
customers continue valuing the company’s products, and will not stray to other brands.
- Offering sales promotions from time to time gives customers added value to their
purchase.
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 - Giving superior customer service, like sending customers a message when new stocks
arrive, remembering the customers’ preferences, and knowing them by their first name,
may seem trivial but these are important simple services that the sales staff can be
trained to do.

Customers as Partners
The last stage is when companies and customers are already partners. Companies not
only want to maintain the loyalty of their customers but also enhance their relationship to ensure
that they will always choose to buy from them and not from the competitors.

Customer Relationship Management

There are several ways of enhancing a company’s relationship with its customers. One of
the most popular programs that companies now employ is a rewards program where customers
who frequently purchase from a company may earn points that will entitle them to receive a
reward or a gift.

Customer Relationship Management (CRM), or the process of building and maintaining profitable
customer relationship by delivering customer value and satisfaction (Kotler and Armstrong,
2014).
- CRM is now being utilized by companies to enhance their relationship with their
“partners,” or customers who have become loyal to their products.
- CRM program may involve manual monitoring of rewards, such as giving a stamp card
to customers where they receive a stamp every time they make a purchase from the store.
Rewards may be given on the nth visit, or after completing a set number of stamps.
- Rewards may range from free services, toys, to a planner. Here are some examples of
businesses that utilize CRM:
• Some coffee shops give their customers a stamp card during the holiday season,
where the customer receives a stamp for every purchase of a particular drink. Once
the customer has collected all the stamps, he or she receives a planner or journal for
free.
• Some salons also give out stamp cards and offer free services at certain intervals.
For example, once the customer has collected three stamps, he or she gets a free
haircut. On the sixth stamp, the customer gets a free manicure and pedicure. On
the tenth stamp, the customer gets a free whole-body massage and haircut.
- Here are some examples of how loyalty cards benefit loyal customers:
• A popular loyalty card that can be used in the company’s supermarkets, department
stores, and all its affiliate stores allows the cardholder to earn one point for every P200
spent. One point is equivalent to P1, and this can be used to buy from any of its affiliate
stores. A drugstore company does the same.
• A coffee shop offers a reloadable card. Every time a customer uses the card to
purchase drinks, the customer earns a star for every drink. Once 12 stars have been
accumulated, the customer gets a free drink.

Customer Profitability-focused Marketing Pyramid

The customer profitability-focused marketing pyramid segments the customer base into
four types: lead, iron, gold, and platinum customer
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• Lead customers are unprofitable customers who only spread negative word of mouth.
They require more attention, but give very little business to the company.
• Iron customers may be regular customers, but their purchase volume may not merit
special treatment.
• Gold customers are heavy users but are price-sensitive. They may buy in bulk, but only
when they can enjoy discounts and promotions.
• Platinum customers are heavy users and are not price-sensitive. They may buy often with
big purchases, and would not care whether they are getting discounts on their purchases.

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Principles of Marketing
Lesson 3 Marketing Research

Learning Objectives:
1. Define marketing research, its importance to a business enterprise and identify the
steps in marketing research.
2. Distinguish between strategic and marketing; planning in terms of objectives and
processes.

Marketing Research
Steps in Marketing Research What it is Example
1. Define your research This gives focus and clarity Know the voice of channel
problems or issues on why you are doing customers, specifically pain
market research and how points (barriers, irritants,
data will be used in making disappointments, and
decisions. annoyances) and context of
pain points of distributors
2. Choose your market Determine if you need In-home visit plus in-depth
research approach qualitative and/or interview of distributors
quantitative approach, then
determine the specific type
of marketing research you
will use to attain your
research goals.
3. Create your research Draft and test the questions Ask dislikes as well as wish
design to be asked to the right list. Subdivide respondents
sampling target and plan via new distributors and top
how data will be analyzed performing distributors
4. Collect data This involves having the One-on-one interview
invited respondents answer
your research completely.
5. Interpret the data Cluster and convert the Lapsed distributors lack
“what” to “so what” to gain confidence. They quit after
insights or new truths experiencing a sales rejection
even after passing their sales
training.
6. Recommend Solutions Convert “so what” to “now Offer demo assistance and
what”, meaning, the actions coaching to lapsed
that should be taken by the distributors who easily get
target user or users. It may discouraged.
be possible to recommend
different actions to different
users

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Principles of Marketing
Lesson 4 Market Buying Behavior

Learning Objectives:
1. Differentiate the buying behavior and decision making of individual/ household
customer versus the business (organizational) customer.

BUYER BEHAVIOR

4 Characteristics Influencing Buyer Behavior in Consumer Markets

1. Cultural Characteristics
2. Social Characteristics
3. Personal Characteristics
4. Psychological Characteristics

Culture
• Beliefs, customs, rituals and practice that a particular group of people follows.
• The marketer should carefully study all the different cultures and frame the marketing
strategies accordingly.

Social Class
• A social position that an individual occupies in a society.
• People belonging to a social class have many characteristics, such as education,
occupation, ownership of property and source of income

Social Classes

Class % Share in % Share Average

Number of in Total Annual
Families Income Income

AB 1% 9% PHP1,857,000
C 9% 26% PHP603,000
D 60% 56% PHP191,000
E 30% 9% PHP62,000
Total 100% 100% PHP206,000
Family
• Family members, have a great impact on buyer behavior.
• Two kinds of families may be formed.
• The first kind is a family in which someone is born and grows, and religion, politics,
economics and education of that person depends directly on that family.
• The second kind of family in which the buyer’s behavior is affected includes children and
people under supervision.
Reference Groups
• Includes buyer reference group heavily influence the selection and specific brand.
• They somehow affects the value and behavior of others.
• Types of Reference Groups

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 o Primary Groups – there is regular but informal interaction (family, friends, neighbors,
coworkers)
o Secondary Groups – More formal and have less regular interaction (religious groups and
professional association)
o Aspiration Groups – one that a person wishes to be a member of,or wishes to be identified
with.
Roles and Statuses
• Social status of each person throughout his life depends on a family group, clubs and
organizations.
• Person's position within each of these groups can be defined based on the role and status
of the individual.

Personal Characteristics

• Age and Life-Cycle Stage

• People change the goods and services they buy over their lifetimes.
• Tastes in food, clothes, furniture, and recreation are often age related.

Lifecycle stages
• Bachelor Stage – young, single and independent
• Newly Married Couples – young, no children, also known as DINKs (double income, no
kids)
• Full Nest I – families with children, with youngest child below six years
• Full Nest II – families with children, youngest child six years or older
• Full Nest III – families with dependent children
• Empty Nest I – older married couples, no children living with them
• Empty Nest II – older married couples, retired, and no children living with them
• Solitary Survivor I – older, no family and supporting self
• Solitary Survivor II – older, no family and retired
Occupation
• Blue-collar workers
• White-collar workers
Economic Circumstances
• Marketers of income-sensitive goods watch trends in personal income, savings, and
interest rates.
• The high costs of labor in foreign countries have brought about the rise of the call center
industries in developing countries like India and Philippines.
Lifestyle
• It is a person’s pattern of living as expressed in his or her psychographics.
• It involves activities (work, hobbies, shopping, sports and social events) and interests
(food, fashion, family, recreation) and opinions (about themselves, business, products)
Personality
• It refers to the unique psychological characteristics that lead to relatively consistent and
lasting responses to one’s own environment.

Psychological Characteristics

Motivation
• A need becomes a motive when it is aroused to a sufficient level of intensity.
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 • A motive (or drive) is a need that is sufficiently pressing to direct the person to seek
satisfaction.
Perception
• The process by which people select, organize, and interpret information to form a
meaningful picture of the world.
• Example: Red wine has been experiencing increasing demand, as people perceived it to
be good for the heart as well as giving the drinker a sophisticated image.
Learning
• Learning describes changes in an individual's behavior arising from experience.
Beliefs and Attitudes
• A belief is a descriptive thought that a person has about something

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Principles of Marketing
Lesson 5 Targeting Strategies and Positioning

TARGETING STRATEGIES
• Undifferentiated Marketing – the business considers the entire market as the target
market.
• Differentiated Marketing – the business considers the different segments in the market.
• Concentrated Marketing – The business develops product for one segment of the
market.

Undifferentiated marketing
• The other term used for this approach is mass marketing
• This marketing approach attempts to sell through persuading a wide audience.
• Example: Toothpaste, Cola Drinks
Differentiated marketing
• These products are designed to satisfy the smaller segments
• Most companies do this for specialization and to remain competitive.
Concentrated marketing
• The popular term for concentrated marketing is niche marketing.
• Another term for the same is “Focused Market”.
• A niche market is a subset of the market on which a specific product is focusing

Target Market
• A fairly homogenous group of people or organizations to which a company wishes to
appeal
• The Primary Target Market (PMT) is a segment of the market considered to be the logical
volume customers
• Secondary Target Market (SGT) is the next logical volume of customers.

Example

Logical PTM of Close Up

Age – 16-21
Sex – Male/Female
Income – C
Civil Status – Single
Education – High School / College
Profession – Student
Location – Urban, Rural
Psychographics – Free Spirit, Outgoing, Playful, Active, Hygienic
Benefits Desired – Fresh breath

POSITIONING

Positioning
• It is defined as owning a distinctive characteristic for your product in a product
category.
• It refers to how you communicate the essential benefits of your small business to
potential customers.
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How do you position your product in the market?
• Specific demographic
o If you try to be everything to everyone, you may not appeal to any group.
o Example: Deodorant for women
• Low-price strategy
o Some companies position themselves as affordable options for consumers by selling
low-priced goods.
o Example: 99 store
• High-price strategy
o Some companies price their products or services higher than their competition to
create a perceived value
• Distribution
o Where you sell your product says much about its quality.
o Example: Tennis and golf equipment manufacturers position certain models in their
line as higher quality by selling them only in pro shops or specialty stores.
• Affinity
o If you have a customer base with a common, personal denominator, you can
position your company to play on their loyalty to their group.
o Example: Christian-owned businesses; Sponsorship of a school sports program
• Perceptual mapping
o A technique used to visually display the mental image that the target market has on
a product relative to its competitors.

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