Chapter 11

MANAGING THE
Engineer managers are engaged in the production
MARKETING FUNCTION of tangible or intangible goods. Some of these engineer
managers are directly responsible for marketing the
company’s products or services. If he is promoted as
• What is the Marketing Concept?
gene- ral manager, both the production and marketing
• The Engineer and the Four P’s of Marketing functions become his overall concern.
At whatever management level the engineer mana-
The Product
ger works, he must be concerned with convincing others
The Price to patronize his outputs. If he is the general manager of
a construction firm, he must convince people with con-
The Place struction needs to avail of the services of the company.
If he is the staff officer of a top executive, he must
The Promotion
convince his boss to continuously rely on him regarding
• Strategic Marketing for Engineers the staff services he provides.
If the foregoing statements are true, the engineer
Selecting a Target Market
manager has a marketing problem. He needs to
Developing a Marketing Mix under- stand certain concepts related to the marketing
discip- line.

WHAT IS THE MARKETING CONCEPT?

Marketing is a group of activities designed to
facilitate and expedite the selling of goods and services.
The marketing concept states that the engineer must
try to satisfy the needs of his clients by means of a set
of coordinated activities. When clients are satisfied with
what the company offers, they continually provide busi-
ness.
227
226
THE ENGINEER AND THE FOUR P’S OF
When products are similar in quality and other

MARKETING wlll be a strong

cha racteristics, pricemade.
factor on whether
does not hold true, how-
or not a sale Will be ThiS
The engineering organization will be able to meet the ideas. This is because
ever, in the selling of services and
requirements of its clients (or customers) depending on rendered or every idea
of the uni queness of every service
how it uses the four P’s of marketing which are as generated.
follows:
Four P‘S Of
1. the product (or service) Figure 11.1 The Engineer Manager and the
Marketing
2. the price
3. the place, and
4. the promotion. VEHICLE RESULT
OBJ ECTIV ES
The Product
In the marketing sense, the term “product” includes The Marketing Product Price
the tangible (or intangible) item and its capacity to•satisfy O bjectives Place Success or Failure
a specific need. l When a customer buys a car, he is of the Promotion
actually buying the comfortable ride he anticipates to Engineer
derive from the car. This is not to mention th psychological Manager
benefits
price
attached to the ownership of a car. When a type of service becomes sta ndardized,
When a construction
The services provided by the engineer manager will can be a strong competitive tool.
be evaluated by the client on the basis of whether or not firm, for instance, charges a flat 10 percent service fee for
his or her exact needs are met. When a competitor comes all of its construction services, a competitor may charge a
be subject to whether
into the picture and sells the same type of service, the lower rate. Such action, however,.will
practice.
pressure to improve the quality of services sold will be or not the industry Will allow such
felt. When improvement is not possible, “extras” or “bonu-
ses” are given to clients. An example is the construction The Place
company that provides “free estimates” on whatever If every factor is equal, customers would prefer to
of the
inquiries on construction are received. buy from llrms easily accessible to them. If time is
esSe nce, th e ne t rest firlTl W1O be patronized.
places
The Price It is very important for companies to locate in
by their customers . Not
Price refers to “the money or other considerations where they can be easily reached
for any company.
exchanged for the purchase or use of the product, idea, every place is the right locatiOrl
it
or service.”‘ Some companies use price as a competitive When a company cannot be near the customers,
tool or as a means to convince the customer to buy. minimize the effects of
uses other means to eliminate or
.
the problem Some of these means are:
'McCarthy and Perreault, Jr., p. 218.
"Eric N. Berkowitz and others, Marketing (Homewood, Illinois: Irwin, 1992) 229
p. 726.
2Z@
 1. hiring sales agents to cover specific areas;
2. selling to dealers in particular areas;
of informing or persuading people about p artic ular
products, services, beliefs, or action.”5 The mass media
3. es tablishin g br anches where cu stomers are referred to include television, radio, magazines, and news-
located; papers. If the engineering manager wants to reach a large
establishing franchises in selected areas.
4. number of people, he may use any of the mass media
depending on his specific needs and his budget. Each of
Man ufacturing companies can choose
the above-mentio ned options. Service C or adapt all of the public advertising carriers, i.e., radio, television,
constructio n firms adapt the modified ompanies like magazines, and newspapers, has their own specific
pie is the engineer manager of a co
versions. An exam- audiences and careful an alysis must be made if the
gives commissions to whoev•er nstruction firm whO engineering manager wants to pick the right one.
truction contract for the firm. could negotiat e a cons-
An example of an advertising message is shov, n in
The Promotion Figure 11.2.
Pu bl bc it y. The promotional tool that publishes news
When engineer managers have
product s or services or information about a product, service, or idea on behalf
to sell, they will have to convince buyers to buy from of a sponsor but is not paid for by the sponsor is called
them.
Before the buyer makes the purchasing decision, how- publicity." The mass media is also the means used tor
ever, he must first be informed, persuaded, and influenced. publicity. If the engineer manager knows how to use it,
The activity referred tO, in this case, is called
publicity is a very useful promotional tool. His message
promotion. may be presented as a nev•s item, helpful information,
McCarthy and Perreaul t define promotion as
com- or an announcement.
municating information between seller and
potential buyer
to influence attitudes and behavior.”" An example of a publicity release is shown in Figure
There are promotiopal tools aVailable and the en- 11.3.
gineer manager must be familiar with them if he Pe.rs‹ iial Hell ing. A more aggressive means of pro-
wants
to use the m effectively. These tools are as fo11ows/ 4 moting the sales of a product or service is called personal
selling. It refers to the “oral presentation in a conversa-
1. advertising
tion with one or more prospective purchasers for the
2. publicity purpose of making a ale ”'
3. personal selling Personal selling may be useful to the marketing
4. sales promotion efforts of the engineer manager. If, for instance, he is the
general manager of a firm manufacturing spare parts, he
Advertising . Nylen defines advertising as “a paid may assign some employees to personally seek out spare
message that appears in the mass media for the
purpose
3 McCarthy and Perrea ult, Jr. , p. 365.
‘Richard E. ›Stan1ey, Promotion, Advertising , Ptt blicity, Persona
l Selling, "Stanley, p. S.
! l8 s PromCt ttoii fEnglewood Cliffs, New Jersey:
P rentice-Hal l, Inc., 1982) p. 8. ’P atri ck Du rine and othe rs . be / ri i / i i,y ( C in cin n a ti : <9 ou th -Weste rn
Pu blisliing Co. , 1992! p. 283.
230
231
 Figure 11.2 An Example of an Advertising Message
Figure 11.3 An Example of a Publicity Release

ALECTO GENERAL TECHNOLOGY

NOKIA PRESENTS THE FIRST PHONE DESIGNED
AND FOR LOCAL NEEDS
DEVELOPMENT CORPORATION Manila, July 1, 1997 — Nokia Mobile Phones, the largest
European and world’s second largest manufacturer of mobile
phones and a world leader in digital technology, has introduced
ENGINEERS • DESIGNERS • CONTRACTOR • SUPPLIER to the Philippines the Nokia 3810 “Big Face”, the first mobile
phone designed specifically for the needs of the Asia-Pacific
cellular market.
Computer Facilities
Design and Installation “This new design which was inspired by a regional
research is another step in our aim to strengthen our market
Local Area Network-Cabling position”, Martin Fernandez, Nokia Mobile Phones Philippine
Data Communication and Country Manager said.
Telecommunication Works
The Nokia 3810 is a product of extensive regional
research and feedback. According to the research, there is a
Electrical Wiring
demand for a design that would easily accommodate longer and
more detailed messages Asians, including Filipinos, are
Mechanical and Civil Works
accustomed to. .Tagged as Nokia “Big Face”, the 3810 has a
Fiber Optic Cabling Installation and larger screen contained in a small and sleek European styled
Termination body, making it easier to read messages. With its unique full
graphic display, the Nokia 3810 displays large or small text,
Supplier of UTP Fiber Optic and depending on the length of the message. Combined with
Coaxial Cable Nokia’s state of the art menu systems, it is easier to find what
you are looking for.

1495 D. Oliman St., Makati City Moreover, Nokia 3810 provides a comprehensive range of
Tels. 890-2571, 890-2492 features like call management, memory functions, short
890-3604, 890-3607 message services, security/code control, optional controls, data
Fax No. 890-2978 transmission and has the most complete range of accessories.
Nokia Mobile Phones is a part of the Nokia Group, a global
telecommunications company headquartered in Helsinki,
' From the PLDT Yellow Pages, Luzon Visayas, Mindanao
Finland. Nokia employs nearly 34,000 people in 45 countries
Telephone Directory, October 1996, p. 160.
and has net sales of US$8.5 billion in 1996. Nokia can be
visited on the world- wide web http:/www nokia, com.

*From Manila Bulletin, Special Supplement, July 7,

232 1997, p. 55-7.

233
parts dealers and big trucking companies to carry their Figure 11.4 An Example of a Company Using Sweepstakes
as a Sales Promotion Tool
product lines.
Shales Promotion. Any paid attempt to communicate
with the customers other than advertising, publicity, and DISTANCE, PAY
GET A BAYANTEL PHONE, CALL LONG
personal selling, may be considered sales promotion. TO DRIVE
YOUR MONTHLY BILLS ANB GET A CHANCE
This includes displays, contests, sweepstakes, coupons, AWAY A WINNER!
trading stamps, prizes, samples, demonstrations, refer-
ral gifts, etc.' BAYANTEL

Contests and sweepstakes are very popular sales

promotion tools. An example is shown in Figure 11.4.

STRATEGIC MARKETING FOR THERE HAS NEVER BEEN A TELEPHONE PROMO

BIGGER
THAN THIS!
ENGINEERS NOW, B ayanTel, the phone company that’s helping you com-
municate not tomorrow, but today, iS
giving away not one, not
Companies, including those managed by engineer BMW 3 Series model
two, not even three, but FIVE, brand-new
managers, must serve markets that are best fitted to 316 for its telephone subscribers.
their capabilities. To achieve tliis end, a very important
activity called strategic marketing is undertaken. IT’S SO EASY TO GET A CHANCE TO WIN! This promo
RS in designated
is open to BayanTel TELEPHONE SUBSCRIBE
Under this set-up, the following steps are made: BayanTel franchise areas (see coverage below) only.
monthly charges
1. selecting a target market ONE: Get a BayanTel phone and pay your first
right away!
2. developing a marketing mix
call anywhere. Better if
Two: Use your BayanTel phone to Every f*’200 worth of
ternational and domestic Iong distance.
Selecting a Target Market paid e and first
charges (over and above the basic installation charg
A market consists of individuals or organizations, or month advanced service) entitles you to one raffle ticket.
earn more
both, wilds the desire and ability to buy a specific THREE: Pay your montly bills promptly so you can
product or service. To maximize sales and profits, a raffle tickets right away.
company has the option of serving entirely or just a
portion of its chosen market. Within markets are Get a BayanTel phone now. Get a BMW to drive soon. Just keep
segments with common needs and which will respond on using that BayanTel phone to call anywhere — more raffle tickets
similarly to a marketing action." Figure 11.5 shows an for Iong distance!
example of the various seg- ments of a given market. PROMO ENDS DECEMBER 31, 1997

July
’Barry Berr,an and Joel R. Evans, fiefoi/ Manaz•em.ent, Fifth Edition I New *From an advertisemen t, Philippine Daily Inquires,
York: MacMillan Pa blishing Co., 1992) p. 504.
"Berkowitz and others, p. 723.
20, 1997, p. E-2.
236
 Figure 11.5 The Construction Market and Its Segments
An analysis of the various segments ofi the chosen
market will help the company make a decision on whe-
ther to serve all or some of the segments. The segment
or segments chosen become the target market. THE
CONSTRUCTION
In selecting a target market, the following steps are MARKET
necessary:
1. Divide the total market into groups of people
who have relatively similar product or service
needs.
Residential Industrial
2. Determine the profit potentials of each segment.
Segment Segment
3. Make a decision on which segment or segments
will be served by the company.
As shown in Figure 11.5, a company may choose any
or all of the residential, industrial, and government seg- actual
actual
ments. This decision will depend, however, on the profit construction construction G
potentials of each segment and the capability of the firm. sub-segment nm ove
sub-segment S e r
A smaller company may find it most profitable to en egm nt
t
supply only the constructi on materi al needs of the
residential segment. A bigger company, however, may
find it more profitable to perform actual construction in construction construction
addition to selling construction materials. materials materials sub-
sub-segment segment
Factors Used in Selecting a Target Marhet. A target
market must have the ability to satisfy the profit
objectives of the company. In selecting a target market, a
the following factors must be taken into consideration: co ctu
u n al
1. the size of the market, and su ctio str
s b n
nt egm - c
uc ons
2. the number of competitors serving the market. e m tio tr
al ate n
The total demand for the product or service in a s s ri
given area must be determined first if the company se ub-
wants to serve that particular market. If there are nt gm
e
existing businesses serving the market, the net demand
must be considered. Figure 11.6 illustrates an example of
the relationship between demand and supply of a
particular product. The figures presented indicate that
there is still 237

236
 Figure 11.7 The Company, The Marketing Mix and the Target
room for another company in the market for telephone
Market
lines in Cabanatuan City.

Developing a Marketing Mix THE COMPANY

After the target market has been identified, a

Product
marketing mix must be created and maintained. The Price Other
marketing mix consists of four variables: the product, Promotion markets
the price, the promotion, and the place (or Place
distribution).
Given a marketing environment, the engineer
man- ager can manipulate any or all variables to
achieve the company’s goals. As such, the quality of
the product may be enhanced, or the selling price made THE TARGET MARKET
a little lower, or the promotion activity made a little
more aggressive, or a wider distribution area may be
covered. Any or all of the foregoing may be undertaken
as conditions warrant. Other mari‹ets
Other
As shown in Figure 11.7, all marketing activities are markets
focused on the target market.

Figure 11.6 Total Demand and Net Demand as a Guide for

Determining Target Market
SUMMARY
Telephone Lines in Cabanatuan City
Demand and Supply Situation
1997

Total Demand
150,000 lines To survive, companies must continuously generate
Supply income. To be able to do so, they must be able to sell
Company A enough quantity of their products or services.
50,000 lines
Engineering firms are no exception.
Company B
30,000
Company C The proper management of the marketing function
10,000 helps the engineer manager convince customers to
Total Supply
90,000 lines patronize the firm. Specifically, the engineer manager
NET UNSATISFIED DEMAND must know how to use effectively the four P’s of market-
60,000 lines
ing which are the product, the price, the place, and the
promotion.

238 239
 An activity called strategic marketing is designed QUESTIONS FOR REVIEW AND DISCUSSION
to make sure that the marketing objectives of the firm
1. How. may the marketing concept be explained? Is it
are
applicable to engineering firms?
achieved. Strategic marketing calls for selecting a target
market and developing an appropriate marketing m,x. 2. What is meant by the term “product”?
The marketing mix consists of the appropriate levels 3. How may the engineer manager meet the threat of
of product quality, price, promotion, and place. a competitor’s product?
4. Why is price said to be a strong competitive tool?
5. What are some of the possible measures to make
products easily available to customers?
6. How may the engineer manager convince the buyer
or client to patronize the firm?
7. What is advertising? What are the types of
advertising media?
8. May the engineer manager use publicity in promo-
ting his firm? Cite an example.
9. In selecting a target market, what must the engineer
manager do?
10. What factors must be used in selecting a target
market?

SUGGESTED ITEM FOR RESEARCH

Choose an engineering firm with an existing mar-
keting unit. Draw the organization chart of the firm
stor- ingthe marketing unit and its relationship i*/ith
other units.

240
Case 11. BUGTAG CHEMICAL CORPORATION : Help
ockholders were as
Samuel Bugarin and Antonio Tagorda were class- and the capital contribution of the st
follows:
mates at the Chemical Engineering Departirient of De la itai c ontribution
Name of the Stockholder aAAymoou
Salle University. After passing the boai‘d examinations unnt oof Ca
in 198 l , Engineer Bugarin applied for a job in a chemical 1. s amuel Bugarin r•so,ooo,ooo
manufacturing company. He first wor‘ked as an assis- 15,000,000
2. Antonio Tagorda
tant in the quality control unit. Later, he became chief
of the unit. He handled various jobs in the production 3. Edgardo Abuan 3,000,000
department. Because of his good performance, he was 1,000,000
4. Jesus Ual£tt
promoted to production manager in 1993. 1,000,000
s. Rosario Mariano
Engineer Taporda got a job in 1982 as production 1,000,000
6. Ausberto
planner of Reliance Chemical Company. In 1990, he was
Taguinod 1,000,000
assigned as assistant production manager. When the
company’s marketing manager resigned in 1991, he was 7. FrancisCo Bundoc 1,000,000
transferred to the marketing department and was named 8. Amparo Par tgas ,oo
as the new marketing manager. His main function was
9. Andres NicolaS o,ooo f” 54 ,
to market the company’s products consisting of synthetic
resins, aluminum paste, adhesives, plasticizers, calcium Total 000 ,000
sulfate, etc. When he assumed his post as marketing caustic soda liquid,
The three agreed to produce
manager, the company is already serving a group of loyal h ydrochloric acid, SOda ash, sodium sulph ate, sodium
customers. The increasing requirements of these cus- construction of the
sulfuric acid. The
tripolyphosp ate, andalready D asmariiias , C avite.
tomers also meant additional orders for the company’s company’s plant has begun in
the Bugtag Chemical Cor-
products. The comp any’s sales increased even if the The compay has been named
number of its customers did not poration.
organizing the product-
In a class reunion held in Aprii 199 , S aniuel and Samuel has already started ction planner. Antonio
Antonio met and they conversed foi more than three hours. ion department by hiring a produ
to t tke in organizing hi s
Samuel mentioned that he had started organizing his is still considering what steps
the lack of informa-
own chemical manufacturing firm and he wanted Antonio department. One of his problems is
market the company
to join him. Antonio agreed and in a subsequent meet- tion regarding the nature of the
must e of the u tmOSt
ing decided to divide the work between the two of them. tap. AlsO, Antonio is awar
1 mportance of providing the production department with
Samuel was to take care of production and Antonio would a demand fore-
handle marketing. They decided to invite an experienced cast for the company’s products.
finance officer and a high school classmate, Edgardo
Abuan. He became the company’s finance manager.
The company was registered as a stock corporation
243
242