MARKMGT Midterm Notes

Session 2

Businesses are born but brands must be built

Brand
- has been invested in and developed over time
- Simplifies consumer decision making, reduces risk and set expectations.
- Not easy to reproduce strongly held beliefs and attitudes established in the minds of consumers.
- Provides emotional connection to a business

How do you build a great brand?

- Define your brand as a leader to serve others
- Be relatable and involved
- Be consistent
- Be creative
- Deliver value
- Satisfy customers making customer value
- Create a good customer experience to gain loyalty
- Loyalty is sustained over time from positive experiences
- Let customers feel they belong to a group like your brand

Market- Gathering of People for the purchase and sale of items and goods
Demand of a product or brand

Marketplace- Open square or place in town where markets and public sales are held
Metamarkets- cluster of complementary products and services related in consumers mind but spread
across diverse industries

Key Customer Markets- Consumer, Global, Business, Government

Market size- total volume of a given market

Session 3

Marketing is an Art and Science

It creates, appreciates, invites new ideas while measuring, analyzing , predicting, and determining the
reach and effectiveness of methods. Developing brands take creativity and artistic sensibility.

5 Step Marketing Process Model

Understand the marketplace and customer wants and needs- demands

Design a customer-driven marketing strategy- who we serve and how are we different
Construct a marketing program that delivers superior Value- 4Ps Marketing Mix
Build profitable relationships and create customer delight- Customer relationship management/ are
we creating value and satisfying customers?
Capture value from customers to create profits and customer quality- Customer lifetime value

Marketing offers- combination of products, services and experiences to satisfy a need.

Products will sell easily when the marketer understands Consumer needs, develops products providing
superior customer value, then prices & distributes as well as promotes them effectively.

How to sell easily? Develop a strategy to achieve a specific goal. Develop a Marketing strategy for
a long term approach to planning sustainable competitive advantage.

Competitive advantage factors- Operational efficiency, diversification, mergers and

acquisitions, HR, international expansion, cross-cultural adaptation, organizational structures,
etc.

Dimension of value and quality, main elements are

-Cost based advantage (lower costs and product price)

-Product based advantage (higher product quality, packaging and design/style)

-Service based advantage (more product flexibility, accessibility, delivery, range, reliability, tech support)

Two parts defining marketing

Customer Analysis -
identifying and evaluating characteristics of a base of customers for segmentation and target marketing
Who are your customers, what and where do they buy, and how do they choose brands, why do they
prefer a brand over another?

Competitor Analysis-
Identifying competitors and evaluating their strategies to measure their strengths and weaknesses
compared to yours. Very critical to the company’s Marketing plan
Who are your key competitors, their strengths and weaknesses, strategies and objectives?

If companies truly understand marketing and use it properly, sales will follow*

-Must be utilized by all departments in an organization

What is Marketed?

Goods- Physical products that can be touched and used

Services- Airlines, hotels, banks, logistics etc

Events and Experiences- Sports tournaments, Disneyland etc.

Persons- Artists, models

Place and properties- Cities, nations, tourism, real estate

Organizations- Red cross, WHO

Information- education and reading materials

Ideas- Famous taglines ex: Its more fun in the PH

Customer Value and Satisfaction

-Customer value is the satisfaction the customer experiences by providing a service relative to the cost
paid. All operations contribute to creation of value.

Low customer satisfaction- performance and customer experience is lower than expectation

Satisfied customer- both criteria meet expectations

Delighted customer- Exceeds expectations

4 types of value

Functional Value- Offers a solution to the customer

Monetary Value- Price paid is relative to offered worth

Social Value- Allows consumer to connect with others

Psychological Value- Allows consumer to express themselves or feel better

Actual vs Perceived Value

Real / Actual Value- Cost of producing and distributing an item

Perceived Value- When a customer believes a product is worth more because of benefits gained; item
can be sold way higher than the actual cost ex: branded luxury items

Purchase Decisions
A customer chooses a product based on perceived value and is only satisfied if actual value is the same
or exceeds perceived value*

Much better if perceived value is higher than actual price, bc customers are more willing to buy*

Ex: If I believe an item to be worth 1k and I see it for sale for 300 I will definitely buy it.

Exchanges and Relationships

Exchange: Trading something in return

Relationship: Must be solidly built with customers and keep them by delivering value, leading to
Customer Lifetime value, purchases over a lifetime of patronage.
Marketing Mix (4PS now 7)

Product

Price

Place

Promotion

Process

People

Physical Environment

What is Showrooming? - Checking items on physical store locations and then buying online later on for
cheaper prices.

Product- Tangible and intangible item produced to cater to target market and consumer need
Should achieve high-level business objectives.

3 parts of Product Strategy

Vision- market opportunity, target market, positioning and competitive analysis
Goals - measurable time-bound objectives clearly defined. Ex: increase revenues by 20%
Initiatives- High level efforts and big, creative ideas to execute the goals

How to pull off Product Differentiation- change product form/ design and style, features,
improve performance quality, conform with expected specifications, pay attention to durability in
stressful conditions, make sure the product is reliable/ won’t break easily. When it breaks, make
sure repair is simple and easy.

How to pull off Service Differentiation/ Good service- Make it easy to order a product, deliver
it, and install. Include Customer training and consultation for equipment, as well as maintenance
and repairs to keep products in good condition.

Product Classification- Grouping similar products into categories to help set up marketing
strategies for each segment. Different products require a unique marketing strategy.

4 main classifications of Consumer Products

1. Convenience goods- low cost items with little differentiation, purchased often out of
habit without price checking.

Strategy- price is unimportant as long as not too high compared to competitors. Focus on
Wide scale promotion to make customers familiar and aware with the brand. Also
consider strategic placement, near small items next to the checkout line to stir impulse
purchases
.
2. Shopping goods- important items more researched by consumers and compared by
price among different choices.
 Strategy- Focus on Product quality and pricing, offer attractive value to consumers.
Marketing becomes way more important the larger the purchase, for value-cost
comparisons.

3. Specialty goods- Unique and has a loyal following where buyers seek out the one
specific product regardless of price-value comparison. Ex: luxury and designer items.

Strategy- Not price sensitive because customers are willing to pay. Focus on outstanding
and innovative products, as well as promoting status to increase perceived value.

4. Unsought goods- products people do not know about and don’t think of buying but buy
out of fear or danger. Ex: insurance, batteries.

Strategy- Remind consumers that the product exists and it can help them avoid future
hardships. Focus more on promotion, because consumers rarely think about these
products.

Note: Certain goods can fall under multiple categories depending on the buyer*

Value Proposition- Summarizing why a consumer should buy a product or use a service because it will
add more value and solve a problem etc*
Unique Selling Proposition (USP)- What we have that competitor’s don’t*

Customers do not buy products, only benefits, and Marketers must be benefit providers based on
physical, social, and individual needs.

Needs become Wants when they are directed to objects that may satisfy the need.

5 Levels of Product By Philip Kotler

Core Benefit- Reason for being, utility provided

Generic Product- Product version containing the core benefit
Expected Product- Characteristics buyers normally expect and agree with
Augmented Product- Extra features, benefits, services to differentiate the product from
competitors and exceed customer expectations. Has extra costs.
Potential Product- All innovations, augmentations and transformations a prospective product
may develop into, to surprise and delight customers.
Session 4

Product Life Cycle- Every product goes through a series of stages starting from introduction, growth,
maturity, and decline. Keep in mind products have a limited lifespan. Sales pass through stages while
profits rise then fall. Different strategies are needed per stage to maximize company profits. .

Introduction Stage- Product is new and unknown to consumers, immediate profit is not a pressure,
Awareness is the main focus. Revenues are typically low or negative in this stage.

Strategy:
Establish product branding and awareness, quality level & intellectual property protection- trademarks and
induce Product Trials.
Pricing: should be low penetration (setting low price to attract buyers) to build market share
Distribution: selective until consumers show acceptance of the product.

Price Skimming- High price, low volume; can only be done if there are few or no competitors. To skim
maximum revenue from segments willing to pay the high price.

Growth Stage- Product becomes better known to the public. Firms also benefit from increased
production levels resulting in Economies of Scale- Cost advantage that arises with increased product
output. More products produced= lower fixed cost per unit. More Output= Cheaper price

Strategy:
Product quality- maintained with additional features and services, can add new models and flanker
products
Pricing- maintained as demand is increased and competition is little. Can also be lowered to attract
price-sensitive buyers
Distribution- add new channels and enter new market segments because of customer acceptance
Promotion- larger audience, focus advertising on preferences
What is a flanker/fighter brand?- a new product, same category offered to the market by a company
that already established a brand within the category. Goal- target different consumers and increase
market share

Most popular in difficult economic times when value for money is more appealing.

Example:

Maturity Stage- Market saturates (current consumers are already satisfied). Products that survive
previous stages spend the longest in this phase.
Sales- grow at a decreasing rate then stabilize.
Competition- higher; leads to significant profit reduction.

Strategy: Maximize profit and defend Market Share

Product- Differentiation; introduce new features to the existing product
Pricing- recommended to be lower because of competition
Distribution- more intensive and incentives may be offered to encourage preference vs competitors.
Promotion- emphasize on branding and product differentiation; use widespread media

Decline Stage- Sales either decrease or stabilize due to a downturn in the market. More innovative
products are introduced and customer preferences change.

Possible Strategies: Improving profits by reducing marketing spend and cost cutting
Product: Maintain. Also possible to revive by adding new features and uses. Pricing: intensely cut
Distribution: Could discontinue or sell to another firm who wants to continue the product.
Promotion: continue to offer it; can be catered to a loyal niche segment

Problems with the product Life Cycle

1) In reality very few products follow the cycle

2) Length of each stage varies
3) Decisions of Marketers can change the stage, such as maturity to decline by price cuts
4) Not all products go through the stage, some from intro to decline
5) Subjective; not easy to tell which stage a product is exactly in
6) Not 100% accurate all the time.
 Boston Consulting Group (BCG) Matrix- Guide for resource allocation based on market share
as well as growth of strategic business units.

Relative Market Share: X axis

- Represented by the horizontal axis
- Is the company’s market share divided by the share of its biggest competitor.
- Measures the company’s strength in the relevant market segment
Relative Market Share: Y axis
- Market growth is represented by the vertical axis

Market size: number of individuals in a certain market who are potential buyers, stat-based.
Market share: company’s portion of sales within the entire market where it operates.
Market Growth: increase in demand for a product or service over time.

How do you calculate Market Share???

How do you calculate Market Growth???

QUESTION MARK- Low Market Share & High Market Growth
- When a company tries to enter a high growth market which already has a market leader.
- Cash needs are high but bc of low share
- If u dont do anything to change the market share, the question mark will only earn large amounts
short term, later on becoming a dog.
- Possible uncertain opportunities; company needs to decide whether or not to increase investment

STARS- High Market Share & High Market Growth

- Level up from question mark, successful and growing rapidly.
- Needs large amounts of cash to maintain position
- Generates lots of cash and are leaders in the business
- Represent the BEST PROFIT growth and investment ventures for the company.

CASH COWS- High Market Share & Low Market Growth

- Produces High levels of cash for a company; Superior market position and low costs.
- Profits and cash generation should be high. Needs should be light because of low growth
reinvestment.
- Large cash surpluses should be generated
- Foundation of the company

DOGS- Low Market Share & Low Market Growth

- Irrelevant
- Weak market share, low in growth, generate low profit and losses
- Usually dropped
Session 5

The Product Adoption Curve- a visual representation of the way different groups of people have a
willingness to try your product over time.

At each stage of the product adoption curve, there will be certain demographics buying the product.

5 PHASES & Product Life Cycle Crossover

Innovators: Introduction Stage

- risk taking, change-seeking customers; tries the product way before anyone else. High risk
tolerance and financial liquidity helps them face product-related potential failures.
- Ex: people who line up for Iphone release
Early adopters: Growth Stage
- Consumers or businesses who use new products before others.; opinion leaders
- Likely to pay more for the product only if it improves efficiency, reduces cost, increases market
penetration or raises social status.
- More conservative than innovators but open to new things.
- Ex: introduction of HDTV
Early Majority: Growth Stage
- Group of people who begin buying products and services after waiting for positive feedback from
those who have already bought and are satisfied with it.
- Seldom leaders but adopt new ideas before the average person
Late Majority: Maturity Stage
- Last segment of a population to adopt an innovative technology
- Skeptical of change
- Usually older, less affluent and less educated population than the early segment consumers
Laggards: Decline Stage
- Consumers who avoid change; may not be willing to adopt new products until all methods are
phased out. Focus is on reliability, availability, simple to use and low cost
- Bound by tradition and hardest to convert to customers
- Usually waits until price falls
Session 6

Pricing
- Factors in making price decisions: the company, customers, competition, and marketing
environment
- Must be consistent with the firm’s marketing strategy, target market and brand positioning.
- Internet gives buyers the choice to compare prices from thousands of vendors
- Price negotiations can be conducted in online and in person

When does a firm set a price?

- When it develops a new product
- When it introduces its regular product into new distribution channels or geographical areas
- When it enters bids on new contract work

What are the different Pricing Strategies?

Market-Skimming Pricing
- Setting a high price for a new product to skim maximum revenue from segments willing to pay the
high price.
- Competitors should not be able to easily enter the market and offer a lower price.
- Product quality and image must support the price
- Enough buyers must be willing to pay the high price offered
Pros
- Can measure how much people are willing to pay
- Makes your product look prestigious and high end
- Easy to lower down prices
Cons
- Large profits cause by this method attracts competitors
- Only works for businesses that have large competitive advantage like tech companies

Market- Penetration Pricing

- Setting a low price for a new product to attract many buyers and a large market share
- Opposite of skimming
- Price is set to ‘penetrate the market’
- Common in mass market products such as food items, candy, household items etc.
- Suitable for products with long anticipated Life Cycles
- Useful if launching into a new market
- Only works if the market is highly price-sensitive in which low prices produce more market growth
- If the price is low enough, it will attract more consumers.
Pros
- Low price= More Consumers
- Discourages competitors who cannot produce the product for small profit margins.
Cons
- Players need enough capital to succeed.
- In a price-sensitive market, customer loyalty is harder to maintain.

Status Quo Pricing

- Matching competitors pricing or charging close to competition
- Bandwagoner

Premium
- “Not all can afford”, “High price= Good quality”
- Setting a higher price than similar products where uniqueness is about the product/service.
Product Line
 - Setting price steps between various products in a product line based on cost differences between
products & Customer feedback on different features
- Ex: Baby Diapers have different product lines offering qualities unique from each other,
Psychological
- Pricing based on customer perception of the product
- Appeals to emotions over rationality, based on needs and wants
Odd-even Pricing
- Ending price with certain numbers to influence buyers’ perceptions
- Ex: P99.99 (think it is only 90 but actually its 100) (Kala mo naka sale pero di pala)
- Also classified as psychological pricing
Reference Pricing
- Competitive pricing; sold just below the price of a competitor's product.
- Comparing the competitor’s advertised price, using it as a basis and lowering your own price.
Value Pricing (Everyday low prices)
- Consistent low prices
- Ex: Divisioria 168 cheap clothes bags and random shit

Multiple unit pricing

- Buy 1 take 1
- 2 or more identical products and selling for a single price

Bundle Pricing
- Selling a package or set of goods for a lower price compared to buying all separately
- Usually assorted with different products
- Ex: Book sales sa National (whole series for cheaper price)
Differential Pricing
- Strategy producing a better match between demand and supply
- Shifting some demand from peak to off-peak periods/ place.
- Also called discriminatory pricing or multiple pricing
- Ex: theme parks, museum, Eat all you can restaurants
Product Form Pricing
- Different versions of the product are priced differently, but not proportionately to their costs.
- Ex: Ipad, Iphone versions
Image Pricing
- Pricing the same product at many different levels based on image differences
- Ex: Cheez whiz has different sizes and container shapes but same product nonetheless.
Location Pricing
- Same product priced differently at different locations even if the cost incurred is the same
- Ex: movie tickets, concert tickets
Time Pricing
- Seasonal prices
- Ex: Christmas, New year
Customary Pricing
- Based on consumer expectations

How do you set the Price for your product/ service? (Pricing Policy factors)

1. Select the price objective

- First decide where you want to position the market offering
- Clearer objectives make price setting easier
- Possible objectives are: Maximize current profit, Product Quality Leadership, Maximize
Market Share, Maximize Market Skimming
2. Estimate Demand
 - Each price will lead to a different level of demand and a different impact on the
company’s marketing objectives.
- Demand and price are inversely related (Higher the price, lower the demand)
- Consider price sensitivity and price elasticity of demand
What is Price Elasticity?
- Determines the changes in demand with unit change in price
- Little to no change in demand when price is changed= Inelastic
- Significant change in demand when price is changed=Elastic
- Demand is likely to be less elastic when there is no change in demand, fewer or no substitutes,
when buyers do not notice the higher price, when buyers keep their buying habits, and if the
higher prices are justified.
- Variable or dynamic pricing is all about price elasticity of demand.
- If price changes a lot and the quantity bought remains almost the same, demand is inelastic.
- If price swings have a big swing on buying, it is elastic.

How can we predict whether a demand is likely to be elastic or inelastic? (Factors)

Substitutes
- If substitutes are easy to find when product price increases, demand is more elastic.
Necessity vs Luxury
- A necessity is a must-have, regardless of price. Luxury is not absolutely necessary; just
something nice to have.
Share of the consumer’s budget
- If a product takes up a large share of consumer budget, a small increase may make it too
expensive to afford for many buyers
Competitive dynamics
- Goods that are only provided by one supplier have inelastic demand; products that have high
competition are more elastic

3. Determine costs
Types of Cost
a) Fixed Cost
b) Variable Cost
c) Target Costing

Strategies
- Excess plant capacity
- Competition
- Aggressive pricing
- Initiate price increases when demand exceeds supply, when cost go up, Government regulations,
remove/reduce discounts and rebates/taxes
- Indirectly increasing price/ cutting cost methods such as shrinking pack size, substitution of
cheaper raw materials, reducing product features, services, using less expensive packaging for
the same price as before.
- Create new economy brands

4. Analyze competitors- costs, prices, offers

- Respond to price changes of competitors
- Maintain price
- Maintain price and add value
- Reduce price
- Increase price and quality (premium & luxury)
- Launch a lower price fighter brand
5. Select a pricing method
- After summing up costs, pick the most suitable pricing method
 6. Select the final price
- Impact of other marketing activities
- Company pricing policies
- Impact of price on other parties

Pricing Based on PLC

Session 8

Place Strategy
- How and where a company will place its products and services that will increase sales and
market share

Distribution Strategy
- How an organization will distribute products and services to the end user
- Must be the right place and time
- Efficient and effective distribution is vital for achieving overall marketing objectives
- Principles are the same but innovations change the practice itself
- Global Marketplaces have more opportunities to connect buyer-seller
- Delivery must be optimal
- Products can be digitized and bought with a few clicks while delivery is only hours using drone

Place and Distribution Intermediaries

- Marketing Channels: the entire system for getting products from producer to consumer
- Channel Management: process where the company develops marketing techniques and sales
strategy to reach its customer base.

Distribution Channels
- Refers to the chain of intermediaries which the product passes through to get from producer to
consumer.

What are the 2 channels of distribution?

Direct Distribution/ Channel marketing

- Distributing straight from the manufacturer to the consumer
- The advantage is the complete control a manufacturer has over their product
- Made on order or shops owned by manufacturers.
- More common since the advent of the internet
- As much as possible this is channel is advised
 Can be B2B or B2C (Business to Business or Business to Customer)
Business to Consumer (B2C)
- Small scale manufacturing
- Simplest form of distribution
- Produces own products and directly sells to consumers in their own retail store Ex: Body Shop
- Pros: Low Overhead cost, High rates of profit, convenient when distributed via Internet 24hrs
- Cons: Cannot compete with geographical reach and has low business volume; customers also
have to pay shipping fees
- Ex: If you make specialty coffee you cannot sell in volume in company website/ store compared
to supermarkets

Indirect Distribution
- Distribution using intermediaries such as wholesalers and retailers who handle the product and
distribute it to their own channels after receiving from producers
Intermediaries
- Wholesalers buy large quantities of a product from manufacturers and sell it to retailers. They do
not sell directly to consumers.
- Retailers sell products directly to consumers for personal use; sold in smaller quantities

What are the common Place and Distribution Strategies?

Intensive Distribution
- Commonly used to distribute low priced products/ impulse purchases

Exclusive Distribution
- Limits distribution to a single outlet
- Product is usually high priced, requires intermediary to place details in selling

Selective Distribution
- Small number of retail outlets are chosen distributors
- Manufacturers want a large geographical spread

What makes distribution so important?

- It affects sales; if not available, cannot be sold
- It affects profits, may contribute up to 50% of final selling price
- Delivery is seen as part of the product influencing customer satisfaction
- Involves key long term strategic decisions

What is the best distribution channel?

Market Structure
- Starts with the customer and product itself
Company Objectives
- Some channels sell better than others
Resources
- Some channels are cheaper and others more expensive to maintain
Overall Marketing Strategy
- Distribution channel must complement sales objectives and positioning strategy

How to choose a distributor?

Market Coverage, Sales Forecast, Cost, Other resources, Profitability, Control, Motivation, Reputation,
Competition, Contracts etc.

Michael Porter’s 5 Forces Model

 - Determines the attractiveness of the industry
- Influences the price, cost and required investment of firms in an industry
- Helps increase profit margin for existing businesses
- Provides info on competition, capital requirements, government policies, price basis, current
distribution channels
- Updated with trends and info for future growth and competition
- Assess effectivity of future and current business strategies
- Enables industries, businesses, marketers to see and avoid negative external effects

Bargaining Power of Buyers

- Certain Factors tend to increase customer bargaining power
- Buyer Volume
- Big ticket items
- Low switching costs
- Standardized or undifferentiated products
- Purchase is not very important to the buyer
- Buyer has all relevant info
- Buyers can reduce industry profits by forcing down prices, demand more service, playing one
competitor vs another
- Few buyers can influence price while many buyers means companies have more influence in
price

Bargaining Power of Suppliers

- Certain factors tend to increase supplier bargaining power
- Domination of a few suppliers
- Suppliers are more concentrated than buyers
- No substitutes
- Supplier has more important customers
- Differentiated product
- High switching Cost
- Suppliers can raise prices or reduce quality and squeeze profitability

Rivalry Among Competitors (Competitive Rivalry)

- Which factors tend to increase rivalry among existing competitors?
- Many rivals
- Slow growth
- High fixed costs
- Low switching costs
- Large capacity increments
- High exit barriers

Threat of New Entrants, Barriers to Entry

- Factors that raise barriers to market entry by new entrants (What makes entering a market
difficult)
- Economies of scale
- Brand identity
- Differentiation
- Capital requirements
- Switching costs
- Access to distribution
- Absolute cost advantages
- Government policy
- Expected retaliation
Threat of Substitute Products
- What increases the threat of substitute products?
- Low switching costs
- Whether buyers view the substitutes as being good or better in terms of quality, performance etc.
- If more attractive priced substitutes are available
- Looks different but can do the same things your product does

Complements suggested by Scholars

- Complements increase demand of the primary product used, increasing profit potential

Session 9

How do you show the world your products are the best? Use Promotion
- A successful product or service means nothing unless the benefits can be communicated clearly
to the target market.
- The promotion’s message should reinforce product benefits and help the firm to develop a
positioning strategy for their products.
- Firms need to carefully consider the message conveyed by their promotion strategy
- The message will affect the audience’s perception of the Company’s Reputation
- Use Promotional Mix Methods
- Advertising

Traditional Marketing
- Any kind of promotion, advertising or campaign that has been used for years and proven to be
effective
- Already succeeded so it really works

Above the Line Advertising (ATL)

- Using mass media methods
- Focusing advertising to a large audience
- Goal is to build the brand
- Cons: Impact is hard to quantify and measure
- Ex: Tv, newspaper, website, billboard ads

Below the line Advertising (BTL)

 - Non-traditional advertising
- Primary purpose to drive sales
- Hard to measure expenditures and expenses
- Gives tangible incentives to purchase a product

Sales Promotion
- Designed to create a short term increase in sales
- Discount coupons, codes, free shipping
- Ex: Lazada and shopee 11:11, 4:4

Through the line Advertising (TTL)

- Combination of both ATL and BTL ensuring maximum growth of the product or brand
- Ex: A firm can use newspaper ads inviting customers to enter their store for discounts and
freebies (ATL)
- When the customer visits the store, they will be offered store banners and product samples (BTL)

Public Relations
- Developing a positive relationship between the organization and the media and the public
- Creating favorable publicity
- Minimizes the impact of negative situations

Personal Selling
- Sales Interaction between sales representative and consumer

Sponsorship
- Paying organizations and events to use branding and logos
- Usually used in sporting events
- Player jerseys and stadiums are labelled with the branding
- Tournament may also be named after firm or brand name

How to be an Ethical Marketer: ADVERTISE HONESTLY

- Refrain from advertising and promoting facts that misrepresent the nature, characteristics, quality,
origin, etc of goods, services and commercial activities
- Doing so is False Advertising and sanctionable by Lanham Act, 15 in USCA Law.
- Great advertising reaches at a human level both in honesty and emotion
- About real communication, emotional connection, and bringing real value by showing possibilities
and making dreams reality.

Using Media Strategy to help Promotions

- Media strategy is how the firm will deliver its message
- Before selecting media strategy, always study readership and general behavior of target
audience

Guidelines for media strategy using Promotional mix aspects

- Where will they promote it?
- What newspapers do their target market read?
- What TV programs do they watch?
- Websites they visit
- Ex: Amazon uses a varied promotional mix of TV, online and print
- Amazon caters to different types of customers because of this strategy.
GROUP REPORTS

Group 1- Marketing Myopia

● According to Theodore Levitt (2016), Businesses will do more excellent if they concentrate on
meeting customers' needs than on selling products.
● The failure of industries is not because of marketing saturation; instead, it is due to a failure of
management.

● Marketing Myopia - lack of insight (short-sighted) into what a business is doing for its customers
--- tend to invest time and money on what they are doing right now that has caused them to be
often blind to the future.
● Railroad business defined their business narrowly to the point that they let their competitors take
customers away from them as they assumed themselves to be in a railroad business ONLY.

● Shadow of Obsolescence: why most companies stop growing once their product loses its life
due to being outdated over time.

● Dying “growth” industries suffering from marketing myopia are subjected to a self-deceiving
cycle of bountiful expansion and undetected decay.

● Absence of a problem that leads to the absence of thinking.

● Mass-production industries are compelled by the prospect of declining unit costs as output rises

There are four conditions guarantee the self-deceiving cycle, namely:

● The belief that growth is assured by expanding and more affluent population,

● The belief that there is no competitive substitute for the industry's major product,

● Too much faith in mass production and the advantages of rapidly declining unit costs as
output rises,

● Preoccupation with a product that lends itself to carefully controlled scientific experimentation,
improvement, and manufacturing cost reduction.
 ● Selling focuses on the seller's needs, and marketing focuses on the buyer's needs.

● Top management is transfixed by technical research and development's profit possibilities.

● Electronics Industries grow with the illusion that a superior product will sell itself because they
have created a successful product
“What business are you in?”
The question seeks to challenge companies to expand expertise to their industry as a whole,

rather than focusing on a generalized product.

Decline of Railroads
● Its popularity diminished not because transportation demand lessened or because

alternative modes of transportation were invented and introduced into the market

● Due to companies focusing solely on railroads instead of filling the demands for

advanced and efficient transportation.

● They thought they were only a railroad company, not a transportation business.

● Widening their services to the transportation industry as a whole, focusing on being

consumer-oriented would have stimulated growth.

Hollywood vs Television

● Hollywood focused too much of its attention to product-oriented “Movies” instead of

consumer-oriented “Entertainment”.

● The prospect of Television was rejected and discarded by film companies and viewed

as a threat.

● In the 1950s Television dominated the entertainment industry, in which the era was

dubbed as the Golden Age of Television.

● Had Hollywood adapted its mindset to being an entertainment company, television

would have been considered as an investment for potential growth- preventing

losses from transitioning later on.

From Groceries to Supermarkets

● Over-the-counter corner shops manned by shopkeepers each specializing in its own

product or service.
 ● High labor costs

● Long queues

● Consumers needed multiple trips to different stores to complete shopping lists.

● Large-scale, multi-product all-in-one grocery store

● Overall cost was also lessened due to lesser manpower required.

● Idea was rejected by food chains, who judged the cheaper prices, travelling long

distances to shop for food items, and doubted the relevance of unfamiliar methods.

● Food chain methods eventually failed to increase growth while Supermarkets

expanded, its dominance still present today.

● With survival heavily dependent on projecting their products into supermarkets,

companies who refused to adapt eventually went out of business.

Henry Ford: Genius that made the assembly line

● Henry Ford set the price of an automobile at $500, much lower than his competitors.

● Every person was challenged to operate at the highest efficiency to meet the price

goal.

● The desire to sell more resulted in his invention of the assembly line, in which mass

production is the result of a low price, not the other way around.

THE BEGINNING AND THE END (IMPORTANT)

● a view that highlights customer satisfaction over goods production.

● Using the backwards development method, the company visualizes the final product

first all the way back to raw materials, entirely for consumer benefit.

● Improves producer-consumer relationships

DON’TS if you are a business owner

1. Think as if your business is invincible

2. Limit business to a certain industry
3. Be only product oriented or focus on selling instead of Marketing
 4. Pay little to no attention to customers’ basic needs

Importance of having a vision

● Clear goal that a leader can visualize for the company
● The destination that a leader would like the business to be at
● Takes into consideration the roads/methods needed to be taken as a team to get
there

Becomes a shared goal for the company and its employees.

- Stimulates the employees and pushes them to work towards a company that is
centered on its customers’ needs.

A blueprint for the company’s success.

● Serves as a drive/motivation for a leader, with the goal of having a vast amount of
followers (customers) in mind.

Customer-creating

- Prioritizing value satisfactions for their customers

- Customers must see the worth of a company’s product/services and why it stands out
from other competitors.

Customer-satisfying

- A company is not just about producing goods/providing services.

- Employees must think of themselves as buying customers
- “What would make me want to do business with this company?”
Examples of companies in the Philippines that were not able to sustain business growth in a
changing market environment: Muji, Topshop, Fun Ranch, Tropical Hut

Group 2- Theories

Theories of Human Motivation

Freud’s Theory
Maslow’s Theory
Herzberg’s Theory
McGregor’s Theory X and Y

Sigmund Freud- Sigmund Freud is an Austrian neurologist, known as the founding father of
psychoanalysis.

Theory of Personality focusing on dynamics

Influence of unconscious fears and desires, motivation on thoughts and behavior
Personality composed of id, ego, superego; conscious, preconscious, unconscious mind. Unconscious
mind governs our behavior in which psychological triggers can be but in adverts. Selling basic biological
needs can satisfy the ID.

ID
- instinctive and primal, responsible for biological needs and wants such as eat drink, sleep, sex
- Hedonism ( instant gratification purpose)
- “I feel like doing this, so I will do it regardless of consequences”.
SUPEREGO
- Moral-based and ethical personality
- Values, principles, morals, social standards
- Mostly shaped by what we learn as children from adults
- Conscience; distinguish right from wrong
- Pressure to behave in a “proper” way
- Where guilt and self- criticism comes from
- “I wanna do this but its bad so I won’t do it”

EGO
- A fine line between ID and Superego
- Considers values, morals, social standards
- Wait for the right moment to satisfy need and desire
- “I wanna do this but because its bad, I will do something good that can satisfy my need instead”

Maslow’s Hierarchy of Needs

Human needs can be reduced to 5 Categories. As humans satisfy their basic needs, they will have to
seek to achieve the higher level needs.
Marketing Implications of Maslow’s theory

Physiological needs: House, food, clothing

Safety Needs: Insurance, radial tires, vocational training
Love and Belongingness: Personal care products
Esteem Needs: Luxury Items
Self Actualization: Education, travel, hobbies

Herzberg’s Theory
- Discusses two factors that affect satisfaction of people in jobs.
- Hygiene Factors and Motivating Factors.
- Both Factors can apply in consumer purchase
- Hygiene factors make the customer consider a product, but marketer needs to sell harder if
hygiene is fewer
- Motivating factors actually convince a consumer to buy a product.
- Weakness of this theory: Satisfaction and productivity are not always directly correlated and
varies from employee to employee
- No strict classifications for certain job conditions
- Newer valuables that contribute to employee satisfaction might exist
- Employees highly value salary, social status and relationships as motivators
- Method Bound; similar studies have varying results.

Hygiene Factors
- Present to Maintain satisfaction only, not necessarily making the employees highly motivated.
- Causes dissatisfaction when not present
- Examples are salaries, workplace conditions, company policies, workplace relationships

Motivating Factors
- When present, it can increase the employee’s motivation to excel at work
- Known as incentives and satisfiers
- Does not necessarily cause dissatisfaction when absent
- Examples are opportunities for growth, recognition, achievement, bonuses

McGregor’s Theory of X and Y

Douglas McGregor
- American social psychologist
- Presented two opposing views of human motivation in 1960 Human Side of Enterprise book
- Theory focuses on attitudes and perceptions of the managers to motivate employees

Two types of Managers

Manager 1
Know how to Distribute responsibility, instill trust, and motivate team members to deliver
their best

Manager 2
Less about leadership and more about strict implementation and regulation

Theory of X and Y- based on Maslow’s Hierarchy of Needs

X
- Based on lower-order needs; gets poor results in the long run
 - Employees are naturally UNMOTIVATED
- Top Management controls workers
- Control is centralized
- Employees are minority; have minimal delegation
- Assumes that workers dislike working, avoid responsibility, need to be monitored, no ambition,
need to be controlled and threatened to deliver and produce results

- Based on higher-order needs; produce better performance and allow people to grow and develop
- Employees do not need to be controlled; they need to be empowered
- Managers value other people’s opinions and participation
- Decision making is decentralized
- Employees can take initiative and self-direction
- They seek and accept responsibility, no need for direction
- Motivated to fulfill goals
- Consider work a natural part of life and solve problems imaginatively

Assumptions on Theory Y
- Employees can perceive their job as relaxing and normal
- Employees may not require only threat, but self direction and self control are possible if they
dedicate themselves to achieve organizational goals
- A rewarding and satisfying job results in employee loyalty and commitment
- An average employee can learn responsibility
- Employees have skills and capabilities that can be used to solve organizational problems

Group 3- PESTEL Analysis

The Organization and Environment- changes often, and companies must adapt. Anticipation can
provide competitive advantage.

Use PESTEL
- Important tool for businesses to navigate their way through the environment considering internal
and external factors
- Form conclusions such as industry attractiveness, market potential. Determine current market
and industry performance, to predict market or industry key success factors and trends for future
growth and success
- Identification of unavoidable changes that might be significant on company development
- Macroeconomic variables must be taken into account to anticipate changes
- Reveals the direction or change in business environment
- Manages direct and indirect threats
- Appraises key factors
- Enables the organization to understand its position
- Can collaborate with SWOT to provide new strategies
Limitation of the Model
- Time consuming and costly; results may be outdated
 - Insufficient and inaccurate; may require further research or collaborate with Porter’s Five Forces
and SWOT

Political
- understanding of the political aspects of the country.
- Includes government policies which may affect the economy, the industry, and the
organization/company
- Government has a great impact on the daily operations of businesses
- Government influences, regulations, opportunities
- Examples: Coca Cola following the labor laws, and Grab following minimum wage laws.

Economic
- refers to the economic situation of the country; finance and trade activities
- helps prepare and figure out ways in case there will be fluctuations
- Ex: Nike targeting customers with good purchasing power and Adidas analyzing the economic
dynamics before investing.

Socio-Cultural
- analyzes the population of the country as a whole to help the company to better understand the
buying behavior of the population and how they will approach the market.
- Social mobility, income distribution, demographics
- Ex: Uber being user friendly, Nike targeting those who are health conscious, Apple analyzing that
middle class people in the US avoid buying their products due to price

Technological
- regarding how companies are affecting the environment especially developing environmental
friendly strategies to make the majority’s surroundings safer.
- Research and development; new technology
- Ex: Nike reusing plastic to make their products.

Environmental
- Pollution control, planning policies, waste disposal and recycling
- examples involve online companies, (e-commerce), research and development, and government
support of new technologies

Legal
- be prepared in order to comply with what is required to run especially to adapt to any certain
changes made by the government.
- Certain laws must be followed
- Ex: Republic Act No. 7581 “The Price Act”

Pivot variable- An element of crucial importance that can greatly influence the development of the
company.

Group 4- Porter’s 5 Forces (Check Session 8)

Group 5- Porter’s Generic Strategies

Michael B. Porter suggested ways of achieving a sustainable competitive advantage over the other
competing firms in a market using 3 Generic Strategies that can be used in 2 basic types of
competitive advantage.
Cost Leadership Strategy
- Focuses on lowering production costs
- To increase profit companies should sell at market prices
- To increase market share companies should sell products lower than market prices
- Succeed by increasing profits by reducing costs, increasing market share by lowering price
- Lowering production costs is vital and company must always find ways to do it
- Ex: walmart sells branded products at low cost
- Ex: Ikea has standardized products to allow the company to produce many at low cost
- Ex: Amazon gets its advantage from investing heavily in improving their IT.

Differentiation Strategy
- Focus on making the product/service attractive and unique compared to competitors
- Make it stand out
- Uniqueness is a value that attracts consumers
- Should always consider the ones consuming products, ensuring consumer insights are well
defined and established
- Ex: Apple products

Focus Strategy
- Targeting products into a niche market, specific market
- To understand the needs of the target audience and pursue cost leadership or differentiation
- Strong bond between product and customer
- Ex: TOMS Shoes- targets specific market consumers that uphold and value ethics
- Ex: LUSH- niche market for those who prefer organic, natural, handmade cosmetics

How to choose the right generic strategy?

Step 1: Use SWOT for each Generic Strategy adopted

Step 2: Use Porter’s 5 Forces Analysis to understand the nature of industry company is in
Step 3: Compare results of SWOT Analysis with Porter’s 5.

For an organization to be successful and make profit in a highly competitive market, clear strategies are
needed. Porter’s generic strategies can aid an organization in planning on how to have a competitive
edge among their competitors.

Summary of Strategies:

Cost Leadership-Gain market share through lowering prices while maintaining profitability or by
maintaining average prices which will in turn increase profits

Differentiation Strategy-Win market share by offering unique features that are valued by their customers

Focus-Strategy achieving cost leadership or differentiation within niche markets in ways that are not
available to more broadly-focused player