Principles of Marketing

Grade 12 – ABM
Instructor: Mr. Paolo J. Castillo
Chapter 6-7

Basic Concepts of Marketing

Chapter 6

Products, Offers, Satisfiers, Resources

Lesson 1

Products | Offers | Satisfiers | Resources

 Anything that can be offered to someone to satisfy a need or want is a product.
 A product refers to physical object.
 Services refer to intangible object.

Value & Satisfaction

 Value is the customers’ estimate of the product’s capacity to satisfy a set of goals.
 Value is the ratio between what the customer gets and what he gives.
 Customer gets benefits & assumes costs.
 When customers expectance = Performance (Satisfied)
 Customer Expectance > Performance (Dis-satisfied)
 Customer Expectance < Performance (Highly Satisfied)

HOLISTIC MARKETING CONCEPT

• Companies have new capabilities that can transform the way they have been doing
marketing.
• Companies can operate a powerful new information and sales channel.
• Companies can collect fuller and richer information.
• Companies can facilitate and speed up internal communication.

Marketing Mix
• Marketing Mix:
• Combination of 4 controllable variables
• Product
• Price
• Place
• Promotion
Product Considerations
• Choice of products
• Packaging
• Services to support products
• Branding
• Warranties
• Level of quality
• Business image
• Product research & development
• Positioning

Price Considerations
• Price setting – What is your goal?
• Terms – Conditions of purchase and payment between suppliers and buyers.
• Discounts – Reductions in the price of goods, which are sometimes negotiated.
Place Considerations
• Channels of distribution – How do products get from manufacturer to customer?
• Specific stores
• Transportation – What carrier will you choose to move your products?

Promotion Considerations
• Advertising: Non-personal promotional messages paid for by an identified sponsor.
• Personal Selling: Communication between a salesperson and a customer intended to
influence the customer’s buying decision.
• Publicity: Information about a business or its products distributed through the media at
no cost to the business.
External Factors That Affect the Marketing Mix
• Customer attitudes
• Economic conditions
• Technological advances
• Political forces
• Natural forces
• Competition

Internal Factors That Affect the Marketing Mix

• Company objectives
• Company policies
• Financial situation

As far as Customers are concerned there are three elements to address

• Customer value: Difference between the values that the customer gains from owning
and using a product versus the costs of obtaining the product.

• Customer satisfaction: The extent to which a product’s perceived performance in

delivering value matches a buyer’s expectations.
• Quality: The characteristics of a product or service that bear on its ability to satisfy
stated or implied customer needs.

Marketing Management Philosophies

1. Production: consumers will favor products that are available and highly affordable
2. Product: consumers favor products that offer the most in quality, performance, and
innovative features
3. Selling: consumers will not buy unless an organization undertakes a large-scale selling
and promotional effort
4. Marketing: determining the needs and wants of target markets and delivering the
desired satisfactions more effectively and efficiently then the competitors
5. Societal marketing: generating customer satisfaction and long-run societal well-being
are the keys to both achieving the company’s goals and fulfilling its responsibilities
MARKETING CONCEPTS
• There are FIVE competing concepts under which organizations conduct their marketing
activities:
• The Production Concept
• The Product Concept
• The Selling Concept
• The Marketing Concept
• The Societal Marketing Concept

THE PRODUCTION CONCEPT

• Consumers will favor those products that are widely available and low in cost.
• Therefore increase production and cut down costs.
• And build profit through volume.

THE PRODUCT CONCEPT

• Consumers will favor those products that offer the most quality, performance, or
innovative features.
• Therefore, improve quality, performance and features.
• This would lead to increased sales and profits.

THE SELLING CONCEPT

• Consumers, if left alone, will not buy enough of company’s products.
• Therefore, promote sales aggressively.
• And, build profit through quick turnover.

THE MARKETING CONCEPT

• The key to achieving organizational goals consist in determining the needs and wants of
target markets and delivering the desired satisfactions more effectively and efficiently
than competitors.
• And build profit through customer satisfaction and loyalty.

(5) THE SOCIETAL MARKETING CONCEPT

• It is Marketing Concept (+) Society’s well being.
• Balancing of following three considerations while setting marketing policies :
-Customer’s want satisfaction -Society’s well being
-Company’s profits

Marketing Plan
Analyzing
• current market situation
• opportunities and issues
• implementation
• finance
• control
Marketing Plan
I. Current Market Situation
~Market Situation
~Competitive Situation
~Macroeconomic Environment

Marketing Plan
II. Opportunities and Issues Analysis
~Opportunities & Threats outside firm
~Strengths & Weaknesses within firm
~Issues Analysis
~Financial & Marketing Objectives

Marketing Plan
III. Marketing Strategy
~Target Market ~Sales Promotion
~Product Positioning ~Res. & Develop
~Product Line ~Market Research
~Price ~Distribution
~Sales Force ~Level of Service
~Advertising—when and where

Benefits of a Good Marketing Plan

Firms achieve higher rates of return on invested capital when they have
--A clear business purpose
--A clear business objective

Benefits of A Good Marketing Plan

That is reflected in a well-thought-out marketing plan with
-- an effective marketing mix
Pricing Strategies
Chapter 7

Origins of Pricing
Lesson 1

“Price should never be just about cost plus markup. It should also be a tool for communication
and strategy.”

Suggested Retail Price (SRP)

• It denotes the price that a consumer product is expected.
Emerge of the Suggested Retail Price
• Two elements in particular seriously altered merchandisers’ approach to pricing.
• Mass Production – which led to wider access to cheap goods that are sold in bulk.
• Transportation – the emerge of long range mechanical transportation systems would
provide merchants with access to a far wider variety of goods than was ever before
possible.

Pricing a New Product

• Market skimming – involves setting the price high in order to milk the segments with
higher disposable incomes, with the price gradually being reduced over time to milk the
next income tiers.
• Market penetration – involves setting the price even lower than planned, if only to
attract as much of the market into trying it and hopefully becoming loyal to it.

Psychological Pricing
• Much of pricing’s communication, particularly with regard to referencing other
products’ prices, is inherently psychological in nature.
• Odd-number pricing – Prices that end in non-rounded odd numbers, such as 9.95 or
99.50, are said to give the consumers the perception that the prices are not as
expensive as they actually are.
• Free pricing – Selling of two (2) complementary products.

Discriminatory Pricing
• Market segmentation is a way of life.
• Market segmentation often translates to opportunities for discriminatory pricing –
offering different prices to different market segments.
• Customer-segment pricing – this takes advantage of the likelihood that the upscale
market takes the higher price for granted while the broader market expects a more
mainstream price point.
• Product-form pricing – the price in here are not commensurate with the far greater
margins.
 • Image pricing – Upscale products practically demand higher prices, otherwise their
credibility may be ruined.
• Location pricing – This is a form of discrimination that is based on the physical location
of the buyers.
• Time pricing – this is a form of discrimination – what is the difference between selling
the stocks anytime in the day.

Product Mix Pricing

• Product line pricing – The flagship product in the line, for instance, will likely have a
popular price point as it seeks to attract a wide audience. The premium product gets a
premium price while a populist offering have a low price point.
• Optional feature pricing – It is difficult to sell complete packages to consumers. It may
be easier to sell them a basic stripped-down model first, then everything else becoming
optional add-ons.
• Captive product pricing – They end up having the customer as a captive market for the
consumables on which they really make their money.
• By-product pricing – In case the production of your product generates by-products and
you manage to find a way to make money out of these by-products, then this becomes
an opportunity for realigning the price of your primary product.
• Product bundle pricing – Bundling the slower moving products together with star
performers can be a strategic option.

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