Principles of Marketing (2nd Quarter)

MARKETING RESEARCH
➢ is the function of linking the consumer, customer and public to the
marketer through information.
Information Used:
a. to identify and define marketing opportunities and problems;
b. to generate, refine and evaluate marketing actions;
c. to monitor marketing performance; and
d. to improve understanding of the marketing process.
Marketing Researchers – they specify the information needed to
address marketing issues, design the method for collecting information,
manage and implement the data collection process, analyze the results
and communicate the findings and their implications.
Marketing Researchers - They engage in a wide variety of activities,
ranging from analyses of market potential and market shares to studies
of customer satisfaction and purchase intentions. Every marketer needs
research.
The role of marketing research is not to make marketing decisions but
rather help reduce risks in decision making.
Marketing Research

✓ provides important data to help solve marketing challenges that a

business will most likely face

✓ an integral part of the business planning process.

✓ It is the process of determining the viability of a new service or

product through research conducted directly with potential customers.
Marketing Research Process
1. Identification and definition of Research Problem
2. Conducting situational analysis and informal investigation
3. Planning and conducting the formal investigation
4. Analyzing and Interpreting Data
5. Summarizing the findings and preparing a research report

I. Identification and definition of Research Problem

This involves
a. Identification of Research Problem
b. Laying down objectives,
c. Determining the extent of information required
II. Conducting situational analysis and informal investigation
Involves collecting information regarding business environment, market
situation, competitions and industry surrounding the problem in
general. An informal investigation includes an investigation with the
people outside the organization like suppliers, wholesalers, consumers,
advertising agencies etc. This is done to determine whether a detailed
study is necessary and feasible or not.

III. Planning and conducting the formal investigation

a. Preparing research design – exploratory, descriptive, casual
b. Selecting the sources of information – primary data or secondary
data
c. Deciding methods of data collection – survey, observation,
experimentation, online survey, etc.
d. Planning the Sample Frames, Sample size, and Questionnaire
e. Collecting the data – survey, observation or experimentation

Research Design
a. Exploratory research – involves reaching a better understanding of
the research problem and identifying the variables to be measured.
b. Descriptive research– describes marketing mix characteristics and
he extent of association between variables
c. Causal research– investigates cause-and-effect relationships or why
change in one variable brings about change in another.
Sources of Information
a. Primary data – gathers original information directly through survey,
experiments, field tests, direct observations, FGD, & interviews
b. Secondary data – uses previously published information such as
materials on the internet, existing marketing research results,
company’s stock lists etc.
There are two main types of marketing research: Quantitative and
Qualitative. Quantitative research usually includes phone, mail,
Internet or in person interviews.
Quantitative data can be counted, measured, and expressed using
numbers. While Qualitative data is descriptive and conceptual.
Qualitative data can be categorized based on traits and characteristics.
Market Research Technique/Data Collection
1. Surveys - are most frequently used by researchers, they ask users a
short series of open- or closed-ended questions, which can be delivered
as an onscreen questionnaire or via email.
2. Interviews - are one-on-one conversation with members of your
target market. These can be done face-to-face or online.
3. Focus group discussion - is about bringing together a carefully
selected group of people who fit a company’s target market. There is a
moderator that will lead the flow of the group discussion and question
and answer activities.
4. Customer observation - a researcher will be observing the customer
and reads its verbal and non-verbal communication or activities to gain
the study needed by the organization.
4. Analyzing and Interpreting Data
Involves classification, tabulation and interpretation of the data
collected. Statistical techniques are used to draw conclusions and make
recommendations of the report.
5. Summarizing the Findings and Preparing a Research Report
The last step involves the preparation of a written report that helps the
management to make effective decisions based on the finding and
recommendations of the report.
Importance of Marketing Research
1. It helps in the formulation of marketing plans, policies and strategy;
2. It helps in problem-solving and decision making;
3. It acts as a controlling technique for marketing activities;
4. It helps to understand market complications and opportunities; and
5. It aids in understanding consumer behavior and consumption
patterns.
CONSUMER MARKET
➢ A system composed of all individuals who purchase goods and
services for personal consumption or use.
Consumer Purchase Decision Process
1. Recognizing a need
- The consumer thinks of brands and products that he or she would
purchase to satisfy his or her needs of wants.
- Marketers of different brands also think of ways to show how
their products would satisfy the need and wants of the customer.

2. Searching for Information about a product or service

- This information comes from various sources such as
advertisements, which in turn may utilize different approaches to
convince a customer to purchase a certain product.

3. Evaluating the different product/services available

- Brand X or Brand Y or Brand Z
- Quality, what is much better

4. Making a final purchase decision

- After gathering information about products, consumers may again
review their options and evaluate them for their strong points
before making their final choice.
- Their selection of brands may be aided by advertisements or
reviews from friends, peers or relatives.

5. Making an after-purchase evaluation

- In the actual decision, consumers will avail of their preferred
services or products.
- The final choice of the consumer is based on his or her evaluation
of the products or services beforehand.
 Example:
BMW E46 general maintenance + Things to do after purchase
- After the purchase, the consumer will make an evaluation of the
product or service.
- If there is dissatisfaction, the marketers must identify what
feature of the product has fallen short of consumers’
expectations.
Factors influencing consumer behavior
1. Cultural – individual’s belief, traditions, norms and values learned
from their family or other institutions from his or her society.
2. Social – Sum of the customer’s social functions and interactions
with the members of his group.
Three Social Factors:
1. Reference Group – family members, relatives, friends, co workers
and others who can influence the purchasing of an individual.
2. Social Role - Refers to the attitude and behavior that is expected
of an individual based on his or her responsibilities.
3. Social Status – Often based on how much an individual can earn
and spend.

4. Personal – are exclusive to the individual alone such as age,

lifestyle, occupation, civil, status, religion, economic status, and
personality.
5. Psychological – are those which associated with the human mind
and behavior.
Some psychological factors that affect consumer behavior are:
1. Motivation – reason that guides one’s behavior.
 2. Perception – Individual’s unique way of viewing an object as
phenomenon.
3. Learning – change in behavior of an individual after acquiring
knowledge or experience.
4. Beliefs and attitudes – centered on the assumptions that an
individual makes regarding an object or phenomenon.
Types of consumer behavior
An individual’s buying behavior is mostly determines by the level of his
or her involvement in purchasing a product or service.
Involvement – relates to the willingness of the consumer to acquire
more information about the product or service before purchasing it and
determining the difference between brands of the same product before
making a final purchase.
Types of consumer behavior are:
1. Variety seeking behavior – requires very little to no amount of
involvement.
- A consumer manifests this behavior for the sake of trying
something new or when purchasing products that are cheap but
routinely used.
2. Habitual buying behavior – requires minimal amount of
involvement as manifested in purchasing the products which are
routinely used but those feature do not significantly differ from
other brands.
3. Dissonance-reducing behavior – often requires relatively larger
amount of involvement manifested after a consumer buys a
certain product brand and realizes that he or she may have made
a wrong decision.
4. Complex buying behavior – require the greatest amount of
involvement. This is manifested when buying very expensive
products.
BUSINESS MARKET
➢ A system composed of firms and business organizations that
purchase semi-processed goods and raw materials either for their
operations or for reselling.
➢ Decision making in business market involve large group of people
since purchases tend to be expensive or large in quantity.
Characteristics of Business Markets
1. The demand in business markets – the demand for products in
the business markets is referred to as the derived demand based
on the needs of the consumer.
2. The complexity of buying – business purchases often involve a lot
of money because the company either makes repeat purchases of
a product, or it buys a products which will be used for a long time
such as heavy equipment or machineries.
➢ Purchase decisions include careful attention to every detail of
transaction and business transactions are formalized by contracts.
3. The involvement of professional purchasing agents – companies
and firms rely on the expertise of professional purchasing agents
who have skills in dealing with suppliers, and are professionally
trained to make purchasing decisions.
Business Buying Decision Process
1. Recognizing of a need
➢ Businesses identify a need which will be addressed when they
purchase certain goods of raw materials.
2. Determining product specifications
➢ Product specifications refer to the functions, features, and
requirements related to the product or service to be created or
improved.
 3. Listing possible suppliers
➢ Once product specifications are laid out, business markets are now
ready to look for possible suppliers of raw materials, goods and
equipment that the business markets can use in making their
products.
➢ Extensive list of suppliers who can comply with the product
specifications at an affordable price. This task is performed by
purchasing agents.
4. Selection of suppliers
➢ From supplier list, the business then selects the one which offer the
product that complies to its specifications at a reasonable price.
➢ The purchase is then made, and the selected supplier becomes the
company’s official source of goods, equipment or raw materials
needed in its operations.
5. Periodic review
➢ The quality of the raw materials or equipment bought will be
evaluated regularly by the personnel who use the purchased
product.
Types of business buying situation
Buying situation – involve the nature and frequency of a purchase.
1. Straight rebuy – the company or firm is satisfied with the raw
materials or equipment from supplier and make rebuys on a
regular basis.
2. Modified rebuy – the company has encountered problems in the
supplier’s raw materials or equipment then makes changes in its
specifications which may include pricing of the product, terms of
payment or delivery schedule.
3. New buy – refers to a new purchase made by the firm or company
from a different supplier. The firm often offers extensive research
to choose the best supplier, on the other hand, the supplier is
expected to improve its product to entice new customers.
Participants in the business buying process
1. Users – directly utilize products and services, they primarily
determine what products needs to be purchased by the company
or firm.
2. Influencers – help in further defining specifications and features
needed for a product or service.
3. Buyers – usually the professional purchasing agents of the firms
who negotiate with the suppliers as a part of the buying process.
4. Deciders – people in the organization who have the authority to
make or approve decisions.
5. Gatekeepers – control the flow of information from the business
markets to the suppliers. The information may encourage or
discourage the members of the business markets to further
engage in the buying process.
MARKET SEGMENTATION, TARGETING AND
POSITIONING
➢ A Target Market is a group of people to whom a company intends to
sell its products and services.
Why Target Market?
They are primary recipient of the company’s marketing effort.
Identifying TM helps the company maximize its marketing resources to
attract and retain loyal group of customers. This is why companies
usually spend time, effort and money to identify their target market.
Stages of Target Marketing
1. Market segmentation
2. Market targeting
3. Market positioning

1. Market Segmentation
Market Segments - part of a market that contains a group of buyers
with similar buying habits. The way a business segments its market
depends on the product being sold and the customer.
Why segment?
- Buyers are not the same
- It allows you to choose which buyers to target
- Creates significant competitive advantage
Categories/variables of market segmentation
1. Demographic variables – basic statistical characteristics of
consumers.
➢ Age
➢ Life cycle stage
➢ Gender
➢ Income
➢ Religion, race and nationality
2. Geographic – physical features of a certain area and other related
characteristics, provides quick overview of differences and
similarities between consumers according to geographical
features.
➢ Climate
➢ Population
3. Psychographic – attempts to answer the WHY’s regarding a
consumer’s purchasing behavior lifestyle pattern.
➢ Lifestyle patterns
➢ Hobbies and interests
➢ Opinions and beliefs
➢ Personality
4. Behavioristic – product usage of consumers and their attitude
towards the brand.
➢ Loyalty
➢ Special occasions
➢ Benefits
 3. Market Targeting – a stage where the company or firm further
examines its potential as an actual target market. The company
also deliberates whether it has the resources to cater the market
segment. Thus, market segment they will choose by the end of
market targeting has the greatest potential for a high rate of
sales.
Types of market targeting strategies
1. Undifferentiated marketing – aka Mass Marketing – companies
or firms who deliberately choose not to focus on just one
segment. They tend to sell a wide variety of product/s with highly
generalized features.
2. Differentiated marketing – aka Segment Marketing – companies
who perform their strategies make sure their products cater the
3. tend to have highly specific features.
4. Concentrated marketing – aka Niche Marketing – products or
services often have highly specific features. However, a company
or firm tailors its products or services to only one specific
segment. This specific segment is called Niche.

3. Market Positioning – after a company or firm has identified its actual

target market/s, its product or service must now create a favorable
impression on the customers minds.
Concerned with how the customers perceive the products and how
they are defined by the customers.
Its objectives is to occupy a clear, unique, and advantageous position in
the customers’ minds.
Determine current market position
➢ Who are you as a brand?
➢ What do you stand for?
➢ Who are your target customers?
➢ How will you meet those needs?
➢ Who are your competitors?
➢ What do you do differently?

Types of market positioning strategies

1. Feature-based positioning – marketers sell their brands on the
basis of their feature.
2. Use-based positioning – marketers sell their brands on the basis
of their possible uses or the types of circumstances when they can
be used.
3. User-based positioning – marketers advertise their products
based on the type of consumer who can benefit from their
product.
4. Head-on competitive positioning – used by market challengers or
the “number two” brands in the market.
5. Lifestyle positioning – marketers sell their products or services
according to the cultural practices or values that their target
market/s subscribe to.
DEVELOPING THE MARKETING MIX
PRODUCT
➢ Tangible objects that a company sells to the customers for their use
of consumption.
Levels of product
1. Core – Most important, bought regardless of our will or the brand
Example: Medicine, Rice, Mask
2. Actual – The brand is well-known, bought because of the quality
Example: Hawk over Guess, HBW over Panda
3. Augmented – things we consider when buying
Example: Aircon, Refrigerator, other appliances
Classification of Products
1. Consumer Goods – (consumer market) for own consumption
2. Industrial Goods – (business market) ex: machineries
New Product Development (innovation)
- A process that involves the conceptualization and the creation of
innovative products that will catch the attention of the customer
and ensure their loyalty to a particular brand.
Example: Snacks that are DOH approved
Stages of New Product Development
1. Idea generation – company searches for and survey new ideas to
be used in developing a product.
2. Idea screening – ideas generated by the company experts are
carefully scrutinized
 3. Concept development and screening
Product idea – what we should do to the product
Product concept – how we should sell it
Product image – how we want the customers to see our product
Concept testing – is the product effective?
4. Market business planning
(Market segmentation and targeting)
How it will be marketed. Target market is concretely identified
and characterized, the profit objectives are planned as well as
price, placement and promotion of the product is identified.
5. Product development
Involves the efforts of both the marketing and research
department of companies.
6. Test marketing (feasibility) – provides the marketer with
experiences in testing the product and the entire marketing
program before full introduction/implementation.
7. Commercialization – finalization of decisions and launching of the
product.
Soft launch – limited number of customers
Full-scale launch – official launching
Product Line – group of similar products offered by the same company
under the same brand. This may differ in sizes, variants of flavors, or in
specific types, but are all under a general class.
Product life cycle – defined as the period of time that a product is
introduced, sold and eventually removed from the market.
Diminishing Margin Utility – getting tired of the same offers
Product development stage
1. Introduction – product is launched in the market.
2. Growth – product gains acceptance in the market and the profits
for the firm or company starts to increase.
3. Maturity – product has been in the market for a long period of
time and competitors has also increased.
4. Decline – profits and sales for the product continues to decrease.
Marketing strategies for service firms
1. Selecting and training employees
2. Associating effective customer service with employees’
motivation
3. Delivering high quality service
4. Building a strong customer base
DEVELOPING MARKETING MIX
PRICING
➢ The amount of money charged for a product or service.
➢ The sum of all the values that consumers exchange for the benefits
of having or using the product or service.
Example: tuition, rent, retainer, toll, salary/wage, due
Mark-up – added amount based on the target sales after which the
company determines the price.
Sales Forecast – estimates the quantity of goods that can be sold within
a specified period and the accompanying costs and the predicted
profits.
Demand Forecast – estimates the market demand of a good in the
future.
Break-even point – the state when the company revenues qual the
expenses can be determined based on the fixed and variable cost.
Pricing Approaches
1. Cost-based pricing – the fixed and variable costs are determined
as the basis of the selling price.
2. Perceived value pricing – pricing is based on the customer’s
perceived value.
3. Competitive pricing – prices of goods are based on the
competitors’ prices on the goods.
Price Setting
1. Marketing objectives – these are goals that companies set as part
of their marketing strategy in the promotion of their good to
customers to maximize profits.
 2. Research and development costs – conceptualization of goods
3. Market structure – uniform price is set for all sellers
4. Elasticity of demand – relationship between consumer demand
and changes in the price of goods.
5. Laws – laws passed by the government should also be considered
in the pricing of goods.
Pricing Schemes
1. Product bundle pricing – individual products are put together to
create one whole bundle or set which is then offered to
customers.
2. Main or captive product pricing – the main product is charged a
lower price but additional charges go with it.
3. Product line pricing – involves the separation of goods and their
variations into categories by creating price gaps to emphasize
differences in quality.
4. Market penetration pricing – a low initial price is set to attract
customers, improve sales and eventually eliminate competition.
Based on law of demand.
5. Market skimming – involves setting a high price for a product to
gain as much as possible before the number of competitors for
the same product increases.
DEVELOPING MARKETING MIX
PLACE (Channel of Distribution)
➢ Establishing an excellent channel of distribution ensures that the
product will reach the target customers.
➢ Distribution entails the uses of Marketing Intermediaries who are
people or organization responsible for linking the producer or the
manufacturer to consumer.
Example: broker, agent
Two main marketing or channel of distribution
1. Retailers
2. Wholesalers
Retailing
➢ Refers to all the activities including the sale of goods or services
directly to the final consumer.
➢ Individuals engaged in retailing are collectively called retailers.
➢ Usually in small quantity
Retailing as a part of Philippine culture; Sari-Sari Stores
Sari-Sari (variety) Stores - are small retail shops found in
neighborhoods that cater to the residents of a particular community.
Retailing as a formal business
➢ Supermarkets
➢ Drugstores
➢ Department stores
➢ Convenient stores
➢ Hypermarkets
➢ Non-store retailing
Wholesaling
➢ Includes all activities involved in selling products to merchandisers or
producers for business use.
➢ they carry a wider assortment of products which are offered cheaper
when bought in bulk.
Types of wholesalers
1. Merchant wholesalers – buy goods in bulk from producers and
then resell to retailers with a mark-up. They are sometimes
referred to as distributors.
2. Full-service wholesalers – provide a wide range of service to their
customers as recruitment of sales people conducting inventory
and delivery of goods.
Classification of Channel of Distribution
1. Intensive – products need many intermediaries
2. Selective – when there are few intermediaries
3. Exclusive – when only one intermediary is needed
Four types of Full-Service Wholesalers
1. General merchandise wholesalers – offers wide variety of non-
perishable goods.
2. Limited line wholesalers – provide an assortment of goods that
are limited to a few specific product lines but offer a broad
selection of items.
3. Specialty line wholesalers – are compromised only of a single
product line but offer extensive customer service for the
products. A rock jobber is a type of specialty line wholesale who
maintains and display the stock of goods.
4. Brokers and agents – negotiate with the price and third party
transactions.
DEVELOPING MARKETING MIX
PROMOTION (Marketing Communication)
➢ This comprises the activities done to increase the target consumer’s
knowledge of the product.
➢ The promotion that a company will undertake depend on the budget
it sets aside, and there are several ways to set a promotional budget.
Ways to set a promotional budget
1. Allocate a set of percentage
2. Examining the competitor’s budget
3. Plan out the different tasks and types of promotion to be done.

➢ The right combination of methods for setting a budget, and adjusting

them according to the situation, can be the deciding factor in
whether or not promotional campaign succeeds.
The aim of promotion is to:
A. Increase brand awareness
B. Create interest
C. Generate sales or create brand loyalty
Promotional tools
1. Advertising – it is a non-personal form of communication meant
to bring a product or service to the attention of potential or
current customers. The most expressive of the promotion types,
relying heavenly on visual, colors, words and sound.
➢ Reach – is the percentage of the target market who is exposed to a
particular advertisement.
➢ Frequency – is the number of times the target audience is exposed
to the message.
Medium of advertisement – televisions, print ads
Outdoor advertisement – billboards, tarpaulins, ads
Indoor Advertising – mall, restroom, airports, alternative print ads on
the internet website.
➢ Intermediary website – acts as the gateway to different content:
example school networking sites.
➢ Destination site – provides information on specific subjects,
products or services.
Examples: travel companies, manufacturing websites
Objectives of Advertising
➢ To inform
➢ To persuade
➢ To compare
➢ To remind
Advertising message can be expressed through the following execution
style:
➢ Lifestyle
➢ Slice of Life
➢ Testimonial
➢ Mood
➢ Fantasy
➢ Technical scientific evidence
➢ Musical
 2. Personal selling – is a face-to-face technique wherein the
salesperson uses his or her persuasive skills to convince a
customer to buy a particular good or service. Good salesperson
can effectively boost sales by building strong and binding
relationships with customers who value the time and effort they
put into promoting the product.

3. Sales Promotion – consists of sales activities which help increase

sales for a product/service. It often provides quick response.
Types of sales promotion
1. Consumer Scheme – for customers (individuals)
Example: cash, coupons, discounts
2. Trade promotion – for wholesalers, retailers and distributors.
Example: freebies, incentives, commission

4. Public Relations – is the practice of communicating with the

media and general public in order to establish a strong
relationship between a target audience and an organization,
company, or individual to create and maintain positive image to
each participants.
5. Direct Marketing – is a form of marketing and advertising in
which a company communicates and interacts with its target
audience directly, without middlemen or intermediaries’ entities.