I.

COMPILATION OF LECTURE OUTLINE

STRATEGIC PLANNING AND THE MARKETING MANAGEMENT

PROCESS

Marketing Concept- means that an organization should seek to make a profit

by serving the
needs of the customers groups.

What is MARKETING?
The process of planning and executing conception, pricing,
promotion, and
distribution of ideas, goods, and services to create exchanges that
satisfy individual and
organizational goal.

MARKETING MANAGEMENT – the process of conceptualizing, analyzing,

planning,
implementing, and controlling marketing activities to achieve the
organization’s desired
key result area.

Strategic Planning – includes all the activities that lead to the development of
a clear
organization mission, organizational objectives, and appropriate
strategies to achieve the
objectives for the entire organization.

THE STRATEGIC PLANNING PROCESS

I. Organizational Mission- statement of mission or purpose of

organization and the description of their existence.

Key Elements:
1. The organization’s history- history of objectives, accomplishment,
mistakes and some critical characteristics and events of the past
2. The organization’s distinctive competencies – things that an
organization does well; so well in fact that they give it an advantage
over similar organization.
3. The organization’s environment – the environment dictates the
opportunities, constraints, and threats that must be identified
before a mission statement is developed.

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 Mission statement must be;
a. Achievable
b. Motivational
c. Specific

II. Organizational Objectives – are the end points of an organization’s

mission and are what it seeks through the ongoing, long-run
operations of the organization. These objectives must be; Specific,
measureable, action commitments by which the mission of the
organization is to be achieved.

Objectives can accomplish the following;

1. They can be converted into specific action.
2. They will provide direction
3. They can establish long run priorities for the organization.
4. They can facilitate management control.

III. Organizational Strategies – involves the choice of major directions the

organization will take in the pursuing its objectives.

a. Organizational Strategies Based on Products and Markets –

developing organizational strategies is to focus on the directions
the organization can take in order to grow.
Four paths in order to grow
1. Market penetration strategies – focus primarily on
increasing the sale of present products to present
customers
2. Market development strategies – pursuing growth
through market development, an organization would
seek to find new customers for its present products.
3. Product development strategies – the new products
developed would be directed primarily to present
customers
4. Diversification – strategy can lead the organization into
entirely new and even unrelated business. Seeking new
products for customers not currently being served

b. Organizational Strategies Based on Competitive Advantage –

devising means to gain competitive advantage against other.
Competitive advantage is an ability to outperform competitors in
providing something that the market values

c. Organizational Strategies Based on Values – focuses on

developing and delivering superior value to customers as a way
to achieve organizational objectives. It also focuses not only on

2
 customers need , but also on the question, How can we create
value for them and still achieve our objectives.

IV. Organizational Portfolio Plan- final phase of strategic planning process

is the formulation of the organizational portfolio plan, that is,
portfolio of business, product line.

Strategic Planning Environment – give necessary information to strategic

plan
1. Cooperative environment – includes all firms and individuals who
have a vested interest in the firm accomplishing its objectives
2. Competitive environment – includes primarily other firms in the
industry that rival the organization for both resources and sales
3. Economic environment –state of macro economy and changes in it
that also bring about marketing opportunities and constraint.
4. Social environment – includes general cultural and social traditions,
norms, and attitudes
5. Political environment – includes the attitude and reactions of the
general public, social and business critics, and other organizations.
Legal environment – includes a host of federal, state, and local legislation
directed at protecting both business competition and consumer rights.

MARKETING REASEARCH: PROCESS AND SYSTEMS FOR

DECISION MAKING
Marketing Research – is the process by which information about the
environment is generated,
analyzed, and interpreted for use in marketing decision making. It
is an aid to decision
making and not a substitute for it. In other words, marketing
research does not make
decision, but it can substantially increase the chances that good
decisions are made.

THE MARKETING RESEARCH PROCESS

The 5 P’s of the Research process

1. Purpose of the research – to determine explicitly why the research
is needed and what it is to accomplish.
2. Plan of the research – it spells out the nature of the research to be
conducted and includes an explanation of such things as the sample
design, measures, and analysis technique to be used.

3
 3. Performance of the research – involve preparing for data collection
and actually collecting them. Data collection will defend on the kind
of research and the type of data needed.
4. Processing of research data – the preparation of data for analysis
and the actual analysis of them.
5. Preparation of research report – completes statement of everything
done in a research project and includes a write- up of each of the
previous stage as well as the strategic recommendation from the
research.

Sample Research Plan

I. Tentative projective title
II. Statement of the problem
One or two sentences describing the general problem under
consideration
III. Define and delimit the problem
States the purposes and scope of the problem. Purpose refers
to goals and objectives.
IV. Outline
This is a tentative framework for the entire project. Show
statistical tables in outline form, and also show planned graphs
V. Method and Data source
The types of data to be sought are briefly identified. A brief
explanation of how the necessary information or data will be
gathered ( surveys, experiment, library sources)
VI. Sample design
This provides a description of the population to be studied
and how it will be defined.
VII. Data collection forms
The forms to be employed in gathering the data are discussed
here. These involve surveys, questionnaire, or an interview
schedule. The plan should state how these instruments have
been validated and should be given any evidence of their
reliability and validity.
VIII. Personnel requirements
This provides complete list of all personnel who will be
required, indicating exact jobs, time duration, and expected rate
of pay.
IX. Phases of the study with the time schedule
This is the detailed outline of the plan to complete the study.
The study should be divided into workable pieces:
- Preliminary investigation
- Final test
- Sample selection
- Mail questionnaire, field follow up, and so forth
- Additional task

4
 X. Analysis plans
This is the discussion of editing and proofreading of
questionnaire, coding instruction, and the type of data analysis.
A major table that will appear in the report should be presented.
XI. Cost estimate for doing the study
This includes all cost incurred in doing the study.

Qualitative and Quantitative Research

Qualitative research – typically involves face-to-face interviews with

respondents designed to
develop a better understanding of what they think and feel
concerning a research
topic, such as a brand name, a product, a package, or an
advertisement.
Quantitative research – involves more systematic procedures designed to
obtain and analyzes
numerical data.

CONSUMER BEHAVIOR
The marketing concepts emphasizes that profitable marketing begins
with the discovery and understanding of consumer needs and then develops
a marketing mix to satisfy these needs. Thus , an understanding of
consumers and their needs and purchasing behavior is integral to successful
marketing.

INFLUENCES ON CONSUMER DECISION MAKING

1. Social Influences
a. Culture and Subculture – one of the most basic influences on an
individual’ needs, wants, and behavior, since all facets of life are
carried out against the background of the society in which an
individual lives. Cultural values are transmitted through three
basic organizations: the family, religious organizations, and
educational institutions.
b. Social class – develop on the basis of such things as wealth, skills,
and power.
c. Reference groups and families – when forming attitudes and
opinions as described as reference groups. Group includes family
and close friends, and fraternal organizations and professional
association.

2. Marketing Influences

5
 a. Product influences – attributes of a company’s product, including
brand name, quality, newness, and the physical appearance of the
product such as packaging and labeling information.
b. Price Influences – the price of the products and services often
influences whether consumers will purchase them after which
competitive offering is selected.
c. Promotion Influences – advertising, sales promotion, salespeople,
and publicity can influence what consumers will think about
products, and what experience in purchasing and using the
products.
d. Place Influences – distribution of products can influence in several
ways; 1). Products that are convenient to buy in a variety of
stores. 2). Products are sold in an exclusive outlets. 3). Offering
products by non-store methods such as internet or by catalog.

3. Situational Influences
a. Physical Features – most readily apparent features of a situation.
These includes geographical and institutional location, décor,
sounds, visible configuration etc.
b. Social Features – provide additional depth to a description of a
situation. Persons characteristics, their roles and interpersonal
interactions are potentially relevant examples.
c. Time – a dimension of the situations that may be specified in units
ranging from time of day to season of the year.
d. Task features – a situation include an intent or requirement to
select, shop for, or obtain information about the general or specific
purchase.
e. Current Conditions – make up a final feature that characterizes a
situation. These are monetary mood or monetary conditions rather
than chronic individual traits.

4. Psychological Influence
a. Product Knowledge – the amount of information a consumer has
stored in her/his memory about the particular products
b. Product Involvement – a consumer’s perception of the importance
of an item

CONSUMER DECISION – MAKING PROCESS

1. Need Recognition – starting point of the buying process is the

recognition of an unsatisfied need by the customer.
a. Physiological needs- primary need of human body to survive
b. Safety needs – need for protection from physical harm
c. Belongingness and love needs – a social needs or need for
companionship
d. Esteem needs – self awareness and importance to others

6
 e. Self-actualization needs – defined as a desire to become more and
more what one is, to become everything one is capable of
becoming.

2. Alternative Search
a. Internal sources – searched through whatever stored information
and experience in his mind for dealing with the need.
b. Group sources – common source of information for purchase
decision comes from communication with other people.
c. Marketing sources – information include such factor as advertising,
salesperson, dealers, packaging, and display.
d. Public sources – information include publicity, such as newspaper
article about the product, and independent rating of the product.
e. Experiential sources – refer to handling, examining, and perhaps
trying the product while shopping.

3. Alternative Evaluation
a. Consumer has information about a number brands in a product
class.
b. Consumer perceive that at least some of the brands are viable
alternatives for satisfying a recognized need
c. Each the these brands has a set of attributes ( color, quality, size,
etc. )
d. A set of this attribute is relevant to consumer
e. The brand that is perceived as offering the greater number of
desired attributes
f. The brand the consumer like best is the brand the consumer will
intend to purchase.

4. Purchase Decision
If no other factors intervene after the consumer has decided on
the brand that is intended for purchase, the actual purchase is a
common result of search and evaluation.

5. Post purchase Evaluation

a. The decision is an important one psychologically or financially, or
both.
b. There are number of forgone alternatives
c. The forgone alternatives have many favorable features.

THE STRATEGIC 3C’S AND THE MARKETING TRIANGLE

3C’s in Marketing

Customers

7
 Competition Company

Customers

Two Basic Questions

1. Who are your customers and why?
Who are not your customers and why?
2. What are your customer’s needs, wants, and expectations?

Competition

Determine the direct and indirect competition

• Direct Competition – offering the same line of product
• Indirect Competition – all company competing for the customers
share of money

3 Ways to Competitive Advantage

Better

Faster Closer

Company
 Competencies of company to devise strategy and tactical plan to
satisfy customers.

KRA – Key Results Area used to evaluate of marketing performance

KRA Basic Components

Shares

8
 Market Shares Profit

Sales – resulting from satisfying customer’s requirements.

Market Share – resulting from outperforming competition.
Profit – resulting from having excess of sales over expenses.

Evaluating 3C’s into KRA

What is marketing? How it is measured?

3C’s KRA
Consumers  Sales
Competition  Market shares
Company  Profit

Maximizing Sales

Sales = Selling Price x Sales Volume

2 Basic Ways to maximize sales

1. increase or maximize the selling price

2. increase or maximize sales volume

3 Ways to increase sales volume

1. New users (who uses the product)

2. New usage (for what purpose is the product used)
3. More usage (when & in what occasion is it used)

II. WRITTEN REPORT OF ORAL PRESENTATION

Topic: New Product Planning and Development

New Product Strategy

1. New-to-the-world products. Products that are inventions.

9
 2. New category entries. Products that take a firm into a category new to
it, but are not new to the world.
3. Additions to product lines. Products that are line extensions, flankers,
and so on, to the firm’s current markets.
4. Product improvements. Current products made better.
5. Repositioning. Products that are retargeted for a new use or
application.

Ten Factors Associated with New Product Success

1. Product superiority/quality. The competitive advantage the product has

by virtue of features, benefits, quality, uniqueness, and so on.
2. Economic advantage to the user. The product’s quality for the
consumer’s money.
3. Overall/project fit. The product’s synergy with the company.
4. Technological compatibility. The product’s technological synergy with
the company.
5. Familiarity to the company. How familiar or “close to home” the
product is to the company’s current products and markets.
6. Market need, growth, and size. The magnitude of the market
opportunity.
7. Competitive situation. How easy the market is to penetrate from a
competitive standpoint.
8. Defined opportunity. Whether the product process has a well defined
category and established market to enter.
9. Market-driven process. The new product process is well-planned and
executed, receiving adequate resources suited to the customer’s
needs, wants, and buying behavior.
10. Customer service. The product is supported by friendly, courteous,
prompt and efficient customer service.

New Product Planning and Development Process

1. Idea Generation
Every product starts as an idea. Ideas are the raw materials for product
development, and the whole planning process depends on the quality
of idea generation and screening process. Since idea generation is the
least costly stage in the product development process, it makes sense
that an emphasis be placed first on recognizing available sources of
new product ideas and then on funneling these ideas to appropriate
decision makers for screening.

2. Idea Screening

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 The primary function of the idea screening process is twofold: first, to
eliminate ideas for new products that could not be profitably marketed
by the firm, and second, to expand viable ideas into full product
concepts.

3. Project Planning
The new product proposal is evaluated further and responsibility for
the project is assigned to a project team. The proposal is analyzed in
terms of production, marketing, financial, and competitive factors.

4. Product Development
At this juncture, the product idea has been evaluated from the
standpoint of engineering, manufacturing, finance, and marketing. If it
has met all expectations, it is considered a candidate for further
research and testing.

5. Test Marketing
The management goes outside the company and submits the product
candidate for customer approval. Test market programs are conducted
in line with the general plans for launching the product. Test marketing
is a controlled experiment in a limited geographical area to test the
new product or in some cases certain aspects of the marketing
strategy, such as packaging or advertising.

6. Commercialization
This is the launching step where the firm commits to introducing the
product into the marketplace.

III. WRITTEN REPORT OF CASE PRESENTATION

Case Study: Starbucks

Brief Background
Starbucks Coffee Houses were started in Seattle, Washington, in 1971 when
three young men, Gerald Baldwin, Gordon Bowker, and Zev Siegl, decided to
try their hand at selling gourmet coffee. They were betting that consumers
would pay $1.50 for a cup of coffee compared to 40 cents for generic coffee
offered elsewhere. By 2002, there were more than 3,400 Starbucks Coffee
Houses throughout the world. Starbucks has decided to stick to its knitting,
understand its core competency, know what the value proposition is for the
customers, and do everything possible to get close to the customers.

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Main Problem
How to boost sales growth far more rapidly than current sales?

Objective
• To develop ways and means to attract new customers while
maintaining the old customers
• To maximize sales volume

SWOT Analysis

Strength
• High revenue
• Large profit margin

Weakness
• Difficulty to perfectly replicate their product to their different branches

Opportunity
• Only 5% of coffee consumption in the US is done in coffee houses
leaving ample room for growth

Threat
• New competitors enter the industry

Alternative Courses of Action

• Develop a variety of products to offer in the market
• Saturate the market
• Increase the selling price

Recommendation
Starbucks must saturate the market by means of opening and locating
branches to every corner of major cities. They must also offer various
products to attract their customers and to maintain their competitive
advantage by continuously developing new products.

Conclusion
In order to maximize the sales profit, we must maximize the sales price or
sales volume, and/or both. By saturating the market with new products that
are well strategized, the company will then have an increase in their sales
growth.

IV. COMPILATION OF WRITTEN REPORTS

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2. PRODUCT STRATEGY

OBJECTIVES
• To be able to learn on how to make a strategic plan in marketing a
product.
• To have a great opportunities to increase sales and develop a
sustainable competitive advantage.
• To learn on how to go with the flow of the current trends.

CONTENT

Product strategy – is a critical element of marketing and business strategy,

since it is through the sale of products and services that companies survive
and grow.

Product - is the sum of the physical, psychological, and sociological

satisfactions the buyer derives from purchase, ownership, and consumption.

Types of product
• Tangible Product - the physical entity or service that is offered to the
buyer.
• Extended Product - the tangible product along with the whole cluster
of services that accompany it.
• Generic Product - the essential benefits the buyer expects to receive
from the product.

Product Classification
1. Agricultural products and raw materials
These are goods grown or extended from the land or sea such as iron
ore, wheat, and sand. In general, these products are fairly
homogeneous, sold in large volume, and have low value per unit or in
bulk weight.
2. Organizational Goods
Such products are purchased by business firms for the purpose of
producing other goods or for running the business. This category
includes the following:
a. Raw materials and semi-finished goods.
b. Major and minor equipment, such as basic machinery, tools, and
other processing facilities.
c. Parts or components, which become an integral element of some
other finished goods.
d. Supplies of items used to operate the business but that do not
become part of the final product.

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 3. Consumer goods
Consumer goods can be divided into three classes:
a. Convenience goods, such as foods, which are purchased
frequently with minimum effort. Impulse goods would also fall
into this category.
b. Shopping goods, such as appliances, which are purchased after
some time and energy, are spent comparing the various
offerings.
c. Special goods, which are unique in some way so the consumer
will make a special purchase effort to obtain them.

Product Quality and Value

Quality - can be defines as the degree of excellence or superiority that an

organization’s product possesses.

Value - can be defined as what the customer gets in exchange for what the
customer gives.

Product Mix and Product Line

Product Mix
Product mix is the complete list of all products offered for sale or
produced by a company. It is a composite of all products, brands or items
within each product line

Product Line
Product line is a group of products closely related to each other. They
are intended for same uses or they function in similar manner.

Three reasons organizations offer varying products within a given

product
1. Potential customers rarely agree on a single set of specifications
regarding their “ideal product” differing greatly in the importance and
value they place on specific attribute
2. Customers prefer variety.
3. The dynamics of competition lead to multiproduct lines.

Branding

Factors that serve to increase the strength of a brand

1. Product quality when products do what they do very well.
2. Consistent advertising and other marketing communications in which
brands tell their story often and well.
3. Distribution intensity whereby customers see the brand wherever they
shop.

14
 4. Brand personality where the brand stands for something.

Brand - is a name, term, design, symbol, or any other feature that identifies
one seller’s good or service as distinct from those of other sellers. The legal
term for brand is Trademark.

Trademark - is a registered company name. It is a brand registered under

the Intellectual Property Office (IPO), and therefore given legal protection.

Branding Strategies
1. Line Extension - approach uses a brand name to facilitate entry into
a new market segment.
2. Brand Extension - a current brand name is used to enter a
completely different product class.
3. Franchise Extension or Family Branding - a company attaches the
corporate name to a product either to enter a new market segment or
a different product class.
4. Dual Branding - also known as joint or co-branding, strategy is one in
which two or more branded products are integrated.
5. Multibranding Strategy - companies may also choose to assign
different brand names to each other.

Packaging
Packaging is a group of activities in product planning which involved
designing and producing container or wrapper for a product.
Product Life Cycle
1. Introduction Stage- this is the stage when the product is launched in
the market.
2. Growth Stage - also known as the “Market acceptance stage”. This is
when sales and profits increase at an increasing rate.
3. Maturity Stage - during this stage, sales and profit start to decline.
4. Decline Stage - new products or brands eventually enter the
industry.

The Product Audit

Product audit is a marketing management technique whereby the
company’s current product offerings are reviewed to ascertain whether each
product should be continued as is, improved, modified, or deleted.

Factors to be considered in Deletion of Products

1. Sales trends
How have sales moved over time? What has happened to market
share? Why have sales declined? What changes in sales have occurred
in competitive products both in our line and in those of other
manufacturers?
2. Profit Contribution

15
 What has been the profit contribution of this product to the company?
If profits have declined, how are these tied to price? Have selling,
promotion, and distribution costs risen out of proportion to sales? Does
the Product require excessive management time and effort?
3. Product Life Cycle
Has the product reached a level of maturity and saturation in the
market? Has new technology been developed that poses a threat to
the product? Are there more effective substitutes on the market? Has
the product outgrown its usefulness? Can the resources used on this
product be put to better use?
4. Customer Migration Patterns
If the product is deleted, will customers of this product switch to other
substitute products marketed by our firm? In total, will profits
associated with our line increase due to favorable switching patterns?

Product Improvement
Product Improvement is a cross-functional effort between the
Engineering, Manufacturing, Quality and Marketing teams to monitor product
quality/yield/cost and then identify, prioritize and implement ongoing product
improvement activities.

SUMMARY
This chapter discussed the central element of marketing management
which is the product strategy. It includes the four important areas of concern
in developing product strategies. First, the basic issues in product
management which includes the product definition, product classification,
product quality and value, product line and product mix, branding and brand
equity and packaging. Second part includes the product life cycle which
consists of its introductory stage, growth stage, maturity stage and the
decline stage. The last part which is the product audit includes the factors in
deciding if the products are to be deleted in the market.

CONCLUSION
Product Strategy is perhaps the most important function of a company.
It must take in account the capabilities in terms of engineering, of
production, of distribution (sales) existing in the company or of time to
acquire them (by hiring or by mergers). It must evaluate the customers
expectations at the time of delivery. It must foresee the competition
(including new entrants) probable moves to enter the same market.

REFERENCES
• Alminar-Mutya, Ruby F., (2007) “Elements of Marketing”, Fourth
Edition, Navotas Press, Navotas City
• http://www.feb-
patrimoine.com/english/corporate/product_strategy.htm

16
 • http://www.masetllc.com/products/452.shtml

3. NEW PRODUCT PLANNING AND DEVELOPMENT

New Product Strategy

1. New-to-the-world products. Products that are inventions.

2. New category entries. Products that take a firm into a category new to
it, but are not new to the world.
3. Additions to product lines. Products that are line extensions, flankers,
and so on, to the firm’s current markets.
4. Product improvements. Current products made better.
5. Repositionings. Products that are retargeted for a new use or
application.

Ten Factors Associated with New Product Success

1. Product superiority/quality. The competitive advantage the product has

by virtue of features, benefits, quality, uniqueness, and so on.
2. Economic advantage to the user. The product’s quality for the
consumer’s money.
3. Overall/project fit. The product’s synergy with the company.
4. Technological compatibility. The product’s technological synergy with
the company.
5. Familiarity to the company. How familiar or “close to home” the
product is to the company’s current products and markets.
6. Market need, growth, and size. The magnitude of the market
opportunity.
7. Competitive situation. How easy the market is to penetrate from a
competitive standpoint.
8. Defined opportunity. Whether the product process has a well defined
category and established market to enter.
9. Market-driven process. The new product process is well-planned and
executed, receiving adequate resources suited to the customer’s
needs, wants, and buying behavior.
10. Customer service. The product is supported by friendly, courteous,
prompt and efficient customer service.

New Product Planning and Development Process

1. Idea Generation
17
 Every product starts as an idea. Ideas are the raw materials for product
development, and the whole planning process depends on the quality
of idea generation and screening process. Since idea generation is the
least costly stage in the product development process, it makes sense
that an emphasis be placed first on recognizing available sources of
new product ideas and then on funneling these ideas to appropriate
decision makers for screening.

2. Idea Screening
The primary function of the idea screening process is twofold: first, to
eliminate ideas for new products that could not be profitably marketed
by the firm, and second, to expand viable ideas into full product
concepts.

3. Project Planning
The new product proposal is evaluated further and responsibility for
the project is assigned to a project team. The proposal is analyzed in
terms of production, marketing, financial, and competitive factors.

4. Product Development
At this juncture, the product idea has been evaluated from the
standpoint of engineering, manufacturing, finance, and marketing. If it
has met all expectations, it is considered a candidate for further
research and testing.

5. Test Marketing
The management goes outside the company and submits the product
candidate for customer approval. Test market programs are conducted
in line with the general plans for launching the product. Test marketing
is a controlled experiment in a limited geographical area to test the
new product or in some cases certain aspects of the marketing
strategy, such as packaging or advertising.

6. Commercialization
This is the launching step where the firm commits to introducing the
product into the marketplace.

4. INTEGRATED MARKETING COMMUNICATIONS

Integrated Marketing Communications is a term used to describe a holistic
approach to marketing. It aims to ensure consistency of message and the
complementary use of media. The concept includes online and offline
marketing channels. It is a planning process designed to assure that all

18
brand contacts received by a customer or prospect for a product, service, or
organization are relevant to that person and consistent over time.

Integrated Marketing Communications is a term used to describe a holistic

approach to marketing. The concept includes online and offline marketing
channels. Online marketing channels include any e-marketing campaigns or
programs, from search engine optimization (SEO), pay-per-click, affiliate,
email, banner to latest web related channels for webinar, blog, micro-
blogging, RSS, podcast, and Internet TV. Offline marketing channels are
traditional print (newspaper, magazine), mail order, public relations, industry
relations, billboard, radio, and television. A company develops its integrated
marketing communication programme using all the elements of the
marketing mix (product, price, place, and promotion).

Integrated marketing communication is integration of all marketing tools,

approaches, and resources within a company which maximizes impact on
consumer mind and which results into maximum profit at minimum cost.
Generally marketing starts from "Marketing Mix". Promotion is one element
of Marketing Mix. Promotional activities include Advertising(by using
different medium), sales promotion (sales and trades promotion), and
personal selling activities. It also includes Internet marketing, Sponsorship
marketing, Direct marketing, Database marketing and Public relation. And
integration of all these promotional tools along with other components of
marketing mix to gain edge over competitor is called as Integrated Marketing
Communication.

THE PROMOTION MIX

The promotion mix concept refers to the combination and types of non
personal and personal communication. Marketers have at their disposal four
major methods of promotion. Taken together these comprise the promotion
mix. In this section a basic definition of each method is offered while in the
next section a comparison of each method based on the characteristics of
promotion is presented.

ADVERTISING

It is a paid form of nonpersonal communication about an organization, its

product or its activities that is transmitted through a mass medium to a
target audience. Advertising is a form of communication used to help sell
products and services. Typically it communicates a message including the
name of the product or service and how that product or service could
potentially benefit the consumer. However, advertising does typically
attempt to persuade potential customers to purchase or to consume more of

19
a particular brand of product or service. Modern advertising developed with
the rise of mass production in the late 19th and early 20th centuries.[1]

Many advertisements are designed to generate increased consumption of

those products and services through the creation and reinvention of the
"brand image". For these purposes, advertisements sometimes embed their
persuasive message with factual information. There are many media used to
deliver these messages, including traditional media such as television, radio,
cinema, magazines, newspapers, video games, the carrier bags, billboards,
mail or post and Internet marketing. Today, new media such as digital
signage is growing as a major new mass media. Advertising is often placed
by an advertising agency on behalf of a company or other organization.

ADVERTISING DECISIONS

 THE EXPENDITURE QUESTION

Determining the size of the advertising budget or determining how

much to spend on advertising.

METHODS

 Percent of Sales

The firm simply takes a percentage figure and applies it to either

past or future sales.

 Per-Unit Expenditure

One in which a fixed monetary amount is spent on advertising for

each unit of the product expected to be sold.

 All You Can Afford

The advertising budget is established as a predetermined share

of profits or financial resources.

 Competitive Parity

Advertising budgets are based on those competitors or other

members of the industry.

 The Research Method

The advertising budget is argued for and presented on the basis

of research findings.

20
  The Task Approach

It initially formulates the advertising goals and defines the tasks

to accomplish those goals.

 THE ALLOCATION QUESTION

This question deals with the problem of deciding on the most

effective way of spending advertising dollars.

 Marketing Strategy

Advertising process involves creating messages with words,

ideas, sounds and other forms of audiovisual stimuli that are designed
to affect consumer behavior.

Two General Criteria for Effective Advertising Message

1. It should take into account the basic principles of communication.

2. It should be predicated upon a good theory of consumer motivation

and behaviour.

3 BASIC COMMUNICATION PROCESS

1. The sender or the source of communication

2. The communication or the message

3. The receiver or the audience

 Media Mix

Advertising process which involves different media types such as

newspapers, radio, television, internet, etc.

SALES PROMOTION

Sales promotion is an element of the marketing process that can close the
sale of goods or services to a potential customer by providing the incentive
to make a positive purchase decision. Sales promotion describes
promotional methods using special short-term techniques to persuade
members of a target market to respond or undertake certain activity. As a

21
reward, marketers offer something of value to those responding generally in
the form of lower cost of ownership for a purchased product (e.g., lower
purchase price, money back) or the inclusion of additional value-added
material (e.g., something more for the same price).

 Objectives of Sales Promotion

 Building Product Awareness
 Creating Interest
 Providing Information
 Stimulating Demand
 Reinforcing the Brand

 Push versus pull marketing

 Push strategies involve aiming promotional efforts to contributors,

retailers, and sales personnel to gain their cooperation in ordering,
stocking, and accelerating their sales of a product.
 Pull strategies involve aiming promotional efforts directly at customers
to encourage them to ask the retailer for the product.

Classification of Sales Promotion

Sales promotion can be classified based on the primary target audience to

whom the promotion is directed. These include:

 Consumer Market Directed

 Trade Market Directed
 Business-to-Business Market Directed

PUBLIC RELATIONS

Public relations describes the various methods a company uses to

disseminate messages about its products, services, or overall image to its
customers, employees, stockholders, suppliers, or other interested members
of the community. The point of public relations is to make the public think
favorably about the company and its offerings. Also referred to as publicity,
this type of promotion uses third-party sources, and particularly the news
media, to offer a favorable mention of the marketer’s company or product
without direct payment to the publisher of the information.

 Commonly used tools of public relations:

 news releases

22
  press conferences
 speaking engagements
 And community service programs.

Goals of Public Relations

 To create, maintain, and protect the organization's reputation
 Enhance its prestige
 Present a favorable image.

Areas of Public Relations

 Product public relations

 Employees relations
 Financial relations
 Community relations.

DIRECT MARKETING

According to the official definition of the Direct Marketing Association (DMA),

direct marketing is an "interactive system of marketing which uses one or
more advertising media to affect a measurable response and/or transaction
at any location.

Measurability sets direct marketing apart from general advertising and

other forms of marketing. Direct marketers can measure the response to any
offer. Measurability allows direct marketers to test a variety of lists, offers,
media—virtually any aspect of a campaign—in order to allocate marketing
resources to the most effective combination of elements.

Direct Marketing Media

 Direct mail
 Telephone-based direct marketing (telemarketing)
 Magazines
 Newspaper
 Television

7. PRICING STRATEGY

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PRICE – means the money value of product or service expressed in terms of
peso and or centavos. Price is also means the amount of money needed in
order to acquire a product or service and its accompanying services

PRICING OBJECTIVES

1. PROFIT ORIENTED OBJECTIVES.

a. Target return objective sets a specific level of profit of an objective. This

amount is often stated as percentage of sales or investment. Businessmen
want satisfactory return as an assurance of corporate survival or success.

b. Profit maximization objective seeks to get as much profit as possible.

2. SALES ORIENTED OBJECTIVE – seek higher level or sales volume, peso

sales or market share without primary reference to profit. Some managers
are more concerned about more sales than profit, since more sales lead to
more profit. This concern can only be possible if costs of materials are not
increasing.

3. STATUS QUO OBJECTIVE – This objective adopted by managers who are

satisfied with their present profits under market share. These companies
simply stabilize price by sticking to their own price line. This is a non-price
competition company.

PRICING STRATEGIES

1. SKIM THE CREAM PRICING – Involves setting a higher price from what
the market expects. This can be possible, since the buyers associate higher
prices with better quality goods.

2. PENETRATION PRICING – Involves setting a low initial price for the

product or service. Product is priced at minimum that will generate profit.
The aim of this strategy is to target the mass market immediately.

PRICING STRATEGY FOR NEW PRODUCTS

1 PREMIUM PRICING STRATEGY – Is the use of a high price for high

quality product. Economy pricing strategy is charging a low price for lower
quality product. A good value strategy is charging lower price for high quality
product, and the overcharging strategy is overpricing price of the product in
relation to quality.

24
2. SKIM-THE-CREAM PRICING – Involves setting higher price from what
the market expects. This can be possible since e the buyer’s associate higher
prices with better quality goods. This strategy makes sense under certain
condition. First, the quality of the product can be relative to its high price.
Second, cost of production for small volume must not be high to affect high
price. And finally, market entry for competitors must not be easy to undercut
the high price.

3. MARKET PENETRATION PRICING – Involves setting a low initial price for

the product or service. Product is priced at minimum that will generate profit.
The aim of this strategy is to target the mass market immediately and win a
large market share. This strategy can be effective when market is price
sensitive, where low price result to market growth.

PRICING STRATEGY FOR PRODUCT MIX/PRODUCT LINE

1. PRODUCT LINE PRICING – Determining the price levels between product

varieties in a line based cost differences, product features and competitor’s
prices. For example, a product has several varieties – regular and premium
categories, the marketer may set a higher price for the premium category
and lower price for the regular category because they differ in costs, features
and performance.

2. OPTIONAL PRODUCT PRICING – The strategy of pricing options or

accessory products along with a main product. The marketer quotes the base
price for the product and offer accessory products at optional price. Market
may decide to take optional items at optional prices, or leave it and decide
just for the main product at the base price.

3. CAPTIVE PRODUCT PRICING – The strategy of pricing accessory

products required to be used along with a main product. Marketers
commonly set a low price for main products and high price for the accessory
product.

4. BY-PRODUCT PRICING – This decision requires manufacturers to seek a

market for its by-products and should accept any price that covers more
than the cost of storing and delivering them. This will allow manufacturers to
lower expenses and reduce main product’s price. By –Products are those
sawdust from lumber mills; processed meats; bar soaps; chocolate bars;
petroleum product which can be sold to another industrial market who can
re-processed these items into another final products.

25
5. PRODUCT BUNDLE PRICING – This combines products and offers the
bundle or total package at a reduced price. This strategy can promote sales
of products which consumer may need or are slow-moving items, but the
package price must be low enough to get them buy the bundle.

PSYCHOLOGICAL PRICING POLICIES

1. FIXED-PRICE POLICY – In-store retailers adopt one-price system, where

goods are sold to customers at the same price. This gives advantage such as
building customer confidence in the store, it saves time, and can be used for
self service store.

2. VARIABLE PRICE POLICY –Price paid by custo0mer at a given time for a

certain item is determined by the buyer’s bargaining power. This gives the
seller flexibility in dealing with customers like by lowering prices to some
buyers.

3. ODD-PRICE POLICY – Prices are set at odd amounts, such as P19.95;

P99.95; P39.95. This pricing is based on the belief that buyers feel, for
example, that P19.95 is much lower than P20.00 or 99.95 lower than
P100.00, because they give more attention to the peso figure than the
centavos.

GEOGRAPHICAL PRICING POLICY

1. FACTORY POINT – When seller quotes the price at FOB factory (Free on
Board). The buyer is responsible for paying the cost of transportation. Title to
the products and risks are transferred to the buyer at the time of loading the
goods of the shipper’s dock or carrier’s place. Under FOB factory price policy,
the seller charges the same amount for similar products of the same quantity
and quality irrespective of the distance or nearness of the buyer’s business.

2. POSTAGE PRICE STAMPING – This is a geographic pricing policy where

the seller is pricing FOB at the buyer’s location. Seller quotes a price which
includes delivery cost regardless of the buyer’s location. Seller receives net
profit on each sale depending upon the amount of his shipping costs. This
can be used if freight costs can b e a minor issue on the seller’s cost
structure or this is given as additional service in the form of free delivery.

3. ZONE PRICING – This geographic policy is synonymous with pricing of

parcel post service, long distance telephone service. Zone lines for the total
market must be carefully drawn to avoid discrimination among buyers.

26
Although delivered prices may vary from one zone to another, within a zone,
all customers pay the same delivered price.

ELEMENTS TO CONSIDER IN SETTING PRICES

INTERNAL ELEMENTS AFFECTING PRICING DECISION

1. MARKETING OBJECTIVES – The Company must first decide on its

marketing objectives. Common objectives are profit maximization, market
share leadership, product quality leadership or competitive survival.

2. MARKETING MIX STRATEGY – Pricing decisions vary with products

features, distribution, and promotion decisions. Companies often position
their products on price, wherein it defines the target market, competitors
and product design. This technique is called target costing, wherein it starts
with identifying ideal selling price, then targets costs that will ensure that the
price is met.

3. COSTS - Types of costs are the fixed and variable costs. Fixed costs are
overhead expenses that do not vary with quantity produced or sold. These
maybe the rentals, executive salaries, interest and the like. Variable Costs
are directly related to output level, such as the quantity of raw materials
needed to produce quantity of output. The sum of the fixed cost and variable
cost is called total cost.

EXTERNAL ELEMENETS AFFECTING PRICE DECISION

1. MARKET AND DEMAND – Before setting the price, the marketer must
understand the relationship between price and demand under different types
of market. Economists recognize four types of markets: pure competition,
monopolistic, oligopolistic, and pure monopoly. In a pure competition, a
seller cannot charge higher than the on-going price because buyers can
obtain as much as they need at the regular price. In monopolistic
competition, buyers and sellers can trade over range of prices, because
sellers can differentiate offers to buyers in terms of variations in features,
quality, style or services. In an oligopolistic

2. COMPETITOR’S COST, PRICES AND OFFERS – A company’s pricing

decision is affected by its competitor’s cost, prices and offers. A consumer
planning to purchase a product will evaluate prices of comparative
competitor’s brands.

27
Other external elements are economic factors like interest rates, inflation
affecting pricing decisions. Government restrictions and social concerns may
also be taken into account.

PRICING APPROACHES

1. COST BASED PRICING

a. COST-PLUS PRICING – This is the simplest method wherein a standard

mark-up is added to the cost of the product. To illustrate, suppose a
manufacturer has the following variable and fixed costs and expected
sales.

Variable cost - Php 10.00

Fixed cost - 30,000.00

Expected Unit sales - 1,500.00

Therefore, the manufacturer’s unit cost will be:

Unit cost = VC + (FC/Unit sales)

= 10 + Php30,000 / 1,500

= Php 30.00

Suppose the manufacturer wants to earn 20% markup on sales.

Manufacturer’s Selling Price = Unit cost / (1- % mark-up)

= Php 30.00 / (1-.20)

= Php 37.50

Cost-Plus pricing remains popular because sellers are more concern about
costs than demand; they do not have to make frequent adjustments as
demand changes.

b. BREAK EVEN PRICING – Wherein the marketing organization tries to

determine the price at which it will break even or achieve the target profit it
aims.

Supposing fixed cost is Php 30,000.00, variable cost is Php 10.00, at Php
37.50 the company must sell at least 1091 units to break-even.

Break-even Volume = Fixed cost / (Price-variable cost)

28
 = 30,000 / (37.50-10) for its marketing program.

= 1091 units

2. VALUE BASED PRICING – Considers consumers perceived value on the

product. This means that the price is considered before designing the
product or planning for its marketing program. Value pricing is offering just
the right combination of quality and good service at the fair price. Pricing
begins with analyzing consumer needs and value perceptions, and price is
set to match consumer’s perceived value.

3. COMPETITION BASED PRICING

a. GOING RATE PRICING – The company places less attention on its own
costs or demand. This approach charges the same price with that of major
competitors. Some firms follow the leader’s price, and feel that holding to
the ongoing price will minimize price wars.

b. SEALED BID PRICING – This sets price based on how the marketer
thinks that the other competitors will price, irrespective of cost and
demand, when company bids for job. In short, the higher the marketing
organizations set its price above cost, the lesser is the chance of getting
the contact.

PRICING STRATEGY

DEMAND INFLUENCES ON PRICING DECISIONS

Demand influences on pricing decisions concern primarily the nature of

the target market and expected reactions of consumers to a given price or
change in price.

A. Demographic Factors – In the initial selection of the target market that

a firm intends to serve, a number of demographic factors are usually
concerned. Demographic factors that are particularly important for pricing
decisions include the following.

1. Number of potential buyers, and their age, education, and gender.

2. Location of potential buyers.

3. Potential of potential buyers (organizational buyers or final

consumers)

4. Expected consumption rates of potential buyers.

29
 5. Economic strength of potential buyers.

B. Psychological Factors – Psychological factors are related to pricing

concern primarily how consumer will perceive various prices or price
changes.

PRICE ELASTICITY

Both demographic and psychological factors affect price elasticity.

Price elasticity is a measure of consumers’ price sensitivity, which is
estimated by dividing relative changes in the quantity sold by the relative
changes in price.

e = percent change in quantity demand / percent change in price

SUPPLY INFLUENCES ON PRICING DECISIONS

A. Pricing Objectives – pricing objectives should derive from overall

marketing objectives, which is turn should be derived in corporate
objectives. The most common pricing objectives are (1) pricing to achieve a
target return on investments (2) stabilization of price margin, (3) pricing to
achieve a target market share, and (4) pricing to meet or prevent
competition.

B. Cost Considerations in Pricing – The price of a product is usually must

cover costs of production, promotion, and distribution, plus a profit for the
offering to be a value to the firm. In addition, when products are priced on
the basis of costs plus a fair profit, there is an implicit assumption that this
sum represents the economic value of the product in the market place.

C. Product Consideration in Pricing

1. PERISHABILITY – Goods that are very perishable in a physical

sense must be priced to promote sales without costly delays

2. DISTINCTIVENESS – Products can be classified in terms of how

distinctive they are. Homogenous goods are perfect substitutes for
each other, as in the case of bulk wheat or whole milk, while most
manufactured goods can be differentiated on the basis of certain
features, trademark, engineering design, and chemical features.

3. LIFE CYCLE

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ENVIRONMENTAL INFLUENCES ON PRICING DECISION

A. Competition – In setting or changing prices, the firm must consider its

competition and how competition will react to the price of the product.

1. Number of competitors.

2. Size of competitors.

3. Location of competitors.

4. Conditions of entry into the industry.

5. Degree of vertical integration of competitors.

6. Number of products sold by competitors.

7. Cost structure of competitors.

8. Historical reaction of competitors to price changes.

B. Government Regulations

GENERAL PRICING MODEL APPROACH

SET PRICING OBJECTIVES

EVALUATE PRODUCT PRICE RELATIONSHIP

ESTIMATE COST AND OTHER PRICE LIMITATION

ANALYZE PROFIT POTENTIAL

SET INITIAL PRICE STRUCTURE

CHANGE PRICE AS NEED

31
SET PRICING OBJECTIVES

Given a product or service designed for a specific target market, the

pricing process begins with a clear statement of the pricing objectives. These
objectives guide the pricing strategy and should be designed to support the
overall marketing strategy.

EVALUATE PRODUCT PRICE RELATIONSHIP

Marketers need to consider what value the product has for customers
and how price will influence product positioning.

ESTIMATE COST AND OTHE PRICE LIMITATIONS

The cost to produce and market products provides a lower bound for
pricing decisions and baseline from which to compute profit potential. Price
limitation that need to be considered are government regulations and the
prices that are charged by competitors for similar and substitute products.

ANALYZE PROFIT POTENTIAL

Analysis in the preceding stages should result in a range of prices that

could be charged. Marketers must then estimate the likely profit in pricing
levels in this range.

SET INITIAL PRICE STRUCTURE

The price structure takes into account the price to various channel
members, such as wholesaler and retailers, as well as the recommended
price to final consumers or organizational buyers.

CHANGE PRICE AS NEED

There are many reasons why an initial price may need to be changed.
Channel members may bargain for greater margins, competitors may lower
their prices, or costs may increase with inflation. In the short term, discounts
and allowances may have to be larger or more frequent than planned to get
greater marketing effort to increase demand to profitable levels.

CONCLUSION

32
 Pricing decision that integrate firm’s cost with marketing strategy,
business conditions, competition, demand, product variables, channel of
distribution and general resources can determine the success or failure of a
business. This places very heavy burden in the price maker. Modern – day
marketing managers cannot ignore the complexity or the importance of price
management. Pricing strategy must be continually reviewed and must take
into account that the firm is dynamic entity operating in a very competitive
environment. There are many ways for more to flow out of a firm in the form
of costs, but often there is only one way to bring revenues and that is by
price-product mechanism.

8. GLOBAL MARKETING

The process of conceptualizing and then conveying a final product or

service worldwide with the hopes of reaching the international marketing
community. Proper global marketing has the ability to catapult a company to
the next level, if they do it correctly. Different strategies are implemented
based on the region the company is marketing to.

BASIC REASON WHY FIRM INVEST IN OTHER COUNTRIES:

 Offensive Goals

1. Increase profit prospect

2. Maximize total sales revenue
3. Take advantage of economies of scale
4. Improve overall market position

 Defensive Goals
1. Compete with foreign companies
2. Have access to technological innovations that are developed in
other countries.
3. Take advantage of significant differences in operating costs
between countries.
4. Pre-empt competitors global move
5. Not be locked out of future markets by arriving too late.

Elements of the global marketing mix

Product

A global company is one that can create a single product and only have to
tweak elements for different markets

33
Price

Price will always vary from market to market. Price is affected by many
variables: cost of product development (produced locally or imported), cost
of ingredients, cost of delivery (transportation, tariffs, etc.), and much more.
Additionally, the product’s position in relation to the competition influences
the ultimate profit margin. Whether this product is considered the high-end,
expensive choice, the economical, low-cost choice, or something in-between
helps determine the price point.

Placement

How the product is distributed is also a country-by-country decision

influenced by how the competition is being offered to the target market

Promotion

After product research, development and creation, promotion (specifically

advertising) is generally the largest line item in a global company’s
marketing budget. At this stage of a company’s development, integrated
marketing is the goal. The global corporation seeks to reduce costs, minimize
redundancies in personnel and work, maximize speed of implementation,
and to speak with one voice. If the goal of a global company is to send the
same message worldwide, then delivering that message in a relevant,
engaging, and cost-effective way is the challenge.

Problems with Entering Foreign Markets

 Cultural Misunderstanding
 Political Uncertainty
 Import Restrictions
 Exchange Controls and Ownership Restrictions
 Economic Conditions

PROGRAMMING FOR GLOBAL MARKETING

Global Marketing Research

- Organizations must collect and analyze pertinent information to support

the decisions before getting to the issues addressed by market research.

4 Organizational Issues to consider:

1. Population Characteristic - marketing manager should be familiar with

the total population and with the regional, urban, rural, and interurban

34
distribution. Other demographic variables are also important such as the
number and size of families, education, occupation, and religion.
2. Ability to Buy
4 broad measures should be examined:
a. gross national product or per capita national income
b. distribution of income
c. rate of growth in buying power
d. extent of available financing
3. Willingness to Buy - the cultural framework of consumer motives and
behavior
4. Differences in Research Tasks and Process
Problems that a market researcher is likely to encounter:
a. Language
b. Data Content
c. Timeliness
d. Availability in the United States

Global Product Strategy

Product planning is necessary to determine the type of product to be offered

and whether there is sufficient demand to warrant entry into a foreign
market

Global Distribution Strategy

Manufacturer

No Some Much

Control Control Control

United States Foreign Market

Export Export Foreign Foreign Foreign Foreign

Resident
Buyer
Agent Merchant Agent Distributor Branch Consumer

35
Indirect channels of distribution - the channel arrangement where the
manufacturers sell to resident buyers, export agents, or export merchandise
located in the United States have the manufacturers' least control. These are
the most indirect channels of distribution.

Direct channels of distribution - manufacturers become more directly

involved and, hence, have greater control over distribution when agents and
distributor located in foreign markets are selected

Global Pricing Strategy

Pricing task is often more complicated in foreign markets because of

additional problems associated with tariffs, antidumping laws, ____ inflation,
and currency conversion.

Global Advertising and Sales Promotion Strategy

- An important promotion decision that must be made is the type of

agency used to prepare and place the firm's advertisements
- Use either a U.S. - based multinational agency or a multinational
agency with the U.S. offices to develop and implement the ad campaign
- Sales promotion can also lead to opportunities and problems for
marketers in foreign markets.

Entry and Growth Strategies for Global Marketing

There are six ways by which company can initially enter global market
and pursue growth in the global market place.

1. Exporting – occurs when a company produces the product outside

the final destination and then ships it there for sale. The easiest and
most common approach for a company making its first international
move.
Advantages:

• It avoids the cost of establishing manufacturing operation

in the host country
• It may help a firm achieve experience-curve and location
economies
Disadvantages:

• Sometimes higher cost associated with the process

• Necessity of the exporting firm to pay import duties or face
trade barriers

36
 • Delegation of marketing responsibility for the product to
foreign agents who may not be dependable

2. Licensing – is the most common strategy for small and medium-

size company.
Advantage:

• The firm does not have to bear the development cost risks
associated with operating up with foreign market.
Disadvantages:

• Firm does not have tight control over manufacturing,

marketing and strategy that is required for realizing
economies of scale
• There is risk that the license technology may be capitalized
on by foreign companies

3. Franchising – is similar to licensing but tends to involve long term

commitments. It is commonly employed by service firm, exposed to
manufacturing firms.

4. Joint Venture – are especially popular in industries that call for

large investments, such as natural gas exploration and automobile
manufacturing.
Advantages:

• Firms may be able to benefit from a partner’s knowledge of

the host country’s competitive position, culture, language,
political systems, etc.
• Firms gains by sharing costs and risks of operating in a
foreign market
• Political considerations make joint ventures the only
feasible entry mode.
• Allow firms to take advantage of a partner’s distribution
system, technological know-how, or marketing skills.
Disadvantages:

• Firm may risk giving up control of proprietary knowledge to

its partner
• Firm may lose the right control over a foreign subsidiary
needed to engage in coordinate global attacks against rivals
5. Strategic Alliances
- considered as distinct entity for two
reasons:

37
 a. normally partnerships entered into by two or more firms
to gain competitive advantage on worldwide versus local
basis
b. usually of a much longer-term nature than are joint
venture
Advantage:

• It can be used to reduce manufacturing costs, accelerate

technological diffusion and new product development, and
overcome legal and trade barriers.
Disadvantage:

• The increased risk of competitive conflict between the

partners

6. Direct Ownership
Advantages:

• Complete control over its technology and operations

• Immediate access to foreign markets
• Instant credibility and gains in the foreign country
• Ability to install its own management team
Disadvantage:

• Huge costs and significant risks associated with this

strategy

Regardless of the choice method used to gain in entry into and grow
within a foreign marketplace, company must somehow integrate their
operations. A critical decision that marketing managers must make relates to
the extent of adaptation of the marketing mix elements for the foreign
country in which the company operates. As a guideline, it is more likely to
succeed under the following conditions:

• When markets are economically similar

• When worldwide customer are the basis for segmenting
markets
• When customer behavior and lifestyle are similar
• When the product is culturally compatible across the host
country
• When a firm’s competitive position is similar in different
markets
• When competing against the same competitors rather than
competing against purely local companies

38
 • When the product is an organization and high-technology
product rather than a consumer product
• When there are similarities in the physical, political, and legal
environment of the home and host countries
• When the marketing infrastructure in the home and host
countries are similar

V. COMPILATION OF CASE PRESENTATION

CASE 2: MCDONALD’S CORPORATION IN THE NEW

MILLENIUM

I. BRIEF BACKGROUND
Jack Greenberg, CEO of McDonald’s Corporation is thinking about the
“Big Mac Attack” which resulted to McDonald’s earnings to decline in the late
1990’s and early 2000’s. Dynamic market expansion, new products, and
special promotional strategies had made McDonald’s Corporation a leader of
fast food industry. However, sales growth in the United States had slowed to
below the industry average in recent years. Jack Greenberg was trying to
decide on a set of appropriate strategies for the future in order to reverse
the declines to stay ahead of the competition.

II. MAIN PROBLEM

How will McDonalds cope up with the improved and new product lines
offered by its competitors?

III. OBJECTIVES
• To improve their product lines
• To increase its sales

IV. SWOT ANALYSIS

Strength
• Drive thru sales grow three times faster than on-premise sales
• They train employees in faster food preparation methods
• Using timers to encourage employees to prepare and deliver food
faster

Weaknesses
• They have minimal line of products
• Using timers to encourage employees to prepare and deliver food
faster

39
Opportunity
• McDonalds is a popular fast food chain in the industry
• Price is lower than other competitors
• Advertisement

Threats
• Competitors – indirect & direct competitors
• Young consumers are getting tired of fast food and are thinking about
their health.

V. ALTERNATIVE COURSES OF ACTION

• Survey
• Introduce new/improved line of products
• Promotional strategy

VI. RECOMMENDATION
McDonald’s should be quick in introducing or in improving its product
line to be able to take advantage of the changes in customer’s preferences
and tastes.

VII. CONCLUSION
Therefore, McDonalds should think of a way on how they could retain
their products in the Growth Stage like improving their product lines or
introducing new products that will suit the consumer’s preferences and
tastes. They should think of a strategy in which they could counter attack the
products offered by its competitors.

CASE 3: STARBUCKS

Brief Background
Starbucks Coffee Houses were started in Seattle, Washington, in 1971 when
three young men, Gerald Baldwin, Gordon Bowker, and Zev Siegl, decided to
try their hand at selling gourmet coffee. They were betting that consumers
would pay $1.50 for a cup of coffee compared to 40 cents for generic coffee
offered elsewhere. By 2002, there were more than 3,400 Starbucks Coffee
Houses throughout the world. Starbucks has decided to stick to its knitting,
understand its core competency, know what the value proposition is for the
customers, and do everything possible to get close to the customers.

Main Problem
How to boost sales growth far more rapidly than current sales?

40
Objective
• To develop ways and means to attract new customers while
maintaining the old customers
• To maximize sales volume

SWOT Analysis

Strength
• High revenue
• Large profit margin

Weakness
• Difficulty to perfectly replicate their product to their different branches

Opportunity
• Only 5% of coffee consumption in the US is done in coffee houses
leaving ample room for growth

Threat
• New competitors enter the industry

Alternative Courses of Action

• Develop a variety of products to offer in the market
• Saturate the market
• Increase the selling price

Recommendation
Starbucks must saturate the market by means of opening and locating
branches to every corner of major cities. They must also offer various
products to attract their customers and to maintain their competitive
advantage by continuously developing new products.

Conclusion
In order to maximize the sales profit, we must maximize the sales price or
sales volume, and/or both. By saturating the market with new products that
are well strategized, the company will then have an increase in their sales
growth.

CASE 4: PFIZER, INC. ANIMAL HEALTH PRODUCTS –

INDUSTRY DOWNTURNS AND MARKETING STRATEGY
Brief Background

Gail Oss, a Territory Manager of Pfizer Inc., Animal Health Group in western
Montana and south-eastern Idaho. She sold high quality animal health

41
products, often times at a premium price. She is also responsible to visit and
communicate with the ranchers in her territory. The NAFTA agreement with
Canada and Mexico had hit the local rancher particularly hard. That make
rancher no choice but to lower their price.Some other reasons for the decline
are Switching to alternative meat product, Changes in customer lifestyles,
Health/nutrition issues.Ranchers were actively seeking ways to cut costs.
One way in which ranchers could cut costs was either scrimp on animal
health products or to switch to a lower cost alternative and some ranchers
wants to give up. Gail Oss worried not only about her company but most
especially to her livelihood.

Main Problem

The problem is that the Pfizer, Inc. Health Products declines its marketing
stability due to industry downturns.
Objectives

 To provide solution to the recession condition of the cattle industry.

 To provide two-way communication between the consumers and the

producers.

 To instill and maintain good and long-term relationship among

consumers and distributors.

 To increase sales

SWOT Analysis

Strength

 Strong manufacturing capabilities

 Known for quality products

 Continuous research and development

Weakness

 Products are sold at premium price.

Opportunity

 Global marketing coverage

 Good relationship among customers

 Ranching has already been a part of the history in Montana

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Threat

 NAFTA Agreement

 Local competitors (direct and indirect)

Alternative Courses of Action

 Use marketing strategies that will give benefits not only to Pfizer but
also to cattle industry

 Make use of its company’s resources

 Minimize the selling price

Recommendation

 Use marketing strategies such as sales promotions and advertisement

that will give benefits not only to Pfizer but also to cattle industry for
example Pfizer should launch a commercial or any other promotion
mix, which tells that the cattle will be healthy if they use the product
and also tell the benefits people can get in eating this kind of cattle,
with this the Pfizer get a high sales and they will provide solution to the
recession condition of the cattle industry.

Conclusion

We came up with the conclusion that through the aid of marketing strategies
such as sales promotions, advertising, public relations etc. We will be able to
make solution on the on going industry downturns in Montana.

CASE 7: LONGEVITY HEALTH CARE SYSTEM INC.

BRIEF BACKGROUND
 1972 – 75 - nursing care for parents
 1976 -1977 – leased a 40-bed hospital and converted it to a nursing
home
 1979 – business incorporated as Longevity Nursing home.
 1980-85 – acquired 8 nursing homes in Grand Rapids area, 480 beds.
 1986-88 – Constructed nursing homes in Grand Rapids area, 210 beds.
 1990-91- converted a 30 bed wing of Grand Rapids nursing home to
sub acute care
 1992 -93 – Constructed a 50-bed sub acute care facility in Grand
Rapids area.
 1992 – Acquired a retail pharmacy in Grand Rapids.
 1992-93 – Acquired 7 nursing homes in Toledo are, 280 beds.

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  1993 – Corporation name changed to Longevity Healthcare Systems
Inc

MAIN PROBLEM:
 How to increase the profitability of Longevity ‘s nursing homes in
Toledo , Ohio
OBJECTIVES:
 To increase the profitability of nursing homes in Toledo, Ohio.

SWOT ANALYSIS
 STRENGTH
Longevity’s nursing homes in grand rapid Michigan is profitable.

 WEAKNESS
lack of marketing strategy

 OPPORTUNITIES
high demand for nursing homes.
increasing the need for Alzheimer's treatment.

 THREAT
Competitors

ALTERNATIVE COURSES OF ACTION

 Introduced sub acute care

 To have an Alzheimer's treatment
 Integrate longevity by establishing a pharmacy in Toledo.
 To be sensitive to the cost/price of their nursing homes.

CONCLUSION AND RECOMMENDATION

 Customer satisfaction would become an important competitive factor
and Longevity would need to assess the reactions of nursing home
residents and their families to the quality of its services.
 Expanding into Alzheimer’s treatment because of the demographics
and the growing need for facilities in the area.
 It is also an opportunity to further integrate Longevity b y establishing
a pharmacy in Toledo.

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CASE 8: TUPPERWARE
Brief Background

In 1958, Justin dart purchased Tupperware from former DuPont

chemist Earl Tupper for $10 million. From that the time until 1980.
Tupperware earned an estimated $3 billion pre-tax and had a phenomenal
25-year record of doubling sales and earn every 5 years. In 1983,
Tupperware sales slipped 7 percent and operating profit of 15 percent. In
1992, sales for the second quarter fell 33 percent from the same period a
year before. That quarter also saw 20 percent decline in the number of
selective US dealers.

Traditionally, Tupperware plastic products were sold at in-home

parties. Selling Tupperware might be a lot easier except that most women
(55 percent Tupperware’s estimate) either have no idea how to find
Tupperware or no desire to go to a Tupperware party. Some 40 percent of
Tupperware’s sales are from people who skip the parties but send orders
along with friends who attend.

Competitors like Rubbermaid were introducing low-priced products and

capturing market. Tupperware relies heavily on overseas market to generate
sales growth but due to economic downturns, revenues drop by more than
one third.

Main Problem

Loss of business due to economic downturns, competition and poor

placement of the product

OBJECTIVE

To meet the increasing competition and to regain its lost market.

SWOT ANALYSIS

 Strength
 Offers variety of new products
 High Quality product
 Multi-purpose product
 Weakness

45
  High price
 Poor placement
 Opportunities
 Exposure of products all over the world
 Threat
 Bankruptcy

ALTERNATIVE COURSES OF ACTION

 Reinvent its marketing approach through eMarketing

 Lower the product’s price
 Hired more trained tupperware ladies to promote and explain the
product’s advantages.
 Sell tupperware on cart-like kiosk in malls across the country

RECOMMENDATION

Reinvent its marketing approach through eMarketing

1. TV Shopping
2. E-commerce
3. Direct Mail

CONCLUSION

Tupperware’s intention of retaining direct selling using in-home parties is

an effective approach in increasing the firm's sales in later years; it has
been such an effective channel in Tupperware historically. But then,
companies around the world starts thinking globally, time and distance
are shrinking rapidly with the advent of faster communication,
transportation, and financial flows. The concept of in home parties is to
show and prove the quality of Tupperware. The company must change
their selling strategy to increase their sales, this is due to the fact that
there are only few percentage of consumers have no desire to go to
Tupperware parties. The company should take advantage of eMarketing
which opens up new avenues for smaller businesses on much smaller
budget, to access potential consumers from all over the world.

VI. LIBRARY RESEARCH FOR RELATED LITERATURE

46
VII. Directory of Marketing Course (Engr. Ramos class)
MARKETING MANAGEMENT
E5I4 – 3:30-5:00 – TF
ENGR. MARCELO T. RAMOS JR.

NAME ADDRESS CONTACT

ARTILLEGAS, Cheene M. 502 A. Mabini street Dela Paz Binan, 09322021
Laguna 829
BASTON, Romarico Jr., A Blk. 71 Lot 25 Ipil 1 Bulihan, Silang, 09063020
Cavite 586
CABUELLO, Liezl B. Blk.4 Lot 27 champaca St. Elvinda Vill. 09293051
San Pedro Laguna 498
CEPE, Jennylyn J. Blk.8 Lot 6 Pisces St. Mercedez Homes 09278800
3-A Binan, Laguna 476
CLIMACO, Roxanne M. 203 Amendrala St. San Vicente, San 09156442
Pedro, Laguna 194
DADUFALZA, Renato Jr. Blk.6 lot 29 Phase 1 St. Joseph Village 09054144
N. 7, Cabuyao, Laguna 431
DANTIS, Eileen L. Blk.10 Lot 5 Town Homes Subd. Brgy. 09065417
Milagrosa, Carmona , Cavite 860
DELOS SANTOS, Jerica Blk.1 Lot 34 Adelina 2-A San Pedro, 09161168
Joy G. Laguna 657
ELOMINA, Richiel E. 3734 Felix Reyes St. Balibago, Sta. 09174902
Rosa City, Laguna 633
ENTILA, Cherry Rose R. Blk.19 Lot 10 Phase 1-A Berlin St. Villa 09167910

47
 Olympia. Subd., San Pedro, Laguna 377
ESPINO, Sunshine S. 171 San Pablo Street Carmona, Cavite 09153184
949
ESTRELLA, Carmela Phase 3B Blk. 21 Lot 8 Pacita Complex 09162839
Mariel E. I, Binan,Laguna 834
EVANGELISTA, Irish R. Blk. 97 Lot 15 Phase 2 Golden City 09266978
Subd. Sta. Rosa City, Laguna 711
FALCON, John William A. Blk. 5 Lot 24 Diamond St. Saint Francis 09153772
IV San Francisco Binan, Laguna 451
HERNANDEZ, Joan A. 0618 A. Mabini St. Dela Paz Binan, 09276078
laguna 036
MAPOLA, Cielo Maureen 181 Bigaa, Cabuyao, Laguna 09053919
A. 093
MONTOYA, Jhernie G. 129 Talon, Amadeo, Cavite 09053624
207
NAYPA, Josie A. Blk. 3 Lot 8 Bvena Rosa 9, Brgy 09099556
Macabling, Sta. Rosa City Laguna 832
PELAEZ, Jofel Anne T. Blk. 223 Lot 10 Phase 2 Mabuhay City, 09266978
Mamatid, Binan, Laguna 717
PIALAGO, Jonathan C. 238 Sterling St. GMA, Cavite 09294508
726
SEVILLO, Bryan D. 291 Tubigan, Binan, Laguna 09053384
038
VERGARA, Jover D. 09272322
324
VILLAR, Joscel Anne C. 129 Purok 2, Brgy. Macabling Sta. 09158779
Rosa City, Laguna 965
YASAY, Jonjon M. 09056441
371

VIII. UPDATED RESUME with PICTURE as of SEPTEMBER

2009

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