Marketing is a system of business activities designed to plan, price, promote, and distribute something of value; want-satisfying products services,

and ideas for the benefit of target market (present and potential household consumers or industrial users to achieve the organizational objectives). NEEDS OF CONSUMER 1. Basic needs food, shelter, and clothing 2. Indispensable needs education, medical care, electricity, appliance, recreation, and leisure 3. Luxury cars, cell phone, jewelries, computers, cosmetics, travel, and beauty products Category of Marketing A political party trying to market its candidate to the public The director of an art museum providing new exhibits to generate greater attendance and financial support A labor union marketing its ideas to members and to the company management Professor trying to make their courses interesting for students Profit is a reward for entrepreneurship CREATION OF UTILITIES Utility defined as an attribute in an item that makes it capable of satisfying human needs 1. Form utility is the physical and chemical changes that makes the product more valuable 2. Place utility is created when the product is made readily accessible to potential consumers 3. Time utility is created when the product is available to consumers when they want it 4. Possession utility is created when a costumer buys a product (ownership is transferred to the buyer) 5. Image utility is more subjective, different to measure concept. It involves the emotional and psychological value that a person attaches to a product/brand because of reputation or social standing of a person MARKETING CONCEPT IS BASED ON THREE FUNDAMENTAL CONCEPT 1. All company planning and operations should be costumer oriented 2. The goal of the firm should be profitable sales volume and not just volume for the sake of the volume alone 3. All marketing activities in a firm must be organizationally coordinated DIFFERRENCE BETWEEN MARKETING AND SELLING SELLING 1. 5. emphasis is on the product MARKETING 1. emphasis on the consumer wants 2. company first determines costumer needs and wants 3. materials is profit oriented 4. planning is long-run oriented in terms of new product 5. stresses wants of a buyer stresses needs of a seller

2. 3.

company first make the product and then figure how to sell it management is sales volume oriented 4. planning is short-run in terms of todays product and market

MARKETING ENVIRONMENT FORCES A. Internal forces inherit in the organization and generally controllable by the organization B. External forces which are largely uncontrollable by the organization, thus a strong challenge to the marketing executives

Kinds Marketing Environment I. Macro-environment national type of a business which includes all factors that can influence an organization but that are out of their control II. Micro-environment small type of a business which influence the organization directly that includes suppliers that are directly and indirectly III. External Macro-environment are forces that have considerable effect on any organizations marketing system a. Demography important to control the types and kinds of product to be produced and its quantity base on sexes and ages capable for their needs b. Economic conditions is the current stage of business cycle, inflation rate, and interest rates Inflation rate is the increase of all prices in general level of goods and services but decline in purchasing power Interest rate when interest rates is too high, consumers may tend to hold-back to a long-term purchases like housing or car loans c. Business cycle or economic cycle this cycle involves shift over times between periods of relatively rapid growth output(recovery and prosperity) and periods of (stagnation or decline) and (contraction or recession) Recovery stage where a businessman found ways to keep business moving Prosperity stage of success of business Recession stage of reductions of business expenses or declining of business flow Stagnation stage where business is not moving or no progress d. Competition rivalry of two or more businesses striving for the same costumer or market Aspects of competition o Types of competition o Market structure Types of Market Structure a. Pure competition very many competitors, small size of competitions, homogenous products, no control of price, and easy to enter the industry b. Oligopoly c. Monopolistic many competitors, some depends on degree of differentiation, and easy to enter the industry Types of competition o directly similar products o substitute products o limited products IV. Social and Cultural forces Emphasis on quality of life when lifestyles changes, our marketing also changes Role of women women had now grown in political and economical power, and job opportunities and also as men

Attitudes toward physical fitness and eating our physical health sensitivity level is being raised which causes the growth of economy Impulse buying we need to buy a product to satisfy our life Desire for convenience a product should be suitable, fit, and satisfy the costumers V. Political and Legal forces Policy rules and regulation that should be followed Legislation process of making law Five Categories General monetary and fiscal policies level of government spending, money supply, and tax legislation Broad social legislation and accompanying policies set by the regulatory agencies includes environmental control and pollution laws set by the environmental protection agency to helps to reduce unemployment fall Government relation with individual industries subsidies in agriculture, ship building, and passenger rail transportation and other industries Legislation specifically related to marketing Laws Should Marketing Executives Know Laws to regulate competition Laws to protect consumers The provisions of information and the purchase of products VI. Technology major technological breakthroughs carry as a three-fold market impact a. Start entirely new industries as computers, robots, and lasers b. Virtually alter and destroy existing industries as walkman and diskman beaten by mp3,mp4, and i-pods c. Stimulate other markets and industries not related to the new technology Monitor the Environment One key to learning about the environment Marketing executives must be alert to the trends, new developments, and changes o Information sources o New government publication Information sources o Periodicals o News o Government publications Determine aspects of consumer behavior of competition activity VII. External Micro-environment Market maybe defined as a place where buyers and sellers meet, products or services are offered for sale, and transfers of ownership occur Kinds of Market Stock market Automobile market Retail market for furniture Wholesale market for furniture Three Factors to Consider in Market 1. people or organization with needs or wants 2. their purchasing power 3. their buying behavior Suppliers supply side of exchange transaction Marketing intermediaries are independent business organization that directly aid in the flow of product and services between a marketing organization and its market. Two Types of Marketing Intermediaries

resellers/middleman wholesalers and retailers various facilitating organization provide transportation, warehousing, financing, and other supportive sellers needed to compete exchanges between buyers and sellers

Copy right policy of copying product Laws to Protect Costumers ingredients suggested retail price consumers goods pricing generic names safety standards safety suggestions and precaution packaging and labeling warranty seal

T M

- trade mark

R - registered

C - copy right

Labeling carries information about the product or the seller Types of labeling 1. Brand label brand alone applied to the product or package 2. Grade label identifies quality by letter, number, or word 3. Descriptive label information about the use, construction, care, performance or other features Product design one way of building an image of product through its design Good design can improve the marketability of product in many ways as; Can make the product easier to operate Can upgrade the products quality or durability Can improve product appearance and reduce manufacturing costs Color it is the determining factor in a costumers acceptance or rejection to the product Product quality is extremely important but most difficult of all the image-building features to define Product warranty and product liability are expressed (written or spoken) or implied (intended by the seller) Branding it makes easy for costumer to identify products or services Reasons for branding To promote branding To maintain a consistent quality of output Brand is a name, term, symbol, or special design, or some combination of this elements that is intended to identify the goods or services on one seller or a group of sellers Brand name consists of words, letters, and or elements that can be vocalized Selecting brand name Suggest something about the products characteristics Be easy to pronounce Be distinctive Be adoptable Be capable of being registered and legally protected Brand strategies

Marketing entire output under manufacturers own-brands Branding of fabricating parts and materials Marketing under middlemens brand

Middlemens strategies carry only manufacturers brand carry middlemens brand along with manufacturers brand Strategies common to manufacturers and middlemen branding a line of products branding for market saturation Brand mark part of the brand that appears in the form of symbol, design, or distinctive coloring or lettering Trademark is given legal protection under the law to the appropriate seller Generic name unofficial brand name to identify based by the stores and consumers Battle of the brands Trademark licensing effective branding strategy Reasons of licensing trademark it can be very profitable since there is no expense involve on the part of the licensor there is promotional benefit because the licensors name gets wider circulation for beyond the original trademark article licensing can help protect the trademark Packaging are all activities involve in designing and producing the container or wrapper for a product Reasons for packaging safety and utilitarian purposes implement a companys marketing program to increase profit possibilities Importance of packaging in marketing To obtain the benefits of protection and convenience Increase the use of branding and rise the publics health and sanitation standards New developments occur rapidly and in seemingly endless flow which requires managements constant attention to packaging design Packaging strategies 1. Changing the package decrease in sales and expand the market by attracting new groups of costumer 2. Packaging product line deciding whether to develop a family resemblance in packaging of its several products 3. Family packaging involves the use of identical packages for all products or use of packages with some common feature 4. Refuse packaging stimulate repeat purchases as the consumer attempts to acquire a matching set of containers 5. Multiple packaging practice of placing several units in one container Criticism of packaging Packaging depletes our natural resources Packaging is excessively expense Health hazards occur from some forms of plastic and aerosol packaging

Packaging is deceptive

PRODUCT AND PLANNING DEVELOPMENT Product strategy Product innovation Product planning management Meaning of product Narrow set of tangible physical attributes Broader recognizes each product as different product Product manufacture, service, and physical components Categories of New Product Innovative product truly unique or original product Replacement for a new product Imitative product fake or imitation Classification of product Consumer goods intended for ultimate household use Industrial goods intended for producing other goods or services Convenience goods complete knowledge of a certain product with minimum of effort at low price Shopping goods compared by price, style, and demand Specialty goods strong brand preferences at a high price Unsought goods unwanted product or unaware of Two Types of Unsought Goods o New products the consumer is not yet aware of o Consumer does not want Classification of New Product Raw materials live materials used to make a product Pubricating raw materials are used to make a product Finished product pubricated product is ready to install Installation finished product is installed Accessory equipment used in the production of operation of an industrial firm Operating supplies convenience goods of the industrial field Stages of Life Cycle Introduction product is lunch in the market Growth market acceptance, sales and profit increases Maturity sales and profit decline Decline new products or brands eventually enter the industry PRICING STRATEGY AND POLICY Policy is a managerial guide to a decision-making when difficult situation arises Strategy is a broad plan of action by which an organization intends to reach its goals DISCOUNT AND ALLOWANCES

Discounts and Allowances result in deduction from the price list or some other concession such as free merchandise or advertising allowances Quantity discounts are the deductions from the price list to encourage buyers to buy large amounts or to make most of their purchases on that seller Non-cumulative discounts are based on individual order or more products and to encourage large order Cumulative discounts are used in perishable products and based on the total volume purchased over a period of time Trade discounts/functional discounts are deductions offered to the buyers in payment for the functions that they will perform Cash discounts are given to the buyers when they pay in cash at specific period of time Seasonal discounts are given during the seller slow season Forward dating is the variation of both seasonal and cash discounts under which a buyer places an order but does not have to pay until after the season has started and some sales revenue has been generated Promotional allowances are price reductions given as a payment for promotional services performed by the buyers Brokerage payment unlawful to pay or received brokerage allowances except for services rendered Promotional Allowances are lawful only if they are offered to all competing costumers on proportionally equal terms Legality of quantity discounts are result in different prices in different costumer Legality of trade discounts could be given to classes of buyers GEOGRAPHIC PRICING STRATEGIES Geographic pricing strategies the buyers pay the geographic limits of the firm, location of the production facilities, the source of its raw materials, and its competitive strength in various market areas F.O.B. (free on board) pricing its the only one that the seller pays only the costs of the load and the buyer pays the entire costs of transportation as freight costs and costs of the load PRICING STRATEGIES AND POLICIES Uniform delivered pricing the same delivered price is quoted to all buyers regardless of their location, also called postage stamp pricing or free delivery pricing Zone delivered pricing sellers market is divided into a limited number of geographic zones and freight-in is the average of all charges at all points within the zone area Freight absorption pricing firm is at the price disadvantage when it tries to sell to buyers located in the nearer to competitors plant and quoted a factory price plus the freight costs that would be charged the competitive seller located to that costumer Skim-the-cream pricing involves setting a price that is high in the range of expected prices and act as a strong hedge against a possible mistake in setting the price. Its easy to decrease the original price if its too high but its difficult to increase if its price is too low. Penetration pricing a low initial price is set to reach the mass market immediately, the product is high elastic demand, can be achieved through large-scale operations, and expected to face a very strong competition soon after it is introduced to the market. Effects of Penetration Pricing It may discourage other firms to enter the field because of low profit margin It may give the innovator such a strong hold on its share of the market that future competitors cannot cut into it One price strategy a seller charge the same price to all similar costumers who buys the same quantity of a product Flexible price/variable price strategy the seller charge a different price to all similar costumers who buys the same quantity of a product

Unit pricing has been employed largely by supermarket chains; each separate product and package size there is a shelf label that states the price of the package that expressed in dollars and cent per ounce, pound, pint or some other standard measure Price lining is used extensively by retailers of all types of apparel which consists of selecting a limited number of prices at which the store will sell its merchandise Resale price maintenance the manufacturers want to control the prices of their products by making a price lists which the retailers guide for reselling the manufacturers products and provide mark-up Off-price retailing reselling the well-known products under the manufacturers suggested retail price Resale maintenance laws a series of state and federal laws permitted manufacturers to legally set the retail price on their products The state fair trade laws are laws intended to protect small retailers from the onslaught of larger retailers, especially the chain stores LEADER PRICING AND UNFAIR PRACTICES ACTS Leader pricing temporary price units are made on well known items with the idea that these special (leader) will attract costumers to the stores Loss leader product prices are cut with the idea that they will attract customer to the store Two Model Laws Unfair sales acts a reseller is prohibited from selling an item below invoice costs, including freight plus stated mark-up Unfair practices acts the minimum price is set at invoice costs including freight plus retailers or wholesalers or cost doing business PSYCHOLOGICAL PRICING Odd pricing form of psychological pricing that consists of setting a price at uneven (odd) amounts such as 49 cents, 19.95 rather than so called even amount PRICE COMPETITION VERSUS NON-PRICE COMPETITION Price competition a firm can effectively engage price competition by regularly offering prices that are as low as possible A firm can also use price to compete by: Changing its price management may decide to raise the rather than to cut quality or aggressively promote the product and still maintain the price Reaction to price made by competitors only firm can assume that its competitors will change price and should be ready to follow guidelines on how it will react. If a competitors boosts price a reasonable delay in reacting probably will not be perilous. Non-price competition sellers maintain stable prices attempt to improve their market position by emphasizing other aspects on their marketing program Two major methods of non-price competition Promotion a striving to secure greater sales by intensive advertising Product differentiation marketing strategy based on the creation upon the creation and promotion of product differences which may be real or imagined in the character of the product or in packaging name or way it is being promoted
TYPES OF ORGANIATIONAL CHARTS Functional Organization

PRESIDENT & GEN. MANAGER

VICE PRES. MARKETING

VICE PRES. PRODUCTION

VICE PRES. FINANCE

VICE PRES. EXTERNAL AFFAIRS

VICE PRES. RESEARCH

Geographical Organization

GENERAL MANAGER

MINDANAO BRANCH

NORTH LUZON BRACH

METRO MANILA BRANCH

By Product

SOUTH LUZON BRANCH

VISAYAS BRANCH

GENERAL MANAGER FLOUR DIVISION ANIMAL FEEDS DIVISION POULTRY DIVISION

By Costumer
STORE MANAGER

MENS DEPARTMENT

LADIES DEPARTMENT

CHILDREN DEPARTMENT

Line Organization

PRES.
VICE PRES.

MGR. SUPPLY ASST. ASST. ASST. ASST.

PRESIDENT
Matrix Organization

MGR. SUPPLY ASST. ASST. ASST. ASST.

MANAGER OF PROJECT PROJECT MANAGER 1 PROJECT MANAGER

MANAGER OF ENGINEERING ENGINEERING GROUP 1 ENGINEERING GROUP

MANAGER OF PRODUCTION PRODUCTION GROUP 1 PRODUCTION GROUP

MANAGER OF FINANCE FINANCE AND ACCOUNTING GROUP 1 FINANCE AND ACCOUNTING

MANAGER OF PERSONNEL PERSONNEL GROUP 9 1 PERSONNEL GROUP

Mixing Department

GENERAL MANAGER PRODUCT A

MARKETING

PRODUCT B FINANCE

PRODUCT C
PRODUCTION

INDUSTRIAL

SALE

CONSUMER SALE

LUZON BRANCH

VISAYASMINDANAO BRANCH

Taller Organization Structure

RECTOR VPAA DEAN ASSTANT DEAN CHAIRPERSON COORDINATOR FACULTY

Marketing Research Managers need information in order to introduce products and services that create value in the mind of the customer. Market research deals specifically with the gathering of information about a market's size and trends. Marketing research covers a wider range of activities. While it may involve market research, marketing research is a more general systematic process that can be applied to a variety of

10

marketing problems. The goal of marketing research is to provide the facts and direction that managers need to make their more important marketing decisions. The Value of Information is determined by: The ability and willingness to act on the information. The accuracy of the information. The level of indecisiveness that would exist without the information. The amount of variation in the possible results. The level of risk aversion. The reaction of competitors to any decision improved by the information. The cost of the information in terms of time and money. The Marketing Research Process Most marketing research projects involve these steps: I. Problem Definition The decision problem faced by management must be translated into a market research problem in the form of questions that define the information that is required to make the decision and how this information can be obtained. The objective of the research should be defined clearly. To ensure that the true decision problem is addressed, it is useful for the researcher to outline possible scenarios of the research results and then for the decision maker to formulate plans of action under each scenario.

II. Research Design Three categories of marketing research: 1. Exploratory research has the goal of formulating problems more precisely, clarifying concepts, gathering explanations, gaining insight, eliminating impractical ideas, and forming hypotheses. Exploratory research can be performed using a literature search, surveying certain people about their experiences, focus groups, and case studies. When surveying people, exploratory research studies would not try to acquire a representative sample, but rather, seek to interview those who are knowledgeable and who might be able to provide insight concerning the relationship among variables. Exploratory research may develop hypotheses, but it does not seek to test them. Exploratory research is characterized by its flexibility. 2. Descriptive research is more rigid than exploratory research and seeks to describe users of a product, determine the proportion of the population that uses a product, or predict future demand for a product. Descriptive research should define questions, people surveyed, and the method of analysis prior to beginning data collection. In other words, the who, what, where, when, why, and how aspects of the research should be defined. Two basic types of descriptive research: a. Longitudinal studies are time series analyses that make repeated measurements of the same individuals, thus allowing one to monitor behavior such as brand-switching. b. Cross-sectional studies sample the population to make measurements at a specific point in time. A special type of cross-sectional analysis is a cohort analysis, which tracks an aggregate of individuals who experience the same event within the same time interval over time. Cohort analyses are useful for long-term forecasting of product demand. 3. Causal research seeks to find cause and effect relationships between variables. It accomplishes this goal through laboratory and field experiments.
Data Types and Sources Secondary data may be internal to the firm, such as sales invoices and warranty cards, or may be external to the firm such as published data or commercially available data. The government census is a valuable source of secondary data. Secondary data has the advantage

III.

11

of saving time and reducing data gathering costs. The disadvantages are that the data may not fit the problem perfectly and that the accuracy may be more difficult to verify for secondary data than for primary data. Some secondary data is republished by organizations other than the original source; one should obtain secondary data directly from its source and consider who the source is and whether the results may be biased. There are several criteria that one should use to evaluate secondary data. Whether the data is useful in the research study. How current the data is and whether it applies to time period of interest. Errors and accuracy - whether the data is dependable and can be verified. Presence of bias in the data. Specifications and methodologies used, including data collection method, response rate, quality and analysis of the data, sample size and sampling technique, and questionnaire design. Objective of the original data collection. Nature of the data, including definition of variables, units of measure, categories used, and relationships examined. Primary data are demographic and socioeconomic characteristics, psychological and lifestyle characteristics, attitudes and opinions, awareness and knowledge, intentions, motive, and behavior. Primary data can be obtained by communication or by observation. Communication involves questioning respondents either verbally or in writing. This method is versatile, since one need only to ask for the information; however, the response may not be accurate. Communication usually is quicker and cheaper than observation. Observation involves the recording of actions and is performed by either a person or some mechanical or electronic device. Observation is less versatile than communication since some attributes of a person may not be readily observable, such as attitudes, awareness, knowledge, intentions, and motivation. Observation also might take longer since observers may have to wait for appropriate events to occur, though observation using scanner data might be quicker and more cost effective. Observation typically is more accurate than communication. IV. Questionnaire Design The questionnaire is an important tool for gathering primary data. Poorly constructed questions can result in large errors and invalidate the research data, so significant effort should be put into the questionnaire design. The questionnaire should be tested thoroughly prior to conducting the survey. Measurement Scales Attributes can be measured on following scales: Nominal numbers are simply identifiers, with the only permissible mathematical use being for counting. Example: social security numbers. Ordinal scales are used for ranking. The interval between the numbers conveys no meaning. Median and mode calculations can be performed on ordinal numbers. Example: class ranking Interval scales maintain an equal interval between numbers. These scales can be used for ranking and for measuring the interval between two numbers. Since the zero point is arbitrary, ratios cannot be taken between numbers on an interval scale; however, mean, median, and mode are all valid. Example: temperature scale Ratio scales are referenced to absolute zero values, so ratios between numbers on the scale are meaningful. In addition to mean, median, and mode, geometric averages also are valid. Example: weight Validity and Reliability The validity of a test is the extent to which differences in scores reflect differences in the measured characteristic. Predictive validity is a measure of the usefulness of a measuring instrument as a predictor. Proof of predictive validity is determined by the correlation between

12

results and actual behavior. Construct validity is the extent to which a measuring instrument measures what it intends to measure. Reliability is the extent to which a measurement is repeatable with the same results. A measurement may be reliable and not valid. However, if a measurement is valid, then it also is reliable and if it is not reliable, then it cannot be valid. One way to show reliability is to show stability by repeating the test with the same results. Attitude Measurement Many of the questions in a marketing research survey are designed to measure attitudes. Attitudes are a person's general evaluation of something. Customer attitude is an important factor for the following reasons: Attitude helps to explain how ready one is to do something. Attitudes do not change much over time. Attitudes produce consistency in behavior. Attitudes can be related to preferences. Attitudes can be measured using the following procedures: Self-reporting - subjects are asked directly about their attitudes. Self-reporting is the most common technique used to measure attitude. Observation of behavior - assuming that one's behavior is a result of one's attitudes, attitudes can be inferred by observing behavior. For example, one's attitude about an issue can be inferred by whether he/she signs a petition related to it. Indirect techniques - use unstructured stimuli such as word association tests. Performance of objective tasks - assumes that one's performance depends on attitude. For example, the subject can be asked to memorize the arguments of both sides of an issue. He/she is more likely to do a better job on the arguments that favor his/her stance. Physiological reactions - subject's response to stimuli is measured using electronic or mechanical means. While the intensity can be measured, it is difficult to know if the attitude is positive or negative. Multiple measures - a mixture of techniques can be used to validate the findings, especially worthwhile when self-reporting is used. There are several types of attitude rating scales: Equal-appearing interval scaling - a set of statements are assembled. These statements are selected according to their position on an interval scale of favorableness. Statements are chosen that has a small degree of dispersion. Respondents then are asked to indicate with which statements they agree. Likert method of summated ratings - a statement is made and the respondents indicate their degree of agreement or disagreement on a five point scale (Strongly Disagree, Disagree, Neutral, Agree, and Strongly Agree). Semantic differential scale - a scale is constructed using phrases describing attributes of the product to anchor each end. For example, the left end may state, "Hours are inconvenient" and the right end may state, "Hours are convenient". The respondent then marks one of the seven blanks between the statements to indicate his/her opinion about the attribute. Stapel Scale - similar to the semantic differential scale except that 1) points on the scale are identified by numbers, 2) only one statement is used and if the respondent disagrees a negative number should marked, and 3) there are 10 positions instead of seven. This scale does not require that bipolar adjectives be developed and it can be administered by telephone. Q-sort technique - the respondent if forced to construct a normal distribution by placing a specified number of cards in one of 11 stacks according to how desirable he/she finds the characteristics written on the cards. Sampling Plan

V.

13

The sampling frame is the pool from which the interviewees are chosen. In designing the research study, one should consider the potential errors. Two sources of errors are random sampling error and non-sampling error. Sampling errors are those due to the fact that there is a non-zero confidence interval of the results because of the sample size being less than the population being studied. Non-sampling errors are those caused by faulty coding, untruthful responses, respondent fatigue, etc. There is a tradeoff between sample size and cost. The larger the sample size, the smaller the sampling error but the higher the cost. After a certain point the smaller sampling error cannot be justified by the additional cost. While a larger sample size may reduce sampling error, it actually may increase the total error. There are two reasons for this effect. First, a larger sample size may reduce the ability to follow up on non-responses. Second, even if there is a sufficient number of an interviewer for follow-ups, a larger number of interviewers may result in a less uniform interview process. VI. Data Collection In addition to the intrinsic sampling error, the actual data collection process will introduce additional errors. These errors are called non-sampling errors. Some non-sampling errors may be intentional on the part of the interviewer, who may introduce a bias by leading the respondent to provide a certain response. The interviewer also may introduce unintentional errors, for example, due to not having a clear understanding of the interview process or due to fatigue. Respondents also may introduce errors. A respondent may introduce intentional errors by lying or simply by not responding to a question. A respondent may introduce unintentional errors by not understanding the question, guessing, not paying close attention, and being fatigued or distracted. Such non-sampling errors can be reduced through quality control techniques.

VII.

Data Analysis - Preliminary Steps First, it must be edited so that errors can be corrected or omitted. The data must then be coded; this procedure converts the edited raw data into numbers or symbols. A codebook is created to document how the data was coded. Finally, the data is tabulated to count the number of samples falling into various categories. Simple tabulations count the occurrences of each variable independently of the other variables. Cross tabulations, also known as contingency tables or cross tabs, treats two or more variables simultaneously. However, since the variables are in a two-dimensional table, cross tabbing more than two variables is difficult to visualize since more than two dimensions would be required. Cross tabulation can be performed for nominal and ordinal variables. Cross tabulation is the most commonly utilized data analysis method in marketing research. Many studies take the analysis no further than cross tabulation. This technique divides the sample into sub-groups to show how the dependent variable varies from one subgroup to another. A third variable can be introduced to uncover a relationship that initially was not evident. Conjoint analysis is a powerful technique for determining consumer preferences for product attributes.

Hypothesis Testing A basic fact about testing hypotheses is that a hypothesis may be rejected but that the hypothesis never can be unconditionally accepted until all possible evidence is evaluated. In the case of sampled data, the information set cannot be complete. So if a test using such data does not reject a hypothesis, the conclusion is not necessarily that the hypothesis should be accepted. The null hypothesis in an experiment is the hypothesis that the independent variable has no effect on the dependent variable. The null hypothesis is expressed as H0. This hypothesis is assumed to be true unless proven otherwise. The alternative to the null hypothesis is the hypothesis that the independent variable does have an effect on the dependent variable. This

14

hypothesis is known as the alternative, research, or experimental hypothesis and is expressed as H1. This alternative hypothesis states that the relationship observed between the variables cannot be explained by chance alone. There are two types of errors in evaluating a hypotheses: Type I error: occurs when one rejects the null hypothesis and accepts the alternative, when in fact the null hypothesis is true. Type II error: occurs when one accepts the null hypothesis when in fact the null hypothesis is false. Because their names are not very descriptive, these types of errors sometimes are confused. Some people jokingly define a Type III error to occur when one confuses Type I and Type II. To illustrate the difference, it is useful to consider a trial by jury in which the null hypothesis is that the defendant is innocent. If the jury convicts a truly innocent defendant, a Type I error has occurred. If, on the other hand, the jury declares a truly guilty defendant to be innocent, a Type II error has occurred. Hypothesis testing involves the following steps: Formulate the null and alternative hypotheses. Choose the appropriate test. Choose a level of significance (alpha) - determine the rejection region. Gather the data and calculate the test statistic. Determine the probability of the observed value of the test statistic under the null hypothesis given the sampling distribution that applies to the chosen test. Compare the value of the test statistic to the rejection threshold. Based on the comparison, reject or do not reject the null hypothesis. Make the marketing research conclusion. In order to analyze whether research results are statistically significant or simply by chance, a test of statistical significance can be run. Tests of Statistical Significance The chi-square goodness-of-fit test is used to determine whether a set of proportions have specified numerical values. ANOVA Another test of significance is the Analysis of Variance (ANOVA) test. The primary purpose of ANOVA is to test for differences between multiple means. Whereas the t-test can be used to compare two means, ANOVA is needed to compare three or more means. If multiple t-tests were applied, the probability of a TYPE I error (rejecting a true null hypothesis) increases as the number of comparisons increases. One-way ANOVA examines whether multiple means differ. The test is called an F-test. ANOVA calculates the ratio of the variation between groups to the variation within groups (the F ratio). While ANOVA was designed for comparing several means, it also can be used to compare two means. Two-way ANOVA allows for a second independent variable and addresses interaction. To run a one-way ANOVA, use the following steps: 1. Identify the independent and dependent variables. 2. Describe the variation by breaking it into three parts - the total variation, the portion that is within groups, and the portion that is between groups (or among groups for more than two groups). The total variation (SStotal) is the sum of the squares of the differences between each value and the grand mean of all the values in all the groups. The in-group variation

15

(SSwithin) is the sum of the squares of the differences in each element's value and the group mean. The variation between group means (SSbetween) is the total variation minus the in-group variation (SStotal - SSwithin). 3. Measure the difference between each group's mean and the grand mean. 4. Perform a significance test on the differences. 5. Interpret the results. Discriminant analysis is to determine which variables discriminate between two or more naturally occurring groups. Discriminant analysis can determine which variables are the best predictors of group membership. Essentially, the discriminant function problem is a one-way ANOVA problem in that one can determine whether multiple groups are significantly different from one another with respect to the mean of a particular variable. A discriminant analysis consists of the following steps: 1. Formulate the problem. 2. Determine the discriminant function coefficients that result in the highest ratio of between-group variation to within-group variation. 3. Test the significance of the discriminant function. 4. Interpret the results. 5. Determine the validity of the analysis. Factor Analysis is a very popular technique to analyze interdependence. Factor analysis studies the entire set of interrelationships without defining variables to be dependent or independent. Factor analysis combines variables to create a smaller set of factors. Mathematically, a factor is a linear combination of variables. A factor is not directly observable; it is inferred from the variables. The technique identifies underlying structure among the variables, reducing the number of variables to a more manageable set. Factor analysis groups variables according to their correlation. The factor loading can be defined as the correlations between the factors and their underlying variables. A factor loading matrix is a key output of the factor analysis. An example matrix is shown below. Each cell in the matrix represents correlation between the variable and the factor associated with that cell. The square of this correlation represents the proportion of the variation in the variable explained by the factor. The sum of the squares of the factor loadings in each column is called an eigenvalue. An eigenvalue represents the amount of variance in the original variables that is associated with that factor. The communality is the amount of the variable variance explained by common factors. A rule of thumb for deciding on the number of factors is that each included factor must explain at least as much variance as does an average variable. In other words, only factors for which the eigenvalue is greater than one are used. Other criteria for determining the number of factors include the Screen plot criteria and the percentage of variance criteria. To facilitate interpretation, the axis can be rotated. Rotation of the axis is equivalent to forming linear combinations of the factors. A commonly used rotation strategy is the varimax rotation. Varimax attempts to force the column entries to be either close to zero or one. Cluster Analysis Market segmentation usually is based not on one factor but on multiple factors. Initially, each variable represents its own cluster. The challenge is to find a way to combine variables so that relatively homogenous clusters can be formed. Such clusters should be internally homogenous and externally heterogeneous. Cluster analysis is one way to accomplish this goal. Rather than being a statistical test, it is more of a collection of algorithms for grouping objects, or in the case of marketing research, grouping people. Cluster analysis is useful in the exploratory phase of research when there are no a-priori hypotheses. Cluster analysis steps: 1. Formulate the problem, collecting data and choosing the variables to analyze. 2. Choose a distance measure. The most common is the Euclidean distance. Other possibilities include the squared Euclidean distance, city-block (Manhattan) distance, Chebychev distance, power distance, and percent disagreement.

16

3. Choose a clustering procedure (linkage, nodal, or factor procedures). 4. Determine the number of clusters. They should be well separated and ideally they should be distinct enough to give them descriptive names such as professionals, buffs, etc. 5. Profile the clusters. 6. Assess the validity of the clustering.

VIII.

Marketing Research Report The format of the marketing research report varies with the needs of the organization. The report often contains the following sections: Authorization letter for the research Table of Contents List of illustrations Executive summary Research objectives Methodology Results Limitations Conclusions and recommendations Appendices containing copies of the questionnaires, etc. Concluding Thoughts Marketing research by itself does not arrive at marketing decisions, nor does it guarantee that the organization will be successful in marketing its products. However, when conducted in a systematic, analytical, and objective manner, marketing research can reduce the uncertainty in the decision-making process and increase the probability and magnitude of success. Assessing Marketings Critical Role Organizational Performance Our purpose is to make products with pleasure, that we can sell with pleasure and that our customers can use with pleasure. Soichiro Honda Marketing is so basic that it cannot be considered a separate function. It is the whole business seen from the point of view of its final result, that is, from the customers point of view Business success is not determined by the producer but by the customer. PETER DRUCKER Marketing's job is to convert societal needs into profitable opportunities. ANONYMOUS Low labor skills will challenge educational and training companies to design more effective programs for upgrading human skills. One scholar insightfully described the purpose of marketing as the creation and delivery of a standard of living. Doing Business in the Global Economy The Global- Economy The world economy has undergone a radical transformation in the last two decades. Geographical and cultural distances have shrunk significantly with the advent of jet airplanes, fax machines, global computer and telephone linkups, and world television satellite broadcasting. Asia-Pacific Economic Environment Asia's stake in the global economy has been increasing over the years. The region has recorded high growth rates for much of the 1990s. Asia's economic, prosperity has seen more consumer needs and demands satisfied: improved service, higher-quality merchandise, more convenience, and better value-for-money. Consequently, Asian consumers are tightening their belts and spending less. Thai consumers are shopping more at hypermarts, and Japanese consumers are buying more frequently from discount stores. Governments such as those in Thailand and Malaysia are urging con- turners to switch from imported to locally-made products.

17

Under such challenging conditions, marketing becomes even more important as there exists less margin for error. The Environmental Imperative and Socially Responsible Marketing In today's business climate, companies must accept increasing responsibility for the environment. In the past, a chemical company could belch out factory smoke that polluted the air and dispose of chemicals that polluted the water and soil without much accountability. The move forward environmental protection raised costs for some manufacturers who felt they were being put at a disadvantage against other competitors who operated under weaker or non-existent environmental regulations. Technological Advances The boom in, and merger of, computer, telephone, and television technology has had a major impact on how businesses produce and market their products. As technology has delivered new and better foods, clothing, housing, vehicles, and entertainment possibilities, our lives have changed dramatically. Internet is fast being embraced by businesses as link (or hypertext) to communities, to employees, customers, suppliers, and distributes sales information quickly. The Powerful Consumer The late 1990s, Asian companies can no longer ignore foreign competitors, foreign markets, and foreign sources of supply. They cannot allow their wage and material costs to get far out of line with the rest of the world. They cannot ignore timer technologies, materials, equipment, and new ways of organizing and marketing. In view of this "marketing myopia,"' it is not surprising that there has been a flood of books offering fresh prescriptions on how to run businesses in the new environment. In the 1960s, "Theory Y" was the rage, calling for companies to treat their employees not as cogs in a machine but as individuals whose creativity can be released through enlightened management practice. In the 1970s,"strategic planning' offered a way of thinking about building and managing the company's portfolio of businesses in a turbulent environment. In the 1980s, "excellence and quality" received major attention as the new formulas for success. All of these themes will continue to inspire our business thinking. In the 1990s, companies acknowledged the critical importance of being "customer-oriented and driven" in conducting their activities. It is not enough to be product-driven or technologydriven; too many companies still design their products without customer input, only to find them rejected in the marketplace. And too many companies forget the customers after the sale, only to lose them to competitors through benign neglect. Other Issues Many other critical changes have occurred in consumer and business markets. Consumer markets are often characterized by an aging population; an increasing number of working women; later marriage, more divorces, and smaller families; the emergence of distinct ethnic consumer groups and needs; and the proliferation of more varied consumer lifestyles. Business markets are also changing. Business firms demand higher product quality from their suppliers, faster delivery, better service, and lower prices. Business firms need to speed up their product-development processes because of shorter product life cycles. They need to find better ways to distribute and promote their products at lower cost. The Core Concepts of Marketing 1. Needs, Wants, and Demands A human need is a state of felt deprivation of some basic satisfaction such as food, clothing, shelter, safety, belonging, esteem, and a few other things for survival. Wants are desires for specific satisfiers of these deeper needs. Human wants are continually shaped and reshaped by social forces and institutions such as religious groups, schools, families, and business corporations. Demands are wants for specific products that are backed by an ability and willingness to buy them. Wants become demands when supported by purchasing power.

18

2. Products (Goods, Services, and Ideas) A product is anything that can be offered to satisfy a need or want. 3. Value, Cost, and Satisfaction Value is the consumer's estimate of the product's overall capacity to satisfy his or her needs. 4. Exchange and Transactions Exchange is frequently described as value-creating process because it normally leaves both parties better off. It is also an act of obtaining a desired product from someone by offering something in return. For exchange to take place, five conditions must be satisfied: 1. There are at least two parties. 2. Each party has something that might be of value to the other party. 3. Each party is capable of communication and delivery 4. Each party is free to accept or reject the offer. 5. Each party believes it is appropriate or desirable to deal with the other party. Transactions are the basic unit of exchange between two parties. Monetary transactions, however, do not require money as one of the traded values. Barter transaction consists of the trading of goods or services for other goods or services. Negotiation is the process of trying to arrive at mutually agreeable terms. 5. Relationships and Networks Transaction marketing is part of a larger idea, called relationship marketing. Smart marketers try to build up long-term, trusting win-win relationships with valued customers, distributors, dealers, and suppliers. Relationship marketing cuts down on transaction costs and time in the best cases, transactions move from being negotiated each time to being routinized. Marketing network is the building of unique company asset consists of the company and its suppliers, distributors, and a customer, with which it has built solid, dependable business relationships. Build a good network of relationships with key stakeholders and profits will follow. MARKET is consists of all the potential customers sharing a particular need or want who might be willing and able to engage to exchange to satisfy that need or want. Traditionally, a market was the place where buyers and sellers gathered to exchange their goods. Marketer is someone seeking one or more prospects who .might engage in an exchange of values. Prospect is someone whom the marketer identifies as potentially willing and able to engage in an exchange of values. The marketer can be a seller or a buyer. Suppose several persons want to buy an attractive house' that has just become available. Each prospective buyer will try to market himself or herself to the seller. These buyers are doing the marketing! Reciprocal marketing is the event that both parties actively seek an exchange. MARKETING is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others. Marketing Management is the process of panning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges that satisfy individual and organizational goals. Marketing management has the task of influencing the level, timing and composition of demand in a way that will help the organization achieve its objectives. Marketing management is essentially demand management. Marketing planning, marketers must make decisions on Target markets, market positioning, product development, pricing, distribution channels, physical distribution, communication, and promotion. Company Orientations Toward the Marketplace We have defined marketing management as the conscious effort to achieve desired exchange outcomes with target markets. Demand States and Marketing Tasks 1. Negative demand - If a major part of the market dislikes the product and may even pay a price to avoid it. The marketing task is to analyze why the market dislikes the

19

product and whether `a marketing program consisting o product redesign, lower prices, and more positive promotion can change the market's beliefs and attitudes. 2. No demand Target consumers maybe unaware of or uninterested in the product. The marketing task is to find ways to connect the benefits of the product with the person's natural needs and interests. 3. Latent demand - Many consumers may share a strong need that cannot be satisfied by any existing product. The marketing task is to measure the size of the potential market and develop effective goods and services that would satisfy the demand. 4. Declining demand - Every organization, sooner or later, faces declining demand for one or more of its products. The marketer must analyze the causes of market decline and determine whether demand can be restimulated by finding new target markets, changing the product's features or developing more effective communication. The marketing task is to reverse the declining demand through creative remarketing of the product. 5. Irregular demand - Demand that varies on a seasonal, daily, or even hourly basis, causing problems of idle or overworked capacity. The marketing task, called synchromarketing, is to find ways to alter the same pattern of demand through flexible pricing, promotion, and other incentives. 6. Full demand - Organizations face full demand when they are pleased with their volume of business. The marketing task is to maintain the current level of demand in the face of changing consumer preferences and increasing competition or improve its quality and continually measure consumer satisfaction. 7. Overfull demands - Some organizations face a demand level that is higher than they can or want to handle. The marketing task, called demarketing, requires finding ways to reduce the demand temporarily but not to destroy demand or permanently. Either to discourage overall demand like raising prices and reducing promotion and service. 8. Unwholesome demand - Unwholesome products will attract organized efforts to discourage their consumption. The marketing task is to get people who like something to give it up, using such tools as fear messages, price hikes, and reduced availability. The marketing concept rests on four main pillars 1. Target market 2. Customer needs 3. Coordinated marketing 4. Profitability. TARGET MARKET No company can operate in every market and satisfy every need. Nor can it even do a good job within one broad market. CUSTOMER NEEDS Once a company has defined its target market, it must understand the customers' needs. Five types of needs 1. Stated needs (the customer wants an inexpensive car) 2. Real needs (the customer wants a car whose operating cost, not its initial price, is low) 3. Unstated needs (the customer expects good service from the dealer) 4. Delight needs (the customer buys the car and receives a complimentary map) 5. Secret needs (the customer wants to be seen by friends as a value-oriented savvy consumer) Customer-oriented thinking requires the company to define customer needs from the customer point of view. In general, a company can respond to customers' requests by giving customers what they want, or what they need, or what they really need. The key to professional marketing is to meet the customers' real needs better than any competitor can.

20

Some marketers distinguish between responsive marketing and creative marketing. A responsive marketer finds a stated need and fills it. A creative marketer discovers and produces solutions that customers did not ask for but to which they enthusiastically respond. Hamel and Prahalad believe that companies must go beyond just asking consumers what they want. Why is it supremely important to satisfy the customer? Because a company's sales each period come from two groups: new customers and repeat customers. It always costs more to attract new customers than to retain current customers. Therefore, customer retention is more critical than customer attraction. The key to customer retention is customer satisfaction: A satisfied customer: 1. Stays "loyal" longer 2. Buys more as the company introduces new products and upgrades existing products 3. Talks favorably about the company and its products 4. Pays less attention to competing brands and advertising and is less price sensitive 5. Offers product/service ideas to the company 6. Costs less to serve than new customers because transactions are routinized COORDINATED MARKETING Integrated marketing refers to all the company's departments work together to serve the customer's interests, the result is integrated marketing. Integrated marketing means two things: First, the various marketing functions-sales force; advertising, product management, marketing research, and so on-must be coordinated among themselves. Too often the sales force is, mad at the product managers for setting "too high a price or "too high a volume target; or the advertising director and a brand manager cannot agree on the best advertising campaign for the brand. These marketing functions must be coordinated from the customer's point of view Second, marketing must be well coordinated with the other company departments. Marketing does not work when it is merely a department; it works only when all employees appreciate the impact they have on customer satisfaction. To foster teamwork among all departments, the company carries out internal marketing as well as external marketing. Internal marketing is the task of successfully hiring, training, and motivating able employees who want to serve the customers well. PROFITABILITY The ultimate purpose of the marketing concept is to help organizations achieve their goals. For private firms, the major goal is profit; for nonprofit and public organizations, it is surviving and attracting enough funds to perform their work. The key is not to aim for profits as such but to achieve them as a byproduct of doing the job well. A company makes money by satisfying customer needs better than competitors can. Most companies do not really grasp or embrace the marketing concept until driven to it by circumstances. Any of the following developments might prod them to take the marketing concept to heart: 1. Sales decline: When companies experience falling sales, they panic and look for answers. 2. Slow growth: Slow sales growth will lead some companies to cast about for new markets. They realize that they need marketing know-how if they are to identify and select new opportunities. 3. Changing buying patterns: Many companies operate in markets characterized by rapidly changing customer wants. These companies need more marketing know-how if they are to continue producing value for buyers. 4. Increasing competition: Complacent companies may suddenly be attacked by powerful marketing companies and forced to learn marketing to meet the challenge.

21

5. Increasing marketing expenditure: Companies may find their expenditure for

advertising, sales promotion, marketing research, and customer service getting out of hand. Management then decides it is time to undertake a marketing audit and to improve its marketing. Three hurdles in converting to a market-oriented company I. ORGANIZED RESISTANCE Some company departments, often manufacturing, finance, and research and development, do not like to see marketing built up because it threatens their power in the organization. Initially, the marketing function is seen as one of several equally important business functions in a check-and-balance: relationship. A dearth of demand then leads marketers to argue that their function is somewhat more important than the others. A few marketing enthusiasts go further and say marketing is the major function of the enterprise, for without customers, there would be no company. They put marketing at the center, with other business functions serving as support functions. This view incenses the other managers, who do not want to think of themselves as working for marketing. Enlightened marketers clarify the issue by putting the customer rather than marketing at the center of the company. They argue for a customer orientation in which all functions work together to sense, serve, and satisfy the customer. Finally, some marketers say that marketing still needs to command a central company position if customers' needs are to be correctly interpreted and efficiently satisfied. The marketer's argument for the business concept is as follows: 1. The company's assets have little value without the existence of customers. 2. The key company task is therefore to attract and retain customers. 3. Customers are attracted through competitively superior offers and retained through satisfaction. 4. Marketing's task is to develop a superior offer and deliver customer satisfaction. 5. Customer satisfaction is affected by the performance of the other departments. 6. Marketing needs to influence these other departments to cooperate in delivering customer satisfaction. II. SLOW LEARNING Despite resistance, many companies manage to introduce some marketing into their organization. The company CEO establishes a marketing department; outside marketing talent is hired; key managers attend marketing seminars; the marketing budget is substantially increased; marketing planning and control systems are introduced. Even with these steps, learning what marketing really is comes slowly. III. FAST FORGETTING Even after installing marketing, management must fight a strong tendency to forget basic marketing principles, especially in the wake of marketing success. Some failed because they forgot the marketing maxim: Know your target market and how to satisfy them. Companies face a particularly difficult task in adapting their ad slogans to international markets. When Coca Cola entered China in 1979, for instance, it discovered that the country's simplified Chinese writing system had turned the literal meaning of Coca-Cola into 'Bite the wax tadpole " Coca Cola solved this problem by using four Chinese characters meaning "Very Tasty, Very Happy." Even when the language is the same, the way words are used may differ from country to country. Electrolux's British ad line for its vacuum cleaners (Nothing sucks like an Electrolux") would certainly not lure customers in the Philippines. Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value in the market. A marketer is someone seeking one or more prospects who might engage in an exchange of values. Relationship marketing is the practice of building long-term satisfying relations with key parties-customers, suppliers, distributors-in order to retain their long-term preference and

22

business. Good marketers build up long-term, win-win" relationships by delivering high quality, good service, and fair prices to other parties over time. Marketing management is the process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organizational objectives. Marketing management is essentially demand management; its task is to influence the level, timing, and composition of demand. Five competing concepts 1. Production concept holds that consumers will favor those products that are widely available and low in cost. Managers of production-oriented organizations concentrate on achieving high production efficiency and wide distribution. 2. Product concept holds that consumers will favor those products that offer the most quality, performance, or innovative features. Managers in these product-oriented organizations focus their energy on making superior products and improving them over time. Under this concept, managers assume that buyers admire well-made products and can appraise product quality and performance. However, these managers are caught up in a love affair with their product and do not realize that the market may be less "turned on." Marketing management becomes a victim of the "better mousetrap" fallacy, believing that a better mousetrap will lead people to beat a path to its door. The product concept leads to marketing myopia, a focus on the product rather than on market. 3. Selling/sales concept holds that consumers, if left alone, will ordinarily not buy enough of the organization's products. The organization must therefore undertake an aggressive selling and promotion effort. Selling is preoccupied with the seller's need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it." Theodore Levitt drew a perceptive contrast between the selling and marketing concepts. 4. Marketing concept holds that the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets. The marketing concept has been expressed in many ways: "Meeting needs profitably" "Find wants and fill them." Love the customer, not the product. 5. Societal marketing concept holds that the organization's task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and the society's well-being.

23