Principles of Marketing Module 1.pdf

12 Principles of Marketing Quarter 1 – Module 1 : Marketing Principles and Strategies Department of Education Republic of the Philippines Principles of Marketing – Grade 12 Alternative Delivery Mode Quarter 1 – Module: Marketing Principles and Strategies First Edition, 2020 Republic Act 8293, section 176 states that: No copyright shall subsist in any work of the Government of the Philippines. However, prior approval of the government agency or office wherein the work is created shall be necessary for exploitation of such work for profit. Such agency or office may, among other things, impose as a condition the payment of royalties. Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names, trademarks, etc.) included in this book are owned by their respective copyright holders. Every effort has been exerted to locate and seek permission to use these materials from their respective copyright owners. The publisher and authors do not represent nor claim ownership over them. Published by the Department of Education Secretary: Undersecretary: Assistant Secretary: Development Team of the Module Authors: Jacel E. Agaser, Martita F. Ramsundar and Dr. Marilou LLeno Editor: Maria Elanie Bucayo Reviewers: Jacel E. Agaser, Maria Elanie O. Bucayo and Dr. Marilou LLeno Illustrator: Jacel E. Agaser and Martita F. Ramsundar Layout Artist: Jacel E. Agaser Management Team: Dr. Gina L. Aguitez Printed in the Philippines by ________________________ Department of Education – Bureau of Learning Resources (DepEd-BLR) Office Address: ____________________________________________ ____________________________________________ Telefax: ____________________________________________ E-mail Address: ____________________________________________ Department of Education Republic of the Philippines Principles of Marketing First Quarter Week 1-Day 1-4 LESSON 1: MARKETING DEFINED What I Need to Know The module is divided into two lessons, namely: Lesson 1 – Marketing Defined. Lesson 2 – The Marketing Process After going through this module, you are expected to: 1. Define and understand marketing concepts 2. Recognize the importance of marketing process when developing a marketing plan. What I Know Instructions: Write True if the sentence is correct and False if it is not a correct statement. 1. Marketing affects only those who are marketing professionals. 2. Marketing is all about selling, advertising, and giving promotional tactics. 3. Marketing is the lifeblood of every business; thus, every organization function depends on it. 4. Value is the most important element in Marketing. 5. Customers and clients are the only important key players in Marketing. 6. Marketing is the result or outcome of an activity, not the process 7. Without value, no products and services should be marketed. 8. Marketing includes activities such as creating, communicating, delivering, and exchanging offerings that have value. 9. Examples of activities for communicating value in Marketing include conducting marketing research and finding the best suppliers in the market. 10. Activity set of institutions and processes have different meanings or context when defining what is marketing. What Is It In our everyday life, we use a lot of products and services to survive. From toothpaste to clothes, getting to our destination, the food that we eat, and even check out the latest mobile applications, we cannot deny that we make daily choices about them. So, how do we choose among different products that offer the same benefit anyway? The answer lies in Marketing. It affects all aspects of our life and has a great impact on every one of us. To a layman, marketing may mean selling or advertising the product. However, to a marketing professional, it is a process (Illano, 2016, 3). It begins with the moment the entrepreneur or businessman creates or develops a product or service, to the actual production, to the methods and ways of selling it, to dealing with competitors until it satisfies its customers. This proves that, the heart of business success lies in its Marketing. To quote So and Torres (2016, 1) in their book, entitled Principles of Marketing, “Marketing is often referred to as the lifeblood of ever business.” Let us now discuss the definition of Marketing. We will begin with the definition of Marketing as presented by the American Marketing Association: “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” To really understand this definition, let us try to dissect the important words or group of words being used to describe what is Marketing. Definition of Marketing: 1. Activity, set of institutions, and processes- certain tasks in order to achieve certain goals (Fripp, 2015- 2020). 2. Creating- creating and developing products that provide benefits and solutions to the marketplace. This process begins with market research, product designing, product testing, etc. 3. Communicating - the use of techniques in conveying messages about company’s product and services with the intent of persuading the customers to purchase. Examples are advertising, the use of social media platforms, words of mouth or sales promotions. Department of Education Republic of the Philippines 4. Delivering- distribution strategies used to make the products accessible to the target customers. It includes the use of middlemen, transportation, and warehousing. 5. Exchanging - marketing seek to provide valuable products and services to customers, in return, companies need to benefit from it thru getting profits. 6. Value- the center of everything marketing does. It means marketers provide goods, services, ideas and benefits that customers’ really want. Products or service that serve no purpose or contribute nothing to individual and societal well-being should not be marketed and building long-term customer relationship is very important (Lamb, Hair and McDaniel, 2008, 4). 7. Customers, clients, partners, and society at large- stakeholders or individuals and group of people connected to the business which include customers, employees, suppliers, distributors, and the community. What I Have Learned Marketing affects us in our daily lives as products and services are part of our daily activities. Marketing is more than selling and advertising. It is a process which starts from the developing of a business idea until the product satisfies the customer. Marketing entails important processes and activities such as creating, communicating, delivering and exchanging value. Value is the center of everything marketing does. Without it, no products and services should be marketed. Customers and clients are not the only key players in Marketing. Partners such as employees, suppliers and society also contribute to the success of the business or organization. LESSON 2: Core Marketing Concepts What is It In our previous lesson, we have understood Marketing and its essence on the success of a business. As a consumer, it helped us to be informed about the choices we make whenever we buy a product or avail a service. So, how do Marketers know what to offer in the marketplace? Marketing creates value for the customers. When we say value, it means something that is beneficial to its customers or clients. However, the benefits vary from one person to another. Value might mean affordability for some, or quality, or superior performance to the other. Through Marketing, the variation, and differences we are looking for a particular product or service, has been addressed and has help us to choose what we want or need among them. This is the philosophy behind the Five Core Marketing Concepts. Knowing this will help us gain an insight to the basics of Marketing. The following figure shows the Core Marketing Concepts which will help us to answer this question: McCormick, Francine. 2016. Core Marketing Concepts. 296 × 165 pixels. Accessed May 6, 2020. https://slideplayer.com/slide/5689557/ Figure 1. Core Marketing Concepts Department of Education Republic of the Philippines As seen from above, there are five concepts that are linked to one another with each concept building on the one before it. These are: 1. needs wants and demands 3.value and satisfaction 5. markets 2. products, services, and experiences, 4. exchange, transactions, and relationships Basically, these concepts ask the following questions: A. “What motivates the consumers to take action?” Need - a state of felt deprivation about something that is necessary such as food, clothing, safety, belongingness, etc. For example, “I am hungry.” Wants - form that a human need takes as shaped by culture or individual personality. If hunger is need, then I might want a Burger Mc Do or a Chicken Joy Meal, or maybe a hotdog sandwich offered in the school canteen. Demand - human wants backed up by purchasing power and willingness to buy. Based on how much you have and your willingness to buy, which among the three options will you choose? B. “What will satisfy consumers’ needs and wants?” Products - anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a need or want. (Armstrong and Kotler, 2012) Examples: persons, places, organizations, activities, and ideas. Services - activities or benefits offered for sale that are essentially intangible and don’t result in the ownership of anything. Examples: banking, airlines, haircuts, and hotels. C. “How Do Consumers Choose Among Products and Services?” Customer Value - refers to the benefit customers place on the product or service. The product with highest quality may not mean highest value for customers. Usually, it is affected by the price of product obtained. (So and Torres, 2016, 11) Customer Satisfaction – measurement of how well customer expectations from a purchased product or service have been met. D. “How do Consumers Obtain Products and Services?” Exchanges - act of obtaining a desired object from someone by offering something in return. Transactions - trade of values between parties. Usually involves money and a response. Relationships - building long-term relationships with consumers, distributors, dealers, and suppliers. E. “Who Purchases Products and Services?” A market consists of all potential customers sharing the same need/ want who may be willing and able to engage in exchange to satisfy need/ want. Actual Market buyers who share a Buyers particular need or want that can be satisfied by products or services. Potential Buyers Department of Education Republic of the Philippines Week 2-Day 1-4 LESSON 1: GOALS OF MARKETING What I Need to Know The module is divided into two lessons, namely: Lesson 1 – Goals of Marketing Lesson 2 – Levels of Product Lesson 3- Classification of Product After going through this module, you are expected to: 1. plot marketing goals; 2. identify the different levels of product; and 3. distinguish the different classification of product. What I Know Direction: Write True if the sentence is correct and False if it is not a correct statement. 1. Maximization of profit is the ultimate goal of every commercial business. 2. Marketing goals are statement of what results you want to achieve with your marketing. 3. There are three components of Marketing which could be the basis of our goals. 4. The interacting components of a market are customer and competition. 5. Marketing is all about satisfying both the company and the market equally. 6. The goal of company in the 3C’s is to outperform the competition. 7. KRA or key result areas are the output of fulfilling the strategic 3Cs of Marketing. 8. Satisfying the needs, wants and expectations of the target customers is the key result of sales. 9. Market shares are an effect from outperforming the competition. 10. The three KRAS are customer satisfaction, market shares and profit. What Is It Maximization of profit is the ultimate goal of every commercial business. This is so because profits keep the business operations running and increase the capability of the organization to better serve its customers. However, if businesses are only focused to increasing their profit, without minding their customers, it will not survive. This is why the goals of Marketing is essential in helping the marketers and businessmen to determine how they can better serve their customers and achieve reasonable profits at the same time. So, what is marketing goals? According to Levinson and Lautenslager (2014), Marketing goals are statement of what results you want to achieve with your marketing. What's the primary reason you are marketing? For Go (2010, 21), there are two components of Marketing which could be the basis of our goals. These are: Company Market Figure 1.1 Two interacting Components of Marketing The figure shows that both company and the market are equally important. Satisfying one without satisfying the other is not marketing. Therefore, the company must always consider its capacity in serving the needs of its market. It also means that the company must carefully select its target market where he can have a potential leadership or strong profitable market position. The market, on the other hand, is composed of two other interacting components, customers and competition. Customers might consist of business buyers (wholesalers, resellers) or end users, while competitors are those companies which offer the same product or benefit you are offering to your customers. This is further illustrated by the figure below: Department of Education Republic of the Philippines Customer Competition Figure 1.2 Two interacting Components of a Market As we can see from the figure, we must first develop a good relationship with our customers, then, think of a competitive advantage that will out win the company’s competitors. Combining the three interacting and equally important components of marketing, this will result into the strategic 3Cs of Marketing: Customer Company Competition Figure 1.3 The Strategic 3Cs of Marketing This brings to the key objectives of the 3Cs of Marketing: 1. Customers- to satisfy the needs, wants and expectations of the target customers. 2. Competition- To outperform the competition 3. Company- To ensure corporate health and profit. The key objectives of Marketing must be attained to be called marketing oriented. The output of these 3cs, is called the key result areas (KRA). These outputs are sales, market shares and profit (Go, 2010). Key Result Areas: Sales results from satisfying customer’s needs and wants. Market shares are an effect from outperforming the competition. Profit comes from having excess of sales over cost and expenses in earning market shares. With the 3Cs of Marketing, we can also use the following goals as stated by So and Torres (2016, 2-3) in their book, entitled, Principles of Marketing: 1. Understand the market and its consumers and satisfy their changing needs and wants. 2. Introduce and innovate products and services that improve human condition and the quality of life 3. Design and implement effective customer-driven marketing strategies. 4. Develop Marketing programs that deliver superior value to consumers. 5. Build and maintain mutually beneficial and profitable customer relationships. 6. Capture customer value transactions with full regard into the well-being of the society. What I Have Learned Instruction: Fill in the blanks. 1. Marketing goals are _________ of what __________ you want to achieve with your marketing. 2. There are two components of Marketing: the __________ and the ____________, which could be the basis of our goals. Both company and the market are equally important. Satisfying one without satisfying the other is not marketing. 3. Meanwhile, the market is composed of two other interacting components which are ___________ and______________. Develop a good relationship with our customers should be the primary concern, before thinking of a competitive advantage that will out win the company’s competitors. 4. To be called “market oriented”, companies must achieve the strategic 3Cs of Marketing which are; to _________ the needs, wants and expectations of the target customers, ________ the competition and _________ corporate health and profit. 5. The key result areas of the strategic 3C’s are ________, _________ and _________. Department of Education Republic of the Philippines What’s In Directions: True or False. Write True if the sentence is correct and False if it is not a correct statement. 1. Product is the key element in the overall market offering. 2. Product include services, events, persons, places, organizations, ideas or mixes of these. 3. A company's market offering often include both tangible goods and services. 4. Companies are also creating experiences to differentiate their offer. 5. There are two levels of products and services. 6. Core benefit talks about the features, design, a quality level, brand name or packaging. 7. Actual product answers the question, what costumers are really buying or what is the purpose of creating the product. 8. Levels of product are important for the marketers to know how to add value in company's market offering. 9. Warranties, add-ons and after sales service are ways to augment the product. 10. Consumers see products as a complex bundle of benefits that satisfy their needs. What do organizations market? For most us, we are familiar with products and services being offered to the market. However, nowadays, companies that are committed in creating and delivering customer value, differentiate their offers by offering beyond more than just a simple product and service. So how do they do it? We will discuss it and learn more about products, services and experiences. LESSON 2: PRODUCTS, SERVICES AND EXPERIENCES What’s In: Directions: Complete the crossword puzzle by filling in a word that fits each clue. Across 1. An effect from outperforming the competition. 5. Statement of what results you want to achieve with your marketing Down 2. Interacting components of market that deals with think of a competitive advantage that will out win the company’s competitors. 3. ___________ 3Cs of Marketing stands for customers, competition and company. 4. Comes from having excess of sales over cost and expenses in earning market shares. 5. Results from satisfying customer’s needs and wants. 6. Specific, measurable, attainable, relevant, time bound What is it? According to Armstrong and Kotler (2011, 236), product is anything that Department of Education Republic of the Philippines can be offered to market for attention, acquisition, use or consumption that might satisfy a want or need. Products include more than just a tangible offer like cellphones, cars, gadgets even houses. For instance, when we buy laptop or computer, we are also charged for the installation of MS office applications, or warranties for gadgets and appliances, or the coziness of the place where you usually buy your iced coffee or milk tea. Thus, the definition of product has included services, events, persons, places, organizations, ideas or mixes of these. Services, on the other hand, are a form of product that consist of activities benefits, or satisfactions offered for sale that are essentially intangible and do not result in ownership of anything. Examples are banking, consultation from doctors or lawyers, airline or home repair services. Nonetheless, though there are some companies that only offer pure services, or tangible products with no accompanying services, just like soap, or salt; many of them offer a combination of goods and services. As we can see, companies nowadays are committed in building an offering that brings value to target customers. This means that company’s products are not only limited to tangible goods, but also services and managing experiences for their customers. Today, experiences are considered as one important element of marketing. This is so because as https://www.lazada.com.ph/products costumers are becoming highly educated of the available options for particular product, companies must move to level of customer satisfaction. Take for instance, how do the Lazada’s customers choose among the vast options for a particular product? They are not only looking for the available information about the product, but on to the ratings and previous comments of the customers about the seller. These involve the functionality of the product, delivery schedules, how the product is packaged as well as the sellers’ responsiveness to costumers’ concerns. LESSON 3: CLASSIFICATION OF PRODUCTS Companies that market experiences realize that customers are really buying much more than just products and services (Armstrong and Kotler, 2011). They are buying what the offers will do for them. Levels of Products and Services In order to create value, the companies are thinking about products and services on three levels. Each level adds more customer value. The following figure shows the different levels of products and services: Figure 2. Levels of a Product Based from the above figure, there are three levels to be discussed. These are: 1. Core Product- answers the question, what costumers are really buying or what is the purpose of creating the product? For example, the core product of wrist watch is “to tell time” while a car is “to transport”. 2. Actual Product- this pertains to the features, design, a quality level, brand name or packaging. For car manufacturers, they incorporate unique styling or models, different hoods, paint colors and advanced features with varying prices. 3. Augmented Product- are additional consumer services and benefits. These may include warranties on car parts, insurances, and installment plans. Department of Education Republic of the Philippines Week 3-Day 1-4 LESSON 1: Traditional Approaches to Marketing What I Need to Know The module is divided into two lessons, namely: Lessons 1 – Traditional Approaches to Marketing Lessons 2 – Contemporary Approaches to Marketing After going through this module, you are expected to: 1. Compare the generation of Traditional versus Contemporary Approaches to Marketing. 2. Identify and explain the different approaches under Traditional and Contemporary Marketing. What I Know Instructions: Write the letter of the best answer. Use a separate sheet. 1. Company manufactures face mask assuming many people will buy in the time of COVID-19 pandemic. This company has a ______ concept. A. Exchange B. Product C. Production D. Sales 2. Businesses with ______ concept focus on the internal capabilities of the business rather than on the needs and wants of the market. A. Exchange B. Customer C. Production D. Selling 3. A business that sets its goals and strategies based on what is current system can produce, what products they can design, and what the business itself can do best, has a _____ concept. A. Marketplace B. Sales C. Market D. Production 4. A print ad for a university that states, “We have the most modern classrooms and state-of -the art facilities,” is an example of which marketing concept? A. Sales B. Marketing C. Market D. Production 5. The _______ concept assumes people will purchase more if aggressive selling strategies are used. A. Customer B. Sales C. Market D. Product What’s In With the discovery of technology, can you still remember the old television set used by your grandparents? How about an old radio transmitter with a large antenna? All these things will be tackled in this lesson and will help you to know how the evolution of marketing products started. Instructions: Put a (/) on the picture that illustrates an exchange and (X) if it does not illustrate exchange, Write your answer on a separate sheet of paper. 1. ____ 2. ____ 5. ____ 3. ____ 4. ____ What Is It During the third quarter in the 20th century, Marketing was focused on the methods of production, quality of the product, and effective selling strategies as the cause to increase profit. There are Three (3) Concepts under the Traditional Approaches to Marketing: 1. The Production Concept In the generation, the Production Concept assumes that customers prefer to buy products that are cheaper and widely available. It was more focused on how they can widen the distribution of products and manufacture more. Because as they increase production, it can result to lower production costs. But this concept is only effective, it the customer’s Department of Education Republic of the Philippines choice and taste does not change and if there is a high demand for the product. For example, the mass production of branded shoes like Addidas and Nike in other countries, where the company can reduce the costs of manufacturing. 2. The Product Concept The Product Concept assumes that customers will always buy products of high quality. They were focused on how to improve and innovate existing products. The physical appearance and attributes of products started to be enhanced. However, manufacturers were unable to see the changing needs of the customers. For example, smart phone manufacturers such as Samsung and Apple continuously enhance the features of their mobile phone products. 3. The Selling Concept The Selling Concept gives emphasis on dynamics of selling and promotion. It assumes that the consumers would not purchase the products and services unless you convince them. The goal of this concept is to sell what is manufactured instead of producing what the customer wants. For example, insurance companies such as Sunlife and Manulife hire financial coaches to provide understanding about the benefit of its product. In that way, prospect clients will be convinced and avail the insurance that they offer. What’s More Instructions: Identify whether the picture illustrates a Production Concept, Product Concept, or Selling Concept. Use a separate sheet for your answers. 1. 3. 5. 2. 4. What I Have Learned The Production Concept assumes that customers prefer to buy products that are cheaper and widely available. The Production Concept is more focused on how to widen the distribution of products and manufacture more. The Product Concept assumes that customers will always buy products of high quality. The Product Concept is more focused on how to improve and innovate existing products. The Selling Concept gives emphasis on dynamic selling and promotion. It assumes that the consumers would not purchase the products and services unless you convince them. What I Can Do On a separate sheet, create your own food recipe by stating the following: 1. Recipe Title 2. Step – by- Step Procedure 3. Target Quantity 4. Target Customer Then describe on how you will profit using Personal Selling. Rubrics for Grading 5 3 1 Product Concept The recipe idea is The recipe idea is The recipe idea is unique existing common Content The procedure on how The grammar in stating The recipe does not to make the recipe is the procedure is not state a clear idea very clear with correct clear grammar Department of Education Republic of the Philippines Organization The parts of the recipe The parts of the recipe The parts of the recipe are complete and are incomplete without are disorganized contains the description any selling description on how to sell it Creativity The selling description The selling description The recipe does not contains at least 3 only suggests one contain any selling strategies for the strategy strategy customer Lesson 2: Contemporary Approaches to Marketing What I Know Instructions: Write the letter of the best answer. Use a separate sheet. 1. The question, “What do customers want and need?”, is the focus of which concept? A. Selling B. Production C. Product D. Marketing 2. Assumes that a sale does not depend on aggressive selling but on a customer’s decision to buy a product. A. Selling Concept B. Production Concept C. Product Concept D. Marketing Concept 3. At SHOPEE’s website, customers can chat live with a customer service representative. This online help allows customers to have questions before placing an order. This strategy on assisting customer needs illustrates that SHOPEE has a _______ concept. A. Societal Marketing B. Marketing C. Selling D. Production 4. Market-oriented business focus efforts on: A. Enhancing the technological skills of their employees B. Improving manufacturing facilities C. Customer satisfaction D. Accomplishing Corporate Social Responsibility 5. How do customers evaluate if a good or service has met their expectations? A. Product quality B. Product features C. Attitude of the salesman D. Satisfaction What’s In In the previous lesson, the three concepts: Production, Product, and Selling under the Traditional Approaches to Marketing were discussed and Identified. In this lesson, you will learn how from manufacturing the products to enhancing its attributes and features to selling it will be incorporated into establishing new customers, maintaining good relationships, and produce goods that can preserve the society’s well-being and environment. Instructions: Find 10 words which you can relate with the previous lesson about Traditional Approaches to Marketing. Use a separate sheet for your answers. A F F O R D A B L E A B C D E A B C D E F G H I J K L M N F N O I T U B I R T S I D O P G O S I N N O V A T I O N Q R H I T U V W X Y Z E L L I N G I T A B C D D F F E A F G H I J O U T S R Q P O N N M L K J K M V W X Y P R O D U C T Z A L O O I L A S I B C D U A B B M R O J K L T C D E E S A B C N P F G M I A B F G F T A B D O A B H D M H I J K G O A F F P C D A B N K A B C D M E D H Q P R O D U C T I O N E A B H R T Q U A L I T Y A B R C D E S Department of Education Republic of the Philippines What is It Another term for contemporary is the word current. Marketing nowadays is not only focused on the production or enhancing the quality of the product. It gives more importance to the needs and wants of the consumers. There are three (3) concepts under the Contemporary Marketing Approaches: 1. The Marketing Concept gives importance to the needs of the consumer, which can later give the idea to create new products. This concept aims to create products that can solve consumer problems. To create a good product of good quality, to be able to communicate the purpose of the product and deliver value to consumers are the primary goals of this concept. One good example of this is the paid advertisement of Joy dishwashing liquid that get rid of the problem with greasy plate. 2. The Relationship Marketing Concept marketing activities are done to establish and maintain long term relationship with the customers. Customer profiles are created and updated in databases to monitor the customers’ buying habits and preferences. One best example of this is a customer paying through credit card. As the customer pays, her frequent purchases are being tracked and monitored for the business to know the products they need to market more. 3. The Societal Marketing Concept gives importance to creating products to preserve the well-being of the consumers and the society as well. It aims to manufacture products that are not harmful to the environment. Utensils made of wood that are reusable and eco-friendly is an example of this approach. What’s More Instructions: Identify whether the picture illustrates a Marketing Concept, Relationship Marketing Concept, or Societal Marketing Concept. Use a separate sheet for your answers. 1. 3. 5. 2. 4. What I Have Learned The Marketing Concept gives importance to the needs of the consumer. The goal of the Marketing Concept is to create a product to solve the problems of the consumer. The goal of Marketing Concept is to create a good product of good quality, to be able to communicate the purpose of the product and deliver value to consumers. In Relationship Marketing Concept, marketing activities are done to establish and maintain long term relationship with the customers. In Relationship Marketing Concept, Customer profiles are created and updated in databases to monitor the customers’ buying habits and preferences. The Societal Marketing Concept gives importance to creating products to preserve the well-being of the consumers and the society as well. The Societal Marketing Concept aims to manufacture products that are not harmful to the environment. What I Can Do Visit the Coca – Cola website at https://www.cocacolacompany.com/ and answer the following questions: Use a separate sheet for your answers. 1. What are the products of Coca – Cola? How do they market their products online? 2. Does Coca-Cola have online customer service? If yes, describe its function on the website. 3. Describe the activities of Coca-Cola Company and its contribution to society. 4. In your opinion, what is an Ideal company? Department of Education Republic of the Philippines Week 4-Day 1-4 LESSON 1: Relationship Marketing What I Need to Know The module is divided into two lessons, namely: Lessons 1 – Relationship Marketing Lessons 2 – Customer Service After going through this module, you are expected to: 1. Define relationship marketing; and 2. Explain the value of customers. What I Know Instructions: Write the letter of the best answer. Use a separate sheet. 1. The following are all relationship bonds EXCEPT ONE. Which of the following is NOT? A. Customization B. Financial C. Relational D. Structural 2. In the Philippines, we are familiar with loyalty cards in which we earn a point either convertible to cash or gift every time the customer re-purchase. What kind of relationship bonds it pertains to? A. Customization B. Financial C. Relational D. Structural 3. This kind of bond is common amongst professional service providers and their clients. What kind of relationship bonds it pertains to? A. Customization B. Financial C. Relational D. Social 4. What refers to bonds in which elements in level 1 and 2 maybe combined, because a customer may enjoy the extra service and incentives extended to him because of social bond developed within the business? A. Customization B. Financial C. Relational D. Structural 5. This bond is common among B2b transactions wherein firms add value by making structural changes or delivery system that facilitate the relationship with customers and suppliers. Which is it? A. Core service Provision C. Structural B. Customization D. Switching bond What’s In After we have created a valuable product, service and experience to our customers, the next question that marketers need to understand is how to retain them. As they are getting smarter and demanding, it has become a very challenging task for marketers to convince them to “stay” with the company. How do companies deal with it? Activity 1: Matching Concepts and Approaches Direction: Match the concepts with their respective definition. A B 1. Societal marketing concept a. aims to create products that can solve consumer problems b. gives importance to creating 2. Production concept products to preserve the well-being of the consumers and the society as well. 3. Marketing concept c. customers will always buy products d. consumers would not purchase the 4. Selling concept products and services unless you convince them 5. Product concept e.. customers prefer to buy product that are cheaper and widely available What Is It For marketers and business owners, the goal of their business is not only to attract buyers but to retain satisfied customers. This is because if the company would only aim for a one-time sale transaction, especially if it has limited resources, it will be very expensive to do marketing campaigns all the time. In addition, unhappy customer will result not only in losing him but losing all the potential customers that he has talked with about the company. To avoid these consequences, companies are doing “relationship marketing.” Department of Education Republic of the Philippines Relationship Marketing is about forming long-term relationships with customers. Rather than trying to encourage a one-time sale, relationship marketing tries to foster customer loyalty by providing exemplary products and services (Marketing-schools.org). How do companies do Relationship Marketing? There are a variety of factors which influence the development of strong customer relationships. This include the customer’s overall evaluation of the following according to the presentation of Mahapatara (2013) entitled, “Services Marketing - Customer Relationship Marketing”: 1. the firms’ overall core service market offering 2. bonds created with the customers by the firm 3. barriers that a customer will face once leaving the relationship. 1. Core service provision For all these strategies, the starting point is the strong base of service quality, and customer satisfaction, on which strategies can be built. The company need not be the very best, but it must be competitive always and sometimes even better in delivering its market offering. Thus, the company must be able to satisfy the customer by meeting expectations from a product. The picture on your right shows a typical example of promising something that might disappoint your customer. 2. Switching barriers Switching barriers are any obstacles that prevent customers switching to a different company for a service or a product. These include any “hassle” or too much effort required when switching to another company, called customer inertia and or penalty cost, called switching cost. Common example of switching costs is the pre termination fee you need to pay when you are in “lock in periods”. 3. Relationship Bonds These are retention strategies that keep customer buying the same brand. This strategy has four levels: A. Level 1- Financial Bonds strategy bind the customer by giving financial incentives such as giving discounts or re wards. In the Philippines, we are familiar with loyalty cards in which we earn a point either convertible to cash or gift every time the customer repurchases. B. Level 2- Social Bonds Focuses on providing social and interpersonal relationship between the company and the customer. Social interpersonal bonds are common amongst professional service providers (lawyers, CAs, Financial Advisors, etc.) and their clients, as well as personal care providers (hairdressers, healthcare providers, fashion designers, etc.) and their clients. C. Level 3- Customization Bonds allows customers to avail of tailored services to fit their individual needs. Elements in level 1 and 2 maybe combined, because a customer may enjoy the extra service and incentives extended to him because of social bond developed within the business. The “suki” system in the Philippines is under customization bonds. D. Level 4- Structural Bonds combines Levels 1, 2 and 3 to deliver services that fit the need of the client or customer. Commonly, it applies to B2B transactions wherein firms add value by making structural changes or delivery system that facilitate the relationship with customers and suppliers. Below is a picture of a canteen owner who is a partner of Coca- Cola Philippines. Apart from getting incentives of selling the said products in bulk or in specified volume, the partner may also be given refrigerators, tables and chairs and store signage under terms of binding contracts. What’s More Activity 3: Customer Inertia or Switching Cost? Instructions: Identify the following statements of what kind of switching barriers are the customers are facing. Write CI if it is customer inertia and SC if it’s switching cost. ______ 1. “I’m still with my bank – even though their service isn’t great – but it’s just too much effort to open new accounts and loans somewhere else” ______ 2. “I haven’t been happy with my regular airline lately. But I have got so many frequent flyer points, it would be a shame to lose them” ______ 3. “I don’t like my mobile phone company anymore. But I cannot switch, there is a PHP 3,000. penalty if I break the contract early” ______ 4. “I’d like to go to a new university. But I am not sure whether I would get credit for all my subjects. I might end up having to do three extra ones!” ______ 5. “My accountant’s just OK, but all my records are at the accountants, it would be difficult to move” Department of Education Republic of the Philippines What I Have Learned Relationship Marketing is a strategy used to retain customers. It is about forming long-term relationships with customers. Factors that affect the development of strong customer relationships are core service provision, switching barriers and relationship bonds. Without a strong base of service quality (core service), customers will find it difficult to stay in the company. While Switching barriers keep the customers forcefully Relationship bonds encourage the customers to keep patronizing the company. Relationship bonds have four levels: Financial, Social, Customization and Structural. LESSON 2: Customer Service What I Know Instructions: Write the letter of the best answer. Use a separate sheet. 1. If customer service is done poor before a transaction could take place, what could be the effect to the company? A. Lower employee morale C. No sales transaction will occur B. Lower company engagement D. Higher expenses will be covered by company 2. Which of the following statement is true? A. Providing good customer service is an edge over our competitors. B. Customer service is not a requirement for companies to succeed. C. Excellent customer service means higher costs with no effect on sales. D. Customer service is a marketing strategy to determine who our target market is. 3. The following is an example of customer service EXCEPT ONE. Which is NOT A. Product Delivery C. Sales assistance B. Product warranties D. Technical Advice 4. Which of the following can be used as alternative for customer service to address product problems and customer concerns? A. Company websites C. Product demonstrator B. Merchandiser D. Salesclerk 5. Pizza Hut always delivers pizzas on time. If it is late, they ensure that the pizza delivered will be free of charge. Which of the following characteristic of good customer service that this show? A. Personalization B. Politeness C. Professionalism D. Promptness What’s In In Relationship Marketing, we have understood that it is a strategy to retain customers. There is a lot of strategies under Relationship Marketing, but the commonly used is Customer Service. In the next lesson, we will know what it is and what are the activities done by marketers. Activity 1: Fact or Bluff! Instructions: Encircle if the statement is true and if it is not true. 1. 7- 11 Eleven rewards card is an example of a financial bond. 2. Social gatherings for the customers organized by the companies are example of customization bond. 3. Structural bonds are common to B2B transactions. 4. Switching barriers are negative strategies while relationship bonds are positive strategies used to retain customers. 5. Social bond is the highest level attained by the company to their customers. What is It Customer Service is defined as the process of ensuring customer satisfaction with a product or service (So et. al, 2016). When you say customer service, the common misconception about it, is that it only pertains to the one department area in which products are being returned for malfunctioning or warranties. However, customer service is the act of taking care of the customer's needs by providing and delivering professional, helpful, high quality service and assistance before, during, and after the customer's requirements are met. Why is that so? According to Dunne and Lusch (2008, 394) if the customer service is poor before a customer purchase, he will turn away before the transaction happens. If it is poor during the transaction stage, the customer may back out of the transaction. Lastly, if it is poor after the transaction, customer will not come back to the same store. Thus, having a good customer service is a requirement or a plus point if we want our customers to choose us over our competitors. Department of Education Republic of the Philippines Customer service comes in many forms: Besides company representatives, companies can also use technology as alternatives for customer service. Company websites, social media, or blogs can be used to address product problems and customer concerns. What Makes a Good Customer Service? There are certain characteristics of good customer service according to Mckinney (2015) in his article, “What Is Customer Service? - Definition, Types & Role in Marketing”: 1. Promptness - Promises for delivery of products must be on time. Delays and cancellations of products should be avoided. 2. Politeness - Politeness is almost a lost art. Saying 'hello,' 'good afternoon,' 'sir,' and 'thank you very much' are a part of good customer service. For any business, using good manners is appropriate whether the customer makes a purchase or not. 3. Professionalism - All customers should be treated professionally, which means the use of competence or skill expected of the professional. Professionalism shows the customer they are cared for. 4. Personalization - Using the customer's name is very effective in producing loyalty. Customers like the idea that whom they do business with knows them on a personal level. What’s More Activity 3: Poor vs. Good Customer Service Instructions: Put a (/) on the box if statement shows a good customer service and (X) if it is not. 1. Sago supplier to franchise applicant: “It’s all right to have long lines of customers waiting. It will seem that we are doing so well." 2. A bookstore salesman to customer: “I’m sorry to hear our product didn’t fit your needs, Mr. Santos. I can certainly cancel your subscription. However, would you mind telling me why you’re canceling so we can improve for future customers?” 3. Camera technician to a client: "Of course we can repair it. You just must come back in two or three weeks. Give us a call first ok?" 4. Telephone operator to customer: "It's lunch break. Please call back." 5. A sales agent to customer: “I’m really sorry you’re experiencing this problem. I’m sure we can figure this out, and I’ll work on finding a solution right away!” What I Have Learned Customer service is the act of taking care of the customer's needs by providing and delivering professional, helpful, high quality service and assistance before, during, and after the customer's requirements are met. Customer service can take many forms: Sales Assistance, Product Delivery, technical advice, contact centers, etc. Company websites, social media, or blogs can be used as alternatives for customer service. Characteristics of a good customer service include promptness, politeness, professionalism, and personalization. What I Can Do Rate the following customer service of the following industry based on your experience and explained why. Use the following rating: 1-poor 2-could be better, 3- average, 4-quite good, 5- very good Service Rating Reason The Police Government Department of Health Internet providers Department of Education Republic of the Philippines Week 5-Day 1-4 What I Need to Know The module is divided into two lessons, namely: Lesson 1 – Managing Customer Service Quality and Managing Customer Differentiation Lesson 2 – Customer Relationship Management Lesson 3 – Strategic Marketing Process Lesson 4 – Market Strategy Development: Strategy Alternatives After going through this module, you are expected to: 1. Identify and describe “Relationship Development Strategies” 2. Illustrate successful customer service strategy in the Philippine business enterprise 3. Identify the different steps in strategic marketing process. 4. Propose a marketing strategy for a particular business. LESSON 1: Managing Customer Service Quality and Customer Differentiation What I Know Instructions: Write True if the statement is correct and write “False” if the statement is incorrect. Use a separate sheet for your answers. ___1. Customer-Centered business is similar to Marketing-Centered business. ___2. Ryan contacts MJ’s Tailoring to ask if they sell pajamas for women. The customer service representative who speaks with Ryan offers him options. This is an example of customer profiling. ___3. Online interactions are very important for customers to communicate their concerns on the products they have purchased. ___4. Feedbacks are very important in the creation of customer database because past buying behavior may indicate future buying behavior. ___5. International companies often face difficult problems in creating data about their customers. What’s In To maintain a high quality of service to customers is very challenging to a business. To ensure consistent customer service quality, companies conduct training to its employees and monitor if their services are delivered well. This activity may result into an assessment that can serve as the basis to identify customer service problems, the need for improvement, and customer satisfaction. What Is It Customer Service Quality is very important. Dissatisfied customers can spread bad rumor through word of mouth with a bad customer service experience. This can affect the company’s image and can result to a decrease in the number of customers. Companies can best manage customer service quality by: Establishing objectives that are specific and measurable Having sufficient resources to reach the objectives Regular collection of customer feedback on service quality Assess accomplished goals Identify the need for improvement in terms of service quality Companies must always remember to give services that would lead to customer satisfaction rather than offering it for the sake of fulfilling it alone. Managing Customer Service Differentiation As a business how can you make the quality of your customer service stand out? How can you protect you company from being imitated by competitors? Physical products can be differentiated through patents while services are different, depending on the customer experience. According to So et. al. (Principles of Marketing), Customer-centered companies can differentiate their customer service through: 1. Development and training of their employees to become competent customer contact personnel 2. Designing and implementing a state-of-the-art service delivery environment and system. Sunnies Specs Optical stores have coffee lounge where customers could chat and stay while waiting. Department of Education Republic of the Philippines OKADA Hotel provide shuttle bus that offers free transportation to customers back and forth the ports and terminals. Companies should always improve their customer service. Understanding customer’s needs and wants is an effective way to achieve long-term customer relationship What I Have Learned  Customer Service Quality is very important. Dissatisfied customers can spread bad rumor through word of mouth with a bad customer service experience.  Companies must always remember to give services that would lead to customer satisfaction.  Companies should always improve their customer service. Understanding customer’s need and wants is an effective way to achieve long - term customer relationship. LESSON 2: Customer Relationship Management What’s In Customer Relationship Management is a system of managing the company’s present and future customers. The goal of Customer Relationship Management (CRM) is to sustain their profit and maintain their relationship with loyal customers. What is It Companies collect customers’ information and store it in a customer database with the following: name of customer, birthdate, contact number, and email address. These data help them to track customer’s buying history and preferences. Most customers are not willing to share personal information, but companies make some strategies to encourage customer’s involvement such as: promoting membership clubs, where customers are given a membership card that in every swipe, they will give points, discounts, and rebates and the type of customer, purchase history, and preferences can already be monitored. Customer database is also important in segmenting customers. Through this, the company will know the geographical area where their customers live, the age, the income etc. It will help the company to identify the products and services they need to market. Customer Lifetime Value (CLV) is the predicted sales or profit that a company can acquire throughout the years of establishing a relationship with a particular customer. The Purpose of CLV is the following: It considers establishing long – term relationship with the customer rather than short-term It calculates the cost of acquiring new customers which is called acquisition cost and the cost of maintaining existing customers which is called retention cost It gives importance to the identification of the target markets According to Real C. So et. al. (Principles of Marketing), Customer Lifetime Value (CLV) can be measured with the formula: CLV = (PV)(RP)(RT) Where: PV is the average currency value of a sale RP is the repeat purchase in a year RT is the retention time (months/years) For example, a celebrity who visits a salon and spends Php3,000.00 twice a month for an expected period of two (2) years would have a CLV calculated as: Let PV = Php3,000.00 RP = 24 (twice a month for a year) RT = 2 Remember: Knowing the value of a customer CLV =? enable company to focus on attracting the right = (PV)(RP)(RT) type of customers that will help them develop their = (3000) (24)(2) CRM efforts for future. = Php 144,000.00 Department of Education Republic of the Philippines Effective Strategies in the Implementation of Customer Relationship Management Focus on customer service. If improved product features are not attracting customers, the company should turn to providing better customer service. Purchase or develop a Customer Relationship Management Software. The company should develop or purchase available software that can manage their customer database. Calculate customer acquisition and retention costs. Determining the Customer Lifetime Value of a customer can guide the company in terms of product pricing and discounts. Develop and implement a customer service training program. The goal of the company is customer satisfaction. They must ensure that their employees have the right customer service skills. Empower the assigned contact person to make decisions. The salesperson is the one responsible for closing the deal with a customer. They must be skilled to address customer problems that would result to a long-term customer relationship. Establish interaction lines between your customer and contact person employee. Communication with the customer is very important. Ensure that the assigned salesperson is friendly and accommodating for the customer to be encouraged to make a second purchase. Observe your competitors. Observe what your competitors are doing in terms of customer service. Adopt their good practices and stay ahead. Keep on developing your customer service. Keep on improving around customer service. Discover new ways on how customers can be more satisfied. Observe your strengths and weaknesses as a company. Promote genuine customer service with empathy. Be sincere in assisting customers. Ensure to give customer service with utmost dedication. LESSON 3: Strategic Marketing Process What I Know Instructions: Write the letter of the best answer. Use a separate sheet for your answers. 1. It refers to the process of establishing a clear and concerted direction for all marketing activities of an organization. What is it? A. Marketing Mix C. Strategic Marketing Process B. Marketing Process D. Tactical Planning 2. How many steps are there in a strategic marketing process? A. 2 B. 4 C. 5 D. 10 3. What is the first step in a strategic marketing process? A. Objective Setting C. Mission identification B. Market Strategy Development D. Situation Analysis 4. What could be the best tool in situation analysis? A. Gantt Chart C. Perceptual map B. Marketing Mix Tool D. SWOT Analysis 5. Which of the following employs a differentiation strategy? A. Apple Inc. C. Novu Hair B. CDR King D. Sensodyne Toothpaste What Is It According to Benjamin Franklin, “If you fail to plan, you are planning to fail.” This means that success is bounded on careful planning. If one wishes to win in any area of his life, he must have a clear direction and a strategy to achieve what he wants to accomplish. This is also the same reason why most successful companies and organization undergo Strategic Marketing Process. Strategic Marketing Process seeks to establish a clear and concerted direction for all marketing activities of an organization. It includes plans to reach specific goals or objectives (So, et. al, 2016, 27). This process entails the following: Mission Market Strategy Strategy Evaluation Situation Analysis Objective Setting Identification Development and Control Figure 1. The Strategic Marketing Process Step 1: Mission Identification Companies must first identify what is its purpose in the society through its mission statement. A mission statement is a description of the organization's function in society, often identifying its customers, markets, products, and technology (Kerin, Theng, Hartley, and Rudelius, 2013, 22). However, keep in mind that though it is about stating Department of Education Republic of the Philippines the company’s purpose, a good mission statement should not be product oriented but market oriented. For example, Procter and Gamble is well-known for its different products in the market. Its market-oriented mission statement goes “We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for the generations to come.” Step 2: Situation Analysis In this step, marketers assess and evaluate the current market, customers, competitors and the company’s internal and external environment. In doing so, the company can conduct SWOT Analysis in which the company identify its internal strengths (S), and weaknesses (W) as well as the available opportunities (O) and threats (T). Aside from SWOT Analysis, there are some tools that can be used in analyzing the environment and stakeholders of the business. Among them are PESTLE (Political, Economic, Social, Technological, Legal and Environment) Analysis and 5C (Company, Collaborators, Customers, Competitors and Climate) Analysis. Step 3: Objective Setting To provide a consistent focus on all marketing functions and activities, the company must set objectives that are specific, measurable, attainable, realistic and time bounded (SMART). Objectives can include the following: 1. Profit 4. Quality 7. Social Responsibility 2. Sales 5. Customer satisfaction 3. Market share 6. Employee welfare Step 4: Market Strategy Development This step answers the question, “How will we accomplish our marketing objectives?” It involves the identification of who is our target market, and selection of strategies or competitive advantage that attract them. Competitive advantage is defined as a set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition (Lamb, Hair, and McDaniel, 2013). It is the factor or factors that cause customers to patronize a firm and not the competition. It can be classified into three broad categories: cost leadership, differentiation and focused. a. Cost leadership - used when firm wants to become the lowest cost producer, competing on the price with every industry and earn higher unit profits. Companies employing this are Puregold and Cebu Pacific Airlines. b. Differentiation - if the company wants to offer a product that is unique, or is different and better than their rivals, then differentiation strategy is to be employed. Firms usually charge a higher price for their product or service. Examples are Apple Inc. and Starbucks Corporation. c. Focused - efforts of the company are focused only within just one or on a small number of market segments. These customers have specialized needs that are not commonly addressed by big companies. Examples of this are products like Sensodyne, Novu Hair or organic coffee. Step 5: Strategy Evaluation and Control After the strategy is developed, periodic monitoring and evaluations are necessary to identify any deviations and make adjustments and corrections. LESSON 4: Strategic Alternatives What I Need to Know Instructions: Write the letter of the best answer. Use a separate sheet. 1. It refers to strategic alternatives used when firms want to sell their existing products to their existing market. What is it? A. Diversification C. Market Penetration B. Market Development D. Product Development 2. Ansoff's Strategic Matrix is useful for what? A. Hiring new employee and staff B. Creating products and services C. Understanding customer behavior D. Identifying strategic decisions for companies 3. Which strategy entails creation of new products to existing market? A. Diversification C. Market Penetration B. Market Development D. Product Development 4. Which refers to a strategy of offering new products to new markets that are either related or completely unrelated to a company’s existing offering? A. Diversification C. Market Penetration B. Market Development D. Product Development 5. If the company wants to launch a new product alongside with its existing product, it employs what strategy? Department of Education Republic of the Philippines A. Diversification C. Market Penetration B. Market Development D. Product Development What’s In As companies and organization grow, new customers and new competitors will also emerge. For this reason, marketers must find ways on how they will cope to the changing demands of markets and increasing competition. To do this, successful marketers look for strategic alternatives to identify marketing opportunities for the business to grow. Instructions: Identify what type of competitive advantage the following brands employ. Write CL for Cost Leadership, DF for Differentiation, and FC for Focused. ______ 1. Louis Vuitton ______ 4. iPhone ______ 2. Novu Hair ______ 5. Anmum Materna ______ 3. Puregold ______ 6. Angel’s Burger What is It In the strategic market planning, step four talks about the development of market strategy. In addition to the competitive advantage, there are also four options or strategic alternatives where marketers can choose to discover marketing opportunities. This is discussed though Ansoff’s Strategic Matrix, which is shown on the right: Figure 2. Ansoff’s Growth Matrix A. Market Penetration Market Penetration is used when firms want to sell their existing products to their existing market. The aim of the companies employing this is to “penetrate the market” by increasing the volume of their sales. This is done through offering lowered product prices, improving distribution networks, or the use of intensive marketing promotions. Jollibee is one good example of companies using this strategy. Who would have forgotten the viral videos of #Kwentong Jollibee on social media? This is one of the marketing campaigns of Jollibee that boosted their sales to up to 3x higher than their usual. Jollibee is also famous for other promotions such as the use of coupons, mascots and tv commercial ads. B. Market Development Market Development is about selling the company’s existing products to new markets. New markets may mean selling internationally or in new geographical markets or targeting new customer segments. For example, Jollibee is now entering European countries and Nivea which previously caters to women, is now offering Nivea products for men. C. Product Development Product Development entails creation of new products to existing market. Companies can make some modifications (new variants or flavors, or new packaging) to the existing products, develop or launch new products alongside with the existing products. Companies employing this strategy invests heavily to Research and Development. An example includes Jollibee offering Iced Coffee and Brown Sugar Milk Tea with pearl when the milk tea fad arises among millennials in 2020. D. Diversification Diversification is a strategy of offering new products to new markets that are either related or completely unrelated to a company’s existing offering. Jollibee utilize this strategy when they offered toys, dolls, and other merchandise to the market. Another example, SM Holdings also has conglomerate businesses such as BDO, SMDC and 2Go Express. Department of Education Republic of the Philippines Week 6-Day 1-4 What I Need to Know The module is divided into two lessons, namely: Lesson 1 – The Marketing Environment Lesson 2 – Marketing Research After going through this module, you are expected to: 1. Define Micro-Environment and Macro-Environment in Marketing. 2. Analyze the elements of micro and macro environment and their influence on marketing planning. 3. Define Marketing Research and understand its importance to a business enterprise. 4. Identify the steps in Marketing Research. LESSON 1: The Marketing Environment What I Know Instructions: Write “True” if the statement is correct and write “False” if the statement is incorrect. Use a separate sheet for your answers. ___1. Businesses can control the external environment in which their companies operate. ___2. Demography is the study of people’s vital statistics such as gender, income, and age. ___3. A rise in income means a rise in standard of living. ___4. Inflation is the decrease in the value of money and an increase in the level of price. ___5. Recession or economic downturn increases demand for goods and services. What’s In There are forces that influence the decision making of a business. Marketing Environment is the combination of external and internal factors and forces which affect the company's ability to establish a relationship and serve its customers. It is divided into two: Micro-Environment and MacroEnvironment. What Is It A. Micro – Environment-In Marketing, when you say micro-environment, these are the forces that are internal to the business. Inside forces that affect the decision making of the company that is controllable. Micro - Environment is composed of: 1. Company-A large company as an organization is composed of different departments such as: Research and Development, Operations, finance, Human Resource, and Marketing. Marketing alone cannot function without the help of the other departments. In terms of decision-making strategy, the way the company markets the products, must be aligned with its goals and objectives. 2. Suppliers-provide the materials, utilities, labor, capital, and equipment. Maintaining an effective company – supplier relationship is essential because the success of the company in satisfying customers is affected by the performance of the supplier. For example, a substandard material provided by the supplier may negatively impact the product quality of the company. Unavailability of supplies from the suppliers may also lead to untimely delivery of ordered products from the company 3. Market Intermediaries-Most products are not delivered by the company themselves but through marketing channels such as: wholesalers, distributors, and retailers. An example of this is the department stores that display the products which is also a way of marketing it. 4. Customers-create the demand. Companies must continue to attract customers through their products and services. 5. Competition-Observing the movement of competitors is very important in the business. Some competitors may introduce a new product or enhance existing ones. They may also implement price changes and launch promotional campaigns. The company should monitor these activities to maintain their profits and market share. 6. Publics-This includes the investors, media, financial institutions, community, government, and the society that have a current or prospective interest in the company. The media for example, can build or destroy the image of the company once there is a complaint on their products and services. Another example is when the government implement laws that may limit the activities. Therefore, the publics can positively or negatively affect the company’s competitiveness. Department of Education Republic of the Philippines B. Macro-Environment These are the forces that are external to the business. Outside forces that affect the decision making of the company that is uncontrollable. Macro – Environment is composed of: 1. Economic-It represents the economic factors that can directly impact the business such as: employment, inflation rate, market prices, currency exchange fluctuation, and other relevant statistics. For example: COVID 19 pandemic has affected the trading of products and services that resulted to higher prices. 2. Politico-legal-Political stability of a country is very important. Passing legal laws may affect the activities of a business. One example according to Real C. So et al. (Principles of Marketing), is the proposed legislation imposing a 10% estimated tax on sweetened beverages that caused the decline of the demand for carbonated refreshments. Companies in this type of industry should consider product innovation for them to survive in the effects of the law. 3. Socio-cultural-Culture is defined as the customs and beliefs that are shared by a particular society, nation, or any social group. For example, Filipinos have a colonial mentality, where they prefer to buy imported products than the local ones. Other companies adopt the culture of the place where they established their business. 4. Demographic-Changes in the demographic factors such as population, income, gender, age, and lifestyle may affect the company’s decision in identifying their target market. 5. Technological-Today’s advancement in technology may result in the rapid replacement of old products. Company should continue to develop their tools, systems, and equipment to stay ahead. 6. Natural/Environmental-This factor refers to all the natural resource inputs and natural phenomena in the environment. For example, raw materials such as lumber and fossil fuel come from the natural resources. Continuous consumption of these may result to pollution, global warming, and deforestation. It is very important that the company take the initiative to preserve the environment. Natural phenomena such as storms, flood, and earthquakes, may affect the operation of the business. The company should consider a good geographical location away from these hazards. What I Have Learned  Micro-Environment is the forces that are internal to the business that are controllable. Micro - Environment is composed of: -Company -Suppliers -Market Intermediaries -Customers -Competition -Publics  Macro-Environment is the forces that are external to the business that are uncontrollable. Macro – Environment is composed of: -Economic -Politico-legal -Socio-cultural -Demographic -Technological -Natural/Environmental What I Can Do Instructions: Choose a business in your community. Identify the impact of COVID 19 pandemic to the operations of the chosen business. Think of an action that would best respond to the impact of the marketing environment. Use a separate sheet of paper for your answer. Micro – Environment Six Impact Actions to be taken (6) Forces Department of Education Republic of the Philippines LESSON 2: Marketing Research What I Know Instructions: Write “True” if the statement is correct and write “False” if the statement is incorrect. Use a separate sheet for your answers. ___1. Marketing research is only used to improve the quality of decision making. ___2. Marketing research is a way that connects the customer and public to the business through information ___3. The most common strategy to gather primary data is through observation. ___4. An advantage of using internet surveys is, it is less costly. ___5. The last step in the marketing research process is Data Analysis. What’s In According to Charles Lamb et al. (Principles of Marketing), Marketing Research is the process of planning, collecting, and analyzing data relevant to a marketing decision”. It connects the customer and the public to the business by gathering information stored in their Marketing Information System (MIS). What Is It Marketing Research plays an important role in the Marketing System. It helps companies to know what happens to the product after it was purchased. Who uses the product, how it was utilized and if they were able to satisfy the consumer? The data collected helps the company to decide on how they can promote their products or make necessary changes. According to Real C. So et al. (Principles of Marketing), There are issues that can be addressed by Marketing Research such as: Identify new products and services Determine on how to reduce the risk Identify market opportunities and threats Determine the level of customer satisfaction Identify market movement and changes Identify the means of promoting the product Trial advertisement and promotional campaigns Assess the result of test marketing Determine the price awareness and sensitivity of consumers Identify geographical studies Steps in the Marketing Process: Step 1: Research and Determination Marketing Research is very expensive. Before a company conducts a research, they must determine first what information they need to gather and ensure if research is needed. Step 2: Problem/opportunity definition A Problem and an opportunity can be both the basis for conducting a research. But the company needs to identify it, so they would know what they need to create, change, and improve in their marketing efforts. Step 3: Establishment of Research Objectives Based on the information gathered, the company should outline specific objectives that are S-M-A-R-T (specific, measurable, achievable, realistic, and time bound) to solve the marketing research problem. Step 4: Research Design Determination In this step, the manner of collecting and analyzing the data gathered must be determined. According to Real C. So et al. (Principles of Marketing), there are four major types of Marketing Design: Observational – events that occur in a natural setting are observed regularly or within periods. Experimental – it could be a laboratory or market testing Department of Education Republic of the Philippines Qualitative – interviews, focus-group discussions that consist of small number of respondents that do not reflect the whole population Quantitative - uses surveys to assess observations with large number of respondents, where it reflects the whole population. Step 5: Information Source/Type Identification Information can be sourced from Primary data, where the researcher himself was able to gather it firsthand. Secondary data refers to the information previously collected such as published articles, journals, books and other available reading materials. Information can also be sourced through internal data gathered by the company e.g. (membership cards that are swiped every time the customer buys that shows the purchase history) or through Focus Groups that consist of small number of people who are experts or people relevant in the field to discuss their insights on the research. Step 6: Determination of Data Access Methods There are four ways to access data from consumer surveys: person-administered (surveys conducted through face to face or telephone interview), computer-administered (based on a computerized data that can generate information real time), self-administered (respondents complete the survey on their own), hybrid (a combination of quantitative and qualitative). Step 7: Data Collection Forms Design The survey questionnaire must be carefully conceptualized and should contain the introduction (researcher explains the purpose of the survey), screening (questions to eliminate respondents who are not qualified for the needed data for the research), core (body of the questionnaire), classification (questions to divide respondents into specific groups for statistical analysis. The type of questions can be Categorical (questions that are answerable by “yes” or “no”), Open-end (respondent can answer in his/her own opinion), Metric (respondents can answer using a number on a scale) Step 8: Sample Size and Sampling Plan Determination To achieve 100% accuracy, the researcher should be specific in determining the sample size from the target population. Step 9: Data Collection This is where the survey questionnaires are being distributed to the selected sample size or the respondents. Some companies hire agencies for collecting the data, especially if the target respondents is too large or located outside the city. Step 10: Data Analysis After the collection of data, the researcher will interpret and analyze the results using percentage, mean, standard deviation and other statistical tools. Step 11: Report preparation and presentation In this step, the results and recommendation of the marketing research will be the presented to the management of the company. This will be used as reference for decision and policy making. What I Can Do Instructions: Create an outline of Marketing Research of your chosen business in your community. Work on the first three steps in making a marketing research. Use separate sheet of paper for your answer. 1. Nature and background of business (Ex: sari-sari store, cafeteria, kiosk, convenience store, drugstore) 2. Reason/s why you would like to conduct a research. 3. Objectives (SMART) of your Marketing Research. Department of Education Republic of the Philippines Week 7-Day 1-4 What I Need to Know The module is divided into two lessons, namely: Lesson 1 – Consumer Markets Lesson 2 – Business Markets After going through this module, you are expected to: 1. Describe the Consumer and Business Markets. 2. Differentiate the buying behavior and decision making of individual/household customer versus the business customer. LESSON 1: Consumer Markets What I Know Instructions: Write True if the statement is correct and write False if the statement is incorrect. Use a separate sheet for your answers. ___1. Consumer buying behavior must be well understood by the marketer, for them to use appropriate marketing tools. ___2. Consumers with first-hand experience in buying a particular product will spend less time to research on the product and look for options. ___3. Canada, unlike some other countries, does not have a social class system. ___4. The majority of Filipino considers themselves as upper class, regardless of their income or educational attainment. ___5. A consumer adopts the values and culture inside his family on which he was raised. What’s In Understanding the consumer can help the company adapt the right marketing tools to influence consumer buying decisions. For example, if the company found out through research that some consumers prefer to buy shampoo in small amounts then they can redesign and create smaller packs to meet consumers’ needs. What Is It Consumer Markets are individuals who buy products and services for personal consumption. This type of consumer usually buys in small quantities, which they can only consume for a certain period. Consumer Buying Process is a step by step guideline on how a consumer recognizes a need before he comes up with a purchase decision. Step 1: Need Problem Recognition The needs and problems are being recognized by the consumer through internal stimuli (e.g. feeling of thirst) or external stimuli (e.g. seeing a delicious cake in a retail store. Stimulus (any input that attracts the attention of one or more of the five senses: smell, touch, hearing, sight, and taste) Step 2: Information Search After recognizing the need/problem, the consumer may now look for ways to solve it by searching on a particular product or service and is driven by internal stimuli (remembering the past experience or knowledge about a product/service ) and external stimuli (gather information from the outside environment such as relatives and friends, advertisements and word of mouth) Step 3: Evaluation of Alternatives The consumer compares the product’s attributes, features and price with the other available brands and rank it by importance in accordance to how his needs can be addressed. Consideration set is a list of brands/services gathered through information search that would help the consumer to choose what he will buy. Step 4: Purchase Decision After analyzing the products/services that would best address the customer’s needs, the consumer may now proceed to make a purchase. But the purchase decision can still be changed in terms of the negative feedback about the product/service and the quality of the customer service. Step 5: Post-Purchase Behavior Department of Education Republic of the Philippines In this step, the consumer shall evaluate and make a judgment about how the product/service was able to satisfy his needs. If the customer is satisfied, there can be the tendency that the customer will make a second purchase and become a loyal customer, but if the customer is dissatisfied, he may completely remove the product in his list and spread negative rumors about it to his friends and relatives. The Marketers should be careful about this, for it can destroy the product/service image and the reputation of the company as well. According to Real C. So et al. (Principles of Marketing) there are five roles individuals may act resulting to a buying decision. Consumer Market Buying Roles: Initiator – person who initially suggests to buy a product/service Influencer – person who tries to convince others to buy a particular product/service Decider – the person who makes the final decision to purchase Buyer – the person who makes the actual purchase User – the person who uses the product/service For example: Bryan wants to borrow the personal computer of his brother to work on his assignment, and then his mother suggests the family that Bryan needs a new computer. The mother is the initiator. Then his siblings asked their father that it is better for Bryan to have his own computer so that it can help him to study well and submit school projects on time. The siblings act as influencer. Then the father decides to buy and purchase the computer for Bryan as the decider and buyer. Then after purchasing, Bryan may now use the computer as the user. Consumer Buying Decisions and Consumer Involvement When buying products and services, consumers are influenced by different factors. Involvement means the amount of effort that the consumer uses in the search and evaluation of a product or service to come up with a buying decision. Low Involvement are products and services which can already be seen through advertisements, eye catching store displays that does not really use a thorough research. (Ex: Essential needs such as cereals, juice drink, and shoes). High Involvement uses extensive research before the consumer may decide to purchase. (Ex: car, bridal gown, and gadget) Factors Influencing Buying Decisions 1. Culture is values, beliefs, languages, and customs that are shared in a particular group or society. The way an individual act and dresses reflects the culture where he belongs. So as the evolving environment like for example, the rapid change in technology has influenced greatly on the consumer decision process. Subculture is a homogenous group of people who share the elements of the whole culture but displays a different cultural element on their own. For example, Rina is a Filipina belonging to Ifugao tribe. Her overall culture is being a Filipino, but her subculture is being an Ifugao, a tribe in the Northern part of the Philippines. 2. Social Class is a group of people classified according to economic status or individuals who socialize with people of the same preferences. The common types of social class in our society are: Upper Class, Middle Class, and Lower Class. For Example: A luxury vehicle is most common in the upper class, for they are the executives of a company, owners of big businesses that usually project a status of income and wealth. It is important to Marketers to determine the social class for them to know the focus of their advertisements and to which target customer they can best offer their products/services. According to Real C. So et al., consumers usually interact socially with reference groups (individuals/groups that influence the consumer’s opinion, attitude, and beliefs such as: friends, co-workers, and family), Aspirational groups (groups or organizations that a consumer would like to join. For example, a group of basketball enthusiasts influence a consumer on what type of footwear to buy etc.) Family (values, habits and upbringing that form the consumer’s buying decision). Individual factors affecting consumer buying decisions are gender, age, and personality. Products such as clothing, vehicle, and food are identified by the marketers as age related that is why there is clothing for kids, teenagers, and adult. 3. Personality projects the real self-image and ideal self-image that comprise the psychological makeup of a person. Lifestyle is a way of living that projects a person’s values and attitudes. And the personality of the consumer differs from the other person when it comes to taste and preferences. Motivation is an internal drive that pushes the consumer to buy a product to satisfy the (Maslow’s Hierarchy of Needs) need levels: physiological, security, social needs, recognition, and self-development. 4. Perception is the consumer’s impression towards a product or service varies in terms of prior experience and use. According to Real C. So et al. (Principles of Marketing), there are three perceptual processes that guide a consumer’s perception): selective attention (consumers pay focus to advertisements that address a current need), selective distortion (consumer changes the perception that conflict with beliefs), selective retention (consumer only remembers the things that support their values and beliefs). 5. Learning is a lasting change towards a product/service resulted from experience. For example, a consumer bought a gadget that found to last for many years, he is satisfied with the product and it created a positive image in his mind and would like to consider buying the same brand. Department of Education Republic of the Philippines 6. Belief is a knowledge that a consumer keeps as “true” and attitude is the reaction that is reflected in a person’s behavior. All these factors are very essential to the company or the marketer because they need to know how they can create a positive attitude in a consumer towards their products and services that would also meet their profit goals. What I Can Do Instructions: Draw a flow chart of a Consumer Buying Process of any product you have bought that underwent a careful decision. Explain on how you identify the need or problem, how you conducted an information search, looked for alternatives, arrived at purchase decision and felt happy or unhappy after buying it. You can use the sample flow chart below. Use a separate sheet of paper for your answer. Step Step Step Step Step 1____________ 2____________ 3____________ 4____________ 5____________ LESSON 2: Business Markets What’s In Business or Organizational Markets unlike Consumer Markets do not offer products directly to the consumer. They offer products and services to other companies (Business – to – Busin

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