Chapter 1
Chapter 1
Marketing: An Introduction
Introduction:
PINOY MARKETING
WHY IS MARKETING IN THE Philippines Hot?
Unlike other countries, the Philippines is unique in practicing marketing not just
in business but also in their daily lives. Though many multi company reign supreme in
the fastfood industry, a Filipino company is able to survive and even beat the
competition. Jollibee a Filipino company is now penetrating the global market with
unexpected result. Today, Jollibee owns Chowking, Red Ribbon and Greenwhich, each
are leaders of their respective segments.
In sports, Manny Pacquiao now a senator won many boxing match from boxers
that seemed unbeatable. In Fashion and furniture industry the Philippines have
Monique Lhuillier and Kenneth Cobonpue respectively who have made the Philippines
known and famous in their fields for their state of the art world class design.
Pre - industrial Most people are engaged in hunting, Marketing is trading goods for other
herding, or farming; capital is scarce, and goods or money.
most human effort is devoted to meeting
basic needs for food, clothing, and shelter.
Post - industrial Most citizens have lost their preoccupation Marketing is identifying advanced
with getting and spending and are personal and social needs more
searching for more freedom and time to precisely and developing offerings,
develop as persons rather than as information, and supply systems that
consumers. People grow less interested in will more efficiently satisfy these
the quantity of their goods and more needs.
interested in the quality of their lives.
To understand marketing, one must remember that there are two inter acting
components: the company and its target market.
Nothing can be more convincing to customer than the fact that many other
consumers also want the same product or services. To increase sales revenue, a firm
can increase either the PRICE or the SALES VOLUME. The former can only be increased
up to a certain threshold as it will negatively affect demand if not done within the
affordability range of its target market.
Sales volume of the other hand, can be increased through what is known as the
4Us of marketing:
1. New users – who uses the product or service? Or serviced used?
▪ Red Bull Energy Drink was formulated for blue collar workers as well as
those who work on the midnight shift.
2. Extended users – Who can still use the product or service?
▪ Infant milk companies like Wyeth have different varieties of follow on milk
products designed for young children to continue to provide specific
nutritional requirement for different age groups.
▪ Doctors can provide extra wellness packages such as weekly detoxification
for maintenance or prevention for patients who are already cured of their
health complaints.
3. New usage – for what purpose is the product or serviced used?
▪ Arm and Hammer reposition its baking soda as a new way to deodorized
refrigerators.
▪ Glutathione was originally intended to boost liver function until its
whitening side effects was discovered. The same was true for Viagra
which was originally intended for angina pectoris or chest pain due to lack
of blood and oxygen supply before it was used for treating erectile
dysfunction.
4. More usage – when and in what occasion is the product used?
▪ Del Monte regularly comes out with recipes to encourage more usage of
Del Mont Products.
▪ BPI credit cards offer free meals and waive payment of annual fees in
exchange for attaining a minimum – spending limit.
▪ A Conzace soft gel vitamin is not just being used as multivitamins but to
promote healing and improve skin problems like acne.
Market share is the ratio of your brand sales versus the total sales in your market.
✔ MSG maker Ajinomoto and nescafe coffee are examples of brands with dominant
market share in the Philippines food and beverage market.
✔ Honda and Toyota are almost neck to neck in the passenger car market.
While companies would naturally define its target competitors, it is actually the
consumers who ultimately decide the competitive frame, or the list of related product or
services that consumers consider when exercising their purchasing power. For
instance,
✔ Jollibee may define McDonald’s and Burger King as key competitors but
consumer may simply go to a Pancake House or Teriyaki Boy or even Starbucks
when the lines are too long in Jollibee.
✔ Cebu Pacific grabbed shares not from the Philippine Airlines but from land and
sea transport.
Marketers must therefore understand and consider the competitive frame of their
Target consumers, and strive to have more attractive product value compared to their
direct competition as well as those providing strong substitute. Firms must endeavour
to improve their market shares profitably in both good and bad times.
✔ Sales of GlaxoSmithKline’s cervical cancer vaccines grew at least eight – fold
after a 60% socialized price decrease in November 2008.
Instead of directly attacking a strong leader in the market, companies usually enter
UNDERDEVELOPED market segments or assume strong challenger position within a
particular niche. For instance:
❖ Close up the preference of the cosmetic segment of the market which looks for
fresh breath with the added benefit of a mouthwash while Colgate is better
known in the bigger therapeutic segment which promises stronger, bacteria –
free – teeth.
❖ Mang Inasal chose to focus on the fast food barbeque segment using live coals
instead of electric grillers found in other fast food joints.
When they use the product or service.
Profit is an indispensable component of a firm to continuously satisfy its customers.
Profit however, must always go hand-in-hand with honor. For instance,
● In October 1991, a flash flood killed some 8,000 men, women and children in
Ormoc City, a tragedy caused by years of illegal logging in the province.
● In 1996, 162 persons, mostly teenagers, died in the Quezon City “Ozone
Tragedy” when fire broke out due to faulty electrical wiring. The Tragedy was
exacerbated by the lack of safety measures or enough fire exit. The doors of the
establishment could only be opened by pulling inwards instead of pushing
outwards causing a bottleneck as panicked and rushed out unable to open both
doors.
One cannot justify any profit from business if the consequence is the destruction
of lives. Those proven responsible for illegal logging, peddling prohibited drugs, child
trafficking, prostitution, and even gross negligence leading to death must therefore be
penalized to the fullest extent of the law. Big suppliers must be force of good and
require their suppliers to be aligned with them.
What are the consumer’s needs and wants, and why is it important for marketers
to appreciate the indispensable requirement of consumer motivation?
Needs – are the basic reason or the minimum requirements consumers look for
in a product or service. They called the qualifying or the “gatekeeper” dimension in the
purchase.
Wants – are the determining dimensions among many choices.
Expectations are values or intangibles associated with a product or services. It is
actually part of “wants” but they become extremely important when products or
services are not differentiated. Sales people and other service providers are most
common parts of these expectations of the consumer.
Marketing is not the satisfaction of wants alone. Needs must be addressed first
or else the satisfaction of motivating wants becomes irrelevant. A bank can offer much
higher interest rates on deposits, which is a motivating want. However, existing
depositors will not stay and potential depositors will not be attracted to open accounts
unless they are assured of their basic needs – the stability of the bank, and the safety
and security of the deposit.
Features are simply product attributes offered by a company. They are proof of a
benefit. Advertising agencies call these “reasons why”.
Advantages are what these features can do.
Benefits are advantages that meet the explicit needs and wants of the
customers. They are the favourable results that customers will get when they use the
product/service. Benefits answer the question: “What’s in it for me?”
Benefits must be emphasized more than the features, especially when the prices
are higher to justify the premium price. Exceptions are when a technical person such as
an engineer is talking to a fellow technical person regarding technical specifications they
both understand or when the consumer is paying a much, much lower price for the
usual features included in a consumer product.
MARKETING DEFINED
Based on our introductory explanation, marketing can be defined based on
strategic 3C’s of marketing:
MARKETING is the process of continuously and profitably satisfying the target
customer’s needs, wants and expectations superior to competition.
1
2 3
Company Competition
3 LEVELS FOCUS
Vision explains the company’s future and what it intends to be. Fulfilling one’s
vision is the purpose of undertaking and expanding business enterprises. A shared
vision binds people within a company. For instance:
● Penshoppe, a Cebu-based company, set up in 1986, envisioned
penetrating the metro Manila market within five years to become the
link through which Filipino teens can express themselves as one.
Penshoppe has successfully established over 400 Penshoppe retail stores
nationwide and has emerged as a leading garment brand for the teen
market.
Mission answers the question “What is our business?” as it defines the needs
and wants of the market.
Key Factors for Success (KFS) identifies the limited number of controllable as
well as uncontrollable functions, activities, factors or even bottlenecks that must be
managed well to outperform competition in the present market.
The content of key factors for success is a double-edged sword. While it
guides the company into what has worked or not worked in the past, it can also make a
company a prisoner of convention and be afraid of innovation as the focus is limited to
outperforming competition.
After key factors for success are identified, the company’s strengths and
weaknesses are then measured. Strengths are positive factors, which will help the
company achieve its key results areas (i.e. objectives such as sales, market shares and
profit). Weaknesses, on the other hand, are negative factors, which may hinder the
attainment of the firm’s key result areas.
Identifying strengths and weaknesses is not enough unless the marketer
identifies active steps to take advantage of the strength or resolve a weakness.
Thinking Application
1. Choose two competing companies in the same industry (example: Globe and
Smart). One satisfied your needs, the others did not.
a. Describe the typical consumer of this product or service category.
b. Explain what needs and wants were satisfied and exactly how they were
satisfied.
c. In areas where not satisfied, what should the company do in order to
make you satisfied?
Exercises
1. Propose some hypotheses explaining how marketing may have begun in the
Philippines.
2. Give some illustrations on how marketing adds value to a product.
Caselet
World Tourism is estimated to be a 3.7 trillion dollar industry with over
45,000 hotels and over 800 airlines. In the Philippines, other than Metro Manila, the
country’s top foreign tourist destinations are Boracay, Baguio, Tagaytay and Palawan.
Despite the Asian financial crisis of 1997 which made traveling and shopping
in the Asian region very cheap, the Philippines’ market shares in the regional tourism
industry have not been impressive. Malaysia and Thailand were able to attract at least
5 times more international tourists than the Philippines. If the proper steps are taken,
the Philippines can gain significant revenues from the tourism, which is a major
worldwide industry.
a. Identify the needs and wants of the following foreign customers:
a.1 Leisure Tourists – which can be clustered into sub – groups like people who
come to
● Play golf
● Shopping trips of families and ladies
● Beach holidays
● Marine sports enthusiast
● Historical sight seeing
● Arts and culture tourists
● Special entertainment group
● Eco-tourism
● Special interest groups (cavers, trekkers, hikers)
● Cuisine Lovers
a.2 Business Travellers
a.3 Convention Delegates
b. Investigate how good is the Philippines in satisfying these needs and wants.
c. You have just been appointed as the secretary of tourism of the Philippines,
how can you increase the share of tourist arrival to the Philippines relative to
other countries.