MODULE 1- THE VALUE OF MARKETING

Good day dear students! As business administration students, it is expected that you have the
grasp of the basic knowledge on some business terms and concepts. Take the pre-test below before you
take the leap on the discussion page. Note down the key terms and concepts.

PRE TEST: Answer the following questions without opening notes or reading the materials on the next
page/s or searching for review materials on internet. This is to test your basic knowledge and to assess
analytical skills, this will not be recorded, and we will have separate assessment or announced quizzes.
Record it on your notebook (scratch papers will do as long as it will be an organized notes/compilation
of notes). When you’re done with the quiz, record your scores, again this will not be recorded.

Multiple Choice. Encircle the letter of the correct answer.

1. An approach or game plan

a. business plan c. strategy
b. goal d. tactics

2. The people who use products

a. customers a. consumers
b. buyers b. market

3. The amount of money used in exchange for product

a. currency c. payment
b. price d. rate

4. Describes the consumer's level of expectation

a. satisfaction c. loyalty
b. interest d. objective

5. Refers to how tasks are accomplished on a day-to-day basis

a. tactics c. business plan
b. strategy d. goal

6. The satisfiers of needs as influenced by culture

a. demand c. wants
b. market d. needs

7. A trade of value between two or more entities

a. transaction c. exchange
b. negotiation d. contract

8. A situation where something is missing and has to be satisfied or filled up

a. need c. demand
b. want d. satisfaction

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9. Refers to actual and potential buyers
a. a. market c. consumers
b. customers d. suki

10. Serves as the link between the firm and the market
a. intermediaries c. products
b. employees d. service

11. Another name for communication mix

a. promotions c. sales
b. marketing mix d. advertising

12. Refers to what the seller sells and what the buyer buys
a. product c. benefits
b. uniqueness d. services

13. Individual's desire for a product backed up by capacity to pay

a. need c. satisfaction
b. demand d. want

14. Pertains to delivering products in a way that uplifts consumers or society's well-being.
a. societal concepts c. strategic planning
b. product concept d. customer service

15. The act of obtaining something by offering something in return

a. purchase c. transaction
b. exchange d. order

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Module 1: The Value of Marketing

This module provides an overview of marketing, its basic concepts, importance, and its
philosophies. It also covers discussions on planning the business enterprise and the strategic planning
and marketing plan.

Objectives:
At the end of this module, students are expected to explain:
1. the meaning of marketing;
2. the basic concepts of marketing;
3. the importance of marketing;
4. how the different marketing philosophies vary;
5. the importance of planning in an organization; and
6. how strategic planning differs from marketing plan.

Key Terms:

consumers price societal marketing concept

demand product strategy
exchange product concept tactics
intermediaries production concept transaction
market promotions wants
marketing satisfaction
needs service

Introduction

No organization or company can exist without marketing. Marketing is the lifeblood of any
organization. The success of a company lies on the efficiency of its marketing people with the
cooperation and coordination of other employees from other departments. As emphasized by Kotler
and Armstrong (2001) in the book Principles of Marketing, “because customer value and satisfaction are
affected by the performance of other functions, all departments must work together to deliver superior
value and satisfaction. Marketing plays an integrative role to ensure that all departments work together
toward this goal.” Thus without the assistance of marketing people, no organization or firm can cope
with the competition caused by the dynamism of marketing.

Marketing is present in all areas of our lives. The moment we get up from bed, there is
marketing. Marketing is the reason why we buy the clock, which we set to alarm in the morning to wake
us up. The television program or kdrama we choose to watch is the result of the promotion effort of the
television network competing with other television networks for audience attention. Television
networks compete by offering better story line of programs, more game shows with viewers’
participation, and improved variety shows. All of these are geared toward enhancing the network’s
viewership rating. The food that we choose to eat is a result of marketing. We patronize a certain brand
of soap, shampoo, toothpaste, and other oral care products because of marketing. As we go to office or
school, the billboards that we see, the posters, and tarpaulins along the way promoting various services
or product are forms of marketing strategy.

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 At board meetings or during presentations, our posture and our choice of apparel for the
occasion are definitely influenced by the concept of endorsements or marketing. Thus, marketing is part
of our everyday life.

What is Marketing?

The field of marketing is broad and dynamic. It involves not only product creation but also
pricing the offering wisely in order to attract the right market and promoting and distributing the
products to identified outlets or places. Marketing is concerned with maintaining high customer
satisfaction and continuously building and keeping good relationship with the market.

There are different definitions of marketing as given by various authors:

“Marketing is a social and managerial process

whereby individuals and groups obtain what they
Kotler and Armstrong (2001)
need and want through creating and exchanging
products and value with others.”

“A total system of business activities designed to

plan, price, promote, and distribute want—
Pagoso and Dela Cruz (2000) satisfying products, services, and ideas to target
market in order to achieve organizational
objectives.”

“A process of continuously and profitably

Josiah Go and Chiqui Escareal-Go (2001) satisfying the target customer’s needs, wants,
and expectations superior than competition.”

The Basic Concepts of Marketing

Example:
Needs. This refers to situations in which something is
missing and has to be satisfied. When a person is hungry he needs
food to satisfy his hunger but he
Wants. These are the preferred products of an may want a burger rather than
individual that will satisfy needs. bread.

Individual product preference is

strongly influenced by one’s
personality or culture. Human needs
are few, but human wants are
unlimited.

According to Abraham
Maslow’ hierarchy of needs, there are
several levels of human needs. Starting

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from the bottom, which is known as physiological needs, include the need for food, clothing, and
shelter. This level is followed by safety needs, which consist of things that make one feel secured and
safe, like owning a hose, security of tenure, insurance, etc. Social needs refer to one’s sense of
belongingness to a group or association, like being a member of a choir or an officer of a faculty club or
any distinguished association or organization. Next level is the self-esteem needs or the individual’s
need or strong desire to be recognized of his efforts and accomplishments. The last level in the hierarchy
of needs is the self-actualization need. It involves the continuous improvement of one’s talent, skills,
and knowledge by further studying to be shared or given back to the society.

Demand. This involves one’s need or want for products backed up by his capacity to purchase
the product.
Exchange and Transaction. Both may involve the presence of two entities such as two persons or
companies. They differ in terms of other factors. For example, in transaction, terms and condition, date
of transaction, place of transaction, amount involved, and other agreed upon conditions are present;
while these are absent in exchange because the latter involves getting something in return.

Market. This refers to people patronizing or already using the company’s products or availing its
various services. It also includes those who would avail of the company’s products in the near future.

 Consumer market refers to customers who buys

products and services for their own personal
consumption.

 Industrial market, also called business market,
purchase products and services in order to produce
another product.

Products. Anything that a buyer buys. It is anything that a company offers to satisfy the market’s
needs or wants. Product is not limited to tangible items. It also includes place, person, experience,
advocacy, idea or service. A service is an intangible product. It is defined as “any activity or benefit that
one party can offer to another that is essentially intangible and does not result in the ownership of
anything” (Kotler 2001).

Marketing Mix. Also called the Four Ps (4Ps) in marketing, which means PRODUCT, PRICE, PLACE,
and PROMOTIONS.
 Product – this is what the producers sell and what the market buys.
 Price – this refers to the amount of money paid by the customer in order to acquire the
product or avail the services offered.
 Place – this deals with the distribution of products, as well as the different channels
involved in making the products available to the people.
 Promotion – the means for firms to communicate or inform the market about their
products using various mediums like advertising, sales promotions, personal selling, and
public relations.

Marketing Philosophies

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 The way a company produces product is guided by the philosophies that it values.

 Product Concept (Philosophy) – product performance is given priority. This means that no
product leaves the assembly line if it is not of high quality. Companies that follow the belief that
markets demand quality earn their customers’ loyalty through their quality products.
 Production Philosophy – companies that follow this philosophy values the importance of the
availability of products at all times with reasonable price.
 Selling Philosophy – in this philosophy firms hire marketers or sales people to do aggressive
marketing for the firm’s products or service. Companies following this concept believe that the
market will not choose to purchase their products if they will not undertake any aggressive
selling and promotion efforts.
 Societal Marketing Concept – firms look first into the welfare of society in general and deliver
their offerings in a way that satisfies their market more effectively and efficiently than their
competitors.
 Marketing Concept – firms determine first the needs and wants of their potential market, then
device ways, products, or services to satisfy these needs and wants more effectively and
efficiently than their competitors.

Benefits of Marketing

1. It creates employment.
 Marketing provides job opportunities to many individuals in various fields like
sales, advertising, brand management, teaching, merchandising, research and
development, and logistics.

2. It helps develop more and better products.

 With the companies’ innovation and enhancement of product offerings, more
products are developed, allowing the market to have more product choices.
Activities such as product development, research, communication, distribution,
pricing and service are core marketing activities. Although we normally think of
marketing as being carried out by sellers, buyers also carry on marketing
activities. Consumers do marketing when they search for the good they need at
prices they can afford.

3. It provides better profit.

 Good marketing can be translated into better sales performance and ultimately
more profit for the producers.

4. It improves the quality of life.

 With better product offerings, marketing provides convenience, easy living and
better lifestyle, comfort and efficiency. Also, the overriding objective of the
company is not just to satisfy the needs and wants of his costumers but to do so
profitably better than his competitors (Go, 2001).

5. It produces more entrepreneurs.

 A need for a product or service is an opportunity for businessmen or
entrepreneurs to put up businesses or to be part of an existing one, like being a
supplier or part of the distribution channel.

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 6. It contributes to economic development.
 Through various job opportunities, more members of the society become
employed. Marketing also contributes to economic development through the
revenues the government collects from taxes paid by business people, which
are then allocated to various projects and programs.

Planning the Business Enterprise

Business enterprise involves great planning and decision-making, particularly when it is still in
the conceptualization stage. An individual planning to put up a business need to consider the following:
what business to enter, who will be the target market, how to beat competitors, where to get the
capital needed for the investment, to purchase or not to purchase an equipment, and how to better
serve its market.

Importance of Business Planning

Through planning, one can:

1. Apply for loans;

2. Determine the needed capital;
3. Evaluate actual performance against set targets;
4. Lessen impact of business failure;
5. Lessen risk of doing business;
6. Minimize mistakes;
7. Minimize or eliminate losing capital because everything is well thought of;
8. Result in better preparedness for sudden development;
9. Lead to better coordination among different department in the company; and
10. Program activities in advance.

A good plan serves as a guide in running the business enterprise. It is a process that requires any
business to consider all factors that will affect the plans.

Strategic Planning and Marketing Plan

It is every company’s intention to stay long in the business industry. Thus, companies develop
long-term strategies in order to meet the demand and challenges of the environment in their respective
industry. Companies do their best in order to outperform competitors by offering better products or
improving on their services and doing better than before. To be able to accomplish this, every company
must develop a game plan to attain long-term survival.

What is Strategic Planning?

Marketing Guru, Philip Kotler (2003), defined strategic planning as a process of development
and maintaining a strategic fit between the organization’s goals and capabilities and its changing
marketing opportunities.
Strategic planning starts from the moment the top management at the corporate level forms
the company’s mission statement. A mission statement stipulates what the firm values and its reason

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for existence. This is cascaded down to all the employees and will serve as their guide in the
performance of their tasks.
A company or firm’s mission statement is converted into quantifiable set of objective for the
different management levels to achieve. Then designing the firm’s business portfolio, the collection of
business and products that make up the company follows.
A good business portfolio includes the current business collection and is the basis for deciding
which among the products offered by the company will be phased out or will receive assistance in terms
of investment.
With this, all departments within the company, such as the marketing, production, research and
development, human resource, and operations should work together to achieve the set objectives of
the company.

Strategic Planning vs. Marketing Plan

Through strategic planning, the company decides what it wants to do with each business unit.
Strategic Planning
involves deciding on market strategies that will help a company achieve its overall strategic
objectives.

Marketing Plan
includes the executive summary, current marketing situation, environmental analysis, marketing
objectives, marketing strategies, action programs, budget, and controls.

Parts of a Marketing Plan

1. Executive Summary
 Presents the highlights of the plan. It is the overview of the proposed plan.
2. Current Marketing Situation
 Provides data on the present product, its market, and how products are
distributed and promoted.
3. Environmental Analysis
 Discusses the various external factors that affect the marketability of the
product. This defines the products’ strengths and weaknesses, as well as the
various threats and opportunities facing the product.
4. Marketing Objectives
 Consists of marketing goals in the area of sales, target market, positioning,
market share, and profit.
5. Marketing Strategies
 Consists of the company’s game plan, indicating how objectives will be
achieved.
6. Action Programs
 Indicates the steps that the company would undertake to ensure that marketing
strategies would be achieved. It includes identifying the persons involved, the
timeframe, and the budget.
7. Budget
 This is an important component that puts into details the cost of implementing
the marketing plan.
8. Controls

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  Indicates how progress will be monitored and reviewed by the management.

Process of Strategic Planning

1. Drafting the Company’s Mission

Each company is formed for a purpose. Whether the company is a
manufacturing firm, a bank, academic institution, hotel or hospital, its operation is
guided by its company’s mission—the company’s statement of purpose. It describes the
company’s reason of being or what the company wants to achieve.

The clear mission statement of a firm serves as a guide to all its employees. A
mission is a reminder of the kind of business the company has, the customers the
company is serving, and what the company business should be.

A good mission statement should have the following characteristics: (Kotler et

al., 2009)
It is based on It fits the
It is market- It is
distinctive market
oriented. motivating.
competence. environment.

2. Setting the Company’s Objectives

After drafting the company’s statement of purpose or its mission statement, the
next step is the setting of objectives. This consists of detailed supporting statements or
objectives intended for the different management levels to achieve.

Different management levels, as their effort or way of supporting the objectives

that were already set, must develop marketing strategies.

Examples of a company’s objectives are:

a. To build profitable customer relationship
b. To increase company’s sales
c. To increase company’s product awareness.

3. Designing the Company’s Business Portfolio

Products and businesses are equivalent to the portfolio. Assisted by the
company’s mission statement and set objectives, the company must evaluate its
business portfolio.

There are two (2) ways in which a firm may assess its business portfolio.

1st: Analysis of the current portfolio of the company.

The company assesses its products and decides which among the businesses must be
given more investments, less investments, or no additional investment at all. The first step in the
portfolio analysis is the identification of the various businesses that make up the company.
These businesses are better classified as strategic business unit or SBU. The SBU is a single

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business or collection of businesses that has a distinct mission, a responsible manager, and its
own competitors and that is relatively independent of other business units.” (Hutt and Speh,
2013)

4 strategies for SBUs:

SBUs can pursue any of the following strategies:
a. Build its share. More investment is needed by companies to achieve this.
b. Hold its share. Companies may invest just enough to maintain or hold their
share at the current level.
c. Harvest. Milking the company’s short-term cash flow regardless of the long-
term effect.
d. Divest. Company may sell the SBU or phase out the product and use the
resources elsewhere.

2nd: Development of the company’s growth strategy.

There is a need for companies to appraise its SBUs to determine which among the SBUs
will be given support and up to what extent. A company can evaluate its current products or
portfolio with the growth-share matrix or also known as the Boston Consulting Group (BCG)
Matrix.

Growth-Share Matrix or the Boston Consulting

Group (BCG) Matrix.

In this matrix, the company categorizes

all of its strategic business units according to the
growth-share matrix. On the vertical axis is the
market growth rate that provides the measure
of market’s attractiveness; whereas, the
horizontal axis indicates the market share of the
SBU which measures the strength of the SBU in
the market. The characteristics of the BCG
matrix are as follows:

a. Stars. Are high-growth/high-share business or product that needs heavy investment

to finance its rapid growth.

b. Cash Cows. Are low-growth/high-share business or products. Unlike stars,

businesses and products in this category need less investment to maintain their
market share. SBUs in this classification produce a lot of cash which supports the
other units.

c. Question Marks. These are SBUs with low market share in high-growth market. In
terms of investment, SBUs in this category require more budget or cash to hold its
market share; companies’ decision makers should evaluate which Question Marks

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 they should support to be a star, and which products or businesses to let go or to
phase out.

d. Dogs. Have low-share and low growth status. The cash generated may just be
enough for themselves but does not promise to have big source of profit.

Growth Strategies
A useful way to identify growth opportunities is the use of product/market expansion
grid—a portfolio-planning tool for identifying company growth opportunities through market
penetration, market development, product development, or diversification (Armstrong and Kotler,
2003).

a. Market penetration strategy for company growth

is achieved by increasing or adding sales of current
products to existing or current market.
b. Market development is a strategy for company
growth where new market is identified or
developed for existing or current company
products.
c. Product development refers to the strategy used
by companies to offer new or improved products
to existing or current market segment.
d. Diversification is a growth strategy where
companies acquire businesses outside their
existing or current products and markets.

4. Coordinating Activities to Different Functional Areas

The main focus here is to coordinate the marketing resources and activities to
different departments within the company to achieve the set objectives and
strategies of the firm.

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Identification. Distinguish the word or concept that will complete the following sentences. Write your
answer on the blank.

1. The 4Ps of marketing, namely product, price, place, and promotions are also known as
_________________.
2. Demand is the result of need and wants plus _____________.
3. ______________________ is a written document that consists of the executive summary,
current marketing situation, marketing objectives, marketing strategies, programs, budget, and
controls.
4. A marketing philosophy that makes consumers to favor products because of availability and
affordability is known as _________________.
5. ______________________ refers to a statement of an organization or company's purpose or
reason of being.
6. __________________________ refers to the choice or preferred products of an individual as
influenced by culture or personality.
7. A marketing philosophy where firm hires sales people to do aggressive marketing efforts to
promote the products is called _________________________.
8. _____________________ is communication that informs and persuades the public to accept or
purchase the companies' products.
9. ___________________ provides the highlights of the marketing plan.
10. The process of continuously and profitably satisfying market needs and wants better than
competitors is called _____________________.
11. A single business or collection of businesses of a firm that has its own mission, budget,
competitors, and manpower is known as _____________________.
12. __________________ refers to low-growth, high-market share business or product of a
company.
13. __________________ are SBUs with low-market share in high-growth market.
14. __________________ are high-growth, high-market share businesses or products that need
heavy investment.
15. ____________________ is a market philosophy which assumes that consumers' will favor
products that are available and cheap.

Gap-Fill. Choose the right answer from the words in the box. Write your answer on the line provided
before each number.
a. control g. physiological
b. budget h. safety and security needs
c. strategies i. self-esteem needs
d. environmental analysis j. cash cows
e. selling concept k. dogs
f. consumer market l. industrial market

________1. It indicates how progress will be monitored and reviewed by the management.
________2. A marketing philosophy where firms hire marketers to do aggressive marketing.
________3. It refers to the group of people who purchase goods for personal consumption.
________4. It consists of people who purchase products to produce another product.
________5. It is the first level in the hierarchy of needs of Abraham Maslow.
________6. It is the level in the hierarchy of needs where security of tenure and owning a house are

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 desired.
________7. It details the cost of producing a product or implementing a plan.
________8. It refers to the individual's desire to be recognized for their efforts and accomplishment.
________9. It is the evaluation of the different factors that affect the operations of the business.
________10. It refers to the low-market share and low-market growth product category.
________11. It consists of the various ways that business intends to compete in the market place.
________12. It is an SBU category that needs less investment to maintain market share.

Discussion Questions:

1. Why is it important for a company to have a written plan?

2. What is the role of marketing in strategic planning?
3. Differentiate the marketing management philosophies.
4. What important roles does marketing play in our economy?

Concept Application:

1. Think of two (2) convenience stores where you normally purchase your needs or you frequently
visit. Describe how you were satisfied and not satisfied by the two stores.
2. Between the two convenience stores that you thought of, which is better?
3. What particular needs or wants of the customers were satisfied by the two stores?
4. In which particular areas must the two convenience stores be improved?

Mini Case

There are scenic places that local tourists and foreigners frequently visit in the city of Manila like
Intramuros, Rizal Park, National Museum, Manila Zoo, and Museo Pambata. Choose a place where the
following people would likely visit, and answer the succeeding questions:

1. Family
2. Businessmen or Entrepreneurs
3. Sports Enthusiasts
4. Senior Citizens
5. Students
a. What are the needs and wants of the group of people? How can these be satisfied?
b. How can the management of the scenic places improve the number of tourists'
arrivals?

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References:

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[Link] (accessed June 14, 2020)

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