Grade11-ABM

Principles of Marketing
Module 1
1 Quarter (2nd Semester)
Week 1-2

LESSON 1: A FRAMEWORK FOR MARKETING

LESSON 2: NEEDS, WANTS, AND DEMANDS

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of the module. Use a NOTEBOOK
answering the exercises.
2. Read the instruction carefully before doing each task.
3. Observe honesty and integrity in doing the tasks and checking your answers.
4. Finish the task at hand before proceeding to the next.
If you encounter any difficulty in answering the tasks in this module, do not hesitate to consult your teacher or facilitator.
Always bear in mind that you are not alone.

We hope that through this material, you will experience meaningful learning and gain deep understanding of the relevant
competencies. You can do it!

CHAPTER 1: THE PRINCIPLES OF MARKETING

You can go to a Starbucks café and just sit down for the entire day without ordering anything. Nobody will stop you from
doing that. But the surprising thing is practically everybody who stops by a Starbucks does in fact order something even if they are
not required to.

Perhaps it is part of peer pressure-you will feel embarrassed If you stay In Starbucks for a long while and not have an order
visible on your table. But it is also partly due to our internal concept of fair exchange. Simply put, a customer feels that It is only fair
to pay for a cup of coffee in exchange for the use of a Starbucks sitting area.

To this end, you get to realize that Starbucks is not only in the business of making coffee. It is actually in the real estate
business too! They make most of their money by relying on you to pay for the use of your own little space in their shop, whether it is
an “office space” that you can work in, a “study space” where you can quietly read your books, or a “meeting space” where you can
meet with clients or workmates.
 Next time you are at a Starbucks, observe the crowd and study what they buy. One thing you may notice is that the longer

Marketing is an art, a science, and a field of discipline. Everything that goes on sale is marketed. But not
everything that goes on sale follows the principles of marketing. This chapter covers the essential principles behind
marketing: what it is, what makes for a marketing-oriented transaction, and how consumers stand to benefit from it.

LESSON 1: A FRAMEWORK FOR MARKETING

At the end of this topic, the student will:

1. have a clear definition of marketing; and

2. have a framework for comprehending the principles of marketing.
Preliminary Discussion

Define marketing in your own words, based on what you understand about it thus far.

Give three examples of products that you regularly see around you and describe how they are
“marketed”.

What Is Marketing?
“Marketing is all about creating value through the exchange process.”
Some of you may believe that you already have some idea about what marketing all about. That is good. Our
purpose here is to build up und work with what you know, so that we can integrate everything into a clear and cohesive
framework that maps out what marketing is really all about.
At this point, what is marketing to you? Perhaps some (or all) of the following will come to mind:
The good news is that, yes, all of the above do fall under the realm of marketing. But it should also be pointed out
Advertising Promos and giveaways
Selling Press releases
Sales people Product development
Retail stores and merchants

More selling

that marketing is actually a superset of all of the above and more. By this, we mean that marketing is more than the sum
of all the above-mentioned elements.
To a layman, marketing will indeed be all about selling a product. But to a marketing professional, marketing is a
process. It is a process that begins right at the moment when an aspiring entrepreneur or business development manager
(or marketing manager) realizes that there is an opportunity to build up a business.
You can think of marketing as a discipline or a field of management, in much the same way that finance is a
management field and human resource development is a management field. At the same time, it helps if marketing is
understood by the entire organization because marketing is such an integrative field. Effective marketing needs the
involvement and support of all the other fields of management-operations, finance, human resources, information systems,
and even corporate planning.
Marketing is also about communication. In fact, there is a trend toward using the term “marketing
communications” rather than just “marketing.” This reflects the fact that selling a product (i.e., the layman’s definition of
marketing) is really all about properly communicating that product to the market and to the world at large. It will,
therefore, help to keep this in mind as we proceed throughout this course.
Peter Drucker once said that the aim of marketing s to “make selling superfluous” (Drucker 1973). In other words,
he believed that marketing w all about making products somehow sell themselves, so that getting products to move
become easier. As subtext however it may help to know that a whole lot of work will be involved in order to reach that
ideal. Marketing, in this respect, is a bit like an iceberg: what we get to see-namely the selling and the advertising-is only
a small) percentage of the marketing process, such of what needs to be done should have already happened even before
the product gets out the door

A Definition of Marketing
We begin with a 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.”
Marketing is an organizational function because it is a core task that is expected of a modern organization,
whether or not it operates for profit. While marketing is now considered as an imperative for commercial enterprises, even
non-commercial sectors benefit from a marketing orientation. For instance, when the Department of Health tries to
convince the public to avoid cigarette smoking, it is actually engaging in a marketing campaign. Except that instead of
selling a tangible product, it is selling a healthier lifestyle.
Marketing is also a set of processes because there are essential tasks that have to be engaged in order to produce a
viable marketing strategy. These tasks shall be outlined as we go along through this course.
There 1s also the delivering of value to customers. This is an important element that we shall] be taking some
time to discuss later in this chapter. For now, do take note of the subtext here that marketing is not out to fool customers,
to cheat them of their money, or to sell them something that they do not want. In fact, the building of customer
relationships is very important in marketing. So if a company tries to fool a customer with a subpar experience, then this is
not a marketing-oriented company.
Finally, a key takeaway that we can infer from the above definition is that there is a give-and-take relationship
that lies at the heart of marketing. Marketers seek to provide valuable products and services to customers. In return, they
also need to benefit from it. Of course, this generally happens through the revenues that companies receive from
customers (in the case of profit-oriented enterprises). But there are other ways through which a marketing exchange leads
to mutually beneficial transactions:

● Politician offer promises and hope to potential voters in exchange for their votes that bring them to office.
● TV stations broadcast soap operas to homes in exchange for viewers (hopefully) watching the ads that in
turn would provide profit for the stations.
● Facebook offers its services to its millions of users for free in return for the users allowing paid ads to
occasionally show up in their feeds.

These are all examples of exchange transactions that seek to benefit the parties involved. Some transactions can
be complex (as in the case of TV stations and its tertiary dealings with outside advertisers). But the typical transaction that
we are most familiar with is the common everyday pay-for-product merchant transaction.
On a broader scale, marketing is all about changing behavior through communications in order to achieve
objectives. Getting consumers to buy your products may be the most obvious manifestation of a change in behavior, but it
is not the only possible marketing objective. Marketing’ can also be about changing customer attitudes and perceptions
about your product. Such as getting the customers to actually like it in order to get them to eventually buy it. It could be as
simple as making the market realizes that your product actually exists again, in order to get them to eventually buy it.
If there is a way to describe what marketing is all about in a very concise manner, then it can be this: Marketing is
about meeting needs profitably (Kotler and Keller 2006). You go into business so that you get to satisfy the needs of the
market and, in doing so, you also get to satisfy your organization’s own needs.
 Throughout this textbook, we shall be using the word “product” a lot. Just to be very clear, product in the context
of marketing does not just refer to tangible products such as grocery items and automobiles. The word “product” applies
to anything that is being marketed, whether it 1s a tangible product, an intangible good, a service, a place, or even a
person.

Here are some other examples of products:

Amusement parks Musical bands

Apps on smartphones Pet care

Banking services Radio stations

Coffee shop: the coffee, the food, and Social media sites
the place itself
Telecommunication services
The Marketing System
Generally speaking, the ecosystem for marketing may be illustrated by the following model (Kotler 2000):
Figure 1 presents two key parties, namely the industry (composed of businesses that seek to sell a particular kind

FIGURE 1

The Generalized Marketing System

of good or service) and the market (composed of all current or potential consumers for the given kind of good or service).
In the early days of marketing, only the two central lines-goods/services and money-were the key points for consideration.
Today, however, two other “lines” have joined the equation, namely communication and information. These represent the
value of transmitting information both to and from the market and the industry.
All throughout these transactions, the environment also serves as a significant influencer, affecting both the
industry and the market alike.
The marketing process can also be broken down into components, which are:

● Strategic Marketing
o Customer segmentation
o Target market selection
o Value positioning
● Tactical Marketing: Value Deployment
o Product design and development
o Product portfolio management
o Service development
o Pricing
o Distribution and logistics
● Tactical Marketing: Value Communication
o Sales force strategies
o Sales promotion strategies
o Advertising
 Strategic marketing takes care of the more long-term, timeless nature of the business proposition, while tactical
marketing takes care of the more shorthand medium-term, flexible aspects of the market strategy.
In the case of a consumer brand such as Colgate, the strategic component is involved with managing, preserving,
and enhancing the value of the brand including its brand propositions and promises, and its market segments. Tactical
considerations, on the other hand, include options to stretch the product line through the development of new variants,
managing inevitable price wars from competition, and pushing the product line to even more distribution points.

Sell Your Money!

Present a paper bill from one of your group members. It could be a 20 Peso bill, a 50 peso bill, or higher. Your
group’s objective is to try to convince your classmates that this peso bill is worth more than its face value.

Brainstorm en ways to make this possible and then present your “pitch” in front of the class. You will then give a
suggested retail price (SRP) based on how much value you believe the bill actually holds.

Your group’s objective: after your pitch, the class will be asked for a show of hands on how many of them will
actually consider buying your peso bill for your SRP, which should be higher than the face value.

Presentation time: an estimate of 5 to 10 minutes per group.

POST ASSESSMENT

How did your group strive to create value for your peso bill?

Criteria Details Total Pts. Your Pts.

Effectiveness of pitch Were there any takers for the proposal? 20

Creativity of Pitch How innovative was the sales pitch? 15

Insights What insights did the group gain from the process? 15

Total 50

SELF ASSESSMENT
How well did you comprehend the topic?
YES NO
I. Can you now give your own definition of marketing? [] []
2. Do you now know why communication is essential in marketing? [] []
3. Do you now know what a “product” is? [] []

EXERCISES

I. Discussion
1. Explain in your own words why marketing is principally about communication.
2. Explain how a newspaper engages in marketing. What is its market? What is it selling?
 II. Application and Advancement

Knowing what you know by now…..

1. What kinds of communications does a marketing entity generate? For instance, imagine a Starbucks
coffee shop. What are the detailed elements that communicate messages to the buyer and what are those
messages?
2. Consumers do not directly pay free TV stations, such as ABS-CBN or GMA TV, in exchange for viewing
their programs. Map out the model on how the marketing system works for this industry.
3. Marketers charge consumers for the cost of their goods plus a markup for profit and overhead. Consumers
are therefore paying more than the actual cost of a good. How do you think that there are any moral
implications to this?

LESSON 2: NEEDS, WANTS, AND DEMANDS

At the end of this topic, the student will:

1. know the concept of needs, wants, and demand: and

2. understand the dynamics that drive consumer demand.

PRELIMINARY DISCUSSION
Explain in your own words what a “need” is. Try to explain this form your own experience.

Give three examples of products that you want to have and the reasons why you want to have them. Try to
expound on your reasons.

Needs, Wants, and Demands

A need is a state of felt deprivation about something that is deemed to be necessary. When you feel hungry,
for instance, your body feels deprived of nutrients and therefore triggers a search for solutions.
At the most primal level, we go back once again to the physical needs of food, clothing, and shelter which we
literally need to stay alive and fundamentally comfortable. This incidentally includes the need for water. So let us begin
our discussion with this basic need for water.
In Metro Manila, the two biggest water utilities (Manila Water and Maynilad) insist that for the majority of
households that they service, their tap water is potable. In other words, you can drink the water straight from the faucet.
So how many of us do actually drink straight from the faucet? For low-income households, drinking straight from
the tap is something that they would not think twice about. But as household incomes rise, tap water is quickly replaced
by alternate options of either bottled water or filtered water. Bottled water can come in the form of either neighborhood-
supplied gallon containers or store-bought water. Filtered water, on the other hand, can be had through any number of
installed home filtration systems ranging in price from a couple of thousand pesos to over a hundred thousand pesos!
We all need water, but we have hundreds of options on how to get it, each with its own pros and cons, and each
with its own particular price point.
Now think about this for a moment: Up to the 1980s the concept of buying drinking water, specifically for
households that had reliable tap water service, was practically unthinkable. Most of these Metro Manila households
simply took it as a fact of life that water comes from the tap. The only reason you should even consider buying water is if
vourfnucet was not working. Even then, the idea of buying bottled water, at several pesos per bottle, was considered
preposterous. Why buy via a bottle if you had relatively cheap running water in your home? If your tap water was of
suspicious quality, you boil it and that was it that.
The turning point of this cultural mindset toward water happened in the early 1990s when the city came into the
grip of a cholera epidemic. News reports of damaged pipes that allowed tap water to mingle with raw sewage led to a
sense of paranoia about the water supply. This led to the middle and upper classes migrating toward safer drinking water
options that resulted to the rapid growth of bottled water companies and, eventually, home water filtration systems.
We need water. That is a non-negotiable physiological need. But, in particular, we need safe drinking water
because we also have a need for safety.
Safety, of course, is an emotional need. The higher your disposable income, the more you will likely be willing to
spend to be assured of this feeling of security against the elements. Higher income households, for example, are willing to
pay a premium to live in gated communities that are monitored by security guards. Similarly, if you had the disposable
income, you would probably pay a premium for a higher priced water filtration system for your home that can give you a
peace of mind about the water that you drink. Even if your water service provider insists that tests show your tap water is
very safe to drink.
What would a premium price give you? As it turns out, water filtration is a complicated business involving many
different parameters and outcomes. There is straight filtration which removes contaminants usually through the use of
activated carbon filters. There is also water softening which “softens” water by reducing the amount of calcium and
magnesium from the water. On the other hand, there is disinfection which kills bacteria via ultraviolet light. Lastly, there
is distilling which promises the purest possible water through a high energy evaporative process.
All of these processes, of course, lead to the same outcome of “safer” water. But the consumer’s budget could
determine how many of these features would be incorporated into the system of choice.
In the mid 2000s, a new health fad emerged: alkaline water. Supporters of alkaline water claimed that the
alkalinity in this particular kind of drinking water made it more compatible with the human digestive system, leading to
quicker absorption and better health. Sales teams hawked alkaline water filtration systems at prices that were astronomical
compared to that of regular water purifiers. As it turned out, those who did buy these alkaline dispensers had not one, not
two, but three needs: the physiological, safety, and better health, which was part of something called “self-actualization”
or self-development. Because these devices addressed three important needs, the buyers felt that it was worth it.
In 1943, psychologist Abraham Maslow proposed a hierarchy of human needs that eventually and popularly came
to be represented as a pyramid, with the most basic needs set at the bottom (Maslow 1943):
The premise behind Maslow’s Hierarchy of Needs Theory was that the most basic needs (represented as the
lower levels of the pyramid model) must first be met before the individual can feel a strong desire for the higher level
needs. Thus, before you can even think about being respected by your peers (love/belonging), for instance, you must first
be assured of food, shelter, clothing (physiological) and that nothing untoward Maslow's Hierarchy of Needs happens to
you as you go to, from, and around the school (safety).
What does the model say about people who, for instance, go on hunger strikes to protest an idea? The model says
that these people have gone way beyond fulfilling their physiological needs for one thing, to the point that they can stifle
any hunger pangs through sheer willpower. Safety, love, and esteem are also no longer primary considerations-perhaps
because they have covered these long ago-and so they are now single-minded of purpose.
But while Maslow’s hierarchy seems to make a lot of sense, it is now considered a bit outdated especially when
human needs are viewed from an evolutionary context. Seen from a more anthropological and sociological perspective
needs are derived more from a complex mix of “subjective pleasure, social status, romance, and lifestyle... [Especially] as
a product’s mental associations become more important than its actual physical qualities” (Miller 2009). In other words,
often our needs and wants are fueled more by what the products signify rather than their actual forms.

So consumers can have a multitude of needs. But what do consumers want? First, let us distinguish between a
need and a want.
 You need safe water, but you want ultraviolet technology that would kill those pesky bacteria. You need to eat,
but you particularly want a double-patty cheeseburger.
Did you spot the difference?
Wants are the specific manifestations of needs. You need comfort, and you crave for (or want) a scoop of
creamy gelato and find it there. You need transportation, but in particular you want a classic Mustang convertible. You
need a writing instrument for communicating, but you want a Pelikan M640 Polar Lights Special Edition fountain pen.
Admit it, you want a lot of things. It is the net result of a consumerist culture. You want specific brands of clothes,
you aspire for particular high-end gadgets, and perhaps you want to travel to a number of exotic destinations. These are all
wants because they are specific manifestations of your various needs.
Now, if you want something and you actually have the money to buy it, then this want now becomes a demand.
Demands are wants that are backed by purchasing power. Without this purchasing power, a want is simply something on
someone's wish fist.
A homemaker may aspire for an expensive home water distillation system. But if the household does not have the
budget for it, then they may just settle for a more practical and conventional carbon filtration system or maybe just
ordering jugs of filtered water from the neighborhood supplier.
What does this tell us? Often, what the market buys is not a reflection of what they really want, but rather it
reflects what they can afford at the moment.
This is quite evident in the sad reality that in many poor households, proper nutrition is compromised when the
parents substitute low-cost instant noodle packs for more nutritious fare. Thus, “beef bulalo” flavored instant noodles, for
instance, becomes the viand instead of an actual beef bulalo. This allows the parents to stretch their meager budgets, but it
comes at the price of their children’s nutrition. They may want the real thing but due to limited finances, they opt for the
more “imaginary” fare and this is where their demand goes to.
The next time that you find yourself about to buy something, stop for a moment and review your purchasing
process. You have the purchasing power to acquire that something. But what are the needs that propelled you to select this
particular item in the first place? What would you really have wanted if you had the budget? What needs would that have
satisfied?

Group Assignment
The New Beverage Project

Your group is to design a new beverage for the consumer market. It can be anything-cola, tea, juice, or alcoholic-
but the most important element that you would want to focus on is its ability to address the needs that particular consumer
may have. Present your product proposal and explain what needs you seek to address.

POST ASSESSMENT

How did your group strive to create value for your peso bill?

Criteria Details Total Pts. Your Pts.

Creativity How innovative is the product proposal? 15

Likeability How marketable is the proposed product? 15

Needs addressed How relevant are the needs that the product seeks to satisfy? 20
 Total 50

SELF ASSESSMENT
How well did you comprehend the topic?
YES NO
1. Could you now explain the difference between a need and a want? [] []
2. Can you now explain Maslow’s Hierarchy of Needs? [] []
3. Do you now understand how products satisfy portfolios of needs? [] []

Exercises

I. Discussion
1. Give two examples each of popular brands across these three different categories: (a) sneakers, (b)
automobiles, and (c) junk food. For each of the identified brands, what emotional need does each seeks to
satisfy? Discuss, critique, and analyze.

Sneakers Need satisfied How/Why

Automobiles Need satisfied How/Why

Junk food Need satisfied How/Why

 2. Think of a very expensive product that you aspire to have. Assuming that you do not have the budget for
this, think of a cheaper alternative. Now, imagine buying this cheaper alternative and having it with you
right now. Are you happy with it? Are you contented with it?

Aspirational Product

More economical alternative

How do you feel about having more economical

alternative? Explain your feelings.

3. Imagine now finally having the budget for buying the original expensive item that you wanted. Will you
still buy it even if you already have the cheaper substitute? Go through your decision process point by
point. What needs are you actually satisfying?

Will you still buy the expensive item?

If yes, why?
If no, why not?

What needs are you actually satisfying?

II. Application and Advancement

Knowing what you know by now……

1. Explain why there is a multitude of different types of shampoos in the market shelves, many of which are from
the same manufacturer.

2. Speculate on how specific products can communicate their effectiveness in satisfying a particular need. Use a
popular brand of product as an example.
3. Discuss how much a consumer must spend in order to satisfy a particular need. Is a need ever satisfied, or will the
state of felt deprivation last for life? Simulate this by using a hypothetical character who has particular needs.