PRINCIPLES OF MARKETING

S.Y. ‘23 - ‘24 | Prof. Adrian Salazar

● Abraham Maslow developed a

1.0 MARKETING CONCEPTS theory called the Hierarchy of
Needs:
● MARKETING comprises different ○ Physiological needs - basic
activities that aim to address the needs needs for survival
and wants of potential customers in ○ Safety needs - people need to
various ways. feel secure once they satisfy
● According to the American Marketing their basic needs
Association (AMA), marketing is the ○ Social needs - no man is an
activity, set of institutions, and island, they need to feel a sense
processes for creating, communicating, of belongingness.
delivering, and exchanging offerings ○ Esteem needs - people need to
that have value. feel respected and confident

1.1 about themselves

Marketing Mix
○ Self-actualization - the need
The marketing mix is composed of
that drives people to maximize
the four elements also known as the 4Ps:
their full potential as human
product, price, place, and promotion.
beings
Wants are needs that are shaped by
● PRODUCT - creating value
culture and individual personality.
Products are tangible goods meanwhile
Demands are wants that are backed
services are intangible benefits performed by
with buying power.
people or machines.
● PRICE - capturing value 1.3 Marketing Process
● PLACE - delivering value 1. Analyze the marketplace and
● PROMOTION - communicating value understand customer needs and
wants
ADDITIONAL INFORMATION 2. Design customer-driven marketing
strategy
The Extended Marketing Mix
3. Formulate an effective marketing
● PEOPLE - includes all the members of a
business organization who take part in program
the delivery of service to customers 4. Build profitable relationships and
● PROCESS - how the service is establish customer loyalty
delivered to the customers
5. Capture value from customers to
● PHYSICAL EVIDENCE - a material
received by customers that shows earn profits in value exchange
delivery of service created for customers

1.4 Evolution of Marketing

1.2 Needs, Wants, & Demands Approaches
Need is defined as a state of felt Different Marketing Approaches
deprivation. Production Sales Market

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 PRINCIPLES OF MARKETING
S.Y. ‘23 - ‘24 | Prof. Adrian Salazar

Era
information, entertainment, and
Mid-19th First half of 1950s and
Century 20th onward interaction.
Century ● SAVVY CUSTOMERS - customers
become knowledgeable and
Focus Superior, Aggressive Catering information is just a click away from
innovative advertising needs &
being found
product & selling wants
● RAPID GLOBALIZATION - changes the
competition scene as companies from
1.5 Corporate Social Responsibility foreign countries compete with local

Most businesses understand that businesses.

looking after society’s long-term best

interests and welfare will deliver 2.0 ASSESSING COMPETITIVE
sustainability for the organization. ADVANTAGE

Dr. Archie B. Carroll’s Pyramid of

2.1 The Mission and Vision
Corporate Social Responsibility:
1. Philanthropic Responsibility - ● MISSION - a statement of the
companies strive to give back by organization’s purpose and what it
contributing resources to the wants to accomplish in the bigger
community or improving the quality environment.
of life of others. ● VISION - is the company’s long-term
2. Ethical Responsibility - a company goal. It states where the company
that does what is right, just, and fair would want to be in the future.
beyond just following what is 2.2 The Marketing Environment
dictated by the law
3. Legal Responsibility - when a The marketing environment
company obeys the laws and consists of two types of
observes legal practices environments: the
4. Economic Responsibility - creates microenvironment and the
jobs for the community and macroenvironment.
contributes useful products for the
good of society. MICROENVIRONMENT
1.6 The Changing Marketing ➔ Include the immediate factors that
Environment influence the company’s
performance and day-to-day
The following are examples of
operations.
developments and challenges that
➔ The different components of the
companies face in marketing their products:
microenvironment are:
● DIGITAL AGE - has become an
◆ Company Management - mainly
indispensable part of people’s lives. It
focus on the decision-making of
has become a vital source of
the company.

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PRINCIPLES OF MARKETING
S.Y. ‘23 - ‘24 | Prof. Adrian Salazar

◆ Suppliers - provide the ● Citizen-action public -

resources and materials needed NGOs, NPOs

by the company to manufacture ● Local public - people within

the immediate community
goods
where the company is
◆ Intermediaries - entities that
located
help get the company’s products
● General public - anyone
to its final consumers. These are who knows the company
advertising firms, research ● Internal public - consists
companies, media of the company’s
organizations, etc. employees
◆ Customers - an integral part of
the microenvironment. There are MACROENVIRONMENT
FIVE kinds of customers: ➔ Refers to the external and
● Consumer market - uncontrollable factors that affect the
individuals & households whole industry.
● Business market -
➔ The different components of the
production materials
macroenvironment are:
● Reseller market - reselling
◆ Demographic - quantitative
for a profit
● Government market - buys information on the human
to provide public service population such as age, gender,
● Global market - foreigners income, religion, educational
◆ Competitors - offer products attainment, etc.
belonging in the same product ◆ Economic - factors that affect
category or industry. There are the purchasing power and
TWO kinds of competitors: spending patterns of consumers
● Direct Competitors - ◆ Natural - consists of changes in
companies offering the the physical environment and
same products as you natural resources
● Indirect Competitors -
◆ Technological - can help
serve the same customer
marketers gather data and
needs but offer different
information, conduct business
products.
online, enjoy advancement in
◆ Public - any group of individuals
production, etc.
that has an actual or potential
◆ Political - includes laws and
interest in the company
● Financial public - banks, legislation regulating
lending institutions, businesses, government rulings,
stockholders and other factors
● Government public - ◆ Cultural - a particular set of
government agencies value systems based on their
● Media public - TV, radio, culture, beliefs, and religion
print, new media agencies
2.3 Strategic and Tactical Planning

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PRINCIPLES OF MARKETING
S.Y. ‘23 - ‘24 | Prof. Adrian Salazar

STRATEGIC PLANNING c. Threat of new entrants - time

➔ Companies conduct this type of and cost involved to enter the
planning to define their long-term market, requirement for specialist
goals. knowledge, cost advantages,
➔ Upper management analyzes the barriers to entry
current situation, studies the d. Bargaining power of buyers -
industry, monitors the movement of number of customers, differences
the economy, and understands the between competitors and how
capabilities of the company. easily customers can switch
among them, price sensitivity
TACTICAL PLANNING e. Bargaining power of suppliers -
➔ Focuses on short-term specific number of suppliers, uniqueness
actions to bring the company closer of products/materials being
to established strategic plans. supplied, a company’s ability to
➔ It details what needs to be done, by substitute a raw material
which department, and the tools or
facilities needed to achieve the
3.0 ROLE OF RESEARCH IN
company’s goals
MARKETING

There are several methods that companies

use to conduct a situation analysis: 3.1 Utilizing Marketing Insights
1. PEST Analysis (Political, Economical,
To enable companies to provide
Sociocultural, Technological) - mostly
well-suited products and successful
covers the macroenvironment of
marketing campaigns, they must utilize
marketing, helps a company identify
available data regarding their target market.
opportunities and threats in four major
Digital technologies can help
areas.
companies to gather and analyze data.
2. Porter’s Five Forces Analysis - Michael
EXAMPLE: Social media can help track
Porter, a Harvard professor, developed
consumer trends and preferences by the
the five forces model to analyze the level
consumers’ posts on social networking sites.
of competition is, and how attractive the
industry is. This is important in building a good
a. Rivalry among existing relationship with customers, it also increases
competitors - number of customer loyalty and a positive brand image.
competitors, customer loyalty,
quality differences ● MARKETING INFORMATION SYSTEM (MIS) -
b. Threat of substitute products - consists of people and procedures that
cost differences, availability of assess the information needs of the
substitute products, convenience company and produce the needed
of buying substitute products information that allows the management to
make an informed decision.

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PRINCIPLES OF MARKETING
S.Y. ‘23 - ‘24 | Prof. Adrian Salazar

interpretation, and reporting of

3.2 information to help marketers find
Evaluating Marketing
marketing opportunities, segment their
Information Needs
markets, and make informed marketing
MIS may also provide needed data to
decisions (Pride and Ferrell, 2016).
trade partners such as suppliers, retailers,
resellers, and marketing agencies.
THE RESEARCH PROCESS IN MARKETING
1. Identify the RESEARCH PROBLEM and
EXAMPLE: The Marketing Department
OBJECTIVES
may need to know about the discussion on
2. Develop the RESEARCH DESIGN
social media about the company’s poor
3. Collect DATA
customer service. The MIS must be able to
4. ANALYZE data and INTERPRET
provide the management with valuable
RESEARCH FINDINGS
insights and do ‘damage control’ to protect
5. Prepare RESEARCH REPORT
the reputation of the company.

● EXPLORATORY RESEARCH - its

3.3 Collecting Marketing objective is to collect additional
Information information to understand a certain
problem and to suggest hypotheses
● INTERNAL DATA - can be obtained by about the problem.
collecting consumer and market EXAMPLE: Determining an endorser for
information electronically. By card your brand
information, a company can monitor a ● DESCRIPTIVE RESEARCH - describe
consumer’s amount purchased, or understand the characteristics of
frequency of shopping, items bought, the target market of a product.
and other information. It can be EXAMPLE: A company would like to know
accessed and processed more quickly the typical ballpoint pen consumption
and cheaply than other information behavior of students — when they use it
sources. what they use it for and the features they
● COMPETITIVE MARKETING look for in a pen.
INTELLIGENCE - the systematic ● CAUSAL / EXPERIMENTAL
collection and analysis of publicly RESEARCH - a type of research that
available information about consumers, aims to test the hypotheses in a
competitors, and developments in the cause-and-effect relationship.
marketplace. This involves monitoring EXAMPLE: A fast food company may
consumer behavior and competitors’ study the effects of increasing the price of
activities. their fried chicken. Will consumers still buy
● MARKETING RESEARCH - the process of it? Will the demand decrease? Will people
planning, collecting, and analyzing data patronize its competitors instead?
relevant to marketing decisions (Lamb,
Hair, and McDaniel, 2012). It is also the Secondary data includes internal data and
systematic design, collection, external data which are collected by an

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PRINCIPLES OF MARKETING
S.Y. ‘23 - ‘24 | Prof. Adrian Salazar

outside organization such as population Customer Satisfaction - the customer’s

statistics, published articles, and commercial evaluation of the performance of the product
data being sold by research companies. or service about his or her expectations.
EXAMPLE: If the customer buys X, they
Types of Data Gathering Procedures will expect that their skin will be whitened
1. Online surveys and moisturized. Their expectations will be
2. Telephone surveys based on what the advertised promises.
3. Mail surveys They will be satisfied when the expectations
4. Personal interviews are met but will be disappointed if not.

DATA ANALYSIS - involves a careful Customer Retention - is the company’s

examination of data and the drawing of effort to build and maintain loyalty of
conclusions. customers

RESEARCH REPORT - a formal written Why do companies want loyal customers?

document submitted to the management of ● Loyal customers buy more products
the business organization or to the office ● They are less price sensitive
that requested for the research to be done. ● They spread positive word of mouth

4.0 CUSTOMER RELATIONSHIP 4.2 Relationship Development

MANAGEMENT Strategies
Companies need to exert effort to
satisfy the needs of their customers and
4.1 Relationship Marketing
encourage them to keep on purchasing.
➢ Is a strategy that concentrates on
keeping and improving relationships THREE Factors Affecting the Rationale of
with existing customers. Companies’ Strategies in Keeping Customers
1. Core Service Provision - includes
Customers are the lifeblood of every
service foundations that are built
business.
upon the delivery of excellent

Customer Value - the customer’s perception service. To do so, the company must

of the benefits that he or she gets from a be able to satisfy customers by

product or service, about the price paid to meeting their expectations about a

obtain those benefits. product.

EXAMPLE: Choosing between brand X EXAMPLE: When a customer buys

and Y, you weigh the benefits of buying X cheap shoes, they expect it to not last long.

(whitening, moisturizing) versus soap Y Compared to buying well-known expensive

(moisturizing) about their prices (X = 15php, shoes, they expect it to last long because of

Y = 12php. its price and the popularity of the brand.

2. Switching Barrier - it is the
economic and psychological
difficulty perceived by the customers

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PRINCIPLES OF MARKETING
S.Y. ‘23 - ‘24 | Prof. Adrian Salazar

if they switch from one brand to and different terms of payment. Their
another. relationship grows and the tailoring may
EXAMPLE: A student in Grade 9 will find provide additional incentives as discounts to
it difficult to shift schools because it would the school for loyalty.
be hard for them to build new friendships or
4.3 Relationship Development
to cope with the lessons in the new school.
Stages
3. Relationship Bonds - retention
1. Customers as STRANGERS
strategies that keep the customer
➔ It is the starting relationship with its
buying the same brand.
customers. Its marketing goal is to
This strategy has FOUR levels:
a. Financial bond - these are
acquire customers and earn confidence.
➔ This can be done by advertising, social
financial incentives that he/she
media campaigns, sales promotions,
may receive from the company in
product trials, and other promotional
the form of discounts, lower
activities.
prices, or rewards points, loyalty
2. Customers as ACQUAINTANCES
cards, etc.
➔ His stage is all about satisfying them.
b. Social bond - focuses on the
Customers try out products of the
interpersonal relationship
company and invest a little by buying a
between the company and the
product or two.
customer. It can be a hairstylist,
massage therapist, or even
➔ Companies should avoid mistakes
because their relationship is still fragile. A
doctors.
customer may ask a lot of questions and
c. Customization bond - customers
doubt effectiveness but is still willing to
are allowed to avail of tailored
risk.
services to fit their individual
3. Customers as FRIENDS
needs. This bond is the
➔ Customers who are satisfied with the
combination of both elements 1
company’s products and services will
and 2 because of incentives
resulting from social bonds.
develop loyalty.
➔ The company’s goal is to retain customers
EXAMPLE: In the form of simple
through different marketing activities. An
customization or allowing wet market suki to
example of this is baristas remembering a
get the best parts of the meat.
loyal customer’s usual order.
d. Structural bond - all THREE levels
4. Customers as PARTNERS
are combined to deliver services
➔ It is the last stage of their relationship.
that fit the needs of the customer.
Companies enhance their relationship to
This may apply to
ensure that they will always choose to buy
business-to-business
from them and not from the competitors.
transactions.
➔ Could be done by loyalty programs, the
EXAMPLE: A tailoring company that is
customers also provide value by creating
the official provider of school uniforms
good word of mouth.
provides punctual delivery, customizations,

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 PRINCIPLES OF MARKETING
S.Y. ‘23 - ‘24 | Prof. Adrian Salazar

Summary of Customer Relationship 4. LEAD - unprofitable customers who

Development Stages only spread negative word of mouth.
They require attention but give very
EVOLUTION STAGE
little business to the company
Stranger Acquai-n Friend Partn-
4.4 The Changing Landscape of
tance er
Customer Relationships
Market Acquiring Satisfying Retaini Enhan Here are trends that are shaping the way
ing ng cing
companies and customers relate to each
Goal
other:
Market Advertisin Superior Consist Incent ● RELATING WITH CAREFULLY SELECTED
ing g customer ency, ive CUSTOMERS
Activit service & special progra Not all customers are worth a
ies product offers ms,
company’s marketing efforts, so it is
quality privile
only natural for companies to focus
ges
their effort on those that they can
build a profitable relationship with. For
4.4 Customer Relationship example, credit card companies ask
Management (CRM) initial questions to evaluate whether
they need their services.
➢ Now being utilized by companies to
● BUILDING A DEEPER AND MORE
enhance their relationship with their
INTERACTIVE RELATIONSHIP
“partners”, or customers who have
When profitable customers have been
become loyal to their products.
identified, companies build a deeper
➢ A simple CRM program may involve
and more meaningful relationship with
manual monitoring of rewards, such
them. Instead of using marketing by
as giving stamp cards.
intrusion, they apply marketing by
attraction which is by creating
CUSTOMER PROFITABILITY-FOCUSED
marketing offerings that involve
MARKETING PYRAMID
instead of interrupting consumers.
1. PLATINUM - heavy users and are not
● CONSUMER-GENERATED MARKETING
price-sensitive. They may buy often
Mobile apps and websites now
big purchases, and would not care
encourage consumers to generate
whether they are getting discounts.
their content. For example, a mobile
2. GOLD - heavy users but
app focusing on restaurants
price-sensitive. Buys in bulk but only
encourages members to post their
when they can enjoy discounts and
own dining experiences in the said
promos.
restaurant. It develops a sense of
3. IRON - regular customers but
community among the members of the
purchases may not merit special
application.
treatment

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