CHAPTER 4: LET THE

MARKET KNOW YOU BETTER

Group 4
 7 P’S

positioning product packaging

place people promotion price
In the context of a marketing battle plan, it has three
overlapping objectives
Enterprise Perspective

Scans the market environment and decides to position

itself with products that specifically address the needs of
a chosen target market.
Competitive Perspective

The enterprise has to differentiate and distinguish itself

from its competitors.
Customers Perspective

Positioning is the way the customers perceive the

enterprise and its products or services in their minds
 remember

The stronger the overlap is in these three perspectives, the

more defined the positioning of an enterprise is in the
market place.
COMPETITIVE LANDSCAPE
 LATITUDE
Lays out what is important to the different customer
segments from their differing points of view. Certain
customers may claim that what is important to them are the
quality features and functionality. Other customers may be
looking for style, design, and aesthetic appeal. There would
be customers who do not have the purchasing power to
afford any of the above quality definitions they would buy
lower -priced products with lesser quality.
 LONGITUDE

Represents the product features and attributes of

competitors in the marketplace. Most competitors would
be offering product features which the major customer
segments want to buy. A few will focus on niche
customers who are not in the mainstream.
 remember

The latitudinal and longitudinal dimensions will draw the

parameters of the map, locating both the customers and
the competing enterprises in their respective positioning.
 LONGITUDE
LATITUDE
Is the tangible good or intangible service that the
enterprise offers to its customers in order to satisfy their
needs and to produce their expected results. Products are
often identified with their brand names to distinguish
them from other products in the market. Some products
have built up so much loyalty to the point that their brand
names have become their best selling proposition.
 THERE ARE FOUR GENERAL TYPES OF
PRODUCTS THAT ARE MARKETED BY
ENTERPRISES:
1. Breakthrough products
• Offer completely new performance benefits. They may double the
performance at half the cost. They may be much more convenient
and easy to use. They may cater to a unique set of customer needs
that have not yet been trapped. They may create a new demand.
Marketing breakthrough products need a higher level of customer
education and orientation.
Common examples of breakthrough products are borne out of the
biotechnology field particularly in terms of coming up with new
vaccines to protect people from certain viruses.
Differentiated products try to claim a new space in the
mind of the customer different from the spaces occupied
by existing products. The performance benefits may be
close to existing products but there would be additional
benefits on special aspects of the product.
Copycat products will not make much impression on the
consumer’s mind. The marketer should make up for this
lack of mental space by offering more physical space in
the shelves ,lower prices, easier access, promotional
freebies, and the like aggressive advertising may add to
market demand but a greater cost than the leading brands.
Niche products do not intend to compete directly with
the giants. They are products with lower reach, lower
visibility, lower prices, and lower top of mind. They are
content to play minor rules in specific and smaller
market segments.
There used to be a time when products came wrapped in ordinary
packaging that prominently displayed the brand name, the main attributes
of the product, the company’s logo, and its place of business. Packaging
came in a small, medium, and large sizes without much variation in the
material, shape, and purpose of the packaging. That is a time long gone.
Today, packaging serves several important purposes, which elevate it to
one of the seven P’s of marketing.
First, packaging identifies the product, describes its features and benefits,
and complies with government rules on specifying its contents, weight,
chemical composition, and potency. Packaging provides easy brand
identification for the customers.
Second, packaging differentiates the product from its competitors and
even from its other brand offerings. For example, liquor brands
differentiate their premium scotch and brandy offerings by packaging
them in ceramic bottles.
Third, packaging lengthens the lifespan, physically protects, and extends
the usefulness and the product. Vacuum-packed or aseptically packaged
products prolong the shelf lives of many food and beverage items. High-
tech packaging protects fragile and sensitive products like crystal
sculptures, laptops, precision tools and the like.
Fourth, packaging has become an environment issue by itself. Many packages are discarded
after the contents have been taken out. This generates waste and poses packagers and
customers alike.
Fifth, the aforementioned purposes of packaging have increased the cost of packaging and,
therefore, the price of the product. To counteract this, the packaging must possess its own
value proposition for the customers as well as for the enterprise. For the customers, they may
put some premium on environment-friendly packaging. Customers may even be able to
convert the packaging were exchangeable for cash. Some packaging are so beautiful, they can
create their own value as collectibles.
 remember

Packaging does not refer only to the wrapper or container

of the product. It can mean the bundle of products or
services that are put together to attract and delight
customers. It can also mean the terms and conditions
attached to the sale servicing of the product.
“ Location. Location. Location.” this is the often-recited
mantra of salespeople who wan to have the best access to
their customers. Although finding a good location proves
to be challenging, even more challenging the potentials of
that location.
 INITIAL LOCATION SCREENING
In finding a good location, one needs to consider the following:
1. The number of customers residing of working in the areas, and the
number of customers who frequently pass through the area.
2. The density or number of customers per unit area.
3. The access routes to alternative locations and their traffic count in
those routes.
4. The buying habits of customers or where they buy, at what time and
how frequent.
5. Locational features such as parking spaces, foot access, creature
comforts, and the like
In similar way, the entrepreneur must be able to determine the price that
comes with the location because it will spell out the success or failure of
the business. The entrepreneur has to consider the following:
1. The cost of buying or renting, renovating and operating the location.
2. Customer volume, drop in rates ( what percentage of customers, traffic
would stop by the store) in sales conversion ratios ( what percentage of
drop ins would actually purchase something from the store).
3. Revenues based on the volume and mixed of goods and services
expected to be sold at certain prices.
4. Profits.
In addition to the above factors, the final choice of location must
be based on the following:
1. Image and location conditions. This differs to the physical
look of a location, sanitary conditions, crime and safety levels
etc. the reputation of a location is also important. For
instance, would it be better to put up your store in an upscale
shopping mall or in a low-end “ tiangge” or flee market?
2. Exact fit to target customers. Is the location traffic
generally composed of your target customers?
3. Clustering of competitor establishments. This oftentimes
results in drawing a bigger market to the location.
4. Future area development. A certain location might not have
the most customers or the best economics in the short term,
but it might become a central business hub within the next
five years. Watch out for signs of development like a
construction boom or a anew shopping mall nearby.
5. Fiscal and regulatory requirements. An entrepreneur would
want to set up shop in a town or city with low tax rates, good
governance, excellent infrastructures, and great public
services.
Itwould benefit the entrepreneur to do an in depth location analysis. The
entrepreneur can make use of the following relevant location drivers for
location selection. These are the ‘musts’ in choosing the location for your
business.
1. Physical Proximity to Target Market
For most entrepreneurs, locations are chosen based on how close it is to
the target market. Ideally, the best locations should be easily accessible
from home or the workplace. However, physical proximity is not always
important. F0or instance, most parents will send their kids to the nearest
elementary or high school. However, when it comes to college, most
students wouldn’t mind to a faraway university if it means getting the
best education possible in the course of their choice.
2. Customer Traffic Flow
Customer traffic flow refers to the people that regularly come
into contact with your business establishments. Your shop might
not be near to customer’s homes or workplaces, but it might be
situated somewhere along their daily routes. Higher traffic flows
mean higher drop-in rates for stores along the traffic route.
Important data to research include daily volume of people and/or
vehicles passing through , as well as information on the “peak
hours” and the “ slow hour”.
3. Industry Clustering
A lot of competitors clustered in one location usually draw on a bigger
market to the area. Three stores side-by-side offer more choices to
customers than one stand-alone store. The downside is that clustering
also results in fiercer competition. As such, some entrepreneurs prefer to
establish a monopoly far away from competitors.
4. Convergence od multiple Industries
Locations where multiple industries converge, such as central business
districts, shopping malls and public markets are able to attract more
customers because of one-stop shopping convenience. But again,
competition is usually strong in such areas.
5. Population Concentrations.
Urbanization creates population concentrations. Where people
live, goods and services follow. The greater number of people,
the greater thenumber of needs and wants to be satisfied. Simply
put, the more populous the location is, the greater is the
oppurtunity for business and profit.
6. Activity Hubs
Activity hubs such as large schools, high-rise buildings, public
parks, transport terminals, and entertainment centers provide
good location potentials for food establishments and client-
specific services.
7. Growth Potential
Business are always looking for new areas to expand and grow.
This is especially the when crowded population centers become
saturated with many providers of goods and services. Hence, the
new development site will e natural greener pasture for early
locators. The early locators will catch the early customers.
8. Business Climate
Enterprises prefer locations that are conductive in doing
business. This includes areas with:
• High economic growth
• Stable political situation
• Effective social services
• Good infrastructures
• Cheap utilities
• Efficient transportation and logistics
• Availability of skilled labor force
• Low crime rates
• Good fiscal incentives
• Trusted public officials
9. Cost of Doing Business and Producing Goods and Services
For industrial establishments, the more relevant criteria are those
locations with lower cost of doing business and lower cost of
producing goods and services. Hence, these industrial
establishments would prefer locations outside the main
population centers but with government-supplied amenities.
Cooperative Location Analysis
Perhaps the most common way by which an entrepreneur ‘surveys’ a potential
locations is through comparing it with other locations with more or less the same
features and tenant mix or clusters of competitors. These locations must have that
‘extra something’ that makes competitors fight for a store space within the same area.
Keen observation is required for an entrepreneur if he or she wants to draw several
insights from these favored locations.
Geography and Atmospheric Determinants
Another way of looking at a location or place to sell the product or service can be
based on two major place determinants: geography and atmosphere. Within each
determinant, there are extreme opposite qualities that create a dilemma for the
entrepreneur. To better understand what these dilemmas are, let us take a look at each
one of these determinants.
For the geography determinant, there are six decision

1. Concentration versus Destination

2. Access versus Abundance
3. Clustered versus Dispersed
4. Developed versus Underdeveloped
5. Physical versus Virtual
6. Upscale versus Downscale
 remember

It is natural for entrepreneurs to prefer places where

there is large concentrations of target customers (e.g.,
commercial centers, malls). Nowadays, modern
transportation means and the longing to be relieved from
city living-related stress have paved the way for
destination places.
People are the ultimate marketing strategy. People sell and push
the product. People search hard to find the right market. People
distribute, promote, price, and sell the products in the most
attractive market places. People aim to please the customers
have bought the product. People are the regular contact points
between the enterprise and its market.
The people in marketing organization play a crucial role in the
success of the enterprise. At one end of the spectrum, they are
conducting the market and consumer research that would lead to
the development of product(s) and the formulation of the
marketing strategy. At the middle of the spectrum, they are
devising the market plans and programs that would be translated
to the specific elements of the marketing mix. At the other end of
the spectrum, they are contacting, reaching, and convincing
customers to buy the product(s).
The marketing efforts of people are organized at four levels:
1. To create customer awareness;
2. To arouse customer interest;
3. To educate customers as to evaluate their buying choices; and
4. To close the sale and deliver the products.
To arouse the interest of customers, the enterprise can use
several people or organizational modalities.
First modality- is to outsource the people from advertising
agencies, events management outfits, call centers, and
telemarketers.
Second modality- is to build in-house capabilities by hiring
market researchers, brand managers, salespeople, public
relations officers, website writers, orchestrators, etc.
Third modality- is to collaborate or enter into partnership with
principals, distributors, dealers, and industry associations.
Educating customers in their evaluation process requires the
enterprise to know the customer’s decision-making process.
1. What and who are involved in the buying process?
2. Where are the customers in the buying process? Are they still
canvassing and “shopping around”? Are they currently
focusing on a few candidates? Are they seriously evaluating
the company’s product?
3. What are the next steps of the customers and how can the
company facilitate their next steps? What else do the
customers need to know and what issues must be addressed
by the market?
 Consumer Evaluation Process
INITIAL PROCESS
• Comparison of product
features and probable results
by:
- Window shopping
- Internet browsing
- Brochures collection and
comparison
- Asking friends and relatives
• Word of mouth feedback
• Gut reaction
MID PROCESS FINAL PROCESS
• Customers who have tried the • Tastes test
products before • Physical demo
• Professional evaluator’s • Free trial period
guidebook on competing • Money-back guarantee offer
products
• Testimonials from credible
endorsers
• How often others are seen
actually using the product or
services
Finally, the sale must be closed and the products should be
delivered to the customer. Closing the sale demands that the
product be available, adequate, acceptable, and affordable.

Availability means that the enterprise has the goods or services

on hand. Accessible means that the customers can easily get the
product from their usual buying places or the products can be
conveniently delivered to them. Adequate means the product
meets the quality and delivery specifications of the customer.
Acceptable means that the customer is convinced by the selling
points of the product, finds very little or no objectionable
features in the products, and accepts the conditionality,
warranties, and amenities given by the seller. Affordable means
the price and terms are right.
The organizational modality to educate the customers, help them
in their decision-making process, and to close the sale would
depend on four variables.
1. Is there a need for high contact (face to face) or will low
contact (Internet) be sufficient?
2. Is their a need for high accessibility? If so, the company
requires distributors, dealers, branches, and franchisees to
expand their reach. Alternatively, they need a very fast,
reliable, and economical delivery system.
3. How heavy or light is the transaction cost? High transaction
cost products need new competent people to sell them.
4. Does the customer need a lot of sale servicing and after-sales
servicing.
Promotion is the explicit communication strategy adopted
by an enterprise to elicit the patronage, loyalty, and
support not only from its customers but also from its
other significant stakeholders.
Promotion encompasses all the direct communication efforts of
the enterprise, such as advertising, public relation campaigns,
promotional tours, product offerings, point-of-saale displays,
website, flyers, emails, letter, telemarketing, and others.

Effective promotion depends on three critical factor:

The credibility of the communicator; the message and the
medium of the message; and the receptiveness of the audience to
all that is being communicated.
Before crafting promotion and communication strategy, the communicator
must profile the target audience very well.

For business promoter, it is important to get very positive emotional

reaction from the target audience. All messages must make an impact on
the target audience-sensory, emotionally, and intellectual impact at that.

In developing a promotion campaign, the enterprise should start with the

target audience in mind.
At the beginning of its operations, the enterprise may have a very limited
market to cover. The narrower the market coverage, the more focused the
promotion campaign should be.
As then targeted audience becomes bigger, then marketer can shift to a
shotgun approach. Electronic mails, websites, letter blasts, radio
broadcasts, and print ads in certain publications might serve the purpose.

For mass markets, television commercials, ubiquitous billboards, and

high-circulation broadsheets, magazines or tabloids would already be cost
effective and create quite an impact.
Pricing depends on the business objectives set by the enterprise.
While price is a major factor for the customer in buying a
product, it is not the only factor such as in the case of buying
premium products.
Non-price factors outweigh the price factor whenever a customer
is buying a premium item because he or she is more particular
about the ‘premium-ness’ in terms of quality, the status or image
that the product brings, shorter waiting time or immediate delivery, and
other such decision criteria.

The enterprise should set the prices of its products or services based on its
business objectives such as the following:
1. Profit maximization
2. Revenue maximization
3. Market share maximization
4. Attainment of the desired prestige or quality leadership
5. Penetration, survival, or liquidation
6. Scarcity pricing or market skimming
7. Cost recovery
8. Subsidy pricing
9. Marginal pricing

The first three pricing strategies pertain to the related dynamics

of the different price ranges applied across different product
volumes or quantities while considering the product costs
incurred as these products are brought or sold.
 PROFIT, REVENUE, AND MARKET SHARE
PRICE MAXIMIZATION
VOLUME TOTAL TOTAL TOTAL UNIT COST
REVENUES COSTS* PROFITS
P 10 100 P 1,000 P 800 P 200 P 8.00

P 90 P 1,080 P 750 P 330 P 8.33

12
75 P 1,050 P 675 P 375 P 9.00
P
14 60 P 960 P 600 P 360 P 10.00

P 50 P 600 P 550 P 350 P 11.00

16

P
18

ASSUMING THE FOLOWING: FIXED COSTS EQUAL P 300;

VARIABLE COSTS EQUAL P 5 PER UNIT
The total revenues are computed by multiplying price with quantity as provided in the
third column. The total costs are computed in the fourth column, assuming fixed costs
of P 300, irrespective of the volume level, and variable costs of P 5 per unit. The fifth
column calculates the total profits.

At the price of P14 per unit, the profits are maximized at P375, compared to the other
price levels which yields lower profits. Unit cost is computed in column six in order to
illustrate as volume goes up.

The revenue-maximizing price is derived by multiplying the different prices by their

expected demand volumes.

Market share maximization is achieved by the price that obtains the highest volume of
sales possible without sacrificing too much profitability.in the same table, this market
share-maximizing price is P 10, with a volume of 100 units.
At this low price, profits are still realized. Perhaps a bigger volume can be
obtained at the lower price of P8 per unit. At this price level, a possible
demand for 110 units would produce revenues of P880 and total costs of
P850, yielding a miniscule profit of only P30. at this point, going for
market share might be sacrificing profits too much.

One market research approach in estimating the demand , given the

difference price levels, is to conduct a price tolerance survey of randomly
selected respondents.
As mentioned earlier, prices could be set at a premium to project
a quality image and to distance the product from its inferior
customers. The idea is to attract customers who are willing to
pay extra for the quality difference.
At the other end, prices can be set very low to survive in a
competitive market or to get rid of mounting inventories and
convert them into cash. The other objective of a low pricing
strategy is to penetrate the market fully and overtake the
competition.

Products that are very scarce or rare would appeal to wealthier

customers who wish to belong to an exclusive club of owners.
THANK YOU!