Marketing Management Process

Marketing process includes ways in which value can be created for the customers to satisfy their
requirements. It is an endless series of actions and reactions between the customers and the companies
making attempt to create value for and satisfy the needs of customers.

Exhibit 3C-1: Marketing Management Process

OPPORTUNITIES

MARKET SEGMENTATION

POSITIONING

MARKETING MIX

Opportunity Seeking

The ongoing process of considering, evaluating, and pursuing market-based activities that are believed
to be advantageous for the firm. Prior experience informs the process, but it may also limit it:
opportunity seeking calls for continuous reconsideration and adaptive learning

Exhibit 3C-2 Internally Generated Growth Opportunities

3 major way to seek

opportunities

Market penetration -Growth by having existing products in an existing market

(where similar product are already exist).

Product development -Growth by having new product in an existing market.

Market development -Growth by having an existing product, which may or may not
need some modification to enter a new market.
Other ways to grow:

1. Mergen and acquisition (M&A) - is the area of corporate finances, management and strategy dealing
with purchasing and/or joining with other companies. In a merger, two organizations join forces to
become a new business, usually with a new name.

2. Diversification - is a corporate strategy to enter into a new market or industry in which the business
doesn't currently operate, while also creating a new product for that new market.

Market penetration calls for expansion to reach similar customers. Here are some examples

• Membership shopping club S&R, with over 10 stores, has spun off their popular food service pizza into
S&R New york style pizza restaurant after S&R was bought by the puregold Group. The restaurant is
open to the public but S&R being a membership club allows their members to get a 5% discount
privilege. This allows S&R to have a presence even without the memberships club. S&R New York style
pizza even won Ayala's mall's Grand store of the year award, as well as Glorietta's store of the year
award in 2017.

•Chinese delicacies Egg bee Tin has their popular Ube hopia after the owner learned that Ube was the
best-selling ice cream flavor in a nearby Chinese grocery he used to frequently visit.

New products, especially those that can expand users and usage, acknowledgement as the source of
long term growth for any firm. New product must fit the company mission and strategy. This means new
products must either be related to the existing market such as having new, improved features, new
technology or brands or even new market. This is to increase the hold of the company on the existing
market or be the first mover in a new market.

Ex. Strategies for long term growth

• La Puneraria Paz a leader in memorial and mortuary services, has sister companies in caskets, as well
as memorial parks.

Opportunities for long term growth

•Wilson Lim the president of abenson, set up the waltermart community stores , after he was inspired
by the success story of Walmart while taking the owner president program course at Harvard in USA.
Market development concentrates on new market segment. An example is the food service market
penetrated by food companies like NutriAsia, Century Pacific and Del Monte in addition to their existing
consumer market. Selling to industrial markets like the food service industry is different from selling to
consumers because of differences in purchase decision criteria like availability of bulk packaging,
Technical advice, quickness of service, assured availability and profitability among others.

Exhibit 3C-3 Comparing Sales from Existing and New Product

Sales Profit
Existing products in existing market (Market penetration) P P

Existing products in new market (Market Development) P P

Subtotal from existing product P P

Add: New product P P

Total from all products P P

A company can easily compare the significant contribution of new products to their projected sales and
profit from existing product. This is assuming that the company's existing product will be acceptable 5-
10 years from now, which maybe rare now a days in our fast changing world.

Market segmentation helps the marketers to devise and implement relevant strategies to promote their
products amongst the target market. A market segment consists of individuals who have similar choices,
interests and preferences. They generally think on the same lines and are inclined towards similar
products.
Exhibit 3C-4: Key Questions for Core Strategy: Segmentation, Targeting and Positioning

Core Strategy What is it? Key Questions Examples: Waters Philippines

distributorship opportunity

Market The Partitioning of a How many partitions are  Creative startup with
segmentation market with fairly there in the market? adequate capital
homogeneous needs  Creative startup that are
venture capital funded
 Franchising business
owners
 Individuals wanting to
do business but without
adequate capital and
training
 Business owners who
have a hard time
surviving on thin
margins, price wars or
crowded marketplaces
 Street Vendors
Target market The set of fairly Which customer segment The struggling Filipino
homogeneous has the biggest potential breadwinners interested in a
customers the company for us to compete in? Who business with low capital
desires to serve should we target to win
market shares?

Product Communicating the What overall relevance Start a business easier, faster and
positioning relevance and and differentiation do we more profitable than a traditional
differentiation of a offer our target market? small business. Best training, high
brand and product to credit and management support,
the target market proven compensation and
incentive plan to include car
plans and 5-star foreign vacations

Examples of market segmentations:

 Greenwich targeted single, independent professionals in their 20s – “yindies”, as they called them
internally.

 ACS Manufacturing concentrated of their “Pride” detergent in the washing machine segment instead of
competing head-on with multinational players.

 Go Negosyo, orie of the advocacies of RFM president Joey Conception, focused on helping the micro,
small and medium enterprises (MSMEs) grow.
There are various ways to do market segmentation for consumer products, as show in exhibit 3C-5:

Exhibit 3C-5: Basis of Market Segmentation for Consumer Products

1. By needs and wants(or benefit)

2. By socio-demographics
3. By consumer behavior
4. By psychographics

1. Needs and Wants Segmentation

– A major way to segment a market is by identifying consumer needs and wants. An example is the
multi-million peso market for vitamins and minerals, which segments the market based on
“component”.

2. Socio-Demographics Segmentation

– Market segmentation most often starts woth demographics but demographics cannot be used alone
and must be used in conjunction with other segmentation types.

Exhibit 3C-6: Variables of Demographics Segmentation

-Age

-Gender

-Civil Status

-Income

-Education

-Profession

-Location

-Geographic

-Family Size

-Religion

-Nationality

-Climate
 3. Behavioral Segmentation

– Another method of market segmentation is by consumer behavior. Understanding customer behavior

has its obvious applications.

Exhibit 3C-7: Variables of Behavioral Segmentation

-Purchase Frequency

-User Status

-Usage Rate

-Loyalty Status

-Readiness

4. Psychographics Segmentation

– Psychographics Segmentation is concerned more with answers to questions such as “what you do”
(instead of “who you are”) and “how you spend your money” (instead of “how much you earn”). It is
more often used for creating advertising messages.

Exhibit 3C-8: Variable of Psychographics Segmentation

-Social Issues

-Personal Interests

Exhibit 3C-9: Psychographics Segmentation of the Snack Foods and Beverages Market in the
Philippines, Arranged from Most Stressed to Most Balanced Pace of Life

-Stressed & Stretched

-Whirling Weight Watchers

-Control Lackers

-Health Conscious Struggles

-Spartan Worriers

-Social Foodies

-Family Pleasers
Price segmentation

Marketers can always do benefit segmentation by price. Except for few categories such as those
provided by the government or the company, there will always be buyers who are quite sensitive
(whether in an economic slowdown or not) and buyer who are just the opposite, such as those wanting
superior product or service, especially in an economic boom.

Buyers of Home water purifiers are good example. In retail appliance stores such as Benson,
buyers who are sensitive to initial cost would buy low-cost brands such as __, Even if the filter cartridge
has to be replaced every 3 months. On the other hand, buyers whom prefer superior features, such as 3-
in-1 alkaline, mineral, purified system, onger filter lite and delicious tasting water, would prefer direct
sales brands even with an initial higher cost, such as Waters Bio Mineral Pot by Water Philippines
because it becomes more economical in the long-run.

Business-to-Business Segmentation

As explained in the last chapter, industrial marketing or business to business marketing has
fewer buyers who order in larger quantities and has more levels of decision-makers. Example 3C-10
shows an example.

Exhibit 3C-10: Industrial or Business to business Segmentation

Example of BTB
Variables Segmentation Example of Product
Variables
Demographic Industry Water care focuses on providing water purifiers
for the fast food industry.
Company size Rumarocket supplies artificial intelligence capable
of predicting sales force performance during
hiring. They target companies with at least 50
salespeople.
Geography Pioneer Hi-Bred Agriculture Technologies (PHAT),
the market leader in corn seeds, has different
products for different areas (geography)
depending on the type of soil.
Operating Variables User/ Non-user San Miguel Foods, a major player in animal feeds,
status may try to convince existing user of “food left-
over” to shift to using their B-Meg animal feeds
(user/non user status)
Customer URC Feeds Group may also choose the big fan
requirements farm segment where customers would require
more services (customer requirements), such as
having animal specialists helping them attain
better efficiency.
 Technology Canon’s business solution division has digital
presses that offer high reliability, heavy
workloads, and offset-like print quality with
workflow automation tools that can streamline
production process.
Purchasing Purchase policies Hilti power tools may choose to concentrate on
Approaches companies who prefer to lease than buy their
product
Organization Opisina.com offers both companies with
centralized or decentralized purchasing
operations to place their order of office supplies
using a dedicated websites

Decision Criteria Solar Philippines can choose to prioritize

companies or homeowners that require full
power to operate all their machinery, equipment,
and even air conditioners and freezers versus the
more cost-conscious companies or households
who will use 1-2 solar panels to operate bare
necessities like lights, computers, and electric
fans.
Situation factors Urgency Car Magic offers to repair automotive bumps,
dents and scratches in one day focusing on those
needing quick service.
Specific application or Manila Cordage can offer their heavy-duty ropes
End-use to those in the shipping industry, or those
interested in camping.
Oder size The food service group of Nutri-Asia can offer
their sauce products like Datu Puti vinegar, UFC
catsup, and Silver Swan soy sauce to restaurant
chain for bulk order or to small individual
restaurants
Personal Compatibility Companies supplying products or services to the
Characteristics government may choose to transact with the
departments or bureaus that can deal with them
professionally.
Attitude towards risk Advertising companies can choose corporate
clients who value creative innovation more than
tradition.
Loyalty Insurance companies like Malayan Insurance or
Prudential Life that tap into corporate accounts
may segment clients according to companies that
automatically renew every year versus companies
that hold a yearly bidding.
Research Suppliers

 For FMCGS (e.g. food and beverages, personal care product), one way to know which
market segment to tap, to recognize market trends, and to understand the market size, is
through retail audit reports from Nielsen or home panel reports from Kantar.
 The retail audit reports summarize sales and market shares of over 100 product categories
in several ways: by brand, by product group, by type of store, and by region.
 However, retail audit reports do not include products bought via direct sales and online,
hence, kantar offers a Home Panel research service.
 For instance, should competition classify Alaxan in the analgesic (pain reliever) segment or
the, more specific muscle relaxant sub- segment? A complete list of marketing research
firms like kantar, and Nielsen can be secured from the office or website of the marketing
and opinion research society of the Philippines (MORES).

Industrial Products Market Measurement

 Often, total industry sales and not individual company sales are reported to maintain
confidentiality for each company in the same industry as a whole and determine their
market shares.
 Other industrial marketers simply compare themselves with one or two of their closest
competitors instead of the whole industry, and concentrate on gaining market shares
against these competitors.
 For imported products or products with imported ingredients, a summary of import
manifests supplied by importation research companies may be used to estimate demand
and track competitive movement.
 Companies will usually submit actual sales and production figures to their industry
associations for compiling and summation.

Estimating Market Demand

Before the market demand for a particular product can be defined, it is important to identify specific
product groupings.
 Exhibit 3C-12: Estimating Market Demand for Canned Sandwich Spread and Light beer

Food and Beverages

Food Beverages

Processed Fresh Alcoholic Non-Alcoholic

Canned Frozen Beer Non-Beer

Spread Non-Spread Regular Light

It would be easier for the marketer to estimate the demand for canned spread by multiplying all the
variables involved in the market:

1. Total Population

2. Total Purchasing Power

3. Average expenditure on food

4. Average expenditure on food that is spent on processed food

5. Average expenditure on processed food that is spent on canned food

6. Average expenditure on canned food that is spent on canned spreads

• Demand can change every month.

• Demand can also change with government intervention.

• Market potential in neighboring countries can be used as a benchmark for demand

Target Market
The target market is a fairly homogeneous group of people or organizations to which a company wishes
to appeal.
  Target Market Planning or T-Planning

It enables the marketing and product development group to focus in a target for both product and
communication effort.

Sometimes, multiple target markets exist because of different roles they play in a purchase.

There is no point in marketing an outstanding product if the marketer cannot easily pinpoint who their
target market is and make their target customers understand what the product benefit can be
communicated early.

External Process may also force organizations to evaluate and reassess the viability of sticking to the
same market. A traditional strength can turn into a weakness overnight.

Criteria to Choose Market Segment

 All possible market segments must be considered and reviewed periodically with the best target
market being the segment that offers the highest profitability in relation to the return on
investment.
 After all, what is relevant is not the quantity but what quantity has been sold at a profit. Unless
a firm introduces a new category or has big resources, it is not logical to enter the heavy user
segment just because it can give the highest sales volume.
 In addition, marketers must consider their own strengths and weaknesses as well as
opportunities and threats in what market segments to compete in.

Firms must therefore use an objective set of criteria to shortlist their desired market segments. The
criteria for market attractiveness is shown in exhibit 3C-13:

Exhibit 3C-13: Measure for Market Attractiveness

1. Market size
2. Market growth
3. Homogeneity
4. Ease of creating awareness
5. Purchase authority
6. Loyalty level
7. Responsiveness of customers

After defining criteria or measures for market targeting, the next step is to select or prioritize from
among the market segments defined. Exhibit 3C-14 shows a hypothetical example of a communication
equipment company prioritizing which target market to serve. Using a 5-point scale (5 being the most
attractive and 1 being the least attractive) they have decoded that segment 3, business process
outsourcing, should be their primary target market.
Exhibit 3C-14: Selecting the Target Market

Segment 1: Segment 2: Segment3: Segment 4:

ISP Carriers Business Process International
Outsourcing Data Center
Potential market size 4 3 5 2
Market growth 5 4 5 4
Homogeneity 4 4 4 4
Ease of Creating 4 4 4 4
awareness
Purchase authority 4 4 4 4
Loyalty level 4 4 4 4
Responsiveness of 3 4 5 3
customers
Overall attractiveness 28 27 31 25

Defining the Target Market

A specific way of defining the target market is to identify the primary target market (PTM) that is
the most logical buyers to generate the bulk of sales. Secondary target marketers (STM) must also be
reach through different communications and marketing mixes.

The PTM of a La-Zy Boy chair worth around P 40,000 a unit is defined in exhibit 3C-15. Here,
demographics and psychographics are indicated.

Exhibit 3C-15: PTM of a La-Z-Boy Chair

Demographics:

Age Range : 40’s to 60’s

Gender : Men

Civil Status : Married

Income :A

Education : College

Profession : Owner, Executive, Professional

Marketers must exert an effort to compare the projected PTM profile to the actual PTM profile. The La-
Zy Boy users may turn out to include women who are pregnant and have many discomforts and the
chair is given to her as a gift.

Marketers must also understand the intended product usage vs. the actual product usage.
Examples:

 A subdivision developer has defined their PTM as the upper middle income or the so-called C+
group. The actual profile turned out to include buyers belonging to the AB income group who
buy real estate not because they want to personally live within the subdivision, but as
investment to be sold at a higher price after several years.
 Toyota launched the FX as a family vehicle, but some enterprising people began using it as a
commercial vehicle. They have since rebranded and relaunched the utility vehicle as Toyota
Revo, but still many recognized its familiarity and bought it as utility vehicle.

Exhibit 3C-16: Describing Your Target Market

“Gina is a young mom who has a 2 yr old kid Mai-Mai. She divides her time between caring for the
family and working. As a mother, she budgets the money she and her husband earn to cover all their
needs. Most of the budget goes to food, monthly bills and buying vitamins for Mai-Mai. Gina knows that
she is first a wife and she therefore wants to maintain youth and beauty that her husband fell in love
with. But as a mother, she finds it hard to spend money for her beauty needs, since it would mean
money spent for herself and less for her family.”

Exhibit 3C-17: Steps in Segmentation, Target Marketing and Product Positioning

Article: Market Creation
by Josiah Go

I recently gave a talk about Market-driving Strategies to outstanding graduating student leaders
attending the MarkProf’s annual Marketing Leadership Bootcamp, co-sponsored by Mamsmith and
Fielders Inc., together with some industry leaders.

For application, participants were asked to decode the market creation strategies of a product
of their choice, using the Market- Driving Strategies framework, concept tools and templates introduced
by Mansmith and Fielders.

Let me share some of the lessons about market- driving, market-shaping or market creation
often missed by traditional marketers focusing on brand switching tactics, it would be timely for
companies to compare these with what they have already planned for 2012:

1. Marketing strategies cannot just focus on the marketing mix and positioning of the current
market; it is first and foremost about opportunity seeking.
2. Opportunity- seeking is more about growing the market, not brand switching tactics where the
total market size remains the same.
3. When a brand gains market shares, another brand loses.
4. Retailers will “tax” manufacturers for their one-way gain, through dozen of chargers they can
impose (listing fee, product highlight free, promo fee, among others). Manufactures must start
to understand that just like them, retailer’s growth and return on shelf space (ROSS) is also
dependent on how they grow their respective categories.
5. Brands can launch the best advertisements, the best sales promotions, the best of everything
and result to a market share change, but the market size may remain the same, unless they
focus on the unmet need of the underserved and unserved markets.
6. Opportunity-seeking entails calculated risk taking.
7. Market creation is about understanding key barriers that affect purchase and consumption.]
8. Key barriers, irritants, disappointments and annoyances (BIDA) of served markets can be
different from the underserved markets and a distinction is needed.
9. Many brands come up with cut-and-paste strategy year-in, year-out. This is because they lack
true insights that will inspire them to go beyong low-hanging fruits they see.
10. An insight is about new truths, which means the existing truths must be challenged. This is
uncomfortable to many, especially to companies who have been successful in the past.
11. Combining an understanding of BIDA and true insights prepares the marketers to do their
ideation that can satisfy unmet needs and their insights.
12. Ideation follows the principle of selectivity, which means that one should come up with as many
viable options to satisfy the question on who (target market), what (value proposition), how
(business system) and where (channel).
13. Marketers must go beyond value proposition and look at their value chain and business system.
14. Being exposed to different industries is a plus factor.
15. Long tenure and expertise of senior marketing executives in specific products or industries may
even work against new market creation.
16. Unless marketers try thinking like a child again, there will be much impossibility that will
discourage them from entering understanding markets.
17. The logic of strategy is to stand out.
18. While planning is important, planning for execution is equally imperative.
They should stop using the traditional KRAs.
CHAPTER 3C:
Market
Opportunity
Analysis:
Market
Segmentation