UNIT 6: Develop the Marketing Plan

Introduction:
After Unit 5: Identify and Meet a Market Need, I will be presenting to you as a follow up
lecture on a very much related Unit 6: Developing the Marketing Plan

Before I actually start with the lesson proper, the unit’s target learning objectives are
presented below:

Learning objectives
How much do you know?
At the end of this unit, you must have;
1. explained the importance of marketing a business;
As
2. part of your ainitial
developed activity,
marketing try to test
strategy for your prior knowledge
a business about
with the use thisfour
of the particular
“Ps” of unit of the
marketing:
module.
product, price, place, promotion;
3. discussed factors to consider when pricing products and services;
Answer Task 1.the basic options of channels of distribution and;
4. described
5. identified promotional strategies in marketing products and services
Task 1. Matching Type

plan
How much do you know?

It’s time to take the pre-assessment test first in order to assess your prior knowledge of the
topics to be discussed:
Answer Task 1 – Pre-Assessment Test

Directions: Match Column A with Column B. Match each statement with the term that best
defines it.

A B

___a, Marketing Strategy 1.Creating an image of a product to the customer’s mind

___b. Return on Investment 2.A blending of product, price, distribution, and promotion
used to reach a target market
(ROI)

___c. Cost-based pricing 3.Pricing that is determined by using the wholesale cost of an
item as the basis for the price charged

___d. Marketing Mix 4.Amount earned as a result of an investment

____e. Positioning 5.Identifies how marketing goals will be achieved

___f. Indirect Channel 6.The act of establishing a favorable relationship with customer
and the general public

____g. Advertising 7.Direct communication between a prospective buyer and a

sales representative

____h. Channels of distribution 8.Routes that products and services take from the time they
are produced to the time they are consumed

____i. Personal Selling 9.A paid form of communication sent out by a business about
a product or service

____j. Public Relations 10.Uses intermediaries that move products between the
manufacturer and the consumer

How well did you do?

How did you perform in the pre-assessment test? Were you able to answer
more items correctly? Below is the answer key to your pre-test.

Answers: Task 1

1e 2. d 3. c 4. b 5. a 6. j 7. i 8. h 9. g 10. f

A perfect score of 10 sounds so impressive. Kindly, continue to study this module as a review.
If you go lower than 7 points, studying this module is a must.
Task 2. Guide Questions

Direction: The following are guide questions which cover the entire module. Write your
answers on your assignment notebook.

1. Why is it so important to market the business?

2. What is the role of the marketing plan to achieve your marketing-related strategies?
3. How to develop marketing strategies for a business employing the 4 “Ps” or the
marketing mix?
4. What are the common marketing mix strategies being employed by profit-oriented
business organizations?

After answering the guide questions, share, compare and discuss these with one
of your classmates through messenger or using any other on-line platforms.

Acquire new knowledge

Let me now start the lesson proper……

Lesson I. Importance of a Marketing Plan

Marketing is all of the processes---planning, pricing--used to determine and satisfy the

needs of customers and the company. This definition demonstrates the importance of the
customer.

Importance of Marketing in Business

Marketing informs your customers about the products or services you're offering
them. Through marketing, the customers get to know about the value of the products, their
usage and additional info that might be helpful to the customers. It creates brand awareness
and makes the business stand out. It is very essential to conduct market research to
discover what products or services consumers want to buy.

Using the primary and secondary data that is gathered through market research
helps entrepreneurs develop a marketing concept for the business. To use the marketing
concept successfully, business must be able to:

 Identify what will satisfy the customers’ needs and wants

 Develop and market products or services that customers consider better than other
choices
 Operate profitably

A vital part of implementing the marketing concept is developing a marketing mix

that helps meet customer needs and enables the business to earn a profit.

The marketing mix is a blending of the product, price, place (distribution), and
promotion used to reach a target market.

The Marketing Strategy

In your start-up marketing plan your strategy should address:

 Product introduction or innovation

 Pricing
 Distribution
 Promotion
 Sales or market share
 Projected profitability

When setting your marketing goals, it should observe the SMART guidelines:
Specific, Measurable, Attainable, Realistic, and Timely.

The Three Types of Goals:

Short-Term Goals are what you want your business to achieve in the next year.
Medium-term goals describe what you want your business to achieve in the next two to five
years.

Long term goals show where your business will be, 5, 10, and even 20 years from now.

Write your Marketing Plan

The Marketing Plan is just one components of the business plan. The purpose of the
marketing plan is to

 define your market,

 identify your customer and competitors,
 outline strategy for attracting and keeping customers,
 and identify and anticipate change.

To attract would be investors, your marketing plan must be able to answer the following
questions:

 What product or service will I offer?

 Who are my prospective customers?
 Is there a constant demand for this product or service?
 Can I create a demand for the product or service I want to offer?
 Can I compete effectively in price, quality, and delivery of my product or service?

The marketing plan for your business must include information on the following topics:

1. Product or Service 5. Business Location

2. Target Market 6. Pricing Strategy
3. Competition 7. Promotional Strategy
4. Marketing Budget 8. Distribution Strategy

Apply your Knowledge

Activity 1
Directions: a). Research a sample of an actual Marketing Plan of a particular local
product of your choice and be familiar with its various components. Be ready to present
an impressive highlight(s) of one of its components during our on-line class discussion.
 Acquire new knowledge

I will now proceed discussing the next lesson under this particular unit of the module…

Lesson 2: Product: Identifying the Market Need

The Marketing Concept and the Product

After having decided the kind of business you would like to pursue, you then need to
decide about the details of the products you are to plan offer in the market. In doing
product selection, meticulously consider which products and services would be most
appealing to your target customers. Try to persuade your customers that your products
could satisfy their needs better than any other competitors’ offering, then your products
could serve as a marketing tool for your business.

The marketing concept is the belief that the wants and needs of customers are
the most important consideration when developing any product or marketing effort.
Product Mix refers to the different products and services a business sells.

Product Management

The many aspects of a product that a business must spend time developing and
managing include its features, branding, packaging, labelling, and positioning.

Selecting Product Features

A product includes features, while are product characteristics that will satisfy
customer needs. Features include such things as color, size, quality, hours, warranties,
delivery, and installation.

Branding, Packaging, and Labelling

Brand is the name, symbol, or design used to identify your product.

Package is the box, container, or wrapper in which the product is placed.

Label is where information about the product is given on the package.

The brand, package, and label that you choose for your product will help
differentiate it from others on the market.

Example: McDonalds has become a very distinct and recognizable brand. When
you see its symbol, you know about the quality of the product you have selected.

Product Positioning

Different products and services within the same category serve different customer
needs. For example, both Honda and Mercedes Benz sell automobiles, but these two
product lines are positioned very differently in the marketplace.

Positioning is creating an image for position a product in the customer’s mind.

Product features, price, and quality may be used for position.
Lesson 3: Pricing Strategies

Set Pricing Objectives

The price is the actual amount a customer pays for a product or service.

Examples of pricing objectives include:

 Maximize sales
 Discourage competition
 Establish an image
 Increase profits
 Attract customers

Return on Investment (ROI). Investment refers to the cost of making and marketing a
product. It is the amount earned as a result of the investment and is usually expressed as a
percentage.

Market Share is a business’s percentage of the total sales generated by all companies in
the same market. The total market for product must be known in order for a market share
to be determined.

Determine a Price for a Product

Pricing may be based on demand, cost or the amount of competition.

 Demand-Based Pricing - refers pricing that is determined by how much customers

are willing to pay for a product of service.

 Cost-Based Pricing - is determined by using the wholesale cost of an item as the

basis for the price charged. A mark-up price is determined by adding a percentage
amount to the wholesale cost of an item.

 Competition-Based Pricing - pricing that is determined by considering what

competitors charge for the same good or service. If competition charges for an item,
you must decide whether to charge the same price, slightly more, or slightly less.

Licensing is the process of selling our idea to a company for the development and
launch of a new product. When licensing your idea, there are different ways you can be
paid:

 Upfront payment. The license pays you a fee before development or sales begin.
This may be the only amount you receive, or it could be an amount that is applied to
future royalties.
  Royalties. The license makes payments to you based on a percentage of the
product sales. For example, you may be paid royalties of 2 percent of the total sales
of a product developed from our idea.

 Annual minimum. The license pays you a minimum amount each year regardless
of the amount of sales.

A business can use a variety of pricing strategies when selling a product or service.
The price can be set to maximize profitability for each unit sold or from the market overall.

Note that pricing can make or break a business. Hence, it is important to set the
right price for your product and service.

Other Pricing Strategies employed by businesses:

 Introductory Pricing
As product is introduced into the market, sales will be low, marketing costs will be
high, and little, if any profit will be made.

1. Price skimming – used when a product is new and unique, starts with a high price
to recover the costs involved in developing the product. Then as more competitors
enter the market with similar products, the price is dropped.

2. Penetration pricing – uses a low introductory price with the goal of building a
strong customer base. The low price also discourages competition.

 Psychological Pricing

This type of psychological pricing is based on the belief that certain prices have an
impact on how customers perceive a product. This type of pricing is most often used by
retail businesses. Strategies used in psychological pricing include the following:

1. Prestige pricing is selling at a high price in order to create a feeling of superior

quality and social status.

2. Odd/even pricing suggests that buyers are more sensitive to certain ending
numbers. For example, P99.99 sounds like a bargain compared to an even P100.00.

3. Price lining involves offering different levels of prices for a specific category of
product based on feature and quality. A jewelers might offer three price lines of
diamond necklaces and display them in different cases so that shoppers can go
straight to the price level they can afford.

4. Promotion pricing is offering lower prices for a limited time to increase sales.
This type of pricing is temporary, and prices will return to normal when the
promotion ends.
 5. Multiple-unit pricing involves pricing items in multiples, such as 10 for $10. This
type of pricing suggests. People will buy more items that they would if the items
were priced individually.

 Discount Pricing - offers customers a reduced price. Discount pricing is used to

encourage customers to buy. Markdowns are a type of discount pricing:

1. Cash discounts are offered to customers to encourage early payment of invoices.

2. Quantity discounts are reductions in price based on the purchase of a large

quantity. This is also called a volume discount.

3. Trade discounts are reduction on the list price granted by a manufacturer or

wholesaler to buyers in the same trade.

4. Seasonal discounts are used for selling seasonal merchandise out of season.

The diagram below lists top ten pricing strategies.

1. Marketing Penetration

The price is set low in order to increase sales and market share.

2. Marketing Skimming

The price is set high and is gradually lowered as the product moves through the product life
cycle.

3. Psychological Pricing

The price is set just below a whole number in order to make the product and price more
attractive. E.g. setting price at P99 rather P100

4. Premium Pricing
The firm will set a high price. The price set will reflect the premium quality of the product.

5. Bundle Pricing

Products are bundled together and a slightly cheaper price is charged for buying the
bundled item.

6. Value Pricing

Prices are set on products that reflect the value of the product. If the product has an
economy feel then the price will reflect this fact. Many supermarkets have introduced value
or economy products that reflect this.

7. Captive Pricing

With some products, you have to buy another item in order to use it. If we look at printers,
you need to buy the ink in order to run that printer. Captive pricing is a clever strategy,
usually the additional items that are needed will cost more.

8. Cost Plus Pricing

The organization puts a percentage profit on the cost of making the product. For example, if
the production cost is P200 and the mark up is 20%, the selling price will be P240.

9. Optional Pricing

A firm will charge extra for any optional products that are sold alongside the main product.

10. Competitive Pricing

Apply your Knowledge

Activity 2
Directions: Your plan to open a pizza delivery service near the West Visayas State
University. Your target market includes students who live in dorms and houses on and
near the Main Campus. You know that the price you charge is going to be a major
determining factor to the success of your business as there several restaurants in the
area with which you will be competing. Develop a psychological pricing for the pizza
delivery service.
 5.

Acquire new knowledge

Lesson 4: Distribution and Promotion Strategies

Lesson 4A. Distribution Strategies

`
Distribution strategy is mainly decided by keeping the top management in loop because it
affects overall operations. This strategy can be summarized with 3 main points.

 How to get the product from the manufacturing point to the end customer.

 How to control costs and save time while executing the distribution strategy

 How to build a competitive advantage through distribution

Competitive Advantage
Competitive advantage is an advantage over competition gained by offering consumer
greater value than competitors do In terms of pricing cost leadership will give an edge to
outperform competitors.

Supply Chain Management is the coordination of manufacturers, suppliers, and retailers

working together to meet a customer need for a product.

Channels of distribution are the routes that products and service take from the time they
are consumed. Choosing the right channel of distribution for a product includes finding the
most efficient s way to ship it to desired location. Using the right distribution channels save
time and lower costs for both buyers and sellers.

Direct and Indirect Channels

 Direct channel moves the product directly from the manufacturers to the
consumer.
 Indirect channel uses intermediaries – people or businesses that move products
between the manufacturer and the consumer. Agents, wholesalers, and retailers
serve as intermediaries.

The four basic options for channels of distribution are as follows:

 Manufacturer to Consumer. The product can be sold by the manufacturer directly

to the consumer using various methods:
 a) Internet,
b) direct mail, or
c) television shopping channels.

 Manufacturer to Retailer to Consumer. A sales force can sell manufactured goods

to retail stores, and the retail stores can sell to the consumers.

 Manufacturer to Wholesales to Retailer to Consumer. To reach a large market,

the manufacturer can sell large quantities to a wholesaler, also called a distributor,
who will then store and sell smaller quantities to many retailers. Even though more
intermediaries are involved in this method, prices can be lower because the
manufacturer is producing mass quantities if the product, resulting to lower production
cost.
 Manufacturer too Agent to Wholesaler to Retailer to Consumer. With this
option, the manufacturer does not get involved in selling. Selling is handled by an
agent. This option is often used in international marketing.

Below is a clear illustration of various channels of distribution:

Distribute Goods and Services

Retail businesses, service businesses, and manufacturing businesses will choose

different channels of distribution based on the needs of the businesses. The needs can vary
based on the size of the market, the type of product or service, and customer needs and
wants:

 Retails Business
1. Retail businesses have many ways of selling products. As the owner of a retails
business, you can distribute products in various ways:
1.1 Offer your product or service to consumers in a convenient location
and during convenient hours.
1.2 Use catalogs, fliers, and other advertisements to reach customers who
live outside the areas.
1.3 Create a website. People with access to the Internet can visit your
website to learn about your products and services and to make online
purchases.

 Service Business
Most entrepreneurs who are in the service business sell directly to their customers.
These businesses have a single, direct channel of distribution because the production
and consumption of a service happens at the same time.

For example, electrician, restaurants owners, and lawyers deal directly with the
people who purchase their services.

 Manufacturing Businesses usually don’t sell directly to customers. Instead, they make
their products and then sell the products to other businesses, such as retailers. The
retail store then sells to the final consumer.

Physical distribution includes not only transportation but also storage and handling of
products and packaging within a channel of distribution. A product may move through
several channel members by various forms of transportation to get to the point where it
will ultimately be sold to consumers.

Methods of Physical Distribution

 Transportation. Products can be moved by airplane, pipeline, railroad, ship, truck,

or a combination of methods. You must determine which method is best and most
cost efficient for your products.

 Product Storage and Handling. Efficient storage allows channel members to

balance supply and demand of products. However, this adds to the cost of the
products and also adds the risk that products may be damaged or stolen while
stored. Most products are stored in warehouses at various points through the
channels of distribution.

 Packaging is designed to protect the product from the time is produced until it is
consumed. If the product is not protected during the distribution phase, it could be
damaged or destroyed, resulting in a loss of money to channel members.

Lesson 4B. Promotion Strategies

 You need to promote your business to make customers aware of the benefit of
buying from you. Promotions take many forms including advertising, publicity, personal
selling, and sales promotion. The strategy created by adopting a blend of some, if not all, of
these techniques is called your promotional mix.

 Advertising is a paid form of communication sent out by a business about a

product or service.
 Online Advertising – this is a cost-effective way for businesses to get information
to potential customers through the use of online technology.

Types of Online Advertising

1. Banner Ad – a graphic image or animation displayed within a rectangular
box across the top or down the side of a web page

2. Floating Ad – An ad that moves across the screen or floats above the page
content

3. Wallpaper Add – An ad that changes the background of the page being

viewed

4. Trick Banner - A banner ad that looks like a dialogue box with button, often
appearing like an error messages or an alert

5. Pop Up Ad -- A new window that opens in front of the current one,

displaying an advertisement

6. Pop Under Ad -- A new window, similar to a pop-up ad, that loads behind
the current window and does not appear until the user closes one or more
active windows.
  Newspaper Advertising
 Telephone Directory Advertising
 Direct-Mail Advertising
 Magazine Advertising
 Outdoor Advertising
 Transit Advertising
 Social Networking Sites

Publicity is a nonpaid form of communication that calls attention to your business

media coverage. Good publicity can be as helpful as advertising.

Press release, which is a written statement meant to inform the media of an event
or product, is a good way to promote an event.

Public Relations is the act of establishing a favorable relationship with customers

and the general public. Public awareness and positive public relations can e generated for
your business when you show your community that you are involved and committed to it.

Ways to support your community:

 Sponsor a community sports team.

 Make a donation to a local charity or relief effort program.
 Get involved with the work-based program at your local high school or community
college.
 Becomes active in the local chapters of the Big Brothers or Big Sisters organizations.
 Organize community programs such as cleaning up neighborhood parks.

Self-Promotion. A business should try to keep its name visible and in the forefront of
people’s minds. Self-promotion is a good way to do this. This may include activities such as:

 Giving away t-shirts and hats displaying your company name and logo.
 Distributing pens, notepads, coffee mugs, and other useful items printed with the
name, telephone number, website address, and logo of your business

Other Promotional Strategies:

 Contests as a Promotional Strategy. Contests are a frequently used promotional

strategy. ...
 Social Media Promotion. ...
 Mail Order Marketing. ...
 Product Giveaways and Samples. ...
 Point-of-Sale Promotion and End-Cap Marketing. ...
 Customer Referral Incentive Program. ...
 Causes and Charity. ...
 Branded Promotional Gifts.
 Apply your Knowledge

Activity 3
Directions: Answer the following:
a) You are a convenient store owner in your village. What role will distribution
channels play in your business? Which form of promotion would likely work
best for you?
b) You are going to open a retail store that will offer novelty items. Your target
market is 13-19-year-old girls. Describe the promotional mix you will use for
your business.

Assess your Knowledge

Direction: Answer the following questions

1. What is the importance of marketing a business?
2. How to develop a marketing strategy for a business enterprise with the use of 4 P’s or
marketing mix?
3. What are the basic options of channels of distribution?
4. What are the factors to consider when pricing products and services?
5. What are the most commonly known distribution and promotion strategies?

Summing – up

1.The importance of a Marketing and Developing the Marketing Plan

in business:
  Marketing is all of the processes -- planning, pricing, promoting, distributing, and
selling—used to determine and satisfy the needs of customers and the company.
Businesses that follow the marketing concept use the needs of customers as the
primary focus.
 A marketing strategy identifies how you will achieve your market goals. For a new
business, a marketing strategy should address, product introduction or innovation,
pricing, distribution, promotion, sales or market share, and projected profitability.
 A marketing plan should include information on the product or service, target
market, competition, marketing budget, business location, pricing strategy,
promotional strategy and distribution strategy. Putting it in writing helps you
determine whether your marketing plan is solid and all parts are consistent.

The Marketing Mix/4P’s:

2. Product Strategies
 The different products and services a business offers are its product mix. The
marketing concept keeps you focused on meeting the wants and needs of customers
as you develop a product mix.
 Product features are the characteristics of the product that will satisfy customer
needs. Branding is the name, symbol, or design that identifies your product. The
brand, package, and label will differentiate your product from others. Positioning is
creating an image for a product in the customer’s mind.

3. Pricing Strategies
 A business may set pricing objectives aimed at maximizing sales, increasing profits,
discouraging competition attracting customers, or establishing an image.
 Pricing may be based on demand, cost of competition.
 Service may be priced based on time, materials used, and bundling. Ideas can be
licensed and priced in different ways.
 Introductory pricing strategies include price skimming and penetration pricing,
Psychological pricing techniques include prestige pricing, odd/even pricing price
lining, promotional pricing, and multiple unit pricing. Discount pricing includes cash
discounts for early payment, quantity discounts, trade discounts, and seasonal
discounts.

4. Distribution Strategies
 The four basic options for channels of distribution are 1) manufacturer to consumer
2) manufacturer to retailer to consumer 3) manufacturer to wholesaler to retailer to
consumer, and 4) manufacturer to agent to wholesaler to retailer to consumer.
 Entrepreneurs should examine the different options for channels of distribution and
choose the one that best meets the needs of their business and their customers.
 Transportation, product storage and handing, and packaging needs are all factors
that play an important role when choosing methods of physical distribution.

5. Promotion Strategies
 Advertising may be done on the Internet, on television, on radio, in the newspaper,
in a telephone directory, through direct mailings, in magazines, on billboards and
 signs, and through social networking sites. The best option for a business is the one
that reaches the desired target market in the most cost-effective way. (Greene,2013)

References:

Greene, Cynthia (2013). Entrepreneurship, Cengage Learning Asia Pte Ltd.

Medina, Roberto G., 2014. Entrepreneurship and Small Business Management

Scarborough, N., 2011. Essential of Entrepreneurship and Small Business

Management, Sixth Edition

Kotler, Philip., Principles of Marketing: A Global Perspective, LPEdition

Internet Sources:

www.leanmarketing.net

http://panduka101.wordpress.com>2012/12/06>importance of competitive advantage

http://earn.marsdd.com/article/identifing-market-prolem/

http://business community.com>marketing>why is marketing important