Chapter 11 Managing the Marketing Function Ppt

MANAGNG

THE

MARKETNG

FUNCTION

What

is

the Marketing Concept?

The Engineer and

the

Four P's

of

Marketing

The Product

The Price The Place The Promotion

Strategic Marketing

for

Engineers Selecting a Target Market Developing

a

Marketing Mix

226 227

Chapter

11

Engineer

managers

are

engaged

in

the

production

of

tangible or intangible

goods. Some

of

these engineer

managers are directly

responsible

for

marketing

the

company's products or services.

If

he is promoted as

gene-ral

manager, both the production and

marketingfunctions

become

his

overail

concern.

At

whatever

management level

the

engineer mana-ger

works,

he

must

be concerned

with

convincing others

to patronize his outputs.

If

he

is the

general manager

of

a

construction

firm,

he

must

convince people

with

con-struction

needs

to avail

of

the

services

of

the

company.

Ifhe

is the staff officer of a top executive, he must convince

his

boss

to

continuously

rely

on

him

regarding

the staff

senrices

he

provides.

If

the

foregoing statements are

true, the

engineer manager

has a

marketing

problem. He

needs

to

under-stand

certain

concepts

related

to the marketing

discip-line.

WHAT IS THE MARKETING

CONCEPT?

Marketing is a group of activities designed to

facilitate

and

expedite

the

selling of

goods

and

services.

The

marketing

concept states

that

the engineer

must

try

to

satisfy

the

needs of

his

clients

by

means

of a

set

of coordinated

activities.

When

clients

are satisfred

with

what

the

company offers,

they continually provide

THE

ENGINEER

_{AND THE FOUR P,S}

_OF

MARKETING

The engineering organization

_will

_{be able to meet the}

requirements of

its

clients (or

_{customers) depending on} how

it

uses the four p's of

marketing

which

ur"

u.

roui*s,

1.

the

product (or

service)

2.

the

price

3.

the

place, and

4.

the

promotion.

The Product

In

the

marketing

sense,

the term

.,product,'inciudes the tangible (or _{intangible) item and its capacity}

_tosatis$r

a specific need.1Whe.1a _{customerbuys a car, he is}

_actually

buying the comfortabre ride he anticipates to derive

from

the

car.

This

is

not to mention

th

psychological

_lenents

attached

to the

ownership

of a

car.

.

The services provided by

the

engineer manager

will

be evaluated by

the client

on the basis of

whethei

or not

his

or her" _{exact needs are met. When a competitor comes}

into the picture

and sells

the

same

type

ol

service, the

q{".:-r1r"

to

improve

the quality

of

services sold

wiil

be felt. When improvement is not possible, .,ext _{as,, or*bonu_} ses" are given

to

clients.

An

example

is the

construction

!o-p1"V

that

provides

,,free

estimates',

on

whatever

rnqulnes on construction are

received.

The

Price

Price refers

to

,,the money

or other

considerations

exchanged

for

the

purchase

_or

_{use of}

_{the product,}

_idea,

or

_{service."2 Some companies use}

_price

_as

_a

_competitive

tool or

as

a

means

to

convince

the

customer

to

buv.

lMcCarthy and perreault, Jr., p. 27g.

zEric N. Berkowitz and others, Marketlng (Homewood, _{Illinois: Irwin, 1992)}

r:. 726.

When products are

similar

in

quality

and other

characteristics,

price

will

be

a strong factor

on

whether

or

not

a sale

will

be made.

This

does

not hold true,

how-ever,

in

the seliing

of services and ideas.

This is

because

ofthe

uniqueness

ofevery

service rendered or every idea

generated.

Figure 11.1 The Engineer Manager and

the

Four P's of Marketing

OBJECTIVES VEHICLE RESULT

When a

type

of service becomes standardized, price

can be a strong competitive tool. When a construction firm-,

for

instance, charges a

flat

10 percent service fee

for ail

of

its

construction

services,

a

competitor

may

charge a

Iower rate. Such action, however,,will be subject to

whether

or not the industry

will

allow

such practice.

The

Place

If

every

factor

is

equal,

customers

would

prefer

to

buy

from

firms

easily accessible to them.

If

time is

of

the

essence,

the

nearest

frrm

will

be

patronized'

It

is very

important

for companies to locate

in

places

where they can be easily reached by

their

customers'

Not

every

place

is the

right

location

for any

company.

Wtren a

company cannot be

near

the

customers,

it

uses

other

means

to eliminate

or

minimize the

effects

of

the

problem.

Some

of

these means are:

The Marketing Objectives

of the Engineer Manager

1.

hiring

sales agents

to

cover _{specifrc areas;}

2.

selling to

dealers

_in

particular

_areas;

3.

_{establishing branches where customers}

_are

located:

4.

establishing franchises

_in

_{selected areas.}

Manufacturing

_{companies can choose or adapt}

all of

the

above-mentioned

_options.

_Service

_.o*purriu,

tit

"

construction

_firms

_{adapt the modified versions.}

_{A";";;_}

ple

is the

_{engineer manager}

_{of a construction}

_firm

who

gives

commissions

_to

_{whoever could negotiate}

"

"orr._

truction

contract

_{for the firm.}

The Promotion

when

_{engineer managers have products or}

services to sell, they

will

_{have to convince buyers to buy from}

_thern

Before

_{the buyer}

_makes

_the

_purchasing

decisio.r, fro*_ ever, he must

first

be informed, _{persuaded, and}

_i"ffi;;;.

The

activity

referred

to,

in

this

case, is called promotion-.

McCarthy

and

Perreault

define

promotion

_as ,,com_ municating information _{between selier and potentiar}

_u,ru",

to

influence

_attitudes

_and

_behavior."B

.

There are promotiopar tools available and

the

en-'

grneer manager

_must

_be

_{familiar with}

_them

_if

he wants

to

use

them

effectively. _These

_{tools are}

_{as follows:a}

1.

advertisins

2.

publicity

3.

personal

_selling

4.

saies promotion

Aduertising. Nylen

defines

advertising

as

,,a

paid

message

that

appears

in

the mass media

foithe

_dd;;

3McCarthy

and perreault, Jr., p. 365.

,,",Yf

_{#Il,u,8Hl?*fi}

_{ii;:,K#3:"':::;3:":l!:'.!i^f;i::\'":,;r,{,;}

of

informing or

persuading people about

particular

products,

services,

beliefs,

or

action."s

The

mass media referred to include television, radio, magazines, and news-papers.

If

the engineering manager wants to reach a large

number of

people,

he may

use

any of the

mass media depending on

his

specific needs and

his

budget. Each

of

the public advertising carriers, i.e., radio,

television,

magazines, and

newspapers,

has

their

own

specific

audiences

and careful analysis must be made

if

the

engineering

manager

wants to pick the

right

one.

An

example

of an advertising

message

is

shovrn

in

Figure

11.2.

Publicity.

The

promotional

tool

that

publishes news or

information

about a product, service, or idea on

behalf

of a

sponsor

but is not

paid

for

by

the

sponsor

is

called publicity.G

The

mass

media

is

also

the

means used

tbr

publicity.

If

the

engineer manager knows

how

to

use

it,

publicity is

a

very useful promotional tool.

His

message

may

be presented

as

a

news

item, helpful

information,

or an

announcement.

An

example of a

publicity

release is shown

in

Figure

11.3.

Personal

Selling.

A

more

ag6pessive means

of

pro-moting the

sales of a product or serwice is called personal

selling.

It

refers to the "oral

presentation

in

a

conversa-tion

with

one

or more

prospective purchasers

for

the

purpose

of

making a

sale."?

Personal

selling may

be

useful

to

the marketing

efforts of the engineer manager.

If, for

instance, he is the general manager of a

firm

manufacturing

spare parts, he

may

assign some employees to personally seek

out

spare

sDavid W. Nylen, Aduerfising, Plattning, Intplemen.tatitsn, an.d Con.tntl

(Cincinnati: South-Western Publishing Co., 1986) p. 3.

'JStanley, p. 8.

TPatrick Dunne and others. Retailirtg (Cincinnati: South-Western Publishing Co., 1992) p. 283.

Figure 11.2

An

Example

of

an Advertising Message

ALECTO GENERAL TECHNOLOGY AND

DEVELOPMENT CORPORATION

ENGINEERS

.

DESIGNERS

.

_CONTRACTOF

.

_SUPPLIER

Computer Facilities

Design and Installation Local Area Network-Cabling

Data Communication and Telecomrnunication Works Electrical Wiring

Mechanical _{and Civil} Works

Fiber Optic Cabting Instailation and Termination

Supplier of UTP Fiber Optic and

Coaxial Cable

1495 D. Oliman St., Makati City

Tels. 890-2571, B9A-2492 890"3604, 890-3607

Fax No. 890-2978

'r'From the PLDT _{Yellow pages, Luzon Visayas, Mindanao} 'felephone Dir.ectory, October 1996.

p.

160.

232 ₂₃₃

Figure

11.3

An Example

ot a

Publicity Release

NOKIA PRESENTS THE FIRST PHONE DESIGNED

FOR LOCAL NEEDS

Manila, July 1, 1997

-

Nokia Mobile Phones, the largest

European and world's second largest manufacturer of mobile

phones and a world leader in digital technology, has introduced to the Philippines the Nokia 3810 "8i9 Face", the first mobile phone

designed specifically for the needs of the Asia-Pacific cellular

market.

"This new design which was inspired by a regional research

is another step in our aim to strengthen our market position", Martin Fernandez, Nokia Mobile Phones Philippine Country Manager said.

The Nokia 3810 is a product of extensive regional research

and feedback. According to the research, there is a demand for

a design that would easily accommodate longer and more detailed messages Asians, including Filipinos, are accustomed to. Iagged as Nokia "Big Face", the 3810 has a larger screen contained in

a small and sleek European styled body, making it easier to read

messages. With its unique full graphic display, the Nokia 3810 displays large or smalltext, depending on the length of the message. Combined with Nokia's state of the art menu syslems, it is easier to find what you are looking for.

Moreover, Nokia 3810 provides _{a comprehensive} range of features like call management, memory functions, shoft message services, securityicode control, optional controls, data transmission

and has the most complete range of accessories.

Nokia Mobile Phones is a part of the Nokia Group, a global telecommunications company headquartered in Helsinki, Finland. Nokia employs nearly 34,000 people in 45 countries and has net sales of US$8.5 billion in 1996. Nokia can be visited on the

world-wide web http:/www nokia, com.

+From _{Manila Bulletin, Special Supplement, July 7, L997,} p. SS-7.

parts

dealers

_{and big}

_trucking

_companies

_{to carry}

_their

product

lines.

Sales

Promotion

_{Any paid attempt to}

_communicate

with

the customers other

_{than advertising, publicity,}

_and

personal selling, may

be considered sales

promotiorr.

This

includes displays,

_{contests, sweepstakes, coupons,}

trading

stamps,

prizes,

_{samples, demonstrations, refer_}

ral

gifbs, etc.8

Contests

and

sweepstakes

are

very popular

sales

promotion

tools.

An

example

is

shown

in

Figure

11.4.

STRATEGIC MARKETING

FOR

ENGINEERS

Companies,

_including

_those

_managed

_by

_engineer

managers, must serve markets

that

are best

fitted

to

their

capabilities. To achieve

this

end, a very

important

_activity

called strategic

_{marketing is}

_undertaken.

Under this

set-up,

the

following

steps

are

made:

1.

selecting

a target

market

2.

developing

_{a marketing mix}

Selecting a

Target

Market

A

market

consists of

individuals

or organizations, or both,

with

the desire and

ability

to buy a specific product or service. To maximize sales and

profits,

u

"ornpu.ry has the option

ofserving

entirery

_orjust

a portion

ofits

chosen

market.

Within

ma?kets

are

segments

with

common

needs

and which

will

respond

_{similarly to a}

_marketing

action.e

Figure

11.5 _{shows an example of rhe various segl}

ments of

a

given market.

rBarry Bernan and Joel

York: MacMillan Publishing "Berkowitz and others

R. Evans,.Reta il Management, _{Fifth Edition} (New

Co., 1992) p. 504.

p. 723.

234

Figure 11.4 An Example of a Company Using Sweepstakes

as

a

Sales Promotion Tool

GET A BAYANTEL PHONE, CALL LONG DISTANCE, PAY

YOUR MONTHLY BILLS AND GET A CHANCE TO DRIVE AWAY A WINNER!

F-r-rl

.

_BAYANTEL

IBMWI

u

i

119"3

_-r

THERE HAS NEVER BEEN A TELEPHONE PROMO BIGGER

THAN THIS!

NOW, BayanTel, the phone company that's helping you com-municate not tomorrow, but today, is giving away not one, not

two. not even three, but FIVE, brand-new BMW 3 Series model

316

lor

its telephone subscribers.

lT'S SO EASY TO GET A CHANCE TO WIN! This promo is open to BayanTelTELEPHONE SUBSCRIBERS in designated BayanTel franchise areas (see coverage below) only.

ONE: Get a BayanTel phone and pay your first monthly charges

right away!

Two: Use your BayanTel phone

to

call

anywhere. Better if internationaland domestic long distance. Every P200 worth of paid

charges (over and above the basic installation charge and first

month advanced service) entitles you to one raffle ticket. THREE: Pay your montly bills promptly so you can earn more raffle

tickets right away.

Get a BayanTel phone now. Get a BMW to drive soon. Just keep on using that BayanTel phone to call anywhere

-

more raffle tickets

for long distance!

PROMO ENDS DECEMBER 31, 1997

l'From an advertisement, Philippine Daily Inquirer, July 20, 1997, p. E-2.

An

analysis of the various

segments ofi

the

chosen

market

will

help

the

company

make a

decision on

whe-ther

to

serve

all or

some of

the

segments.

The

segment

or

segments chosen become

the target

market.

In

selecting a

target market,

the

following

steps are necessary:

1.

Divide the

total

market into groups of people who have

relatively similar

product or service needs.

2.

Determine the

profit

potentials _{of each segment.}

3.

Make

a decision on

which

segment or segments

'

_will

be

served

by the

company.

,As shown

in

Figure

11.5, a company may choose any

or

all

of

the residential,

industrial,

and government seg-ments.

This

decision

will

depend, however, on

the

profit

potentials

of each segment and the

capability

of the

firm.

A

smaller

company

may

find

it

most

profitable

to

supply

only the

construction

material

needs

of

the

residential

segment.

A

bigger

company, however,

may

find

it

more

profitable to perform actual

construction

in

addition to

selling construction

materials.

Factors (Jsed _{in Selecting a Target}

_Marhet.

_Atarget

_market

must have the

ability

to satisfy the

profit

objectives of the

company. In selecting a target market, the following factors

must

be

taken

into

consideration:

1.

the

size

of

the market,

and

2.

the

number

of competitors serving

the market.

The

total

demand for the product or service

in

a given area

must

be determined

frrst

if

the

company

wants

to

serve

that

particular

market.

If

there

are existing

businesses serving

the market, the net

demand

must

be

considered.

Figure

11.6

illustrates an

example

of

the

relationship

between demand and supply of a

particular

product. The figures presented indicate

that

there

is

still

Figure

11.5

The Construction Market and

lts

Segments

construction rnaterials sub-segment actual construction sub-segment actual construction sub-segment construction materials sub-segment actual construction sub-segment construction materials sub:segment 237

room

for

another

company

in

the market for

telephone

Iines

in

Cabanatuan

City.

Developing a

Marketing

Mix

After the

target market

has

been

identified,

a

marketing

mix

must

be created

and maintained.

The

marketing mix

consists of _{four variables: the product, the}

price,

the

promotion, and

the

place

(or

distribution).

Given a

marketing

environment,

the

engineer man-ager can

manipulate any

or all

variables

to

achieve the

company's goals. As such,

the

quality

of

the

product may be enhanced,

or the selling

price made

a

little

lower, or

the promotion

activity

made a

little

more aggressive,

or

a

wider distribution

area

may

be covered.

Any or

all

of

the

foregoing rnay be

undertaken

as conditions

warrant.

As shown

in Figure

11.7,

ail marketing activities

are

focused

on

the target

market.

Figure 11.6 Totat Demand and Net Demand as

a

Guide for

Determining Target Market

Telephone Lines

in

Cabanatuan City Demand and Supply Situation

1997 Total Demand Supply

.

Company.A Company B Company C Total Supply

NET UNSATISFIED DEMAND

150,000 lines 50,000 lines 30,000 10,000 90,000 lines 60,000 lines 298 239

Figure 11.7 The Company, The Marketing Market

THE COMPANY

Mix and the Target

SUMMARY

To

survive,

companies

must

continuously. generate

income. To be able to do so, they must be abie to sell enough

quantity

of

their

products or services.

Engineering

firms

are no

exception.

The proper

management of

the

marketing

function

helps

the

engineer manager convince customers

to

patronize the

firm.

Specifically,

the

engineer

manager

must

know how to use effectively

the four

P's of

market-ing

which

are

the

product,

the

price,

the

place,

and the

promotion.

\

\

\

\

\

t

{

An

activity

called strategic

marketing is

designed

to

make sure

that

the marketing

objectives of

the

firm

are achieved. Strategic

marketing

calls

for

selecting a

target

market

and

developing

an

appropriate

marketing

mix.

The

marketing mix

consists of the appropriate levels

of

product

quality,

price, promotion, and

place.

ur

QUESTIONS FOR

REVIEW

AND

DISCUSSION

1.

How

may the marketing ioncept

be explained?

Is

it

applicabie

to

engineering

firms?

2.

What

is

meant

by the term

"product"?

3.

How may the

engineer manager meet

the

threat

of

a

competitor's

product?

4.

Why

is

price said

to

be

a

strong competitive

tool?

5.

What

are

some

of the

possibie measures

to

make

products easily available

to

customers?

6.

How may

the

engineer manager convince

the buver

or client to

patronize

the

firm?

7

.

What is advertising? What are the types of advertising

media?

8.

May the

engineer manager use

publicity

in

promo-ting his firm? Cite an

example.

9.

In

selecting a

target

market,

what must

bhe engineer

manager

do?

10:

What factors must

be used

in

selecting a target

market?

SUGGESTED ITEM FOR

RESEARCH

Choose

an

engineering

firm

with

an existing

mar-keting unit.

Draw the organization chart of the

firm

strow-ing the marketstrow-ing

unit

and

its

relationship rvith

other

Gase 11. BUGTAG _{CHEMTCAL CORPORATTON: Hetp}

Samuel

Bugarin

and

Antonio

Tagorda

were

class-mates at

the chemical

Engineering

Departr'ent

of De ra

salle university. After

passiirg

the boa'd

examinations

in

1981, Engineer

Bugarin

applied

for

a job

in

a chemical

manufacturing

co'rrpany.

He

first

worked

as

an

assis_

tant

in

the quality

control

unit.

Later, he

ber:ame

chief

of

the unit.

He handled various jobs

_in

_the

production

department.

Because

of

his

good performance,

_he

_was promoted

to

production

manager

in

1993.

Engineer

Tagorda

got

a

job

in

19g2 as production

planner

of Reliance Chemical Conipany.

In

1990, he was

assigned as

assistant production

manager.

When

the

company's

rnarketing

manager resigned

_in

_{1g91, he was}

transferred

to the

marketing

department _{and was named}

as

the

new

marketing

manager.

His main

function

was

to

market

the company's products consisting of

synthetic

resins,

aluminum

paste, adhesives, plasticizers, calcium

sulfate,

etc. When

he

assumed

his

post as

marketing

manager, the company

is

already serving a group of loyal

customers. The increasing

_{requirements of}

_these

_{cus_}

tomers

also

meant additional

orders

for the

company's

products. The

_{company's sales increased even}

_if

_the

number of

its

customers

did

not.

In

a

ciass

reunion held

in

Aprii

1g97, Samuel and

Antonio _{met and they conversed for more than three hours.}

Samuel mentioned

that

he

had started

organizing

his

own chemical

manufacturing

firm

and he wanted

Antonio

to

join

him.

Antoni.o agreed

and

in

a

subsequent meet_

ing

decided

to divide

the

work

between

the two

of them.

Samuel was to take care of production

andAntonio

would handle

marketing.

They decided to

invite

an experienced

finance officer and a

high

school

classmate,

Edgardo

Abuan. He

became

the

company's

finance

manager.

The

company was registered as a stock corporation

and

the capital contribution

of

the

stockholders

wele

as follows:

Name of the

Stockholder

Amou@

1.

Samuel Bugarin

2.

Antonio Tagorda

3.

Edgardo Abuan

4.

Jesus Ualat

5.

Rosario Mariano

6.

Ausberto Taguinod

7.

Francisco Bundoc

8.

Amparo Paragas

9.

Andres Nicolas Total P30,000,000 15,000,000 3,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 P54.000,000

The three

agreed

to

produce

caustic

soda

liquid,

hydrochloric

acid,

soda

ash, sodium

sulphate,

sodium tripolyphospate, and

sulfuric

acid. The construction of the companyt

planthas

alreadybegun in Dasmarifras, Cavite' The-compay has been named

the Bugtag

Chemical

Cor-poration.

Samuel has already

started

organizing

the

product-ion department by

hiring

a

production planner' Antonio

is

stif

considering

what

steps

to

take

in

organizing

his

departrnent.oneofhisproblemsisthelackofinforma-tion regarding the nature of the rnarket the company

must

tap. Also,

Antonio

is

aware of

the

utmost importance of

ptlnidittg

the production department

with

a demand

fore-cast

for the

comPanY's Products'