Chapter 11 Managing the Marketing Function Ppt

Chapter

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

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 general manager, both the production and marketingfunctions become his overail concern.

At whatever management level the engineer manager 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 construction 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 problem. has a marketing He needs to undermanager stand certain concepts related to the marketing discipline.

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 business. 226

227

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

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, however, 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

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

The Marketing

The services provided by the engineer .be evaluated

When a type of service becomes standardized, price be a strong competitive tool. When a construction firm-, can

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. manager will 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 that provides ,,free estimates', on whatever !o-p1"V 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.

228

Objectives of the Engineer Manager

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: 229

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 the above-mentioned options. Service .o*purriu,all of tit construction firms adapt the modified versions. " A";";;_ ple is the engineer manager of a construction firm who gives commissions to whoever could negotiate truction contract for the firm. " "orr._

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. 4.

personal selling saies promotion

Aduertising. Nylen defines advertising as ,,a paid that appears in the mass media foithe dd;;

message

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 newspapers. 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 promoting the sales of a product or serwice is called personal selling. It refers to the "oral presentation in a conversation 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.

231

Figure 11.2 An Example of an Advertising Message

ALECTO GENERAL TECHNOLOGY

NOKIA PRESENTS THE FIRST PHONE DESIGNED FOR LOCAL NEEDS

AND

DEVELOPMENT CORPORATION

ENGINEERS

.

DESIGNERS

.

CONTRACTOF

.

Figure 11.3 An Example ot a Publicity Release

SUPPLIER

Computer Facilities Design and Installation

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

Local Area Network-Cabling Data Communication and Telecomrnunication Works

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

Electrical Wiring Mechanical and Civil Works

Fiber Optic Cabting Instailation and

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

Termination

displays large or smalltext, depending on the length of the message. Combined with Nokia's state of the art menu syslems, it is easier

Supplier of UTP Fiber Optic and Coaxial Cable

to find what you are looking for.

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.

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 worldwide web http:/www nokia, com. +From Manila Bulletin, Special Supplement, July 7, L997,

p. SS-7. 232

233

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parts dealers and big trucking companies to carry their product lines.

Figure 11.4 An Example of a Company Using Sweepstakes as a Sales Promotion Tool

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_

GET A BAYANTEL PHONE, CALL LONG DISTANCE, PAY YOUR MONTHLY BILLS AND GET A CHANCE TO DRIVE AWAY A WINNER!

ral gifbs, etc.8

F-r-rl .

Contests and sweepstakes are very popular sales promotion tools. An example is shown in Figure 11.4.

u

BAYANTEL

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

IBMWI

i 119"3 -r

THERE HAS NEVER BEEN A TELEPHONE PROMO BIGGER THAN THIS! NOW, BayanTel, the phone company that's helping you communicate 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!

Selecting a Target Market

Two: Use your BayanTel phone to call anywhere. Better if

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 has the option ofserving entirery orjust a portion"ornpu.ry 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.

charges (over and above the basic installation charge and first month advanced service) entitles you to one raffle ticket.

internationaland domestic long distance. Every P200 worth of paid

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 more raffle tickets on using that BayanTel phone to call anywhere for long distance!

PROMO ENDS DECEMBER 31, 1997 rBarry Bernan and Joel R. Evans,.Reta il Management, Fifth Edition (New York: MacMillan Publishing Co., 1992) p. 504. "Berkowitz and others p. 723.

234

l'From an advertisement, Philippine Daily Inquirer, July 20, 1997, p. E-2. 236

Figure 11.5 The Construction Market and lts Segments

An analysis of the various segments ofi the chosen market will help the company make a decision on whether 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. ' 3.

Determine the profit potentials of each segment.

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 segments. 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. 2.

the size of the market, and 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

actual construction sub-segment

actual construction sub-segment

construction rnaterials sub-segment

construction materials sub-segment

actual construction sub-segment

237

,i

i

construction materials sub:segment

room for another company Iines in Cabanatuan City.

Figure 11.7 The Company, The Marketing Mix and the Target Market

in the market for telephone

Developing a Marketing Mix

THE COMPANY

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 manager 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.

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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

SUMMARY 150,000 lines

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.

Supply

.

Company.A

50,000 lines

Company

B

30,000

Company C

10,000

Total Supply

90,000 lines

NET UNSATISFIED DEMAND

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 marketing which are the product, the price, the place, and the promotion.

60,000 lines

239

298 t

{

QUESTIONS FOR REVIEW AND DISCUSSION

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.

1.

How may the marketing ioncept be explained? Is applicabie to engineering firms?

The marketing mix consists of the appropriate levels product quality, price, promotion, and place. of

2. 3.

What is meant by the term "product"?

it

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?

.

What is advertising? What are the types of advertising media?

8.

May the engineer manager use publicity in promoting his firm? Cite an example.

9.

In selecting a target market, what must manager do?

7

bhe

engineer

10: What factors must be used in selecting a target market?

SUGGESTED ITEM FOR RESEARCH Choose an engineering firm with an existing marketing unit. Draw the organization chart of the firm strowing the marketing unit and its relationship rvith other units.

240

ur

Gase 11. BUGTAG CHEMTCAL CORPORATTON: Hetp

Samuel Bugarin and Antonio Tagorda were classmates 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.

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

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

Total

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 Corporation. Samuel has already started organizing the production 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 forecast for the comPanY's Products'

The company was registered as a stock corporation 243