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

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.

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

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.

\
\

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

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?

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