Transcript marketing & advertising

10-3 MARKETING (part 2)
Price and Distribute
Products
Goal 1 Discuss how the selling price of a
product is calculated.
Goal 2 Differentiate between a direct and
an indirect channel of distribution.
© 2012 Cengage Learning. All Rights Reserved.
SLIDE 1
CHAPTER
Price- the money a customer must pay
10
SLIDE 2
for a product or service
(6 FACTORS IN PRICING A PRODUCT)
● Supply and demand
● Uniqueness
● Age
● Season
● Complexity
● Convenience
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
10
SLIDE 3
VALUE AND PRICE
● Buyers usually want to pay the lowest
price possible.
● Sellers want to charge the highest price
possible.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
PRICE A PRODUCT
10
SLIDE 4
● Selling price – Price paid by customer
● Product costs- cost of a business to make or
purchase the product
● Operating expenses- all of the expenses operating
the business in order to sell product.
● Profit- the amount of money available to the business
after all costs and expenses (Revenue minus Costs)
Selling
Product Operating
=
+
+ Profit
price
costs
expenses
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
10
SLIDE 5
Gross Margin- the difference
between the selling price and
the production costs.
Gross Margin = Selling price + Product costs
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
MARK-UP VS MARK-DOWN
10
SLIDE 6
MARK-UP
● The amount added to the cost of a product
to set the selling price
● Markup on cost
● Markup on selling price
MARK-DOWN
● A reduction from the original selling price
● Reasons for markdowns:
● Low demand, End of season, Flaws
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
DISTRIBUTION
CHAPTER
10
SLIDE 7
● Distribution- How the product is delivered
to the consumer.
● Channels of Distribution: The route a
product goes through to make its final stop
at the target customer
Example: Manufacturer by truck to
wholesale by truck to retail to customer
Channel Members- all of the businesses
involved in getting the final product to the
customer
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
What is the difference between Direct
& Indirect Distribution
● Direct channel of distribution, products
move directly from the producer to the
consumer.
10
SLIDE 8
Example: Ordering a computer online from Dell
● In an indirect channel, others may
participate in the movement of products
from the producer to the consumer, such
as transportation services and retailers.
Example: Allen Outlet Mall Store Nike has
products delivered by truck from
warehouse in Oklahoma
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
10
SLIDE 9
Wholesalers VS Retailers
Wholesaler- Intermediaries between
manufacturers and retailers. Items in bulk
Example: Furniture Warehouses,
Sam’s Club
Retailer- Direct contact with the customer
Example: Allen Outlet Mall Stores
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
10
SLIDE 10
Distribution Channels- the more
channels the higher the cost
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
10-4 Plan Promotion
Goal 1 Justify the importance of
communication in marketing.
Goal 2 Identify and describe the common
types of promotion.
© 2012 Cengage Learning. All Rights Reserved.
SLIDE 11
CHAPTER
10
SLIDE 12
Advertising: Planned Promotion
● Promotion- any form of communication to
inform, persuade or remind customers
about a product or service.
● Effective Communication- the exchange of
information so that there is common
understanding by everyone.
● Personal Selling- Direct, individualized
promotion face-to-face with potential
customer.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
10
ADVERTISING- (3 Types) Paid promotion SLIDE 13
of a product, service, or company
1) PRINT- printed form of advertising
Ex: Magazine, Newspaper, Mail Flyer
Cheap but effective in specific areas
2) BROADCAST- Advertising through light,
sound, or motion Ex: TV or Radio
Expensive but very effective
3) CYBER- Online Advertising Ex: Pop-up Ads
Cost depends on the web site
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
COMPONENTS OF EFFECTIVE
COMMUNICATION
© 2012 Cengage Learning. All Rights Reserved.
10
SLIDE 14
Principles of Business, 8e
CHAPTER
10
SLIDE 15
Checkpoint 
● How does identifying a target market
improve promotion communications?
● Communication can be developed and
directed more specifically if a target market
is identified.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
10
SLIDE 16
TYPES OF PROMOTION
● Merchandising- promotional activities
designed to generate sales in the retail
setting.
● VISUAL MECHANDISING- Signage
● DISPLAY- A display of products usually
placed near the front door/window
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
10
SLIDE 17
Checkpoint 
● Describe the advantages and disadvantages
of the major types of promotion.
● Personalized promotion allows the provider to
meet customers and identify customer needs.
● It is, however, the most expensive type of
promotion.
● Mass promotion reaches a larger target market
and is much less expensive.
● It does not, however, provide for individualized
service, and sales (results) are often not
immediate.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
10
SLIDE 18
ONLINE RESEARCH
● Superbowl Ads- Watch and analyze
superbowl Ads.
www.superbowl-ads.com
● In 2014 the average price per 30 second
ad was around 4 million dollars each.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e