Transcript how marketers use utility lg2 - Mr.Lewis` Online Project Site

Look at this several times before your
final!
• Look at this before 5/12 and ask me about
ANYTHING you don’t understand on Thursday.
The only slides we didn’t go over are the
supply/demand slides that discuss
EQUILIBRIUM.
Your Final Project
• Main Product sold (logo, pic, tagline)
• Graphics: Graphic depiction of interior display
and exterior of store
• Box replica
• Sales Training Video
• BRIEF (1-2 pages) Marketing Plan: Include
distribution used.
Market Segmentation
• The process of classifying people who form a
given market into smaller groups.
• Geographic- Marketing to people in the same
area.
• Psychographic –Marketing to people who have
the same thinking patterns/beliefs.
• Demographic – Marketing to a particular
ethnicity or demographic group.
What is Marketing?
• The process of planning, pricing, promotion,
selling, and distributing products to satisfy
customer’s needs and wants.
Marketing Plan (ESOMIE)
• Executive Summary
• Situational Analysis
– SWOT and PEST
– Objectives
• Marketing and Financial
• Marketing Mix
– 4 P’s Price, Product, Place, Promotion
• Implementation
– Who will do what, when???
• Evaluation/Control
– What performance measures are put in place to determine if
this plan is n track? If it starts going poorly, how will you control
your losses and turn the business around?
Marketing Math
Break Even Units
Suppose you're turning a jewelry-making hobby
into a business. You have $1,000 per month of
fixed costs (studio rent, utilities, equipment,
etc.). Your variable costs for each necklace are
$50 for materials and labor. You'd like to charge
$70 per necklace, since that's what similar
pieces are selling for.
BEQ = $1000 / ($70 – $50) = $1000 / $20 = 50
Fixed cost/ (SP-VC)
Joe sold his machine for $1,000 and it cost him
$700 to make the machine.
To calculate the return on his investment, he
would divide his profit ($1,00-$700 = $300) by
his cost ($700), for a ROI of 43%
P/C
A widget costs $10 and it costs $5 to build. Profit
= $5. This is called CONTRIBUTION MARGIN
A widget costs $10 and it costs $5 to build. Profit
= $5. This is called CONTRIBUTION MARGIN
SWOT
• INTERNAL strengths and weaknesses
• External Opportunities and threats
Environmental Scan
• PEST
– Political
– Economics
– Socio-Cultural
– Technology
Types of Customers
• Innovator - Wants to buy 1st
• Early Adopter – Wants to make sure that the
product has no bugs before buying. Is seen as
trendy.
• Middle Majority – Where most people are.
Buys when everybody else does.
• Laggard – Late to buy things. Waits for prices
to fall.
Types of Businesses
• Domestic – Exists only in this country
• Muti-nationals – Business exists in multiple
countries
• Sole proprietorship – Personal risk is huge but
have great control.
• Partnership – Same risks as sole prop.
• LLC – Limited Liability protection. Can only lose so
much.
• Cooperation –Stockholders, taxed as its own
entity, board of directors make decisions.
Economics
Law of Supply
• Supply: The amount of goods producers are
willing to make and sell.
• Law of supply – Price and quantity supplied
move in the same direction.
– As prices rise, the quantity supplied
generally rises
– As prices fall, the quantity supplied by
sellers falls.
Law of Demand
• Demand: The consumers willingness and
ability to buy products.
• Law of demand: Price and demand move in
OPPOSITE directions.
– As price increases, demand falls.
– As price decreases, demand rises.
Surplus
• Surplus: When supply exceeds demand you
have excess inventory sitting around known as
surplus.
• Possible Causes (others are discussed later)
– Price is too high, customer perceptions are
negative, substitute products exist
Shortage
• Shortages: Demand exceeds supply.
• Examples
– Oil shortages drive gas prices up.
– Bad weather situations (storms, drought,
etc.) drive up the prices of food items.
Equilibrium
• Equilibrium: When the amount of product
being supplied is equal to the amount being
demanded.
• No price hikes or discounts are needed to sell
the product.
• Customers receive a fair price and business
receive a steady flow of business. Everyone
wins!
Equilibrium Example
Market Research
Market research
• Validity – Survey questions measure what they
are supposed to measure. All have to do with
the problem you are looking to solve.
• Reliability – If somebody else gave out your
survey, they would get the same results.
Market research
• Primary Data – Find it yourself! Surveys,
interviews, etc.
• Secondary Data –Research somebody else has
done. Reports, internet, etc.
Market research
• Response Bias
• When somebody answers a question because
they think that’s the way the questioner wants
them to answer.
Pricing
Pricing
• Prestige – Always expensive.
• Penetration –Low price to penetrate a difficult
market that is tough to get into.
• Skimming – Set high then lower as
competition comes in.
• Competitor – Do what the competition does.
• Bundle – Combine with other products and
offer at a lower combined price.
Pricing
• Odd/Even pricing. Setting pricing at odd
prices shows value. Even dollar amounts are
used for classier/expensive items.
Advertising
What you see on an ad
• Typography – Using type artistically. Choosing
proper fonts, placement, etc.
• Adding color increases the production cost,
the readership, and the emotion from a
viewer!
• Focal point – What the viewer see’s first on an
ad.
• Z Pattern – The viewing pattern of people
when they look at an ad.
Types of ads
• Direct Mail (junk mail). Shared cost and large
exposure.
• TV – Expensive but huge reach. More selective
than direct mail. Appeals to the most senses.
• Magazine – Targeted sections of a county,
great for color and high quality images, “As
seen in Newsweek”
Types of ads
• Internet –Low cost but some people ignore
and don’t trust ads due to virus’.
• Newspaper – Good for b/w. Can control
placement of the ad. Many are not reading
papers anymore.
Inventions and Brand Identity
Trademark - a symbol, word, or words legally registered or
established by use as representing a company or product.
Patent – Invention protection
Copyright - the exclusive legal right, given to an originator or
an assignee to print, publish, perform, film, or record literary,
artistic, or musical material, and to authorize others to do the
same.
Decision Making Process
• Extensive – Expensive items. Much research is
needed. Items not purchased often
throughout a lifetime. House, college, etc.
• Routine – No research needed. Purchase these
items regularly. Bread, milk, gum.
• Limited – Some research needed. Bought
occasionally. Smart Phones, electronics, etc.
Buying Motives
• Rational – Buying things for practical reasons.
• Emotional – Buying things based on the way
they make you feel. Prestigious, envied,
pretty/handsome, etc.
Selling
Why do people object?
• Don’t need it
• Don’t’ want it
• Don’t like the source selling it.
• To counter these, make an OBJECTION
ANALYSIS SHEET
Selling tips
• Ask open ended questions
• Use the 7 steps
• Approach, determine needs, sell, overcome
objections, close, cross sell (up-sell), customer
relationship management.
Handling Objections
• Boomerang
– Use negative as a positive
• Feel/Felt/Found
– Say the words feel, felt found in the answer.
• Demonstration
• 3rd Party
– Other people like it so you should too!
• Standing Room Only
– Better get it now or it will be gone!
• Substitution
– Switch out for another product
Sales Floor Areas
•
•
•
•
Selling space
Customer space
Personnel space
Storage space
Displays
• P.O.P. displays result in impulse purchases!
• Architectural – Looks like it’s intended use.
Living rooms at IKEA
• Open displays –You can touch the items
• Closed displays- Items are behind glass,
plastic, etc. Can’t touch them without
assistance.
Distribution
Middlemen
• Also known as intermediaries.
• Help you get the product to the final
customer.
*
The SUPPLY CHAIN
Building
Cooperation in
Channel Systems
LG6
*
15-46
RETAIL DISTRIBUTION
STRATEGIES
*Retail
Distribution
Strategy
LG4
*
• Intensive Distribution -- Puts products into as
many retail outlets as possible including vending
machines.
• Selective Distribution -- Uses only a preferred
group of the available retailers in an area.
• Exclusive Distribution -- The use of only one
retail outlet in a given geographic area.
15-47
Brick and Mortar Retailers
• Local businesses
• Mom and pop shops
• Own their own products and stores.
Wholesalers
• Wholesalers normally make B2B sales, however,
stores like Staples and Costco also have retail
functions.
Distribution
• Rack Jobbers -- Furnish racks or shelves of
merchandise such as music, magazines, and hosiery
for retailers for display and sell them on consignment.
• Drop Shippers -- Take orders from retailers and
other wholesalers and have the merchandise shipped
from producer to buyer. Usually involves materials
that are tough to ship. Chemicals, etc.
COMPARING TRANSPORTATION
MODES
*
Logistics:
Getting Goods
to Consumers
Efficiently
*
LG7
Mode
Cost
Speed
Dependability
Flexibility
Frequency
Reach
Rail
Med.
Slow
Medium
High
Low
High
Trucks
High
Fast
High
Medium
High
Highest
Pipeline
Low
Medium
Highest
Lowest
Highest
Lowest
Ships
Lowest
Slowest
Lowest
Highest
Lowest
Low
Air
Highest
Fastest
Low
Low
Medium
Medium
15-51
TYPES of
INTERMODAL SHIPPING
*
Logistics:
Getting Goods
to Consumers
Efficiently
LG7
*
• Piggybacking: Truck trailers placed on trains
• Fishybacking: Truck trailers placed on ships
• Birdybacking: Truck trailers placed on planes
15-52
Distribution
• Agents generally maintain long-term relationships
with the clients they represent.
- Manufacturer’s agents represent
several manufacturers in a specific
territory.
- Sales agents represent a single
client in a larger territory.
• Brokers usually represent
clients on a temporary basis.
INTERMEDIARIES
CREATE UTILITY
*The Utilities
Created by
Intermediaries
LG2
*
• Utility -- The want-satisfying ability, or value, that
organizations add to goods and services by making
them more useful or accessible to consumers.
• Six types of utilities:
1. Form
2. Time
3. Place
4. Possession
5. Information
6. Service
15-54
*The Utilities
HOW MARKETERS USE UTILITY
Created by
Intermediaries
LG2
*
• Form Utility -- Changes raw materials into useful
products; producers generally provide form utility.
- Starbucks makes coffee the way the customers want it.
- Levi-Strauss transforms denim into clothes.
• Time Utility -- Makes products available when
customers want them.
- Many Walgreens stores are open 24-hours a day.
- Colleges offer day and evening classes.
15-55
*The Utilities
HOW MARKETERS USE UTILITY
Created by
Intermediaries
LG2
*
• Place Utility -- Adds value to products by placing
them where people want them.
- Banks place ATMs at convenient locations.
- Pepsi is available in campus vending machines.
• Possession Utility -- Helps transfer ownership
from one party to another, including providing credit.
- Pay for lunch at McDonalds with your Visa card.
- Car dealers offer loans to buyers.
15-56
*The Utilities
HOW MARKETERS USE UTILITY
Created by
Intermediaries
LG2
*
• Information Utility -- Opens two-way flows of
information between marketing participants.
- Dell’s website offers advice to PC buyers.
- Local government maps show tourist locations.
• Service Utility -- Provides service during and after
a sale and teaches customers how to best use
products.
- Apple offers classes to help computer buyers.
- College placement offices help students find jobs.
15-57
Final Piece of Advice
• Look up Marketing Trends that are occurring
now! Be able to explain them.
• Increased mobile usage – An app for
everything
• Virtual Reality and interactivity
• Personalized marketing messages
– Based on internet searches and purchases
• Internet –Social Media Marketing