Transcript POB 3.01 PPT

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Functions of marketing
 Importance of marketing research to the
creation or improvement of products or
services
 Selling prices of products and services
 Classification of channels of distribution
 Classification of the main types of
promotion

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 The
process of planning & executing the
› Conception
› Pricing
› Promotion and
› Distribution

of ideas, goods, and services to create
exchanges that satisfy individual and
organizational objectives.
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What happens during the marketing process?
Businesses are involved in:
› Product Origin- Research & Development
› Product Pricing
› Product Promotion, and
› Distribution of products and services
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Essential Question:
Why do businesses spend so
much time, money, and
effort to market their goods
and services?
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Products and services are made
available in order to meet the goals of
individuals and businesses.
Answer: to meet customer
needs and to make a profit
Marketing Activities happen during the seven
functions of marketing
 Marketing-
 Product/service
management
information
management
 Distribution
 Financing
 Selling
 Pricing
 Promotion
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Defined:
designing,
developing,
maintaining,
improving, and
obtaining products
and services
in order to meet the
needs of customers.
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Defined:
Using the best ways
for customers to:
locate,
obtain, and
use the products
and services of a
business.
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Defined:
Communicating
directly with
potential customers
in order to determine
and satisfy their
needs and wants.
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Defined:
Obtaining
Managing
and using information
about:
› Products & services
› Customers
› & Competitors
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to improve business
decision-making and
the performance of
marketing activities.
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Defined:
Budgeting for
marketing activities
Securing necessary
funds for operations,
and
Providing financial
assistance to
customers.
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Defined:
Determining and
communicating the
value of products
and services.
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Defined:
Communicating
information such as:
features and
prices
about products and
services to potential
customers.
http://www.rolex.com/en#/home/
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Why do companies spend money on
marketing research?
http://www.deere.com/servlet/PIPInquiry?
PIN=&Submit=Search
http://www.ford.com/innovation/automotive
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-technology

What is marketing research?
› utilizes customers to find solutions to
marketing problems through carefully
designed studies.
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Steps in marketing research:
Define the marketing problem.
Study the situation.
Develop a data collection procedure.
Gather and analyze information.
Propose a solution.
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
Surveys

› ASKING OPINIONS
› RECORDING
OF LARGE GROUPS
› Student survey
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ACTIONS OF
CONSUMERS
› ex: what people
buy, return, use
Focus groups
› SMALL GROUP
DISCUSSION
› Group previews tv
ads
Observations
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Experiment
› PRESENTING TWO
ALTERNATIVES TO
DETERMINE WHICH
HAS BETTER RESULTS
› ex: cloroxed socks
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Parts of a product
› Basic product
› Product features
› Options
› Brand name
› Packaging
› Warranty
http://www.benjerry.com/
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Simplest form of a product or service
Not unique
Usually available from several companies
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Example: basic tv
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› Limited # of
›
›
›
›
channels
No pay per view
No HD
No DVR
No playback
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Example: basic
health insurance
› High deductible
› Limited coverage
› Limited service
providers
› High co-pays
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http://www.chevrolet.com/?seo=goo
_|_2008_Chevy_Retention_|_IMG_
Chevy_Make_|_Exact_Match_Chev
y_Chevrolet_|_chevrolet
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Additions and
improvements to the
product or service
Example: cell phone
offers: built-in digital
camera, voice
dialing, web browser
What are some
features of vehicles?
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http://www.chevrolet.com/pages/
mds/vehicles/helpMeChooseResu
lt.do?bodyStyle=CARS
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What options are available on this vehicle?
Options include
choices of the
product or service.
Car Choices include:
› Models
› Engine size
› Colors
› Manual/automatic
› 2-dr, 4-dr,
hatchback
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a company’s unique
identification for a
product or service
Breyer’s ice cream
Ford Mustang
Maxwell House
Coffee
Nike shoes
Thomasville furniture
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the protection and
security of a product
or service before it is
used.
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A company’s offer to:
Repair
Replace, or
Provide a refund for a
product or service in
order to build consumer
confidence in the
business
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Products vs. Services
 Both:

› Meet the needs or satisfaction of a target
market
› Include a mix of the marketing elements
(product, price, promotion, and place distribution)
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Products

Services
› Tangible
› Intangible
› Perishable or non-
› Perishable
perishable
› Separable
› Easier to market
› More control over
quality
› Inseparable
› More difficult to
market
› Less control over
quality
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Tangible - items one can see and touch
Intangible - no physical form, more difficult to examine
Inseparable - services are consumed at the same time they
are produced. The person or technology producing the
service must be available when and where the consumer
needs it. Marketers must determine when and where
consumers want a service and must be able to provide it at
that location and time.
Perishable -cannot be stored for later consumption, services
must be available at the same specific time as the demand
› If a taxi driver does not have a fare, the service goes
unused
› If all concert seats are full, no more people can hear
performance
Heterogeneous – there will be differences in the type and
quality provided. Skill , training, and motivation of the service
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provider affect quality service.
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Definition:
Money a customer
must pay for a
product or service
Price changes as it
moves through
channels of
distribution from
producer to
consumer. Value is
added at each step.
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
Product costs› Costs to

What are the
components of
price?
The Pricing formula
Selling price=
product costs
+ operating expenses
+ profit
manufacturer of
producing the
product
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Operating expenses› Costs of doing
business:
› Salaries, storage,
equipment,
facilities, utilities,
taxes, etc
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
Profit› Amount left after all
costs and expenses
have been paid
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Example A
 Product cost=$67
 Operating expenses
= $38
 Required profit= $100
 Using price formula,
what is the price?
P=67+38+100
P= $215
Example B
 Product cost = ?
 Op exp = $ 24
 Profit = $45
 Selling Price = $ 169
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Using price formula,
what is the product
cost?
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Prices will be higher due to these factors:
 Supply and demand- limited supply
 Uniqueness – few close competitors
 Age – new product introduction
 Seasonal– used only for a specific period of
time
 Complexity – very technical or complex
 Convenience – people pay for convenience
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1. Must cover the cost of the product
2. Must cover the operating expenses (cost
of running the business)
3. Must allow profit for the business
 If PRICE cannot cover 1-2-3, then
business cannot survive…but must also
 BE COMPETITIVE in the market or will
products will not sell!
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Selling Price-Product Cost
=
 Gross margin*
*Important factor in pricing
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Gross margin represents
amount of money on hand to
pay for operating expenses
of the business
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Markup
 Amount added to the
selling price to cover
the operating
expenses and profit
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Usually stated as a
percentage of selling
price
› Selling price =
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Markdown
A reduction from the
original selling price.
product cost +
markup
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Example: $35+$14=$49
› $35*40%=$14
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Selling price = $49
Markup = $14
Product cost = $35
What is Markup %
 $35 x MU%=$14
MU %=14/35
MU%= 40%
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Selling price = $100
Markup = $25
Product Cost = $75
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What is mark up %?
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Example:
 Original price $35
 20% advertised
markdown
 What is new price?
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$35 x .20 = $ markdown
$ markdown= $7
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New price is $28
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Practice:
Price = $140
Markdown =15%
What is new price?
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What is channel of distribution?
How products and services reach final
customers or businesses
 Can be classified as

› Direct- producer to consumer only
› Indirect- one or more businesses in chain
between producer and consumer
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Direct Examples
Indirect Examples
NO Intermediary Involved
Intermediary Involved
 RCA sells televisions to
Tonya makes and sells
Circuit City who resells to
drapes to local
customers.
customers.
 UPS delivers
 Joe sells fresh peaches
merchandise packages
from his orchard at a
to Ann Taylor retail outlet
roadside stand.
at the mall to be sold to
 Harvey uses landscaping
consumers.
equipment to move soil
 Gant, an ore extractor,
for the foundation of a
sells bauxite to Reynolds
house being built by Mr.
for processing into
Thomas, his customer.
aluminum.
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 How
do the needs of producers and
consumers differ?
 They differ by:
› Quantity – a definite amount of
anything
› Assortment-collection of various kinds
of things
› Location- a place of activity
› Timing – selecting the best time or
speed for doing something
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›
Producer Needs versus Consumer Needs
› Quantity – a definite amount of anything
 Businesses produce or sell massive quantities of
products and services, where as each consumer
needs fewer numbers.
› Assortment-collection of various kinds of things
 Businesses usually specialize in producing a specific
type of products and services, where as consumers
usually purchase a variety of products and services.
› Location- a place of activity
 Businesses may distribute products and services to
customers in other countries as well in local
communities. Consumers mostly buy local.
› Timing – selecting the best time or speed for doing
something
 There could be a gap in time when businesses
produce products and services as to when consumers
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Defined: how products/services reach final
customers and the businesses involved

Channel members – businesses that take
part in a channel of distribution
Allow businesses to adjust :
- quantity and assortments
- accessible in convenient locations
- storage of products for customer’s
convenience.
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The marketing mix element that uses
locations and methods to make the
product/service available to the target
market.

Determining the best methods and
procedures to use so customers can find,
obtain and use a product or service.
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CHANNELS OF DISTRIBUTION
How does CORN get to your table?
1. FARMER/FARMWORKERS GROW
2. FARMWORKERS HARVEST FOR TEMPORARY STORAGE
3. CORN TRANSPORTED TO SILO STORAGE
4. CORN TRANSFERRED TO TRAIN/TRUCK FOR TRANSFER
5. TRAIN TRANSFERS CORN TO MILL/PROCESSING PLANT
6. MILL/PROCESSOR CHANGES PRODUCT
7. PROCESSOR PACKAGES INTO CANS/FROZEN BAGS ETC
8. CANS FROM MILL TO STORAGE
9. STORAGE TO TRAIN/TRUCK TO WHOLESALER
10. WHOLESALER (GROCERS ASSOCIATION) STORAGE
11. WHOLESALER TO RETAILER (FOOD LION) BY TRUCK
12. RETAILER TO CONSUMERS
13. CONSUMERS EAT CORN FOR DINNER!
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Without looking back to previous slide List as many as you can…groups who
had contact with the corn that you eat.
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Influential messages
daily bombard you
from:
› Businesses
› Organizations
› Government
agencies
› Political candidates

Is the promotion
always effective?
http://www.youtube.com/watch?v=R55e-uHQna0&safety_mode=true&persist_safety_mode=1
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Pizza $9.99
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Any form of
communication
used to inform,
persuade, or remind
Used to influence
knowledge, beliefs,
and actions about
products, services
and ideas
OPEN
Clay’s
Pizza
Business card
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Effective
communication
consists of
an understanding of
information between
the sender and the
receiver.


Sender selects a
channel of
communication and
Receiver indicates
understanding by
providing some form
of feedback.
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What is the
relationship between
effective
communication and
promotion?

› Businesses use
promotion to
communicate with
potential customers
about their products
and services.

Information about
products and services
is encoded in a
promotional message.
Promotional messages
may be delivered
through
advertisements and
sales representatives.
Potential customers
decode messages
and provide feedback
by way of purchasing
or inquiring about
products or services.
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
Main types of promotion:
› Personalized - customized for individual
customer
› Mass - communicated with many people with a
common message

Some types of mass promotion:
› Advertisement
› Publicity
› Public relations
› Sales promotion
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Direct, individual
communication with
a potential specific
customer
Most expensive type
of selling
Face to face
contact
Used for complex or
expensive products
Can be by phone
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Examples:
Car salesmen
Jewelry sales
Cosmetic counters
at department stores
Insurance sales
Investment brokers
Realtors
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A non-personal paid
form of
communication
Designed to inform,
persuade, or remind
customers about
a good or a service
Most common
media
› Television
› Newspapers
› Outdoor display
boards
› Magazines
› Radio
› Internet
http://www.godiva.com/welcome.aspx
› Mass Mailings
› Email
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Non paid
communication in
the news media or
by word of mouth
Cannot be
controlled
Can be good or bad
for the business



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Examples
Walmart violations of
EEOC regulations
Food poisoning
linked to local
restaurant
Action 9 contacting
business that did not
stand behind
contract with
consumer
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Activities used to
build and maintain a
positive image
about a company
and its products



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Examples:
Executive at bank is
active in Rotary Club
Speedway Plumbing
sponsors golf hole at
the CTE golf
tournament
Chic-Fil-A gives
discount coupons
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
Communication
activities used to
stimulate sales,
create awareness of
a new product, or
create goodwill for
the business

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
Radio listener
contest with $100,000
prize
Buy one get one free
programs- BOGO
Free gifts- ink
pens/caps/tshirts
given with company
info
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