Unit 3 Product and Service Management for the School Based Enterprise

1. Unit 3Product and Service Management for the School Based Enterprise Small Business Operations

2. Business-to-Business Marketing • Business-to-business marketing is the exchange of products and services between businesses. Marketing, 3e, page 330 • Businesses may purchase products for direct resale to customers. Example: clothing, shoes • Businesses may also purchase raw materials that are then processed by the business into finished products for sale to customers. Example: coffee beans, steamed milk, chocolate syrup Frameworks 3.1

3. Purchasing Purchasingincludes determining the products and services needed, identifying the best sources to obtain them, and completing the activities necessary to obtain them.Marketing, 3e, page 331 Small business owners will frequently travel to a central market - a location where people bring products to be sold or exchanged. Marketing, 3e, page 13 Frameworks 3.1

4. Categories of Business Purchases • Capitol Goods – The building and major equipment. • Operating Equipment – Equipment used in the daily operation of the small business. • Supplies – Consumable materials used in the operation of the small business. • Raw Materials – Unprocessed materials that are incorporated into products. • Services – Tasks performed for the business to support production, sale, or maintenance of the small businesses products or services. Marketing, 3e, page 331

5. Bartering Bartering occurs when small business owners decide to exchange products or services, rather than purchasing with cash. Marketing, 3e, page 12 Frameworks 3.1

6. Acquiring Product Knowledge • A product is anything tangible offered to a market by a business to satisfy customer needs.Marketing, 3e, page 276 • A serviceis an activity that is intangible and consumed at the time of production.Marketing, 3e, page 308 Customers of a specialty coffee shop purchase a tangible product, such as the latte picture above, but they also purchase the service associated with the creation and presentation of the product. Frameworks 3.2

7. Products: DECA’s House of Grounds Most beverages are offered in two sizes, Small 12 oz and Regular 16 oz • Brewed Coffee - Ethiopian, or Costa Rican (decaf if demand exists) • Café Latte - Espresso with steamed milk • Cappuccino - Espresso with steamed milk, capped with milk foam • Café Mocha - A chocolate Café Latte • Café Au Lait- Brewed coffee with steamed milk, equal parts • Flavored Café Latte - Café Latte with a shot of flavored syrup – vanilla, sugar free vanilla, caramel, hazelnut, raspberry, etc. • Hot Chocolate - Chocolate syrup and steamed milk • Steamers - Choice of syrup and steamed milk • Bottled Water • Frozen Milk Chocolate Mocha – One scoop powder mix, ice, and water blended together - 12 oz. size only • Italian Soda – Flavored syrup mixed with club soda - 12 oz. size only • Frozen Italian Soda – Flavored syrup, ice, and regular water blended together - 12 oz. size only Frameworks 3.2.1

8. Inventory Management • The term inventory refers to the assortment of products maintained by a business. Marketing, 3e, page 349 • Just-in-time (JIT) inventory management means that the inventory level is kept low and resupplied just as it is needed. Marketing, 3e, page 348 • This reduces the amount of money the business will need to invest in its inventory. • The amount of storage space, or holding space, is reduced also saving the business money. • JIT helps ensures that fresh products will be available for purchase by customers. Frameworks 3.3.1

9. Inventory Management • A vendor is a business that offers products for sale to other businesses. Marketing, 3e, pages 343 • The invoice is an itemized billing statement with the terms of payment for the order.Marketing, 3e, page 350 Frameworks 3.3.1

10. Vendor List: DECA’s House of Grounds POS Core Technologies, Inc. 9624 153rd Avenue NE Redmond, WA 98052 Quill Corporation P.O. Box 94080Palatine, IL 60094-4080 Specialty Beverages of Arkansas Kim and Ellen Schreyer 2715 Bowman Lane Conway, AR 72034 Wal-Mart Supercenter 1417 Highway 62 65 NorthHarrison, AR 72601 Clark Office Products 116 North Walnut Street Harrison, AR 72601 Espresso Supply 1123 NW 51st Street Seattle, Washington, 98107 Food Service Equipment Brokers 1000 Pat Nash Drive, B-1, Building 6 Branson, MO 65616 Pippin Wholesale Company 512 Highway 62-65 Harrison, AR 72601

11. Determining the Retail Price • Thesellingprice is the amount of money a customer must pay for a product or service. Marketing, 3e, page 401 • A markup is an amount added to the cost of a product to determine its selling price.Marketing, 3e, page 411 • If a 2 GB flash drive costs the business $9 and it is marked up by $1, this is a 10% markup as a percentage of the selling price of $10. (This is a very small gross margin.) • A markdown is a reduction from the original selling price.Marketing, 3e, page 412 • Gross margin or gross profit is the difference between the cost of the product and the selling price.Marketing, 3e, page 410 • Net profit is the difference between the selling price and ALL costs and operating expenses associated with producing the product. Marketing, 3e, page 411 Frameworks 3.3.2

12. Receiving Procedures • The vendor fills orders and sends it to the buyer with a packing list, an itemized listing of all of the products included in the shipment. Marketing, 3e, page 350 • When the merchandise is received by the buyer, it should be unpacked and compared to the invoice or the packing slip. • The merchandise should be inspected for damage and spoilage. Frameworks 3.4.1

13. Services A service is an activity that is intangible, exchanged directly from the producer to consumer, and consumed at the time of production. Marketing, 3e, page 308 The services offered by a physician (diagnosis and advice) is usually provided at the time of examination. Frameworks 3.5

14. The characteristics of Services • Intangible means that the service cannot be touched, seen, tasted, heard, or felt. • Inseparable means that the service is produced and consumed at the same time. • Perishable means that services unused in one time period cannot be stored for use in the future. • Heterogeneous means there are differences between services. Marketing, 3e, pages 309-312 Frameworks 3.5.1

15. Services: Perishable

16. Services: Perishable

17. Services: Intangible

18. Services: Inseparable Most customers associate their real estate agent with the service they provide. Most customers view the quality of the hair cut or style they receive directly with the stylist who provided that service.

19. Service: Heterogeneous The quality of a service can vary from business to business. Have you ever had a bad haircut?

20. Marketing Information System • A marketing information system is an organized method of collecting, storing, analyzing, and retrieving information to improve the effectiveness and efficiency of marketing decisions.Marketing, 3e, page 131 The point of sale system (POS) is an effective tool for gathering sales and product information for use in decision making. Frameworks 3.6

21. Marketing Research • Marketing research is a procedure designed to identify solutions to a specific marketing problem through the use of scientific problem solving. Consider the following steps: • Define the problem • Analyze the situation • Develop a data collection procedure • Gather and study information • Propose a solution Marketing, 3e, pages 136-137 Frameworks 3.6

22. Marketing Research: Collecting Data • After carefully and clearly defining the problem and analyzing the situation, the marketing research project should collect data relevant to the study. • Secondary data is information that has already been collected for another purpose that can be used to solve the current problem. • Primary data is information collected for the first time to solve the problem being studied. Marketing, 3e, pages 137-138 Frameworks 3.6

23. Marketing Research: Primary Data • A survey is a planned set of questions to which individuals or groups of people respond. • Closed ended questions offer two or more choices. • Open ended questions allow respondents to develop their own answers. • A focus group is a small number of people brought together to discuss identified elements of an issue or problem. • The observation method collects information by recording the actions of customers without interacting with or communicating with them. • A test market is a geographic area in which a new product or service is tested in order to gather information about customer reaction to the tested product or service. Marketing, 3e, pages 144-148 Frameworks 3.6

24. Focus Group A focus group can provide valuable information to a business.

25. Test Marketing KFC recently test marketed their new Double Down Sandwich. Instead of bread, you get two pieces of fried chicken, which hold the real contents of the sandwich: two types of cheese, bacon, and a new special Colonel’s sauce. The sandwich was first tested in Providence, Rhode Island and Omaha, Nebraska before it was introduced to the rest of the country.

26. Conduct a Research Project • Conduct a research project to determine the feasibility of adding a new product to the current product offerings of the SBE. • Collect secondary and primary data. • Conduct a focus group • Conduct a survey with open ended and closed ended questions. • Consider conducting a test market of the proposed new product. • Observe customer behavior. Frameworks 3.6.1

27. End of Unit 3 • Visit the website www.quizlet.com to review the terms associated with this unit of instruction. • If you have not already done so, create an account with Quizlet.com. • Use your first and last name (without a space) as your login. • Use your first name (or anything you can remember!) as your password. • Using the Quizlet.com search feature, search for cdorman and find Mr. Dorman’s dashboard. • Open the Subjects folder “Small Business Operations.” • Study the flashcards. • Use the test feature and use the scatter feature.