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Chapter 10: Producing Goods and Services World Wide & Chapter 11: Marketing in Today’s World

Chapter 10: Producing Goods and Services World Wide & Chapter 11: Marketing in Today’s World. Introduction to Business. Production and Operations. OPERATIONS SYSTEM: Planning that goes into producing a Product or Running a Business Includes Facilities Processing

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Chapter 10: Producing Goods and Services World Wide & Chapter 11: Marketing in Today’s World

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  1. Chapter 10: Producing Goods and Services World Wide & Chapter 11: Marketing in Today’s World Introduction to Business

  2. Production and Operations • OPERATIONS SYSTEM: Planning that goes into producing a Product or Running a Business • Includes • Facilities • Processing • People needed to produce goods and services

  3. Facilities • Physical elements needed to produce a product or provide a service • Include: • Factory Buildings • Warehouses • Land • Offices • Machinery • Equipment • Trucks • Consider • location of the facilities-need to be close to product parts • Layout: • Will the plant and office be in same building or near each other? • Depends on Production process

  4. Processing • All activities involved in changing or combining resources to produce a good or service • Transferring raw goods finished goods • Less $ to mass produce 1 item than produce just one item

  5. People • Human Resources=most important factor • Jobs • Plan & Supervise • Program Computers • Repair Machines • Watch over Processing Operations • Plan content and methods by 2 techniques: • Task • Workers • Combination • Hire Local Mangers=Better Strategic Results • Country’s Cultural Concerns Understanding • Consumer Habits • Government Regulations

  6. Controlling Production • Production Forecasting = estimating how much of a company’s goods or services must be produced to meet future demand • Usually based on past demand • Considers: • Economic Growth • Incomes • Scheduling • Inventory Management • Materials Requirement Planning • Manufacturing Resource Planning • Just-In-Time Planning

  7. Controlling Production • Scheduling • Identifies how many goods will be made over a given period of time • How many of each model, color, and size

  8. Controlling Production • Inventory Management • Inventory: amount of goods • Inventory Control: balancing the costs of holding raw materials, partially completed materials, and finished goods with the costs of ordering them • Inventory Management Techniques: • Materials Requirement Planning (MRP) • Getting correct materials where they are needed for production & doing it on time & without unnecessary stockpiling • Manufacturing Resource Planning (MRP II) • MRP + includes input from other departments including finance & marketing • Just-In-Time Planning (JIT) • Materials arrive precisely when they are needed on a production line & finished goods are delivered “just in time” for usage

  9. Making Production Efficient • 3 Main Areas of Concern • Quality Control: measuring goods & services against established standard • Quality Assurance: Business developing departments to work on quality • Quality Circle: group of employees from same area • Define, analyze and solve quality problems in their area • Also work on reducing defects boosting morale, streamlining hiring practices and improving training • ISO 9000 Standard: global/national quality standard committee • Study operation of a factory, laboratory, or office • International Organization Standardization • Certification for testing products, training employees, keeping records & fixing defects

  10. Making Production Efficient • Maintenance • Def: Any kind of activity that keeps a production facility in working condition or puts it back in working condition if it breaks down • Repairing broken machines ASAP • Preventive = more efficient & cost effective • Cost Control • Analyze costs to establish minimum acceptable $ on product • 2 types of cost • Variable Costs: costs of materials, labor, and raw materials that change with number of goods produced • Fixed Costs: cost that must be paid; not dependent on any variable

  11. Working in Operations & Production • Skills Required • Mechanical aptitude=use of tools & machines & hands & eyes • Problem solving =Use information to solve problems • Math/science = weigh, measure, sort, cut, and assemble different kinds of material by patterns or models • Communication = improve products and work environment • Accuracy/attention to detail = putting products together accurately for high quality & efficient operations

  12. CHAPTER 11: Marketing in Today’s Society • Elements of Marketing • Marketing Mix: activities that go into the selling of a product to consumers = product, price, promotion, & place • Product: studies & surveys to find out what goods & services people want to buy • Include qualities • Price: $ set that is attractive to buyers & high enough to cover costs & expenses • Promotion: all activities that go into telling consumers about the product or service & trying to persuade them to buy it • Place: where the product or service is sold • Also the placement/location of goods within the sotre

  13. Product Planning • Types of Products: • Consumer goods: goods sold to individuals and families • 3 Categories: • Convenience goods/services: regularly use without spending much effort • Milk, bread, eggs • Shopping goods/services: spend much time looking around & comparing similar products • Vehicles, higher-priced clothing • Specialty goods/services: select by brand or by company • Cameras, sports & stereo equipment, perfume & fine watches

  14. Product Planning • Life Cycle of a Product • Can be rapid or slow • Clothes-annually vs. equipment-years • 4 Phases • Introduction Phase: On the market for the 1st time • Loses money because of little revenue compared to costs of development • Growth Phase: product = popular • Sales & profits increase rapidly • Others make similar products • Mature Phase: Sales level off & profits begins to fall • More producers & steady demand • Declining Phase: last stage; no longer profitable • Stop making the product or introduce better-quality or more attractive version

  15. Product Planning • Meeting Consumer Needs • Consumers spend = • Physical needs: necessities of life • Food, clothing, housing, transportation, health, safety, & security • Social needs: need to be loved & accepted by others • Desire to be attractive to opposite sex • Cologne, skin care products, deodorant • Psychological needs: need for approval & prestige • Goods/services that show accomplishment • Nondiscretionary income: used to buy items to meet basic needs • Discretionary income: income left over after basic needs are met

  16. Product Planning • Understanding Consumer Motivations • 3 types of motives • Rational motives: logically think about a purchase • Emotional motives: purchase based on feelings or attitudes; impulse buying or irrational purchase • Patronage motives: loyal to a brand or company • Using Market Research • Market Research = gathering of information that businesses can use to determine what kind of goods or services to produce • Forecasts how much to produce • Demographics: study of population

  17. Pricing, Packaging, & Promotion • Pricing: value that producers & sellers place on goods & services • Cover • Producing • Shipping • Promoting • Profit • Fixed & Variable Costs • Break-even point: point at which the total cost is equal to the total money the product earns • 2 Messages: • High price = exclusiveness; better quality • Low price = low quality

  18. Pricing, Packaging, & Promotion • Packaging • Attractive • Clearly labeled • Prevent tampering and protect content • Labels promote advertising • Logo: symbol of manufacturer & brand name of the product • Give directions • Lists ingredients

  19. Pricing, Packaging, & Promotion • Promotion: all activities involved in selling a product • Advertising: paid promotion • Sponsors: People who purchase advertising • TV commercials • Catalogs • Magazine Ads • Newspaper Ads • Billboards • Products themselves • Direct Mail

  20. Distributing Goods & Services • Channel of Distribution: all the people who direct products to consumers • Includes Intermediaries/Go-Betweens • Distributors: represent single manufacturer in a specific geographical area • Wholesalers: receive large shipments  small batches for resale • Retailers: sell goods directly to the consumer • Final Stop

  21. Special Concerns For International Marketers • Communication: • Understanding the language • Traditions and Customs • Understanding customs & traditions in cultures • Differences in Buying Habits • Based on system of values • Research each country

  22. Working in Marketing • Like to meet the needs of others • Enjoy working with others • Important Traits: • Communication: talking, listening, & reading • Human Relations: get along with others & understand why people do what they do • Math skills: basic math skills • Motivation: Goal-oriented & lots of enthusiasm • Creativity/Problem-Solving: use imaginations & answer ?s and solve problems

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