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Essential Standard 3.00 Objective 3.01. Understand the role marketing in business. Understand principles of marketing. Topics. Functions of marketing Importance of marketing research to the creation or improvement of products or services Selling prices of products and services

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Essential standard 3 00 objective 3 01

Essential Standard 3.00Objective 3.01

Understand the role marketing in business.

Understand principles of marketing.


Topics

Topics

  • 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


What is marketing

What is marketing?

  • 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.


Functions of marketing

Functions of Marketing

  • What happens during the marketing process?

  • Businesses are involved in:

    • Product Origin- Research & Development

    • Product Pricing

    • Product Promotion, and

    • Distribution of products and services


Essential standard 3 00 objective 3 01

Products and services are made available in order to meet the goals of individuals and businesses.

Essential Question:

Why do businesses spend so much time, money, and effort to market their goods and services?

Answer: to meet customer needs and to make a profit


Seven functions of marketing

Seven Functions of Marketing

Marketing Activities happen during the seven functions of marketing

  • Product/service management

  • Distribution

  • Selling

  • Marketing-information management

  • Financing

  • Pricing

  • Promotion


Product service management

Product/Service Management

  • Defined:

  • designing, developing, maintaining, improving, and obtaining products and services

  • in order to meet the needs of customers.


Distribution place

Distribution (Place)

  • Defined:

  • Using the best ways for customers to:

  • locate,

  • obtain, and

  • use the products and services of a business.


Selling

Selling

  • Defined: Communicating directly with potential customers in order to determine and satisfy their needs and wants.


Marketing information management

Marketing Information Management

  • Defined:

  • Obtaining

  • Managing

  • and using information about:

    • Products & services

    • Customers

    • & Competitors

  • to improve business decision-making and the performance of marketing activities.


Financing

Financing

  • Defined:

  • Budgeting for marketing activities

  • Securing necessary funds for operations, and

  • Providing financial assistance to customers.


Pricing

Pricing

  • Defined:

  • Determining and communicating the value of products and services.


Promotion

Promotion

  • Defined: Communicating information such as:

  • features and

  • prices

  • about products and services to potential customers.

http://www.rolex.com/en#/home/


Marketing research

Marketing Research

Why do companies spend money on marketing research?

http://www.deere.com/servlet/PIPInquiry?PIN=&Submit=Search

http://www.ford.com/innovation/automotive-technology


Marketing research1

Marketing Research

  • What is marketing research?

    • utilizes customers to find solutions to marketing problems through carefully designed studies.

  • Steps in marketing research:

    • Define the marketing problem.

    • Study the situation.

    • Develop a data collection procedure.

    • Gather and analyze information.

    • Propose a solution.


Types of research studies

Types of Research Studies

  • Surveys

    • ASKING OPINIONS OF LARGE GROUPS

    • Student survey

  • Focus groups

    • SMALL GROUP DISCUSSION

    • Group previews tv ads

  • Observations

    • RECORDING ACTIONS OF CONSUMERS

    • ex: what people buy, return, use

  • Experiment

    • PRESENTING TWO ALTERNATIVES TO DETERMINE WHICH HAS BETTER RESULTS

    • ex: cloroxed socks


Examples of market research

Examples of Market Research


Marketing research2

Marketing Research

Parts of a product

  • Basic product

  • Product features

  • Options

  • Brand name

  • Packaging

  • Warranty

http://www.benjerry.com/


Basic product

Basic Product

  • Simplest form of a product or service

  • Not unique

  • Usually available from several companies

  • Example: basic tv

    • Limited # of channels

    • No pay per view

    • No HD

    • No DVR

    • No playback

  • Example: basic health insurance

    • High deductible

    • Limited coverage

    • Limited service providers

    • High co-pays


Product features

Product Features

http://www.chevrolet.com/?seo=goo_|_2008_Chevy_Retention_|_IMG_Chevy_Make_|_Exact_Match_Chevy_Chevrolet_|_chevrolet

  • 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?


Options

Options

http://www.chevrolet.com/pages/mds/vehicles/helpMeChooseResult.do?bodyStyle=CARS

  • Options include choices of the product or service.

  • Car Choices include:

    • Models

    • Engine size

    • Colors

    • Manual/automatic

    • 2-dr, 4-dr, hatchback

What options are available on this vehicle?


Brand name

Brand Name

  • a company’s unique identification for a product or service

  • Breyer’s ice cream

  • Ford Mustang

  • Maxwell House Coffee

  • Nike shoes

  • Thomasville furniture


Packaging

Packaging

  • the protection and security of a product or service before it is used.


Warranty

Warranty

  • 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


Similarities of products services

Similarities of Products & Services

  • 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)


Differences between products services

Differences between Products & Services

  • Products

    • Tangible

    • Perishable or non- perishable

    • Separable

    • Easier to market

    • More control over quality

  • Services

    • Intangible

    • Perishable

    • Inseparable

    • More difficult to market

    • Less control over quality


Terms

Terms

  • 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 provider affect quality service.


Selling price

SELLING PRICE

  • 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.


Selling price1

Selling Price

  • What are the components of price?

  • The Pricing formula

    Selling price=

    product costs

    + operating expenses

    + profit

  • Product costs-

    • Costs to manufacturer of producing the product

  • Operating expenses-

    • Costs of doing business:

    • Salaries, storage, equipment, facilities, utilities, taxes, etc

  • Profit-

    • Amount left after all costs and expenses have been paid


Use pricing formula

Use Pricing Formula

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

  • Using price formula, what is the product cost?


What factors influence the pricing of products and services

What factors influence the pricing of products and services?

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


How companies set price

How Companies Set Price

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!


Profit margin

Profit Margin

  • Selling Price-Product Cost

    =

  • Gross margin*

    *Important factor in pricing

  • Gross margin represents amount of money on hand to pay for operating expenses of the business


Markups markdowns

Markups & Markdowns

Markup

  • Amount added to the selling price to cover the operating expenses and profit

  • Usually stated as a percentage of selling price

    • Selling price = product cost + markup

  • Example: $35+$14=$49

    • $35*40%=$14

  • Markdown

    A reduction from the original selling price.


Calculate markups mu

Calculate Markups/ MU %

  • Selling price = $49

  • Markup = $14

  • Product cost = $35

  • What is Markup %

  • $35 x MU%=$14

    MU %=14/35

    MU%= 40%

  • Selling price = $100

  • Markup = $25

  • Product Cost = $75

  • What is mark up %?


Calculate mark downs

Calculate mark downs

Example:

  • Original price $35

  • 20% advertised markdown

  • What is new price?

  • $35 x .20 = $ markdown

  • $ markdown= $7

  • New price is $28

  • Practice:

  • Price = $140

  • Markdown =15%

  • What is new price?


Channels of distribution

Channels of Distribution

  • 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


Types of channels of distribution

Types of Channels of Distribution

Direct Examples

  • Tonya makes and sells drapes to local customers.

  • Joe sells fresh peaches from his orchard at a roadside stand.

  • Harvey uses landscaping equipment to move soil for the foundation of a house being built by Mr. Thomas, his customer.

  • Indirect Examples

    • RCA sells televisions to Circuit City who resells to customers.

  • UPS delivers merchandise packages to Ann Taylor retail outlet at the mall to be sold to consumers.

  • Gant, an ore extractor, sells bauxite to Reynolds for processing into aluminum.

  • NO Intermediary Involved

    Intermediary Involved


    Essential standard 3 00 objective 3 01

    • 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


    Essential standard 3 00 objective 3 01

    • 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 need them.


    Channels of distribution1

    Channels of Distribution

    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.


    Distribution place1

    Distribution(Place)

    • 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.


    Essential standard 3 00 objective 3 01

    CHANNELS OF DISTRIBUTION

    How does CORN get to your table?

    FARMER/FARMWORKERS GROW

    FARMWORKERS HARVEST FOR TEMPORARY STORAGE

    CORN TRANSPORTED TO SILO STORAGE

    CORN TRANSFERRED TO TRAIN/TRUCK FOR TRANSFER

    TRAIN TRANSFERS CORN TO MILL/PROCESSING PLANT

    MILL/PROCESSOR CHANGES PRODUCT

    PROCESSOR PACKAGES INTO CANS/FROZEN BAGS ETC

    CANS FROM MILL TO STORAGE

    STORAGE TO TRAIN/TRUCK TO WHOLESALER

    WHOLESALER (GROCERS ASSOCIATION) STORAGE

    WHOLESALER TO RETAILER (FOOD LION) BY TRUCK

    RETAILER TO CONSUMERS

    CONSUMERS EAT CORN FOR DINNER!


    Who touched that corn

    Who touched that corn?

    • Without looking back to previous slide-

    • List as many as you can…groups who had contact with the corn that you eat.


    Communication promotion

    Communication & Promotion

    • 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


    Promotion1

    Promotion

    Pizza $9.99

    • 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


    Effective communication

    Effective Communication

    • 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.


    Communication

    Communication

    • 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.


    Classification of promotion types

    Classification of Promotion Types

    • 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


    Personal selling

    Personal Selling

    • 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

    • Examples:

    • Car salesmen

    • Jewelry sales

    • Cosmetic counters at department stores

    • Insurance sales

    • Investment brokers

    • Realtors


    Advertisements

    Advertisements

    • 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

      • Mass Mailings

      • Email

    http://www.godiva.com/welcome.aspx


    Publicity

    Publicity

    • Non paid communication in the news media or by word of mouth

    • Cannot be controlled

    • Can be good or bad for the business

    • Examples

    • Walmart violations of EEOC regulations

    • Food poisoning linked to local restaurant

    • Action 9 contacting business that did not stand behind contract with consumer


    Public relations

    Public Relations

    • Activities used to build and maintain a positive image about a company and its products

    • 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


    Sales promotion

    Sales Promotion

    • Communication activities used to stimulate sales, create awareness of a new product, or create goodwill for the business

    • 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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