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  1. BUSINESS STUDIES MARKETING Unit 1: Introduction to marketing Photo: Pedro Fernández Sánchez INSTITUT Milà i Fontanals

  2. 1.1 Marketing A. What’s marketing? B. Importance of marketing. C. Marketing mix. INSTITUT Milà i Fontanals

  3. A. What’s marketing? • Detects customers’ needs and wants. • It is a management process. • Supplies customers with goods and services to make profit (mutually beneficial). INSTITUT Milà i Fontanals

  4. B. Importance of marketing. • There is a need for customer satisfaction. • There is a need for business specialization. • Shows the development of an economy. sa_ _ _ _ _ _ tion. sp_ _ _ _ _ _ tion. de_ _ _ _ _ ment INSTITUT Milà i Fontanals

  5. C. Marketing mix. • It is a combination of elements that affects customers’ decision to buy. • The elements are the 4 Ps: • Product. • Price. • Promotion. • Place. INSTITUT Milà i Fontanals

  6. Product • Is the good or service that a company sells. INSTITUT Milà i Fontanals

  7. Price • Quantity or amount of money a customer pays. Photo: INSTITUT Milà i Fontanals

  8. Promotion • How customers are informed about the product. Photo: INSTITUT Milà i Fontanals

  9. Place • How the product will be distributed. Photo: INSTITUT Milà i Fontanals

  10. BUSINESS STUDIES MARKETING Unit 2: Marketing mix Photo: author: Grochim Pedro Fernández Sánchez INTITUT Milà i Fontanals

  11. Unit 2. Marketing mix • 2.1 Product • 2.2 Price • 2.3 Promotion • 2.4 Place INSTITUT Milà i Fontanals

  12. 2.1 Product A. Concept B. Types of products C. Product portfolio D. Product life cycle E. Packaging F. Brand (or Trademark) INSTITUT Milà i Fontanals

  13. A. Concept • Good or service that satisfies customer’s need and her desire to buy it. • Product differentiation is when a company chooses features to distinguish it from others INSTITUT Milà i Fontanals

  14. B. Types of products a) Consumption goods: they satisfy people’s needs directly. There are two types. • Non-durable goods: they disappear when we use them. Examples:________________________________ INSTITUT Milà i Fontanals

  15. B. Types of products • Durable goods: we can use them many times. For example:___________________________ INSTITUT Milà i Fontanals

  16. B. Types of products b) Industrial goods: they are used to make other goods. They do not satisfy people’s needs directly. For instance:___________________________ INSTITUT Milà i Fontanals

  17. B. Types of products c) Services: are non-physical products or economic activities. Examples:_____________________________ INSTITUT Milà i Fontanals

  18. ACTIVITY 3 – Classifying products INSTITUT Milà i Fontanals

  19. ACTIVITY 3 – Classifying products INSTITUT Milà i Fontanals

  20. NESTLÉ Culinary & Frozen Food Cereals Baby Food Dairy Coffee Drinks Ice creams Chocolate Extreme Nestea Nestlé La Lechera Buitoni Kit Kat Nestcafe Chocapic Golden Grahams Nativa Crunch Sveltesse Litoral Nestlé Gold Nestlé Gold Nesquick Solís Cheerios Caja Roja Eko Ideal Maxibon Bonka Nidina Crunch Cereals Dolce Gusto Nestlé Noir La Cocinera Nestlé Viladrau Naturnes Aquarel Ricoré Dolca Pirulo San Narciso After Eight Vittel Perrier S.Pellegrino

  21. Width = 8 products lines Length = 40 products Product line Line depth = 5 products INSTITUT Milà i Fontanals

  22. C. Product portfolio a) Length (of product mix): the total quantity of goods that the company sells. It is the group or set of product lines. b) Width (of product mix): the number of different products line. c) Product line: is a set of goods with similar characteristic. d) Line depth: number of products in a line. INSTITUT Milà i Fontanals

  23. D. Product Life Cycle (PLC) INSTITUT Milà i Fontanals

  24. SALES (€) Product Life Cycle Curve TIME (Years) STAGES PLC INSTITUT Milà i Fontanals

  25. PRODUCTS THAT WE CAN SELL QUICKLY AT RELATIVELY LOW COST. E. Packaging • Importance. • It is important because it helps to sell and to distinguish the product (differentiates) • More so for Fast Moving Consumer Goods (FMCG) • Examples of FMCG: chocolates, soft drinks… INSTITUT Milà i Fontanals

  26. E. Packaging • Characteristics: BEFORE BUYING • Easy to identify (e.g.______________) • Attractive (encourages buying our product) • e.g._______________ INSTITUT Milà i Fontanals

  27. Packaging characteristics • Inform about its content for non transparent packaging (e.g. _________________) AFTER BUYING • Easy to open (e.g. _________________) • Convenient to use (especially if we use often) e.g. _________________________ • Ease of transportation and storage e.g._______________) INSTITUT Milà i Fontanals

  28. F. Brand (trademark) • Concept: is a name (pronounced), symbol, logo (image), slogan or design that distinguishes a seller’s goods or services in the market. INSTITUT Milà i Fontanals

  29. F. Brand (trademark) • Characteristics: • Short • Easy to remember • Associated with product (e.g.___________) • Sometimes we use brand to talk about product (e.g._____________________) INSTITUT Milà i Fontanals

  30. Brand Strategies • Global brands. • Multibrands. • Individual brands • Product line brand • Second brand • Own-brands. INSTITUT Milà i Fontanals

  31. I. Global brands • When the company uses the same name for all the products. E.g. __________________ INSTITUT Milà i Fontanals

  32. II. Multi-brands • Individual brands: we use a different brand for each product. E.g. Procter & Gamble, Henkel, Uniliver, Sara Lee INSTITUT Milà i Fontanals

  33. II. Multi-brands • Product line brand: we use the same brand for similar products. E.g. Pascual - Zumosol INSTITUT Milà i Fontanals

  34. II. Multi-brand • Second brand: Companies with an exclusive / luxury brand; theywant to find another market segment (low price) to sell another brand. E.g. Rolex - Tudor INSTITUT Milà i Fontanals

  35. III. Own-brands • When big supermarkets sell their own products, made by other companies, at a lower price. E.g. Dia, Mercadona, Carrefour INSTITUT Milà i Fontanals

  36. 2.1 Price A. Concept B. Fixing prices - Market based pricing - Cost based pricing - Competition based pricing C. Price strategies - Price skimming or creaming. - Penetration pricing - Psychological pricing 36 Pedro Fernández INSTITUT Milà i Fontanals

  37. A. Price concept • Price tells us the money that a company can earn selling its product (revenue).

  38. B. Fixing prices MARKET BASED PRICING • It uses the market demand to calculate price. • Demand is the quantity of goods a consumer wants to buy. • Supply is the quantity of goods that a company wants to produce and sell.

  39. Demand & Supply Law • The basic law of demand and supply says: • If price goes up, then demand falls and supply increases. • If price falls, then demand goes up and supply decreases. • At the equilibrium, demand equals supply and we have a market price.

  40. GRAPH: Demand - Supply Law & Equilibrium m Supply (curve) As price falls €10 Pe As price falls (40 units, Equilibrium €10 ) Price (€ - Euros) Quantity of demand falls Quantity of demand goes up Demand (curve) 40 units (Qe) QUANTITY (units)

  41. B. Fixing prices COST BASED PRICING • It uses production costs to work out price. • It takes fixed costs and variable cost, and adds a fixed percentage of the cost of making the product, called mark-up.

  42. COST BASED PRICING: A Practical Example • A manufacturer business has a production unitary cost of €20/unit. Find the selling price if the company wants to get a 15% mark-up. SOLUTION: Selling price = Cu + Mark-up Sell. price = €20/unit + 0.15 (€20/unit) Sell. price = €20/unit + €3/unit = €23/unit DATA: Cu = €20/unit Mark-up = 15% o/Cu

  43. COST BASED PRICING: Exercise • A small firm has a unitary: fixed cost of €10/unit and a variable cost of €5/ unit. Find the selling price if the company wants to get a 30% mark-up. DATA: CFu = €10/unit CVu = €5/unit Cu = (€10 + €5)/unit Mark-up = 30% o/Cu SOLUTION: Selling price = Cu + Mark-up Selling price = (CFu + CVu) + Mark-up Sell. price = €15/unit + 0.3 (€15/unit) Sell. price = €15/unit + €3.5/unit = €18.5/unit

  44. B. Fixing prices COMPETITION BASED PRICING Sets price based on competitors’ prices. There are three possibilities: • Similar price (for similar products’ features). • Lower price (we earn more selling big quantities). • Higher price (we have a famous product or better quality).

  45. COMPETITION BASED PRICING If the market has a leader (e.g. Telefónica), Then other businesses can: • Follow the leader (similar prices) • Set independent price (it can provoke a price war)

  46. C. Price strategies • Price skimming or creaming • Penetration pricing • Psychological pricing

  47. C. Price strategies • Price skimming or creaming: company starts with a high price (market segment) and reduces it later (to increase the market). It is used for: - products with no competitors - new products (e.g. latest Channel) - fashionable products (e.g. New Diesel jean) - technological products(e.g. Iphone4) ______________) ______________) ____________)

  48. C. Price strategies • Penetration pricing: when a product has a low initial price to enter the market. When sales go up, the price is increased. E.g. New Airplane Company. ___________________)

  49. C. Price strategies • Psychological pricing: It is based on how customers associate a price with a feature of a product. TYPES: - Regular price - Premium prices - Price on customers’ expectation - Critical price point

  50. C. Psychological pricing (TYPES) TYPES: • Regular price (daily used product such as milk, tea, sugar…) • Premium prices (or prestige pricing, for luxury products; e.g. Ferrari limited edition) • Price on customers’ expectation (depending on customer satisfaction) • Critical price point (e.g. €99.99 or €4.95) e.g.___________________) (e.g.__________________) (e.g.______________)