BUSINESS STUDIES. MARKETING. Unit 1: Introduction to marketing Photo: Morguefile.com Pedro Fernández Sánchez INSTITUT Milà i Fontanals. 1.1 Marketing. A. What’s marketing? B. Importance of marketing. C. Marketing mix. A. What’s marketing?. Detects customers’ needs and wants.
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
BUSINESS STUDIES MARKETING Unit 1: Introduction to marketing Photo: Morguefile.com Pedro Fernández Sánchez INSTITUT Milà i Fontanals
1.1 Marketing A. What’s marketing? B. Importance of marketing. C. Marketing mix. INSTITUT Milà i Fontanals
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
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
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
Product • Is the good or service that a company sells. INSTITUT Milà i Fontanals
Price • Quantity or amount of money a customer pays. Photo: Morguefile.com INSTITUT Milà i Fontanals
Promotion • How customers are informed about the product. Photo: morgefile.com INSTITUT Milà i Fontanals
Place • How the product will be distributed. Photo: http://www.flickr.com/photos/grayconstruction INSTITUT Milà i Fontanals
BUSINESS STUDIES MARKETING Unit 2: Marketing mix Photo: creativecommons.org/ author: Grochim Pedro Fernández Sánchez INTITUT Milà i Fontanals
Unit 2. Marketing mix • 2.1 Product • 2.2 Price • 2.3 Promotion • 2.4 Place INSTITUT Milà i Fontanals
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
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
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:________________________________ Morguefile.com INSTITUT Milà i Fontanals
B. Types of products • Durable goods: we can use them many times. For example:___________________________ Morguefile.com INSTITUT Milà i Fontanals
B. Types of products b) Industrial goods: they are used to make other goods. They do not satisfy people’s needs directly. For instance:___________________________ Morguefile.com INSTITUT Milà i Fontanals
B. Types of products c) Services: are non-physical products or economic activities. Examples:_____________________________ Morguefile.com INSTITUT Milà i Fontanals
ACTIVITY 3 – Classifying products INSTITUT Milà i Fontanals
ACTIVITY 3 – Classifying products INSTITUT Milà i Fontanals
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
Width = 8 products lines Length = 40 products Product line Line depth = 5 products INSTITUT Milà i Fontanals
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
D. Product Life Cycle (PLC) INSTITUT Milà i Fontanals
SALES (€) Product Life Cycle Curve TIME (Years) STAGES PLC INSTITUT Milà i Fontanals
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
E. Packaging • Characteristics: BEFORE BUYING • Easy to identify (e.g.______________) • Attractive (encourages buying our product) • e.g._______________ INSTITUT Milà i Fontanals
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
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
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
Brand Strategies • Global brands. • Multibrands. • Individual brands • Product line brand • Second brand • Own-brands. INSTITUT Milà i Fontanals
I. Global brands • When the company uses the same name for all the products. E.g. __________________ INSTITUT Milà i Fontanals
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
II. Multi-brands • Product line brand: we use the same brand for similar products. E.g. Pascual - Zumosol INSTITUT Milà i Fontanals
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
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
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
A. Price concept • Price tells us the money that a company can earn selling its product (revenue).
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.
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.
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)
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.
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
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
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).
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)
C. Price strategies • Price skimming or creaming • Penetration pricing • Psychological pricing
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) ______________) ______________) ____________)
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. ___________________)
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
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.______________)