Principles of Business & Finance

1. Principles of Business & Finance 3.01 Understand principles of marketing.

2. Marketing • The process of developing, promoting, pricing and distributing products in order to satisfy customers’ needs and wants. Marketing involves all the activities necessary in getting a product from the producer to the consumer.

3. The Seven Functions of Marketing 1.Marketing Information Management 2.Product/Service Management 3.Financing 4.Pricing 5.Promotion 6.Selling 7.Distribution

4. Obtaining information needed to make sound business decisions. Example: Taste tests and surveys. Marketing-Information Management

5. Concepts and procedures necessary to obtain, develop, maintain, and improve a product or service mix in response to market opportunities. A. Risk Management: preventing or reducing business loss. B. Purchasing: Buying goods and services for use in the day-to-day about where a product is sold. Product/Service Management

6. Financing Obtaining money needed to finance the operation of a business. This includes bank loans and offering credit to customers.

7. Pricing Determining a value to charge for goods and services. It is important to consider competition and what consumers are willing and able to pay.

8. Promotion Communication used to inform or remind people about a business’s products. Promotion also involves persuading customers to purchase a product. Your AD here!

9. Selling Determining customer needs and wants through planned, personalized communication intended to influence purchase decisions and ensure satisfaction.

10. Distribution The transporting, storing and handling of goods on their way from the manufacturer to the consumer. This includes the decisions about where to sell a product.

11. Marketing Research • Marketing research involves customers in order to find solutions to 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.

12. Research Studies • Types of research studies • Surveys • Focus groups • Observations • Experiment

13. Surveys • The most common type of marketing research • Surveys gather information from people using a planned set of questions. • Delivered via mail, Internet, or telephone.

14. Focus Groups • A small group of consumers taking part in a group discussion • Focus groups discuses experiences with products or make suggestions for product improvements.

15. Observations • Collects information by recording the actions of consumers. • Researchers observe how consumers study and choose products.

16. Experiment • An experiment presents two carefully controlled products to customers in order to determine which product is preferred. • Examples: • Using two different sizes of packages • Offering coupons to customers to determine buying purchases.

17. Parts of a Product • Basic product • Product features • Options • Brand name • Packaging • Warranty

18. Parts of a Product • Basic productis simplest form of a product or service. • Product features include additions and improvements to the product or service. • Options include choices of the product or service.

19. Parts of a Product • Brand name is a company’s unique identification for a product or service. • Packaging is the protection and security of a product or service before it is used. • Warranty is an offer to repair, replace, or provide a refund a product or service in order to build the confidence of consumers in a business.

20. Products v. Services • Similarities: • Meet the needs or satisfaction of a target market • Include a mix of the marketing elements (product, price, promotion, and distribution)

21. Products v. Services Differences between products and services ProductsServices Tangible Intangible Non-Perishable Perishable Separable Inseparable Easier to market More difficult to market More control over quality Less control over quality

22. Factors Influencing Price • Supply and demand • Uniqueness • Age • Season • Complexity • Convenience

23. Pricing Formula • Selling Price • The price paid by the customer • Product Costs • Costs to the manufacturer for producing the product or paid by the business to buy the product • Operating Expenses • All expenses associated with running a business • Profit • The amount of money available to the business after all costs and expenses have been paid

24. Pricing Formula • Selling price=product costs+operating expenses+profit • Example: 67+38+100=SP • SP=$215

25. Markup v. Markdowns • Markup • The amount added to the cost of a product to set the selling price. • Selling price=product cost+markup • Example: $35+$14=$49 • $35*40%=$14 • Markdown A reduction from the original selling price.

26. Channels of Distribution • Channel of distribution is how products and services reach final customers and the businesses involved.

27. Needs of the Customer • Quantity • A small number at a given time. • Assortment • A variety of products. • Location • All over the world. • Timing • May want to purchase products at different times than producers are willing to make them.

28. Needs of the Business • Quantity • Produce and sell large amounts at one time • Assortment • Specialize in a specific type of product • Location • Needs to ship products all over the world • Timing • Only offer certain products during certain seasons.

29. Types of Channels • Direct • products move from the producer straight to the consumer with no other organizations involved • Indirect • Includes one ore more other businesses between the producer and the consumer

30. Promotion • Promotion is any form of communication used to inform, persuade, or remind. • Effective communicationis the exchange of information so there is common understanding by all participants.

31. Personalized Promotion • The most effective and the most expensive. • Personal Selling • Direct communication between the buyer and the seller • Helps to assess the needs of prospective customers • Done face-to-face

32. Mass Promotion • Directed to many people at the same time • Advertising • Publicity • Public Relations • Sales Promotion

33. Advertising • Most common types of advertising • Television • Radio • Newspapers • Magazines • Mass Mailings • Outside Displays • Internet