* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Sean’s Certified FBLA Review Notes: Chapter 7 Written by The Rana Corporation®. All rights reserved. 07 Marketing and Operation Management 7.1 Marketing Definition a) Study and management of exchange relationships b) The business process of identifying, anticipating, and satisfying customers’ needs and wants. c) One of the primary components of business management and commerce. d) Direct product to other businesses or directly to consumers International Marketing a) Application of marketing principles in more than one country, by companies overseas or across national borders. b) Based on an extension of a company’s local marketing strategy, with special attention paid to marketing identification, targeting, and decisions internationally. 7.2 Marketing Mix a) Includes multiple areas of focus as part of a comprehensive marketing plan, referring to the common classifications: Product, price, placement, and promotion. b) Focusing on a mix helps organizations make strategic decisions when launching new products or revisiting existing ones. Product 1. Refers to a good or service that a company offers, and should fulfill a consumer demand. 2. Type of product can also dictate how much a business can charge for it, where they should place it, and how they should promote it. Price 1. The cost that consumers pay for a product. 2. Marketers must link price for the product to the real and perceived value, but must also consider supply costs, seasonal discounts, and competitors’ prices. 3. Business executives may raise the price to make a product seem more luxurious, or lower it to make it more common for consumers to try. 4. Pricing strategies include: a. Penetration pricing: a strategy of setting a relatively low price often supported by strong promotion to achieve a high volume of sales. They adopt such method because they want to use mass marketing in order to gain a large market share, in which they can slowly increase their price later on. b. Market Skimming: pricing strategy of setting a high price for a new product when a firm has a unique or highly differentiated product with low price elasticity. c. Perceived-value pricing: method used in markets where demand is known to be inelastic and a price is placed upon the product that reflects its value. d. Price discrimination: takes place in markets where it is possible to charge different groups of consumer’s different prices for the same product. e. Loss-Leader Pricing: A product or service that is offered at a price that is not profitable, but sold to attract new customers or to sell additional products and services to those. f. Price gouging: defined as charging a price that is higher than normal or fair (usually during times of natural disaster or other crises). g. Cost-plus Pricing: used by retailers, who take the price that they pay the producers or wholesalers for the product, and just add a percentage mark-up. Place a. Outlines where a company sells a product and how it delivers the product to the market. a. Direct selling to consumer: manufacturer-consumer (such as Amazon.com), where the company contacts customers directly and the products are also sent directly. b. Single-intermediary channel: manufacturer— retailer—consumer. Growth in retailer size means that it has become economic for manufacturers to supply directly to retailers rather than through wholesalers. c. Two-intermediary channel: manufacturer— wholesaler—retailer—consumer. The most common distribution channel: for small retailers with limited order quantities, the use of wholesalers make sense. Buy in bulk from producers and sell smaller quantities to numerous retailers. Wholesalers dominate where retail oligopolies are not dominant. Promotion a. Communicating with actual or potential customers b. 5 main aspects of a promotional mix: a. Advertising: i. Presentation and promotion of ideas, goods, or services by an identified sponsor. b. Personal selling i. A process of helping and persuading one or more prospects to purchase a good or service or to act on any idea through the use of an oral presentation. c. Sales promotion i. Media and non-media marketing communication are employed for a predetermined, limited time to increase consumer demand, stimulate market demand or improve product availability. d. Public relations i. Paid intimate stimulations of supply for a product, service, or business unit by planting significant news about it or favorable presentations of it in the media. 7.3 Foreign Market Entry a) Exporting: easiest and least-risky way to enter the marketing: exports that can be direct or indirect. b) Foreign Direct Investment (FDI): investment made by a firm or individual in one country into business interest located in another. Usually takes place when an investor establishes foreign business operations or acquires foreign business assets in a foreign company. c) Franchise: Domestic company enjoys the higher control as it allows the franchise to function on its behalf and in line with the terms and conditions of the domestic company, McDonald’s. Disadvantages include difficulty maintaining control or evaluating performances over franchisees. d) Licensing: One of the ways to globalize, where the domestic company issues the license to the foreign company to use the manufacturing process trademark, patent, name of the domestic company while facilitating the sales. e) Joint Venture: The companies can go international by combining with other country-based companies with the intention to monetize their existing relationships with the local customers. A JV is an arrangement where parties agree to pool their resources for the purpose of accomplishing a task. f) Management Contract: An arrangement under which operational control of an enterprise is vested by contract in a separate enterprise that performs the necessary managerial functions in return for a fee. 7.4 Ecommerce a) Business model that lets firms and individuals buy and sell things over the internet. a. Business-to-Business (B2B): Both participants are businesses, resulting in a high-volume, high-value partnership. b. Business-to-Consumer (B2C): Businesses serve directly to consumers, such as Amazon, where the needs for physical stores are eliminated. c. Consumer-to-Business (C2B): Consumers originate requirements that businesses fulfill, such as a job board where consumers place project requirements, and companies bid for a project. d. Consumer-to-Consumer (C2C): Companies such as eBay enables consumers to sell to other consumers—a form of e-commerce also known as C2B2C. e. E-commerce offers the consumers the following advantages: i. Convenience: a) Occurs 24 hours a day, seven days a week: transaction costs largely decrease. ii. Increased Selection: a) Stores offer a wider array of products online than they carry in their traditional stores. f. Ecommerce offers the consumers the following disadvantages: i. Limited customer service: a) If shopping online, you cannot simply ask an employee to demonstrate a particular model’s feature in person. ii. Lack of instant gratification: a) When buying an item online, you must wait for it to be shipped. iii. Inability to touch products: a) Images are not able to “convey the whole story” about the item, so ecommerce purchases may not be as satisfying. iv. Intense competition: a) Ecommerce businesses, although easy to start, are tough as the competition for online services is steeper given that “the digital noise is louder”. 7.5 Operational Management a) Customer relationship management (CRM) refers to the principles, practices, and guidelines that organizations follow when interacting with their customers. The ultimate goal is to enhance the customer’s overall experience. b) There are three stages in the CRM model: a. Acquire: a new customer perceived value of a superior product/service; b. Enhance: superior customer service and crossselling/up-selling; c. Retain: proactively identify and reward the most loyal and profitable customers. c) Quality Management: a. Act of overseeing all activities that must be accomplished to maintain a desired level of excellence, which includes the determination of a quality policy, creating and implementing quality planning and assurance, and quality control and quality improvement. b. Total quality management (TQM) is the continual process of detecting and reducing or eliminating errors in manufacturing, streamlining supply chain management, improving the customer experience, and ensuring that employees are caught up. d) Facility Management: a. Encompasses a range of disciplines and services to ensure the functionality, comfort, safety, and efficiency of a build environment – buildings and grounds, infrastructure, and real estate. b. Divided into two basic areas: i. Hard Facilities Management (Hard FM): deals with physical assets such as plumbing, heating and cooling, elevators. ii. Soft Facilities Management (Soft FM): focuses on tasks performed by people such as custodial services, lease accounting, catering, security, grounds keeping. e) Inventory Management: a. Term for goods available for sale and raw materials used to produce goods available for sale: represents one of the most important assets of a business because turnover represents one of the primary sources of revenue generation and earnings. b. Holding inventory for long periods of time might be disadvantageous given storage costs and the threat of obsolescence. c. Inventory can be valued in three ways: i. First in—First out: cost of goods sold is based on the cost of the earliest purchased materials, while the carrying cost of remaining inventory is based on the cost of the latest purchased materials. ii. Last in—First Out states that the cost of goods sold is valued using the cost of the latest purchased materials, while the value of the remaining inventory is based on the earliest purchased materials. iii. Weighted average method requires valuing both inventory and the cost of goods sold based on the average cost of all materials bought during the period.