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Principles of Business &
Finance
3.01
Understand
principles of
marketing.
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.
The Seven Functions of
Marketing
1.Marketing Information
Management
2.Product/Service Management
3.Financing
4.Pricing
5.Promotion
6.Selling
7.Distribution
Marketing-Information
Management
Obtaining information needed
to make sound business
decisions. Example: Taste
tests and surveys.
Product/Service
Management

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.
Financing
Obtaining money needed to finance
the operation of a business. This
includes bank loans and offering
credit to customers.
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.
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!
Selling
Determining customer needs and
wants through planned, personalized
communication intended to influence
purchase decisions and ensure
satisfaction.
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.
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.
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Research Studies

Types of research studies
Surveys
 Focus groups
 Observations
 Experiment

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.

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.

Observations
Collects information by recording the
actions of consumers.
 Researchers observe how consumers
study and choose products.

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.

Parts of a Product
Basic product
 Product features
 Options
 Brand name
 Packaging
 Warranty

Parts of a Product
Basic product is 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.

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.

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)
Products v. Services
Differences between products and services
Products
Tangible
Non-Perishable
Separable
Easier to market
More control over quality
Services
Intangible
Perishable
Inseparable
More difficult to market
Less control over quality
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Factors Influencing Price
Supply and demand
 Uniqueness
 Age
 Season
 Complexity
 Convenience

Pricing Formula

Selling Price


Product Costs


Costs to the manufacturer for producing the
product or paid by the business to buy the product
Operating Expenses


The price paid by the customer
All expenses associated with running a business
Profit

The amount of money available to the business
after all costs and expenses have been paid
Pricing Formula
Selling price=product costs+operating
expenses+profit
 Example: 67+38+100=SP
 SP=$215

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.
Channels of Distribution

Channel of distribution is how
products and services reach final
customers and the businesses
involved.
Needs of the Customer

Quantity


Assortment


A variety of products.
Location


A small number at a given time.
All over the world.
Timing

May want to purchase products at different
times than producers are willing to make
them.
Needs of the Business

Quantity


Assortment


Specialize in a specific type of product
Location


Produce and sell large amounts at one time
Needs to ship products all over the world
Timing

Only offer certain products during certain
seasons.
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
Promotion
Promotion is any form of
communication used to inform,
persuade, or remind.
 Effective communication is the
exchange of information so there is
common understanding by all
participants.

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

Mass Promotion
Directed to many people
at the same time
 Advertising
 Publicity
 Public Relations
 Sales Promotion

Advertising

Most common types of
advertising
Television
 Radio
 Newspapers
 Magazines
 Mass Mailings
 Outside Displays
 Internet
