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1 Functions of marketing Importance of marketing research to the creation or improvement of products or services Selling prices of products and services Classification of channels of distribution Classification of the main types of promotion 2 The process of planning & executing the › Conception › Pricing › Promotion and › Distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. 3 What happens during the marketing process? Businesses are involved in: › Product Origin- Research & Development › Product Pricing › Product Promotion, and › Distribution of products and services 4 Essential Question: Why do businesses spend so much time, money, and effort to market their goods and services? 5 Products and services are made available in order to meet the goals of individuals and businesses. Answer: to meet customer needs and to make a profit Marketing Activities happen during the seven functions of marketing Marketing- Product/service management information management Distribution Financing Selling Pricing Promotion 6 Defined: designing, developing, maintaining, improving, and obtaining products and services in order to meet the needs of customers. 7 Defined: Using the best ways for customers to: locate, obtain, and use the products and services of a business. 8 Defined: Communicating directly with potential customers in order to determine and satisfy their needs and wants. 9 Defined: Obtaining Managing and using information about: › Products & services › Customers › & Competitors to improve business decision-making and the performance of marketing activities. 10 Defined: Budgeting for marketing activities Securing necessary funds for operations, and Providing financial assistance to customers. 11 Defined: Determining and communicating the value of products and services. 12 Defined: Communicating information such as: features and prices about products and services to potential customers. http://www.rolex.com/en#/home/ 13 Why do companies spend money on marketing research? http://www.deere.com/servlet/PIPInquiry? PIN=&Submit=Search http://www.ford.com/innovation/automotive 14 -technology What is marketing research? › utilizes customers to find solutions to marketing 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. 15 Surveys › ASKING OPINIONS › RECORDING OF LARGE GROUPS › Student survey ACTIONS OF CONSUMERS › ex: what people buy, return, use Focus groups › SMALL GROUP DISCUSSION › Group previews tv ads Observations Experiment › PRESENTING TWO ALTERNATIVES TO DETERMINE WHICH HAS BETTER RESULTS › ex: cloroxed socks 16 17 Parts of a product › Basic product › Product features › Options › Brand name › Packaging › Warranty http://www.benjerry.com/ Simplest form of a product or service Not unique Usually available from several companies Example: basic tv › Limited # of › › › › channels No pay per view No HD No DVR No playback Example: basic health insurance › High deductible › Limited coverage › Limited service providers › High co-pays 19 http://www.chevrolet.com/?seo=goo _|_2008_Chevy_Retention_|_IMG_ Chevy_Make_|_Exact_Match_Chev y_Chevrolet_|_chevrolet Additions and improvements to the product or service Example: cell phone offers: built-in digital camera, voice dialing, web browser What are some features of vehicles? 20 http://www.chevrolet.com/pages/ mds/vehicles/helpMeChooseResu lt.do?bodyStyle=CARS What options are available on this vehicle? Options include choices of the product or service. Car Choices include: › Models › Engine size › Colors › Manual/automatic › 2-dr, 4-dr, hatchback 21 a company’s unique identification for a product or service Breyer’s ice cream Ford Mustang Maxwell House Coffee Nike shoes Thomasville furniture 22 the protection and security of a product or service before it is used. 23 A company’s offer to: Repair Replace, or Provide a refund for a product or service in order to build consumer confidence in the business 24 Products vs. Services Both: › Meet the needs or satisfaction of a target market › Include a mix of the marketing elements (product, price, promotion, and place distribution) 25 Products Services › Tangible › Intangible › Perishable or non- › Perishable perishable › Separable › Easier to market › More control over quality › Inseparable › More difficult to market › Less control over quality 26 Tangible - items one can see and touch Intangible - no physical form, more difficult to examine Inseparable - services are consumed at the same time they are produced. The person or technology producing the service must be available when and where the consumer needs it. Marketers must determine when and where consumers want a service and must be able to provide it at that location and time. Perishable -cannot be stored for later consumption, services must be available at the same specific time as the demand › If a taxi driver does not have a fare, the service goes unused › If all concert seats are full, no more people can hear performance Heterogeneous – there will be differences in the type and quality provided. Skill , training, and motivation of the service 27 provider affect quality service. Definition: Money a customer must pay for a product or service Price changes as it moves through channels of distribution from producer to consumer. Value is added at each step. 28 Product costs› Costs to What are the components of price? The Pricing formula Selling price= product costs + operating expenses + profit manufacturer of producing the product Operating expenses› Costs of doing business: › Salaries, storage, equipment, facilities, utilities, taxes, etc Profit› Amount left after all costs and expenses have been paid 29 Example A Product cost=$67 Operating expenses = $38 Required profit= $100 Using price formula, what is the price? P=67+38+100 P= $215 Example B Product cost = ? Op exp = $ 24 Profit = $45 Selling Price = $ 169 Using price formula, what is the product cost? 30 Prices will be higher due to these factors: Supply and demand- limited supply Uniqueness – few close competitors Age – new product introduction Seasonal– used only for a specific period of time Complexity – very technical or complex Convenience – people pay for convenience 31 1. Must cover the cost of the product 2. Must cover the operating expenses (cost of running the business) 3. Must allow profit for the business If PRICE cannot cover 1-2-3, then business cannot survive…but must also BE COMPETITIVE in the market or will products will not sell! 32 Selling Price-Product Cost = Gross margin* *Important factor in pricing Gross margin represents amount of money on hand to pay for operating expenses of the business 33 Markup Amount added to the selling price to cover the operating expenses and profit Usually stated as a percentage of selling price › Selling price = Markdown A reduction from the original selling price. product cost + markup Example: $35+$14=$49 › $35*40%=$14 34 Selling price = $49 Markup = $14 Product cost = $35 What is Markup % $35 x MU%=$14 MU %=14/35 MU%= 40% Selling price = $100 Markup = $25 Product Cost = $75 What is mark up %? 35 Example: Original price $35 20% advertised markdown What is new price? $35 x .20 = $ markdown $ markdown= $7 New price is $28 Practice: Price = $140 Markdown =15% What is new price? 36 What is channel of distribution? How products and services reach final customers or businesses Can be classified as › Direct- producer to consumer only › Indirect- one or more businesses in chain between producer and consumer 37 Direct Examples Indirect Examples NO Intermediary Involved Intermediary Involved RCA sells televisions to Tonya makes and sells Circuit City who resells to drapes to local customers. customers. UPS delivers Joe sells fresh peaches merchandise packages from his orchard at a to Ann Taylor retail outlet roadside stand. at the mall to be sold to Harvey uses landscaping consumers. equipment to move soil Gant, an ore extractor, for the foundation of a sells bauxite to Reynolds house being built by Mr. for processing into Thomas, his customer. aluminum. 38 How do the needs of producers and consumers differ? They differ by: › Quantity – a definite amount of anything › Assortment-collection of various kinds of things › Location- a place of activity › Timing – selecting the best time or speed for doing something 39 › Producer Needs versus Consumer Needs › Quantity – a definite amount of anything Businesses produce or sell massive quantities of products and services, where as each consumer needs fewer numbers. › Assortment-collection of various kinds of things Businesses usually specialize in producing a specific type of products and services, where as consumers usually purchase a variety of products and services. › Location- a place of activity Businesses may distribute products and services to customers in other countries as well in local communities. Consumers mostly buy local. › Timing – selecting the best time or speed for doing something There could be a gap in time when businesses produce products and services as to when consumers 40 Defined: how products/services reach final customers and the businesses involved Channel members – businesses that take part in a channel of distribution Allow businesses to adjust : - quantity and assortments - accessible in convenient locations - storage of products for customer’s convenience. 41 The marketing mix element that uses locations and methods to make the product/service available to the target market. Determining the best methods and procedures to use so customers can find, obtain and use a product or service. 42 CHANNELS OF DISTRIBUTION How does CORN get to your table? 1. FARMER/FARMWORKERS GROW 2. FARMWORKERS HARVEST FOR TEMPORARY STORAGE 3. CORN TRANSPORTED TO SILO STORAGE 4. CORN TRANSFERRED TO TRAIN/TRUCK FOR TRANSFER 5. TRAIN TRANSFERS CORN TO MILL/PROCESSING PLANT 6. MILL/PROCESSOR CHANGES PRODUCT 7. PROCESSOR PACKAGES INTO CANS/FROZEN BAGS ETC 8. CANS FROM MILL TO STORAGE 9. STORAGE TO TRAIN/TRUCK TO WHOLESALER 10. WHOLESALER (GROCERS ASSOCIATION) STORAGE 11. WHOLESALER TO RETAILER (FOOD LION) BY TRUCK 12. RETAILER TO CONSUMERS 13. CONSUMERS EAT CORN FOR DINNER! 43 Without looking back to previous slide List as many as you can…groups who had contact with the corn that you eat. 44 Influential messages daily bombard you from: › Businesses › Organizations › Government agencies › Political candidates Is the promotion always effective? http://www.youtube.com/watch?v=R55e-uHQna0&safety_mode=true&persist_safety_mode=1 45 Pizza $9.99 Any form of communication used to inform, persuade, or remind Used to influence knowledge, beliefs, and actions about products, services and ideas OPEN Clay’s Pizza Business card 46 Effective communication consists of an understanding of information between the sender and the receiver. Sender selects a channel of communication and Receiver indicates understanding by providing some form of feedback. 47 What is the relationship between effective communication and promotion? › Businesses use promotion to communicate with potential customers about their products and services. Information about products and services is encoded in a promotional message. Promotional messages may be delivered through advertisements and sales representatives. Potential customers decode messages and provide feedback by way of purchasing or inquiring about products or services. 48 Main types of promotion: › Personalized - customized for individual customer › Mass - communicated with many people with a common message Some types of mass promotion: › Advertisement › Publicity › Public relations › Sales promotion 49 Direct, individual communication with a potential specific customer Most expensive type of selling Face to face contact Used for complex or expensive products Can be by phone Examples: Car salesmen Jewelry sales Cosmetic counters at department stores Insurance sales Investment brokers Realtors 50 A non-personal paid form of communication Designed to inform, persuade, or remind customers about a good or a service Most common media › Television › Newspapers › Outdoor display boards › Magazines › Radio › Internet http://www.godiva.com/welcome.aspx › Mass Mailings › Email 51 Non paid communication in the news media or by word of mouth Cannot be controlled Can be good or bad for the business Examples Walmart violations of EEOC regulations Food poisoning linked to local restaurant Action 9 contacting business that did not stand behind contract with consumer 52 Activities used to build and maintain a positive image about a company and its products Examples: Executive at bank is active in Rotary Club Speedway Plumbing sponsors golf hole at the CTE golf tournament Chic-Fil-A gives discount coupons 53 Communication activities used to stimulate sales, create awareness of a new product, or create goodwill for the business Radio listener contest with $100,000 prize Buy one get one free programs- BOGO Free gifts- ink pens/caps/tshirts given with company info 54