Producing and Marketing Goods and Services Chapter 8
What is marketing? All of the activities used to insure the effective exchange of goods and services between businesses and consumers.
Purpose of Marketing To develop, promote, and distribute products and services that satisfy customer needs and wants.
Marketing Functions
Marketing Philosophy Marketing Concept: Considers the needs of customers when planning, pricing, distributing, and promoting a product or service
Marketing Strategy Two-step process for planning and marketing products and services: 1. Identify a target market 2. Develop a marketing mix
Target Market Groups of people with similar wants and needs. Most of these groups will show interest in the same products. What is your favorite soft drink, and why? Buying Motives
Target Market Geographic segmentation – based on location such as home addresses Demographic segmentation – based on measurable statistics, such as age or income Psychographic segmentation – based on lifestyle preferences, such as being urban dwellers or pet lovers.
Why Identify a Target Market? Your strategies for designing, pricing, distributing, promoting, and improving your product, service or idea will be easier, more effective, and more cost-effective.
Who is the target market?
Who is the Target Market? 27Cr_Iwc 27Cr_Iwc
The Marketing Mix (The 4 P’s) Product A good, service, or idea designed to fill a consumer need or want. Pricing Balance between cost and affordability. Promotion Communicating information about the product to potential customers. Place/Distribution The product should be in the proper location in order to best get it from producer to consumer.
Pricing Price Skimming - A product pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment. Example: Apple – Iphone, IPOD
Pricing Price Penetration - It sets a low initial price for a product in order to gain quick acceptance a segment of the market. It calls for a sacrifice of short-term profits to establish market share Example: Starbucks initially (1970’s), Xbox, Playstation (make money on games)
Place/Distribution Effectively getting the products and services to consumers in the right quantity, assortment, and location at the right time.
Place/Distribution Channels of Distribution: path a product travels from producer to consumer Direct: goods bought directly from producer Indirect: goods move through middle firms to get to consumer Wholesalers--middle Retailers—sells directly to consumer
The Importance of Promotion Promotion Any technique designed to sell a product. Must communicate the features, uses, and benefits of products. Makes customers aware of products. Makes customers knowledgeable about products. Persuades customers to like products. Persuades customers to purchase products.
Advertising Promotions Advertising Paid, non-personal communication used by an identified sponsor to inform an audience about a product.
Beats headphones IPOD DVD player Nike socks computer HD TV Nintendo DS Smart watch PS4 Google glasses Tablet Blue ray player Cadenza Apple tv Wireless charger smartphone
Product Life Cycle Introduction Stage Slow sales volume to start Makes no money at this stage Growth Stage Profitability begins to rise Increased competition leads to decrease prices Costs reduced
Product Life Cycle Maturation Brand differentiation is needed to keep market share Sales volume peaks and competitors increase Decline Sales volume decrease Profit becomes more of a challenge
Effective Advertising Effective advertising contains the following FIVE elements: 1. Headline - Attracts the readers attention. 2. Copy - selling message after the headline 3. Price - If used, presented accurately and not misleading
Effective Advertising Effective advertising contains the following FIVE elements: 4. Illustration - attract attention, create interest/desire, show product, must appeal to target market 5. Business Identification/Logo/Slogan - distinctive identification or saying people will identify with
Headline Illustration ID/Slogan Copy
Commercials Ameriquest #1 Terry Tate—Reebok oNo7A-94 oNo7A-94 Top Ten Super Bowl Commercials
Advertising Persuasive Advertising Seeks to influence consumers to buy the company’s product rather than those of its competition. Typically emphasizes the quality of the firm’s goods or services.
Advertising Comparative Advertising Compares two or more products directly. Goal is to steal sales from the competition. MAC PC
Advertising Reminder Advertising Attempts to keep the product’s name in the consumer’s mind. Used especially in the maturity and decline stages.