ESSENTIAL STANDARD 3.00 Understand the role marketing in business. 1

OBJECTIVE 3.01 Understand principles of marketing. 2

TOPICS  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 3

FUNCTIONS OF MARKETING 4

 What happens during the marketing process?  Businesses are involved in the process of origin, pricing, promotion, and distribution of products and services.  These products and services are made available in order to meet the goals of individuals and businesses.  Activities of marketing happen throughout the seven functions of marketing 5

FUNCTIONS OF MARKETING CONTINUED Seven functions of marketing:  Marketing-information management  Involves obtaining, managing, and using information about products and services, customers, and competitors to improve business decision-making and the performance of marketing activities.  Product/service management  May include several businesses involved with designing, developing, maintaining, improving, and obtaining products and services in order to meet the needs of customers. 6

FUNCTIONS OF MARKETING CONTINUED Seven functions of marketing:  Pricing  Involves determining and communicating the value of products and services.  Place (Distribution)  Involves using the best ways for customers to locate, obtain, and use the products and services of a business.  Selling  Involves communicating directly with potential customers in order to determine and satisfy their needs and wants. 7

FUNCTIONS OF MARKETING CONTINUED Seven functions of marketing:  Financing  Involves budgeting for marketing activities, securing necessary funds for operations, and providing financial assistance to customers.  Promotion  Involves communicating information such as features and prices about products and services to potential customers. 8

IMPORTANCE OF MARKETING RESEARCH TO THE CREATION OR IMPROVEMENT OF PRODUCTS OR SERVICES 9

MARKETING RESEARCH  What is marketing research?  Marketing research involves customers in order to find solutions to problems through carefully designed studies.  Steps in marketing research: 1. Define the marketing problem. 2. Study the situation. 3. Develop a data collection procedure. 4. Gather and analyze information. 5. Propose a solution. 10

MARKETING RESEARCH CONTINUED Types of research studies  Surveys  Are a specific set of questions asked to consumers.  Focus groups  Are small groups of consumers that discuss a specific product.  Observations  Record the actions of consumers rather than questioning them.  Experiment  Is a comparison of two controlled alternatives for consumers. 11

MARKETING RESEARCH CONTINUED Similarities of products and services  Meet the needs or satisfaction of a target market  Include a mix of the marketing elements: product, price, promotion, and place (distribution) 12

MARKETING RESEARCH CONTINUED PRODUCTS  Tangible  Perishable or non- perishable  Easier to market  More control over quality SERVICES  Intangible  Perishable  More difficult to market  Less control over quality 13 Differences between Products and Services

SELLING PRICES OF PRODUCTS AND SERVICES 14

SELLING PRICES OF PRODUCTS AND SERVICES  What factors influence the pricing of products and services?  Supply and demand  Uniqueness  Age  Season  Complexity  Convenience  Pricing formula Selling price=product costs + operating expenses + profit Example: $205=

SELLING PRICES OF PRODUCTS AND SERVICES CONTINUED  What is markup ?  Is the amount charged of the selling price to cover the operating expenses and profit usually stated as a percent.  Selling price = product cost + markup  Example: $35+$14=$49  $35*40%=$14  What is a markdown ?  Is a reduction from the original selling price. 16

CLASSIFICATION OF DISTRIBUTION AND PROMOTION 17

CLASSIFICATION OF CHANNELS OF DISTRIBUTION  What is channel of distribution?  The channels of distribution is how products and services reach final customers and the businesses involved.  How does having a channel of distribution help businesses?  Channels of distribution allow businesses to adjust quantity and assortments accessible in convenient locations for customers and storage of products. 18

CLASSIFICATION OF CHANNELS OF DISTRIBUTION CONTINUED Types of channels of distribution:  Direct - involves the exchange of products and services between producer and consumer only.  Example:  Local cleaning company promotes its business and provides services to its local customers.  Mary sells her famous juices at the local festivals.  Tonya makes and sells drapes to local customers. 19

CLASSIFICATION OF CHANNELS OF DISTRIBUTION CONTINUED Types of channels of distribution continued:  Indirect - involves the exchange of products and services with one or more business and consumer.  Example:  Drugstores sell Maybelline Cosmetics.  Macy’s sells Nautica line of clothing.  UPS delivers packages for Ann Taylor. 20

CLASSIFICATION OF THE MAIN TYPES OF PROMOTION  How do you know when communication is effective?  Effective communication consists of an understanding of information between the sender and the receiver.  The sender selects a channel of communication and the receiver indicates understanding by providing some form of feedback. 21

CLASSIFICATION OF THE MAIN TYPES OF PROMOTION  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 the message and provide feedback by way of purchasing or inquiring about products or services. 22

CLASSIFICATION OF THE MAIN TYPES OF PROMOTION CONTINUED  Main types of promotion:  Personalized  Customized for individual customer.  Mass  Communicated with many people with a common message.  What are some examples of personalized promotion?  Visits, telephone calls, live audio and video Internet connections  What are some types of mass promotion?  Advertisement, publicity, public relations, sales promotion 23