© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE Marketing Basics Develop Effective Products and Services Price and Distribute Products Plan Promotion 10 C H A P T E R Marketing

© 2012 Cengage Learning. All Rights Reserved. SLIDE Marketing Basics Goal 1Define important marketing concepts. Goal 2Identify the steps in a marketing strategy. Goal 3Describe the consumer decision-making process.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 3 KEY TERMS ●marketing- Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. ●marketing strategy- A company’s plan that identifies how it will use marketing to achieve its goals. ●target market- A specific group of consumers who have similar wants and needs (ID of target market is the first step in a marketing strategy) ●marketing mix- The blending of the four marketing elements—Product, Distribution (Place), Price, and Promotion.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 Key Terms, con’t ●marketing orientation- Using research to study customers and their needs and developing a marketing mix designed to satisfy those needs. ●final consumers- People who buy products or services mainly for their own use. ●business consumers- People, companies, and organizations that buy products for the operation of a business, for use in other products, or for resale to their customers. ●consumer decision-making process -the specific sequence of steps consumers follow in making a purchase ●buying motives- the reasons consumers decide what products and services to purchase (Emotional, Rational). SLIDE 4

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 5 UNDERSTAND MARKETING ●Marketing Activities … as a consumer you… ●See or hear advertisements for products/services ●See brand names on packages of food you eat and labels on clothes you buy ●Read product descriptions on a company’s website ●Interact with salespeople in retail stores ●Other Marketing Activities … of businesses ●Storing products in warehouses and distribution centers and moving products where the will be sold or used ●Establishing acceptable payment methods ●Gathering data on consumer needs to improve products/offerings ●Market to other businesses (more $ spent on Business to Business marketing than is spent on marketing to final consumers!)

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 UNDERSTAND MARKETING, con’t ●Marketing Businesses : All businesses complete some marketing activities, but for some, marketing activities ARE their business; ●Advertising Agencies and Market Research Firms ●Transportation Companies (trucking, railroad, air freight) move products from producers to consumers. ●Shipping Companies provide express pickup and delivery of documents and packages ●Financial Services Companies issue and manage credit/debit cards and may offer loans to businesses ●Wholesalers and retailers work in the distribution, storage, and sale of products and help connect manufacturers to consumers SLIDE 6

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 UNDERSTAND MARKETING, con’t ●Marketing Functions: marketing functions include… ● Product and Service Management-designing, developing, maintaining, improving and acquiring products that meet consumer needs ●Distribution-determining the best ways for consumers to locate, obtain, and use the products and services (*shipping, *handling, and *storing) ●Selling-communicating with potential customers to determine and satisfy their needs (face to face, telephone, computer technologies) ●Marketing Information Management-obtaining, managing, using marketing information to improve business decision-making ●Financial Analysis-budgeting for marketing activities, obtaining necessary funds, providing financial assistance to customers so they can purchase the business’ products ●Pricing-setting and communicating the value of products and services ●Promotion-communicating information about products and services to potential customers (Advertising--radio, TV, newspapers, magazines, mail, internet) SLIDE 7

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 8 Marketing Functions

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 9 MARKETING STRATEGY ●Marketing Planning— satisfying customer needs better than competitors do → $ ales and Profits! ●Develop a successful marketing strategy ●Step #1: Identify a target market ●Step #2: Create a marketing mix

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 10 UNDERSTAND CUSTOMERS Consumer Decision-Making Process--5 Steps 1. Recognize a need. 2.Gather information. 3.Select and evaluate alternatives. 4.Make a purchase decision. 5.Determine the effectiveness of the decision Buying Motives--reasons consumers decide what products/services to buy ●Emotional: purchase decision based on feelings, beliefs, and attitudes ●Rational: purchase decision guided by logic and facts ● 10:00https://youtu.be/dqxQ3E1bubI ● 6:40http://slideplayer.com/slide/ /

© 2012 Cengage Learning. All Rights Reserved. SLIDE Develop Effective Products and Services Goal 1Justify the importance of marketing research. Goal 2Identify the components of a product. Goal 3Describe how services differ from products.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 12 KEY TERMS ●marketing research ●product ●services ●intangible ●inseparable ●perishable ●heterogeneous

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 13 CREATE AND IMPROVE PRODUCTS ●Totally new products ●Major improvements in existing products ●Minor improvements in existing products

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 14 PLAN MARKETING RESEARCH ●Steps in marketing research Define the marketing problem Study the situation Develop a data collection procedure Gather and analyze information Propose a solution.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 15 TYPES OF RESEARCH STUDIES ●Surveys ●Focus groups ●Observations ●Experiments

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 16 Checkpoint ●List the steps in a marketing research study. ●The steps in marketing research are to define the marketing problem, study the situation, develop a data collection procedure, gather and analyze information, and propose a solution.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 17 PRODUCT PLANNING ●Parts of a product ●Product planning procedures ●Idea development ●Idea screening ●Strategy development ●Production and financial planning ●Limited production and test marketing ●Full-scale production

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 18 Checkpoint ●What are the components of a product? ●Products are everything businesses offer to customers and are composed of the basic product, product features, its brand name and packaging, and sometimes a guarantee or warranty.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 19 SERVICES ●Intangible ●Inseparable ●Perishable ●Heterogeneous

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 20 Checkpoint ●In what ways are services different from products? ●Products are tangible and may be nonperishable; it is generally easier to control the quality and marketability of these items. ●Services, however, are intangible, more difficult to market, and perishable.

© 2012 Cengage Learning. All Rights Reserved. SLIDE Price and Distribute Products Goal 1Discuss how the selling price of a product is calculated. Goal 2Differentiate between a direct and an indirect channel of distribution.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 22 KEY TERMS ●Price: money a customer pays for a product or service ●Distribution (Place): location and methods used to make a product or service available to the target market ●Channel of Distribution: route a product takes and businesses involved in moving product from producer to final consumer

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 KEY TERMS ●Channel Members: businesses that take part in a channel of distribution ●Retailer: final business in an indirect channel of distribution for consumer products SLIDE 23

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 24 VALUE AND PRICE ●Buyers usually want to pay the lowest price possible. ●Sellers want to charge the highest price possible.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 25 PRICING FACTORS ●Supply and demand ●Uniqueness ●Age ●Season ●Complexity ●Convenience

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 26 PRICE A PRODUCT ●Selling price ●Product costs ●Operating expenses ●Profit Selling price = Product costs + Operating expenses +Profit

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 27 GROSS MARGIN Gross Margin = Selling price + Product costs

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 28 MARKUP ●The amount added to the cost of a product to set the selling price ●Markup on cost ●Markup on selling price

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 29 MARKDOWN ●A reduction from the original selling price ●Reasons for markdowns ●Low demand ●End of season ●Flaws

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 30 Checkpoint ●What is the formula for calculating the selling price of a product? ●Selling price = Product cost + Operating expenses + Profit

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 31 CHANNELS OF DISTRIBUTION ●Need for distribution channels ●Differences in quantity ●Differences in assortment ●Differences in location ●Differences in timing ●Channels and channel members

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 32 Checkpoint ●What is the difference between a direct and an indirect channel of distribution? ●In a direct channel of distribution, products move directly from the producer to the consumer. ●In an indirect channel, others may participate in the movement of products from the producer to the consumer, such as transportation services and retailers.

© 2012 Cengage Learning. All Rights Reserved. SLIDE Plan Promotion Goal 1Justify the importance of communication in marketing. Goal 2Identify and describe the common types of promotion.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 34 KEY TERMS ●promotion ●effective communication ●personal selling ●advertising ●merchandising

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 35 COMPONENTS OF EFFECTIVE COMMUNICATION

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 36 Checkpoint ●How does identifying a target market improve promotion communications? ●Communication can be developed and directed more specifically if a target market is identified.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 37 TYPES OF PROMOTION ●Personalized promotion ●Mass promotion ●Merchandising ●Mass personalization

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 10 SLIDE 38 Checkpoint ●Describe the advantages and disadvantages of the major types of promotion. ●Personalized promotion allows the provider to meet customers and identify customer needs. ●It is, however, the most expensive type of promotion. ●Mass promotion reaches a larger target market and is much less expensive. ●It does not, however, provide for individualized service, and sales (results) are often not immediate.