What is marketing?? CHAPTER 19

Importance of Marketing Marketing—a set of activities that gets products from producers to consumers The role of the marketing manager CHAPTER 20

Nature of Marketing Marketing activities Buying- obtaining product to be resold Selling- providing info to customers to help them make a purchase Transporting-moving products from manufacturing site to where customers will buy them Storing- holding products until customer purchases Financing- obtaining credit when buying end extending credit when selling Researching- studying buyer interests and needs Risk taking- assuming risks of loss that may occur Grading and valuing- grouping goods according to quality or size and assessing price value CHAPTER 20

Nature of Marketing Cost of marketing- half or more of the price the consumer pays goes toward marketing costs Role of marketing- customer oriented; direct activities toward satisfying customers CHAPTER 20

Market Identification Whom to serve- customer profile based on characteristics such as age, income, gender, family status, etc. Where to serve- limit to certain geographic area based on climate, city, rural, etc. Identifying target markets- groups of people with similar needs to whom the company plans on selling their product(s) CHAPTER 20

The Marketing Mix-4 Ps Product Price Distribution (place) Promotion CHAPTER 20

ELEMENTS OF THE MARKETING MIX Product- can be defined as all attributes, both tangible and intangible, that customers received in exchange for the purchase price © SOUTH-WESTERN EDUCATIONAL PUBLISHING

ELEMENTS OF THE MARKETING MIX Price- the amount of money given to acquire a product. The price must be high enough to cover the costs of producing and marketing the product. © SOUTH-WESTERN EDUCATIONAL PUBLISHING

ELEMENTS OF THE MARKETING MIX Place (Distribution)- the set of activities required to transport and store products and make them available to customers © SOUTH-WESTERN EDUCATIONAL PUBLISHING

ELEMENTS OF THE MARKETING MIX Promotion- providing information to consumers that will assist them in making a decision to persuade them to purchase a product or service Advertising and personal selling © SOUTH-WESTERN EDUCATIONAL PUBLISHING

Developing a Marketing Plan Marketing plan—detailed written description of all marketing activities that a business must accomplish in order to sell its products; written for a specific time period, often one year CHAPTER 20

Product CHAPTER 19

The Product Life Cycle Introduction stage- brand new product enters market; sales low & profits low Growth stage- other brands are available; sales & profits are growing Maturity stage- many competing brands that are very similar; sales highest but profits drop Decline stage- new product is introduced that is better and customers begin to switch; sales & profits drop CHAPTER 20

Product Life Cycle CHAPTER 20

Product Categories Industrial goods- designed for use by other businesses Consumer goods- designed for personal or home use Types of consumer products Convenience goods Shopping goods Specialty goods Unsought goods CHAPTER 20

Convenience Goods Inexpensive items that consumers purchase regularly without much thought CHAPTER 20

Shopping Goods Products that consumers purchase less frequently; have higher price and require some buying thought. CHAPTER 20

Specialty Goods Products that customers insist upon having and are willing to search for until they find them CHAPTER 20

Unsought Goods Products that consumers do not shop for and for which they have no strong need; consumers typically don’t think about these products CHAPTER 20

Steps in Product Development Develop an idea for a new product that customers want to buy. Turn the idea into a workable product design. Be able to produce the product and make it available to consumers at a price they are willing to pay. CHAPTER 19

Creating Product Ideas Consumer research (questionnaires, online research, consumer panels, etc.) Product research Pure research- research done without a specific product in mind Applied research- solves existing product problems or design improvements CHAPTER 19

Creating Product Ideas Designing new products Engineers & researchers build models (prototypes) of products Product is tested Resources to produce large quantities are located Cost to produce is calculated Selling price must cover all costs CHAPTER 19

Product Design Levels Basic product Enhanced product Extended product CHAPTER 21

Product Selection Product line Product assortment Packaging Branding CHAPTER 21

Product Assortment Matrix CHAPTER 21

Producing the Product Different types of manufacturing processes-taking raw materials and converting to finished product Mass production Continuous processing Repetitive production Intermittent processing Custom manufacturing CHAPTER 19

Producing the Product Mass production-assembly process that produces large number of identical products (often uses assembly line) Continuous processing-raw materials constantly move through specially designed equipment to change their form CHAPTER 19

Producing the Product Repetitive production- same thing is done over and over to produce a product; activity is usually simple and may be part of a module or assembly process Intermittent processing-short production runs to make predetermined quantities of different products Custom manufacturing- design and build unique products that meet specific needs of customers CHAPTER 19

The Nature of Services How services differ from products Form- intangible Availability- must be available when & where needed Quality- cannot be separated from person or business supplying the service Timing- cannot be stored or held until needed Managing a service business CHAPTER 19

Differences Between Services and Products Intangible Available only from the person providing them Quality depends on the skill of the provider and may vary from provider to provider Cannot be stored Tangible Available whenever the purchaser wants them Quality depends on manufacturing process but should not vary significantly among batches Can be stored for later use CHAPTER 19

Price CHAPTER 19

Planning a Business Purchase What to purchase When to purchase From whom to purchase How much to purchase CHAPTER 22

Business Buying Processes New task purchase Modified rebuy Straight rebuy CHAPTER 22

Payment Terms and Discounts List price Payment terms Discounts Trade discount Quantity discount Seasonal discount Cash discount CHAPTER 22

Components of Price Selling price Cost of goods sold Operating expenses Margin or gross profit Net profit Markup Markdown CHAPTER 22

Components of Selling Price CHAPTER 22

Pricing Strategies Pricing to meet competition Pricing to earn a specific profit Profit based on consumer demand Pricing to sell more products Pricing to provide customer services CHAPTER 22

Controlling Costs Careful purchasing and operating decisions Factors that can affect costs Markdowns Damaged or stolen merchandise Returned merchandise CHAPTER 22

Place (Distribution) CHAPTER 19

Locating the Business Availability of raw materials Transportation methods Supply and cost of energy and water Land and building costs Labor supply Location of customers Economic and legal factors CHAPTER 19

Production Planning Production planning activities Building layout Inventory management- quantities of materials and supplies needed to produce product Human resource planning-types of jobs, number of people needed, skills needed Production scheduling- steps required, time to complete each step, sequence of steps Building layout Improving production processes CHAPTER 19

Purposes of Distribution Economic discrepancies Economic utility Time utility Place utility CHAPTER 21

Channels of Distribution Channel members Types of distribution channels Direct distribution Indirect distribution Integrated marketing channels CHAPTER 21

Distribution Channels for Consumer Products © Cengage Learning 2013. CHAPTER 21

Selecting a Channel of Distribution Different types of consumers require different channels of distribution Factors to consider Perishability of the product Geographic distance between producer and consumer Need for special handling of the product Number of users Number of types of products manufactured Financial strength and interests of the producer CHAPTER 21

Transportation Decisions Common transportation methods Railways Trucks Piggyback service Airplanes Other transportation methods Waterways Pipelines Containerization CHAPTER 21

Product Handling Tracking products Product storage Order processing Bar codes Product storage Warehouses Distribution center Order processing CHAPTER 21

Promotion CHAPTER 19

Promotion as Marketing Communication Promotional mix Consumer decision-making process Problem recognition Information search Alternative evaluation Purchase Post-purchase evaluation CHAPTER 22

Advertising Advertising purposes and media choices Planning and managing advertising Advertising budget Timing of advertising Advertising evaluation CHAPTER 22

Advertising Purposes To inform and educate consumers To introduce a product or business To announce improvement or product change To reinforce features and benefits To increase frequency of use To increase variety of uses To convince people to enter a store To develop a list of prospects To make a brand, trademark, or slogan familiar To improve the image of a company or product To gain support for ideas or causes CHAPTER 22

Types of Advertising Media Publication advertising Mass media advertising Outdoor advertising Direct advertising Display advertising Internet advertising CHAPTER 22

Truth in Advertising and Selling False advertising Full disclosure Substantiation Penalties for violations Case-and-desist order Corrective advertising Fines CHAPTER 22

Personal Selling Studying the wants of customers (buying motives) Presenting and demonstrating the product Answering customer questions Closing the sale Follow-up CHAPTER 22

Sales Promotions Coupons Promotional material Samples Demonstration Displays Self-service merchandising CHAPTER 22