Objective 3.01 Understand principles of marketing 1

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 2

Functions of marketing 3

Functions of Marketing  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 4

Functions of Marketing continued Seven functions of marketing:  Product/service management  Designing, developing, maintaining, improving, and obtaining products/services to meet the needs of customers  Distribution  Using the best ways for customers to locate obtain, and use the products /services of a business  Selling  Communicating directly with potential customers to locate, obtain, and use the products /services of a business.  Marketing-information management  Obtaining, managing, and using information about products /services, customers, and competitors to improve business decision-making and the performance of marketing activities  Financing  Budgeting for marketing activities, securing funds, and providing financial assistance to customers  Pricing  Determining and communicating the value of products /services  Promotion  Communicating features and prices about products /services to potential customers 5

Importance of marketing research to the creation or improvement of products or services 6

Marketing Research  What is marketing research?  Using customers in order to find solutions to 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. 7

Marketing Research continued Types of research studies  Surveys  Focus groups  Observations  Experiment 8

Marketing Research continued Parts of a product  Basic product  Simplest form of a product/service  Product features  Additions and improvements to the product/service  Options  Choices of the product/service  Brand name  Company’s unique identification  Packaging  Protection and security before it is used  Warranty  Offer to repair, replace, or provide a refund in order to build the confidence of consumers 9

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 distribution) 10

Marketing Research continued Differences between products and services Products Services Tangible Intangible Perishable Non-perishable Inseparable Separable Easier to market More difficult to market More control over quality Less control over quality 11

Selling prices of products and services 12

Selling Prices of Products and Services  What factors influence the pricing of products and services?  supply & demand, uniqueness, age, season, complexity, convenience  Pricing formula Selling price=product costs+operating expenses+profit Example: $215=

Selling Prices of Products and Services continued  Markup  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  Markdown A reduction from the original selling price. 14

Classification of channels of distribution 15

Classification of Channels of Distribution  What is channel of distribution?  How products/services reach final customers and businesses involved  How do the needs between producers and consumers differ? They differ by:  Quantity  business=lots; consumer=fewer  Assortment  businesses=specialize in specific type  Consumers=purchase a large variety of products/services  Location  global or local  Timing  Can be a gap in time when businesses produce products/services as to when consumers need them 16

Classification of Channels of Distribution continued  Channels of distribution allow businesses to adjust quantity and assortments accessible in convenient locations for customers and storage of products.  Types of channels of distribution:  Direct  between producer and consumer  Example-UPS delivers packages for Ann Taylor.  Indirect  Uses one or more other businesses to move product from producer to consumer Example-Tonya makes and sells drapes to a retailer who sells to local customers. 17

Classification of the main types of promotion 18

Classification of the Main Types of Promotion  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. 19

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. 20

Classification of the Main Types of Promotion continued  Main types of promotion:  Personalized is customized for individual customer.  Mass is communicated with many people with a common message.  Some types of mass promotion:  Advertisement  Publicity  Public relations  Sales promotion 21