1. Understand Principles of Marketing
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. 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

5. Seven Functions of Marketing
Marketing-Information Management
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
Designing, developing, maintaining, improving, and obtaining products and services in order to meet the needs of customers

6. Seven Functions of Marketing - Continued
Pricing
Determining and communicating the value of products and services
Place (Distribution)
Using the best ways for customers to locate, obtain, and use the products and services of a business
Selling
Communicating directly with potential customers in order to determine and satisfy their needs and wants

7. Seven Functions of Marketing - Continued
Financing
Budgeting for marketing activities, securing necessary funds for operations, and providing financial assistance to customers
Promotion
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
Customers 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.

10. Types of Research Studies
Surveys
Specific set of questions asked to consumers
Focus groups
Small groups of consumers that discuss a specific product
Observations
Actions of consumers rather than questioning them
Experiment
A comparison of two controlled alternatives for consumers

11. 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. Differences Between Products and Services
Tangible
Intangible
Non-perishable or perishable
Perishable
Separable
Inseparable
Easier to market
More difficult to market
More control over quality
Less control over quality

13. Selling Prices of Products and Services

14. Factors that Influence the Pricing of Products and Services
Supply and demand
Uniqueness
Age
Season
Complexity
Convenience

15. Pricing Formula
Selling Price = Product Costs + Operating Expense + Profit
Example: $215 =

16. Markup vs Markdown
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

17. Classification of Distribution and Promotion

18. Classification of Channels of Distribution
Channels of Distribution – how products and services reach final customers and the businesses involved
How does having a channel of distribution help businesses?
Allows businesses to adjust quantity and assortments accessible in convenient locations for customers and storage or products

19. Types of Channels of Distribution
Direct – the exchange of products and services between producer and consumer only
Examples:
Tonya makes and sells drapes to local customers
Local cleaning company promotes its business and provides services to its local customers
Mary sells her famous juices at the local festivals
Indirect – the exchange of products and services with one or more businesses and consumers
UPS delivers packages for Ann Taylor
Drugstores sell Maybelline Cosmetics
Macy’s sells Nautica line of clothing

20. How do you know when communication is effective?
Consists of an understanding of information between the sender and the receiver.
Senders selects a channel of communication and the receiver indicates understanding by providing some form of feedback.

21. 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
Personalized
Customized for individual customers
Examples – Visits, Telephone Calls, Live Audio & Video Internet Connections
Mass
Communication with many people with a common message
Examples – Advertisements, publicity, public relations, and sales promotion