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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
promotion2
The process of planning & executing the› Conception› Pricing› Promotion and › Distribution
of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.
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What happens during the marketing process? Businesses are involved in:
› Product Origin- Research & Development› Product Pricing› Product Promotion, and› Distribution of products and services
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Products and services are made available in order to meet the goals of individuals and businesses.
Essential Question:Why do businesses spend so much time, money, and effort to market their goods and services?
Answer: to meet customer needs and to make a profit
Product/service management
Distribution
Selling
Marketing-information management
Financing
Pricing
Promotion6
Marketing Activities happen during the seven functions of marketing
Defined: designing,
developing, maintaining, improving, and obtaining products and services
in order to meet the needs of customers.
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Defined: Using the best ways
for customers to: locate, obtain, and use the products
and services of a business.
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Defined: Communicating directly with potential customers in order to determine and satisfy their needs and wants.
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Defined: Obtaining Managing and using information
about:› Products & services› Customers› & Competitors
to improve business decision-making and the performance of marketing activities.
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Defined: Budgeting for
marketing activities Securing necessary
funds for operations, and
Providing financial assistance to customers.
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Defined: Determining and
communicating the value of products and services.
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Defined: Communicating information such as:
features and prices about products and
services to potential customers.
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http://www.rolex.com/en#/home/
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Why do companies spend money on marketing research?
http://www.deere.com/servlet/PIPInquiry?PIN=&Submit=Search http://www.ford.com/innovation/automotive-technology
What is marketing research?› utilizes customers to find solutions to
marketing 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.
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Surveys› ASKING OPINIONS
OF LARGE GROUPS› Student survey
Focus groups› SMALL GROUP
DISCUSSION› Group previews tv
ads
Observations› RECORDING ACTIONS
OF CONSUMERS› ex: what people buy,
return, use Experiment
› PRESENTING TWO ALTERNATIVES TO DETERMINE WHICH HAS BETTER RESULTS
› ex: cloroxed socks
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Parts of a product› Basic product› Product features› Options› Brand name› Packaging› Warranty
http://www.benjerry.com/
Simplest form of a product or service Not unique Usually available from several companies
Example: basic tv› Limited # of
channels › No pay per view› No HD› No DVR › No playback
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Example: basic health insurance› High deductible› Limited coverage› Limited service
providers› High co-pays
Additions and improvements to the product or service
Example: cell phone offers: built-in digital camera, voice dialing, web browser
What are some features of vehicles?
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http://www.chevrolet.com/?seo=goo_|_2008_Chevy_Retention_|_IMG_Chevy_Make_|_Exact_Match_Chevy_Chevrolet_|_chevrolet
Options include choices of the product or service.
Car Choices include:› Models› Engine size› Colors› Manual/automatic› 2-dr, 4-dr,
hatchback
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http://www.chevrolet.com/pages/mds/vehicles/helpMeChooseResult.do?bodyStyle=CARS
What options are available on this vehicle?
a company’s unique identification for a product or service
Breyer’s ice cream Ford Mustang Maxwell House
Coffee Nike shoes Thomasville
furniture
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the protection and security of a product or service before it is used.
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A company’s offer to: Repair Replace, or Provide a refund for a
product or service in order to build consumer confidence in the business
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Products vs. Services Both:
› Meet the needs or satisfaction of a target market
› Include a mix of the marketing elements (product, price, promotion, and place -distribution)
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Products› Tangible› Perishable or non-
perishable› Separable› Easier to market› More control over
quality
Services› Intangible› Perishable› Inseparable› More difficult to
market› Less control over
quality
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Tangible - items one can see and touch Intangible - no physical form, more difficult to examine Inseparable - services are consumed at the same time they are
produced. The person or technology producing the service must be available when and where the consumer needs it. Marketers must determine when and where consumers want a service and must be able to provide it at that location and time.
Perishable -cannot be stored for later consumption, services must be available at the same specific time as the demand› If a taxi driver does not have a fare, the service goes unused› If all concert seats are full, no more people can hear
performance Heterogeneous – there will be differences in the type and
quality provided. Skill , training, and motivation of the service provider affect quality service.
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Definition: Money a customer
must pay for a product or service
Price changes as it moves through channels of distribution from producer to consumer. Value is added at each step.
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What are the components of price?
The Pricing formulaSelling price=product costs+ operating
expenses+ profit
Product costs-› Costs to
manufacturer of producing the product
Operating expenses-› Costs of doing
business:› Salaries, storage,
equipment, facilities, utilities, taxes, etc
Profit-› Amount left after all
costs and expenses have been paid
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Example A Product cost=$67 Operating expenses =
$38 Required profit= $100 Using price formula,
what is the price?
P=67+38+100P= $215
Example B Product cost = ? Op exp = $ 24 Profit = $45 Selling Price = $
169
Using price formula, what is the product cost?
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Prices will be higher due to these factors:
Supply and demand- limited supply Uniqueness – few close competitors Age – new product introduction Seasonal– used only for a specific period of
time Complexity – very technical or complex Convenience – people pay for convenience
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1. Must cover the cost of the product2. Must cover the operating expenses
(cost of running the business)3. Must allow profit for the business If PRICE cannot cover 1-2-3, then
business cannot survive…but must also BE COMPETITIVE in the market or will
products will not sell!
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Selling Price-Product Cost=
Gross margin**Important factor in pricing
Gross margin represents amount of money on hand to pay for operating expenses of the business
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Markup Amount added to the
selling price to cover the operating expenses and profit
Usually stated as a percentage of selling price› Selling price =
product cost + markup
Example: $35+$14=$49› $35*40%=$14
MarkdownA reduction from the
original selling price.
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Selling price = $49 Markup = $14 Product cost = $35
What is Markup % $35 x MU%=$14MU %=14/35MU%= 40%
Selling price = $100 Markup = $25 Product Cost = $75
What is mark up %?
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Example: Original price $35 20% advertised
markdown What is new price?
$35 x .20 = $ markdown $ markdown= $7
New price is $28
Practice: Price = $140 Markdown =15% What is new price?
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What is channel of distribution?How products and services reach final
customers or businesses Can be classified as
› Direct- producer to consumer only› Indirect- one or more businesses in chain
between producer and consumer
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Direct Examples Tonya makes and sells
drapes to local customers.
Joe sells fresh peaches from his orchard at a roadside stand.
Harvey uses landscaping equipment to move soil for the foundation of a house being built by Mr. Thomas, his customer.
Indirect Examples RCA sells televisions to
Circuit City who resells to customers.
UPS delivers merchandise packages to Ann Taylor retail outlet at the mall to be sold to consumers.
Gant, an ore extractor, sells bauxite to Reynolds for processing into aluminum.
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Intermediary Involved NO Intermediary Involved
How do the needs of producers and consumers differ?
They differ by:› Quantity – a definite amount of
anything› Assortment-collection of various
kinds of things› Location- a place of activity› Timing – selecting the best time
or speed for doing something
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› Producer Needs versus Consumer Needs › Quantity – a definite amount of anything
Businesses produce or sell massive quantities of products and services, where as each consumer needs fewer numbers.
› Assortment-collection of various kinds of things Businesses usually specialize in producing a specific
type of products and services, where as consumers usually purchase a variety of products and services.
› Location- a place of activity Businesses may distribute products and services to
customers in other countries as well in local communities. Consumers mostly buy local.
› Timing – selecting the best time or speed for doing something There could be a gap in time when businesses
produce products and services as to when consumers need them.
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Defined: how products/services reach final customers and the businesses involved
Channel members – businesses that take part in a channel of distribution
Allow businesses to adjust :- quantity and assortments - accessible in convenient locations- storage of products for customer’s convenience.
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The marketing mix element that uses locations and methods to make the product/service available to the target market.
Determining the best methods and procedures to use so customers can find, obtain and use a product or service.
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CHANNELS OF DISTRIBUTIONHow does CORN get to your table?
1.FARMER/FARMWORKERS GROW2.FARMWORKERS HARVEST FOR TEMPORARY STORAGE3.CORN TRANSPORTED TO SILO STORAGE4.CORN TRANSFERRED TO TRAIN/TRUCK FOR TRANSFER5.TRAIN TRANSFERS CORN TO MILL/PROCESSING PLANT6.MILL/PROCESSOR CHANGES PRODUCT7.PROCESSOR PACKAGES INTO CANS/FROZEN BAGS ETC8.CANS FROM MILL TO STORAGE9.STORAGE TO TRAIN/TRUCK TO WHOLESALER10.WHOLESALER (GROCERS ASSOCIATION) STORAGE11.WHOLESALER TO RETAILER (FOOD LION) BY TRUCK12.RETAILER TO CONSUMERS13.CONSUMERS EAT CORN FOR DINNER!
Without looking back to previous slide- List as many as you can…groups who
had contact with the corn that you eat.
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Influential messages daily bombard you from:› Businesses› Organizations› Government
agencies› Political candidates
Is the promotion always effective?
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http://www.youtube.com/watch?v=R55e-uHQna0&safety_mode=true&persist_safety_mode=1
Any form of communication used to inform, persuade, or remind
Used to influence knowledge, beliefs, and actions about products, services and ideas
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Pizza $9.99
Business card
OPENClay’s Pizza
Effective communication consists of
an understanding of information between the sender and the receiver.
Sender selects a channel of communication and
Receiver indicates understanding by providing some form of feedback.
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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 messages and provide feedback by way of purchasing or inquiring about products or services.48
Main types of promotion:› Personalized - customized for individual
customer› Mass - communicated with many people with
a common message Some types of mass promotion:
› Advertisement› Publicity› Public relations› Sales promotion
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Direct, individual communication with a potential specific customer
Most expensive type of selling
Face to face contact Used for complex or
expensive products Can be by phone
Examples: Car salesmen Jewelry sales Cosmetic counters
at department stores
Insurance sales Investment brokers Realtors
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A non-personal paid form of communication
Designed to inform, persuade, or remind customers about
a good or a service
Most common media› Television› Newspapers› Outdoor display
boards› Magazines› Radio› Internet
› Mass Mailings› Email
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http://www.godiva.com/welcome.aspx
Non paid communication in the news media or by word of mouth
Cannot be controlled
Can be good or bad for the business
Examples Walmart violations
of EEOC regulations Food poisoning
linked to local restaurant
Action 9 contacting business that did not stand behind contract with consumer
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Activities used to build and maintain a positive image about a company and its products
Examples: Executive at bank is
active in Rotary Club
Speedway Plumbing sponsors golf hole at the CTE golf tournament
Chic-Fil-A gives discount coupons
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Communication activities used to stimulate sales, create awareness of a new product, or create goodwill for the business
Radio listener contest with $100,000 prize
Buy one get one free programs- BOGO
Free gifts- ink pens/caps/tshirts given with company info
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