Principles of Business & Finance
3.01 Understand principles
of marketing.
Marketing
The process of developing, promoting, pricing and distributing products in order to satisfy customers’ needs and wants. Marketing involves all the activities necessary in getting a product from the producer to the consumer.
The Seven Functions of Marketing1.Marketing Information Management2.Product/Service Management3.Financing4.Pricing5.Promotion6.Selling7.Distribution
Marketing-Information Management
Obtaining information needed to make sound business decisions. Example: Taste tests and surveys.
Product/Service Management
Concepts and procedures necessary to obtain, develop, maintain, and improve a product or service mix in response to market opportunities.
A. Risk Management: preventing or reducing business loss.
B. Purchasing: Buying goods and services for use in the day-to-day about where a product is sold.
Financing
Obtaining money needed to finance the operation of a business. This includes bank loans and offering
credit to customers.
Pricing
Determining a value to charge for goods and services. It is important to consider competition and what consumers are willing and able to pay.
Promotion
Communication used to inform or remind people about a business’s products. Promotion also involves persuading customers to purchase a product.
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Selling
Determining customer needs and wants through planned, personalized
communication intended to influence purchase decisions and
ensure satisfaction.
Distribution
The transporting, storing and handling of goods on their way from the
manufacturer to the consumer. This includes the decisions about where
to sell a product.
Marketing Research
Marketing research involves 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.
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Research Studies Types of research studies
Surveys Focus groups Observations Experiment
Surveys The most common type of marketing
research Surveys gather information from
people using a planned set of questions.
Delivered via mail, Internet, or telephone.
Focus Groups A small group of consumers taking
part in a group discussion Focus groups discuses experiences
with products or make suggestions for product improvements.
Observations Collects information by recording the
actions of consumers. Researchers observe how consumers
study and choose products.
Experiment An experiment presents two
carefully controlled products to customers in order to determine which product is preferred.
Examples: Using two different sizes of packages Offering coupons to customers to
determine buying purchases.
Parts of a Product Basic product Product features Options Brand name Packaging Warranty
Parts of a Product Basic product is simplest form of a
product or service. Product features include additions and
improvements to the product or service.
Options include choices of the product or service.
Parts of a Product
Brand name is a company’s unique identification for a product or service.
Packaging is the protection and security of a product or service before it is used.
Warranty is an offer to repair, replace, or provide a refund a product or service in order to build the confidence of consumers in a business.
Products v. Services
Similarities: Meet the needs or satisfaction of a
target market Include a mix of the marketing
elements (product, price, promotion, and distribution)
Products v. Services
Differences between products and servicesProducts ServicesTangible IntangibleNon-Perishable PerishableSeparable InseparableEasier to market More difficult to marketMore control over quality Less control over quality
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Factors Influencing Price
Supply and demand Uniqueness Age Season Complexity Convenience
Pricing Formula
Selling Price The price paid by the customer
Product Costs Costs to the manufacturer for producing the
product or paid by the business to buy the product Operating Expenses
All expenses associated with running a business Profit
The amount of money available to the business after all costs and expenses have been paid
Pricing Formula Selling price=product costs+operating
expenses+profit Example: 67+38+100=SP SP=$215
Markup v. Markdowns Markup
The amount added to the cost of a product to set the selling price.
Selling price=product cost+markup Example: $35+$14=$49 $35*40%=$14
MarkdownA reduction from the original selling price.
Channels of Distribution Channel of distribution is how
products and services reach final customers and the businesses involved.
Needs of the Customer
Quantity A small number at a given time.
Assortment A variety of products.
Location All over the world.
Timing May want to purchase products at different
times than producers are willing to make them.
Needs of the Business
Quantity Produce and sell large amounts at one time
Assortment Specialize in a specific type of product
Location Needs to ship products all over the world
Timing Only offer certain products during certain
seasons.
Types of Channels
Direct products move from the producer straight to the
consumer with no other organizations involved
Indirect Includes one ore more other businesses
between the producer and the consumer
Promotion
Promotion is any form of communication used to inform, persuade, or remind.
Effective communication is the exchange of information so there is common understanding by all participants.
Personalized Promotion The most effective and the most
expensive. Personal Selling
Direct communication between the buyer and the seller
Helps to assess the needs of prospective customers
Done face-to-face
Mass Promotion
Directed to many people at the same time
Advertising Publicity Public Relations Sales Promotion
Advertising
Most common types of advertising Television Radio Newspapers Magazines Mass Mailings Outside Displays Internet
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