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. ServicesDifferences between products and services
Products 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