Producing and Marketing Goods and Services Chapter 10

What is marketing? All of the activities used to insure the effective exchange of goods and services between businesses and consumers.

Purpose of Marketing To develop, promote, and distribute products and services that satisfy customer needs and wants.

Marketing Functions

Marketing Philosophy Marketing Concept: Considers the needs of customers when planning, pricing, distributing, and promoting a product or service

Marketing Strategy Two-step process for planning and marketing products and services: 1. Identify a target market 2. Develop a marketing mix

Target Market Groups of people with similar wants and needs. Most of these groups will show interest in the same products. What is your favorite soft drink, and why? Buying Motives

Target Market Geographic segmentation – based on location such as home addresses Demographic segmentation – based on measurable statistics, such as age or income Psychographic segmentation – based on lifestyle preferences, such as being urban dwellers or pet lovers.

Why Identify a Target Market? Your strategies for designing, pricing, distributing, promoting, and improving your product, service or idea will be easier, more effective, and more cost-effective.

Who is the Target Market? http://www.youtube.com/watch?v=4A227Cr_Iwc

Who is the target market?

Who is the target market?

Who is the target market?

Who is the target market?

Who is the target market?

The Marketing Mix (The 4 P’s) Product A good, service, or idea designed to fill a consumer need or want. Pricing Balance between cost and affordability. Promotion Communicating information about the product to potential customers. Place/Distribution The product should be in the proper location in order to best get it from producer to consumer.

Hybrid cars IPAD Samsung 6 UGGS DVD VCR HD Video Cameras Under Armor Starbucks Home telephones Computers Nike

Product Life Cycle Introduction Stage Growth Stage Slow sales volume to start Makes no money at this stage Growth Stage Profitability begins to rise Increased competition leads to decrease prices Costs reduced

Product Life Cycle Maturation Decline Brand differentiation is needed to keep market share Sales volume peaks and competitors increase Decline Sales volume decrease Profit becomes more of a challenge

Pricing Price Skimming - A product pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment. Example: Apple – Iphone, IPOD

Pricing Price Penetration - It sets a low initial price for a product in order to gain quick acceptance a segment of the market. It calls for a sacrifice of short-term profits to establish market share Example: Starbucks initially (1970’s), Xbox, Playstation (make money on games)

Place/Distribution Effectively getting the products and services to consumers in the right quantity, assortment, and location at the right time.

Place/Distribution Channels of Distribution: path a product travels from producer to consumer Direct: goods bought directly from producer Indirect: goods move through middle firms to get to consumer Wholesalers--middle Retailers—sells directly to consumer

The Importance of Promotion Any technique designed to sell a product. Must communicate the features, uses, and benefits of products. Makes customers aware of products. Makes customers knowledgeable about products. Persuades customers to like products. Persuades customers to purchase products.

Advertising Promotions Paid, non-personal communication used by an identified sponsor to inform an audience about a product.

Effective Advertising Effective advertising contains the following FIVE elements: Headline - Attracts the readers attention. Copy - selling message after the headline Price - If used, presented accurately and not misleading

Effective Advertising Effective advertising contains the following FIVE elements: Illustration - attract attention, create interest/desire, show product, must appeal to target market Business Identification/Logo/Slogan - distinctive identification or saying people will identify with

Copy Headline Illustration ID/Slogan

Advertising Persuasive Advertising Seeks to influence consumers to buy the company’s product rather than those of its competition. Typically emphasizes the quality of the firm’s goods or services.

Advertising Comparative Advertising Compares two or more products directly. Goal is to steal sales from the competition. PC MAC

Advertising Reminder Advertising Attempts to keep the product’s name in the consumer’s mind. Used especially in the maturity and decline stages.

Commercials Ameriquest #1 Terry Tate—Reebok http://www.youtube.com/watch?v=RzToNo7A-94 Top Ten Super Bowl Commercials