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 Marketing 1.Marketing Information Management 2.Product/Service Management 3.Financing 4.Pricing 5.Promotion 6.Selling 7.Distribution

Marketing-Information Management Obtaining information needed to make sound business decisions. Example: Taste tests and surveys.

Product/Service Management 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. Concepts and procedures necessary to obtain, develop, maintain, and improve a product or service mix in response to market opportunities.

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. Your AD here!

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. What is marketing research? Marketing research involves customers in order to find solutions to problems through carefully designed studies.

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)

Differences between products and services Products v. Services Differences between products and services Products Services Tangible Intangible Non-Perishable Perishable Separable Inseparable Easier to market More difficult to market More control over quality Less control over quality

Factors Influencing Price Supply and demand Uniqueness Age Season Complexity Convenience

Pricing Formula Selling Price Product Costs Operating Expenses Profit 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 Markdown 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 Markdown A 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 Assortment Location Timing 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 Assortment Location Timing 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 Indirect 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