Chapter 10: Producing Goods and Services World Wide & Chapter 11: Marketing in Today’s World

Chapter 10: Producing Goods and Services World Wide & Chapter 11: Marketing in Today’s WorldIntroduction to Business

Production and Operations0OPERATIONS SYSTEM: Planning that goes into producing

a Product or Running a Business0 Includes

0Facilities0Processing0People needed to produce goods and services

Facilities0Physical elements needed

to produce a product or provide a service

0 Include:0 Factory Buildings0Warehouses0 Land0Offices0Machinery0Equipment0Trucks

0Consider0 location of the

facilities-need to be close to product parts

0 Layout: 0Will the plant and

office be in same building or near each other?

0Depends on Production process

Processing0All activities involved in changing or combining resources

to produce a good or service0 Transferring raw goods finished goods

0 Less $ to mass produce 1 item than produce just one item

People0 Human Resources=most important factor0 Jobs

0 Plan & Supervise0 Program Computers0 Repair Machines0 Watch over Processing Operations

0 Plan content and methods by 2 techniques:0 Task0 Workers0 Combination

0 Hire Local Mangers=Better Strategic Results0 Country’s Cultural Concerns Understanding0 Consumer Habits0 Government Regulations

Controlling Production0 Production Forecasting = estimating how much of a company’s goods

or services must be produced to meet future demand0 Usually based on past demand0 Considers:

0 Economic Growth0 Incomes

0 Scheduling

0 Inventory Management0 Materials Requirement Planning0 Manufacturing Resource Planning0 Just-In-Time Planning

Controlling Production0 Scheduling

0 Identifies how many goods will be made over a given period of time 0How many of each model, color, and size

Controlling Production0 Inventory Management

0Inventory: amount of goods0Inventory Control: balancing the costs of holding raw materials,

partially completed materials, and finished goods with the costs of ordering them

0 Inventory Management Techniques:0 Materials Requirement Planning (MRP)0Getting correct materials where they are needed for production &

doing it on time & without unnecessary stockpiling0 Manufacturing Resource Planning (MRP II)0MRP + includes input from other departments including finance &

marketing0 Just-In-Time Planning (JIT)0Materials arrive precisely when they are needed on a production line

& finished goods are delivered “just in time” for usage

Making Production Efficient• 3 Main Areas of Concern

1. Quality Control: measuring goods & services against established standard• Quality Assurance: Business developing departments to work on

quality• Quality Circle: group of employees from same area • Define, analyze and solve quality problems in their area• Also work on reducing defects boosting morale,

streamlining hiring practices and improving training• ISO 9000 Standard: global/national quality standard committee• Study operation of a factory, laboratory, or office • International Organization Standardization

• Certification for testing products, training employees, keeping records & fixing defects

Making Production Efficient• Maintenance• Def: Any kind of activity that keeps a production facility in working

condition or puts it back in working condition if it breaks down• Repairing broken machines ASAP• Preventive = more efficient & cost effective

• Cost Control• Analyze costs to establish minimum acceptable $ on product• 2 types of cost• Variable Costs: costs of materials, labor, and raw materials that change with

number of goods produced• Fixed Costs: cost that must be paid; not dependent on any variable

Working in Operations & Production

0 Skills Required0 Mechanical aptitude=use of tools & machines & hands & eyes0 Problem solving =Use information to solve problems0 Math/science = weigh, measure, sort, cut, and assemble

different kinds of material by patterns or models0 Communication = improve products and work environment0 Accuracy/attention to detail = putting products together

accurately for high quality & efficient operations

CHAPTER 11: Marketing in Today’s Society

• Elements of Marketing• Marketing Mix: activities that go into the selling of a product to

consumers = product, price, promotion, & place• Product: studies & surveys to find out what goods & services people

want to buy• Include qualities

• Price: $ set that is attractive to buyers & high enough to cover costs & expenses

• Promotion: all activities that go into telling consumers about the product or service & trying to persuade them to buy it

• Place: where the product or service is sold • Also the placement/location of goods within the sotre

Product Planning• Types of Products:• Consumer goods: goods sold to individuals and families• 3 Categories:• Convenience goods/services: regularly use without

spending much effort• Milk, bread, eggs

• Shopping goods/services: spend much time looking around & comparing similar products• Vehicles, higher-priced clothing

• Specialty goods/services: select by brand or by company• Cameras, sports & stereo equipment, perfume & fine

watches

Product Planning• Life Cycle of a Product• Can be rapid or slow• Clothes-annually vs. equipment-years

• 4 Phases• Introduction Phase: On the market for the 1st time• Loses money because of little revenue compared to costs of development

• Growth Phase: product = popular• Sales & profits increase rapidly• Others make similar products

• Mature Phase: Sales level off & profits begins to fall• More producers & steady demand

• Declining Phase: last stage; no longer profitable• Stop making the product or introduce better-quality or more attractive

version

Product Planning• Meeting Consumer Needs• Consumers spend = • Physical needs: necessities of life• Food, clothing, housing, transportation, health, safety, &

security• Social needs: need to be loved & accepted by others• Desire to be attractive to opposite sex• Cologne, skin care products, deodorant

• Psychological needs: need for approval & prestige• Goods/services that show accomplishment

• Nondiscretionary income: used to buy items to meet basic needs• Discretionary income: income left over after basic needs are met

Product Planning• Understanding Consumer

Motivations• 3 types of motives• Rational motives: logically

think about a purchase• Emotional motives:

purchase based on feelings or attitudes; impulse buying or irrational purchase• Patronage motives: loyal

to a brand or company

• Using Market Research• Market Research =

gathering of information that businesses can use to determine what kind of goods or services to produce• Forecasts how much to

produce• Demographics: study of

population

Pricing, Packaging, & Promotion

• Pricing: value that producers & sellers place on goods & services• Cover• Producing• Shipping• Promoting• Profit• Fixed & Variable Costs• Break-even point: point at which the total cost is equal to

the total money the product earns• 2 Messages:• High price = exclusiveness; better quality• Low price = low quality

Pricing, Packaging, & Promotion

• Packaging• Attractive• Clearly labeled• Prevent tampering and protect content• Labels promote advertising• Logo: symbol of manufacturer & brand name of the product• Give directions• Lists ingredients

Pricing, Packaging, & Promotion

• Promotion: all activities involved in selling a product• Advertising: paid promotion• Sponsors: People who purchase advertising• TV commercials• Catalogs• Magazine Ads• Newspaper Ads• Billboards• Products themselves• Direct Mail

Distributing Goods & Services• Channel of Distribution: all the people who direct

products to consumers• Includes Intermediaries/Go-Betweens• Distributors: represent single manufacturer in a

specific geographical area• Wholesalers: receive large shipments small

batches for resale• Retailers: sell goods directly to the consumer• Final Stop

Special Concerns For International Marketers

• Communication: • Understanding the language

• Traditions and Customs• Understanding customs & traditions in cultures

• Differences in Buying Habits• Based on system of values • Research each country

Working in Marketing

• Like to meet the needs of others• Enjoy working with others• Important Traits:• Communication: talking, listening, & reading• Human Relations: get along with others & understand why

people do what they do• Math skills: basic math skills• Motivation: Goal-oriented & lots of enthusiasm• Creativity/Problem-Solving: use imaginations & answer ?s

and solve problems