Essential Standard 3.00

Essential Standard 3.00

Understand the role marketing in business.

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Objective 3.01Understand principles of marketing.

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Topics• Functions of marketing• Importance of marketing research to the

creation or improvement of products or services

• Selling prices of products and services• Classification of channels of distribution• Classification of the main types of

promotion

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Functions of marketing

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Functions of Marketing• What happens during the marketing

process?

• Activities of marketing happen throughout the seven functions of marketing

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Functions of Marketing continued

Seven functions of marketing:– Product/service management– Distribution– Selling– Marketing-information management– Financing– Pricing– Promotion

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Functions of Marketing continued• Product/service management may include

several businesses involved with designing, developing, maintaining, improving, and obtaining products and services in order to meet the needs of customers.

• Distribution (Place) involves using the best ways for customers to locate, obtain, and use the products and services of a business.

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Functions of Marketing continued• Selling involves communicating directly

with potential customers in order to determine and satisfy their needs and wants.

• Marketing-information management involves obtaining, managing, and using information about products and services, customers, and competitors to improve business decision-making and the performance of marketing activities 8

Functions of Marketing continued• Financing involves budgeting for

marketing activities, securing necessary funds for operations, and providing financial assistance to customers.

• Pricing involves determining and communicating the value of products and services.

• Promotion involves communicating information such as features and prices about products and services to potential customers. 9

Importance of marketing research to the

creation or improvement of products or services

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Marketing Research• What is marketing research?• 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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Marketing Research continued

Types of research studies– Surveys– Focus groups– Observations– Experiment

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Marketing Research continued

Parts of a product– Basic product– Product features– Options– Brand name– Packaging– Warranty

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Marketing Research continued• 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

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Marketing Research continued• 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

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Marketing Research continued

Similarities of products and services • Meet the needs or satisfaction of a target

market• Include a mix of the marketing elements

(product, price, promotion, and distribution)

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Marketing Research continuedDifferences between products and services

Products ServicesTangible IntangiblePerishable Non-perishableInseparable SeparableEasier to market More difficult to marketMore control over quality Less control over

quality

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Selling prices of products and services

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Selling Prices of Products and Services• What factors influence the pricing of

products and services?– Supply and demand– Uniqueness– Age– Season– Complexity– Convenience

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Selling Prices of Products and Services

• Pricing formulaSelling price=product costs+operating

expenses+profitExample: $215=67+38+100

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Selling Prices of Products and Services continued• Markup

– The amount charged of the selling price to cover the operating expenses and profit usually stated as a percent.

– Selling price=product cost+markup– Example: $35+$14=$49– $35*40%=$14

• MarkdownA reduction from the original selling price.

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Classification of channels of distribution

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Classification of Channels of Distribution• What is channel of distribution?• The channels of distribution is how

products and services reach final customers and the businesses involved

• How do the needs between producers and consumers differ? They differ by:– Quantity– Assortment– Location– Timing

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Classification of Channels of Distribution

Quantity-Businesses produce or sell massive quantities of products and services, where as each consumer needs fewer numbers.

Assortment-Businesses usually specialize in producing a specific type of products and services, where as consumers usually purchase a variety of products and services.

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Classification of Channels of Distribution

Location-Businesses may distribute products and services to customers in other countries as well in local communities.

Timing-There could be a gap in time when businesses produce products and services as to when consumers need them.

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Classification of Channels of Distribution continued• Channels of distribution allow businesses to

adjust quantity and assortments accessible in convenient locations for customers and storage of products.

• Types of channels of distribution:– Direct

Example-UPS delivers packages for Ann Taylor. – Indirect

Example-Tonya makes and sells drapes to local customers.

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Classification of the main types of promotion

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Classification of the Main Types of Promotion• Effective communication consists of an

understanding of information between the sender and the receiver.

• The sender selects a channel of communication and the receiver indicates understanding by providing some form of feedback.

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Classification of the Main Types of Promotion

• What is the relationship between effective communication and promotion?

• Businesses use promotion to communicate with potential customers about their products and services. Information about products and services is encoded in a promotional message. Promotional messages may be delivered through advertisements and sales representatives. Potential customers decode the message and provide feedback by way of purchasing or inquiring about products or services.

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Classification of the Main Types of Promotion continued• Main types of promotion:

– Personalized is customized for individual customer.– Mass is communicated with many people with a

common message.• Some types of mass promotion:

– Advertisement– Publicity– Public relations– Sales promotion

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