Chapter 8:

Producing and Marketing Goods and Services

The Role of Marketing

►Marketing: all activities used to insure the effective exchange of goods and services between businesses and consumers

►Where do they start?

With an idea

►Marketers determine customer needs and continue with planning, packaging, name, etc.

The Role of Marketing

►When marketing works well, both sides win

►Vital in capitalistic/market economy

Based on voluntary exchange

Businesses have freedoms

Consumers have freedoms

Marketers are intermediaries between the two

Marketing Functions

►Marketing Functions: set of marketing activities

► Include: Product/Service Planning

Purchasing

Financing

Distribution

Pricing

Risk Management

Marketing Information Management

Promotion

Marketing Functions

► Product/Service: Design and develop products

► Purchasing: Obtain materials needed for

marketing activities

► Financing: Having money available for

activities

► Distribution: Getting products to

customers

► Pricing: What to charge and what

pymt methods to accept

► Risk Management: Security and safety to

products, employees, and customers

► MIM: Research

► Promotion: Communicating with

customers to encourage purchasing

Impact of Marketing on Your Life

►Marketing carries a negative view because of misunderstanding

►Marketing:

Increases SoL

Increases awareness

Creates jobs

Increases choices, quality and lowers prices

A Marketing Philosophy

► Marketing concept:

Consider the needs and wants of customers when making decisions in the business

Driving force

► To be successful:

Identify customers and understand their needs

Develop a product that will satisfy their needs AND satisfy marketing activities

Complete it all at a profit

A Marketing Strategy

►Marketing Strategy:

Two-step process used to plan and market products/services

Steps:

►Identify target market

►Develop your marketing mix

►Target Market:

Identified group of customers where marketing efforts are focused

►Marketing Mix:

Product

Place

Price

Promotion

A Marketing Strategy

► Another name: the 4 P’s

► Product: Goods and services sold to satisfy

customers

► Place (distribution): Where the products will be sold

How they reach their destination

► Price: Amount paid by customer

How they pay

Profit (mark-up) %

► Promotion: Communication with customers

Advertising, publicity, etc.

Product Development

► Planning, Developing, and Testing: Work with engineers and

scientists Survey customers Steps:

► Idea ► Test idea ► Build model ► Design production and

marketing procedures ► Develop budgets and

forecast sales ► Prepare for production

► Developing what Customers Want: Risky Expensive (time and money) Use research to reduce risk Study human behavior Look at buying trends Survey customers Look at buying motives:

► Reasons you make a purchase

► Emotional ► Necessity ► Attitude

Planning Distribution Channels

► Past: wagons, rivers, trains

► Present: ocean, air, truck, and train

Planning Distribution Channels

►Things to consider:

Location

Businesses

Transportation methods available

Cost of each type of available method

Packaging/protection of product

Getting Products and Services to Consumers

►Channel of Distribution: path product takes from producer to consumer

►Direct Channel: consumer purchases product directly from the producer Example: Farmer’s Market

►Indirect Channel: have at least one middle firm (intermediaries) between producer or consumer Example: Grocery shopping at Weis

Getting Products and Services to Consumers

► Retailer:

Business firm who sells directly to the consumer, collects the products of many manuf., prices them, displays them, and makes purchasing easier

► Wholesaler:

Middle firm that assists with distribution activities between businesses

Getting Products and Services to Consumers

►Other forms:

Underground pipelines

Pumping facilities

Storage tanks

Independent trucking companies

Any specialized business used to transport items

Getting Products and Services to Consumers

► Distribution depends on four areas:

Difference in Quantity:

► Adjusts for large quantities produced but only small quantities purchased (per customer)

Differences in Assortment:

► Gather many types of products in one place for consumer convenience

Differences in Location:

► Brings products from all over the world to your area for your convenience

Differences in the Time:

► Allows companies to distribute needed items at the correct time of the year

The Role of Pricing

► Price: what we pay for products and services

►Helps us determine our level of satisfaction

►May pay higher price for better quality

►Consumers will often compare prices to find best deal

The Role of Pricing

►Goals and Objectives:

Cover costs

View as valuable

Be competitive

►Too high-go elsewhere

►Too low-lose money

Maximize profits

Increases sales

Maintain your desired image

► Factors to Influence Price:

Supply

Demand

Quantity purchased

Level of customer service offered

Number of businesses in CoD

Advertising/promotion

Promotional for Successful Marketing

► Ways to get info: Advertising

Publicity

Publications

Word of mouth

► Promotion: tool used to communicate with consumers and persuade purchase of products

► Must be: Enticing

Noticed

Promotional for Successful Marketing

► Role of Promotion: Part of marketing mix

Attract customers to business

Persuade them to buy product

Enforce purchases already made (example: “Dave” and the commerce dept.)

► Media and Methods: Media Adv.: information sent

and paid for by business to reach a large # of people

Examples: ► Coupons

► Free samples

► Contests

Publicity: non-paid information in media (articles)

Personal selling: direct, personal communication between customer and sales person (car sales people)

Promotional for Successful Marketing

► Factors for Promotional Methods: Who are the prospective

customers being targeted? How many? Location? What information do they use?

What is the message? Does everyone need the same information? Is the message simple or complex? Should it be repeated regularly?

What is the budget?

► Personal Selling: Work with customers to

learn their needs and wants

Want to know and understand their buying motives

Provide them with information to help customers make their decisions

Steps: ► Approach

► Presentation

► Close

End of Chapter Questions

►What is a buying motive?

►What are the 4 p’s?

►What is another name for them?

►What are the marketing functions?

►What is the channel of distribution? Direct? Indirect?

►What causes prices to fluctuate?