Producing and Marketing Goods and Services Chapter 10

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=4 A 2 27 Cr_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. • Promotion • Communicating information about the product to potential customers. • Pricing • Balance between cost and affordability. • 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 HD Video Cameras Under Armor DVD VCR Starbucks Home telephones Computers Nike

Product Life Cycle • Introduction 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 • 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 • Advertising • 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: 1. Headline - Attracts the readers attention. 2. Copy - selling message after the headline 3. Price - If used, presented accurately and not misleading

Effective Advertising • Effective advertising contains the following FIVE elements: 4. Illustration - attract attention, create interest/desire, show product, must appeal to target market 5. 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=Rz. T o. No 7 A-94 • Top Ten Super Bowl Commercials