introduction to marketing introduction to business & marketing

INTRODUCTION TO MARKETING

Introduction to Business & Marketing

ASSIGNMENT

1. Read Chapter 13, Pages 214 – 2272. Read Complete the Crossword Puzzle

Provided3. On the Puzzle sheet, answer any one “Critical

Thinking” question from the text. Use complete sentences. Summarize the question in the first sentence.

OBJECTIVE

Be Able to Define Marketing

Define Marketing

• All of the business activities involved with moving goods & services from producers to consumers

OBJECTIVE

Be Able to Identify & Describe the Marketing

Concept

The Goals of Marketing

• To satisfy the

wants & needs

of our customers

• To make Money !!Money !!

The Marketing Concept

“A Business Philosophy”

• If a business is to be successful - make money - if must satisfy the wants & needs of the consumer

OBJECTIVE

Be Able to Identify & Describe the “Four P’s” of Marketing

The “Four P’s” of Marketing• Product Planning

• Pricing

• Promotion

• Physical Distribution

The “Four P’s” of Marketing

• Product Planning

• Pricing

• Promotion

Product Planning

• Any Business Activity That Helps to Design a New Product or Change the Characteristics of an Old Product

PRODUCT PLANNING• Important Concept:

–FEATURES - Facts about your product, physical description (size, color, material used, etc)

–BENEFITS - What the product can do for you!!!

• Pricing

• Promotion

Pricing

• Any Activity Used to Assign a Value to a Product or Service

• Pricing

• Promotion

Promotion• Any Activity Designed to

Let the Customers Know About a Product or Service

–Personal Selling

–Advertising

–Publicity

–Public Relations

–Visual Merchandising

–Sales Promotion

• Pricing

• Promotion

Physical Distribution

• Involves the Actual Movement of Merchandise as it Moves From the Producer to Consumer

OBJECTIVE

Be Able to Match the Seven Marketing Activities With Their Definition or

Examples

Seven Marketing Functions

• Market Information Management

• Financing

• Pricing

• Promotion

• Distribution

• Selling

• Product/Service Management

Distribution

The process of getting goods & services to customers. This includes purchasing, stock handling, inventory

control, & physical distribution >(transportation & warehousing).

Financing

Financing is getting the money that is necessary for setting up & running a

business. Finance also includes protecting investments through risk

management.

Marketing Information Management (MIS)

An effective MIS gathers and analyzes information about customers, trends,

& competitor’s products.

Pricing

Determining the amounts a customer will be charged for a good or service so that a business can earn a profit

Product/Service Management

Obtaining, developing, maintaining, & improving a product or product mix in

response to market opportunities

Promotion

Promotion is any effort to inform, persuade, or remind potential customers about a business’s products or services

Selling

Personally matching customers wants & needs with products & services

available for sale.

(An important associated concept is “Relationship Marketing.”)

Seven Marketing Functions

• Market Information Management

• Financing

• Pricing

• Promotion

• Distribution

• Selling

• Product/Service Management

OBJECTIVE

Be Able to Identify Each Member of the “Primary Channel of

Distribution”

Describe Their Roles

The Primary Channel of Distribution

Producer Wholesaler Retailer Consumer

• Primarily Makes Products to Sell

• But Also Must:

– Buy & Sell

– Finance

– Store & Transport

– Insure

– Etc. Etc. Etc.

Producer

• Breaks Down Bulk Quantities Into Smaller Lots

• But Also Must:

– Buy & Sell

– Buy Real Estate

– Store

– Do Market Research

– Etc. Etc. Etc.

Wholesaler

• Primarily Sells to the Consumer

• But Also Must:

– Display

– Advertise

– Make a Profit

– Package Goods

– Provide Services

– Etc. Etc. Etc.

Retailer

• Most Importantly, Buys Our Products & Services

• But Also:

– Provides Market Research Information

– Uses Our Products & Services Up & Buys Again

Consumer

Sugar Chemicals

CocoaMilk

Producer

OBJECTIVE

Be able to describe, in an essay, how marketing activities benefit

our society

How Marketing Activities Benefit Our Society

• Raises the Standard of Living• Adds Value to What We Buy

– Form Utility– Place Utility– Time Utility– Possession Utility– Information Utility

How Marketing Activities Benefit Our Society

• Makes Shopping More Convenient

• Keeps Prices Reasonable

• Helps Society to Keep Up With Change

• Provides Public Service Activities

Marketing Trivia

• 1/4 to 1/3 of all Jobs are Marketing Related

• $ .50 of Every Dollar Goes to Cover the Cost of Marketing Activities

• Marketing Creates Jobs Which Allows Consumers to Have More Money to Spend on Items That Will Improve Their Standard of Living

PRODUCT PLANNINGPROCESS

OBJECTIVE

Be able to outline the product planning process and identify the

associated terms

FEATURE/BENEFIT ANALYSIS

FEATURES

Facts About the Product

Size, Color, Materials, Warranties, Construction Methods, Manufacturer, Etc.

Benefits = Buying Motives

Buying Motives:

– What a product does for you

– The reasons why people buy products or services

BENEFITS• Will it make you rich?

• Will it make you successful?

• Will it make you happy?

• Will it relax you?

• Will it make you healthier?

• Will it make you attractive?

• Etc. etc. etc.

BUYING MOTIVESActivity

• If you were to design a new car, what buying motives would you appeal to?– Safety?– Excitement?– Cost Savings?– Comfort?– Other

BUYING MOTIVESActivity

• What “features” would you have on your new car?

– Safety

– Excitement

– Cost Savings

– Comfort

– Other?

BUYING MOTIVESAssignment With a Partner

• If you were to design a new ____, what buying motives would you appeal to?– ______________?

– ______________?

BUYING MOTIVES Assignment With a Partner

• What “features” will you have on your new _____?– ____________

– ____________

Other Important Marketing Concepts

• Market Segmentation

• Demographics

– Family Life Cycle

– Trends in Demographics

• Target Marketing

OBJECTIVE

Be Able to Define Market Segmentation

OBJECTIVE

Be Able to Define

Target Marketing

OBJECTIVE

Be Able to Define Demographics

Common Demographics

• Age • Sex• Occupation• Religion• Interests• Income• Family Size

• Geographic Location• Attitudes• Educational Background• Race• Ethnic Background• Wealth• Etc.

DEMOGRAPHIC TRENDS

??? ??? ??? ??? ???

DEMOGRAPHIC TRENDS

• Age

• Incomes

• Geographic Location

• Family Size

• ???

Family Life Cycle• Stages

– Early Childhood

– Teen

– Young Adult/Single– Married w/out Children “Dinks”

– Married w/ Children

– Maturity

– Empty Nest

– Sole Survivor

Product Planning Process

1.) Select general type of

product

2.) Specify the product mix

3.) Develop packaging &

labeling

4.) Identify features &

benefits

1.) Select General Type of Product(OUTLINE)

I.) Consumer Goods

A.) Types

B.) How to Market

II.) Consumer Services

A.) Types

B.) How to Market

Select General Type of ProductOUTLINE

III.) Industrial Goods

A.) Types

B.) How to Market

IV.) Industrial Services

A.) Types

B.) How to Market

1.) Select General Type of ProductOUTLINE

I.) Consumer Goods - Products used for personal, family, or household purposes

A.) Convenience - _________________

B.) Shopping - _________________

C.) Specialty - _________________

I.) Consumer Goods

A.) Convenience Goods - Inexpensive products purchased regularly, little effort spent on decision. Many grocery items fall into this group. Customer will substitute.

1.) Types of Convenience Goods:

Staples - Basic food items used often` (ex. Bread)

Impulse - Unplanned purchases (ex. Candy)

Emergency - Items purchasedbecause of immediate need(ex. Batteries)

2.) Keys to Selling Convenience Goods:

a.) have convenient locations

b.) have extended hours

c.) layout is conducive to self-service

d.) have a wide variety of merchandise

e.) heavy use of print/broadcast media

& displays

Think Seven Eleven!!!

Wanted

LOCATION! HOURS!

SELF-SERVICE!

VARIETY!ADVERTISING!

A.) Convenience - _______________

B.) Shopping - _________________C.) Specialty - _________________

I.) Consumer Goods

B.) Shopping Goods - Purchases made by a consumer after a great deal of searching & comparison (ex. furniture)

1.) Types of Shopping Goods:

a.) higher priced merchandiseb.) risky purchases (if something isn’t

just right)c.) the consumer has time to make a decision

2.) Keys to selling shopping goods:

a.) quality design, development, &

manufacturing

b.) knowledgeable/well trained

salespeople

c.) extensive brand advertising

2.) Keys to selling shopping goods (cont.):

d.) warranties/services after purchase are

important

e.) special promotions & “POP” displays are helpful

A.) Convenience - _______________

B.) Shopping - _________________

C.) Specialty - _________________

I.) Consumer Goods

C.) Specialty Goods - goods purchased by customers who desire a particular product and/or brand and will accept no substitutes. (ex.Cadilac, Rolex, Levi Jeans, Skippy peanut butter)

I.) Consumer Goods

C.) Specialty Goods

1.) Keys to Selling Specialty Goods:

a.) Keeping Product Available

(Product is Pre-sold)

II.) Consumer Services - Things done for people to help them in their daily lives:

A.) Rented Goods Services - _____________

B.) Owned Goods Services - _____________

C.) Non Goods Services - _____________

A.) Rented Goods Services - provides a product that the customer rents & uses. (ex. cars, videos)

B.) Owned Goods Service - one that alters or improves on a good owned by the customer (car wash, shoe shine)

C.) Non Goods Service - provides personal & professional services to customers for a fee. (tax prep., bridal)

A.), B.), & C.) Rented, Owned, & Non-goods Services

1.) Keys to selling:

a.) high quality standards

b.) flexible pricing

c.) effective personal selling

d.) promotion through word-of-mouth testimonial

e.) “Image is everything” encourages repeat sales

III.) Industrial Goods - items purchased for the production of other goods

A.) Installations & Accessory Equipment

B.) Raw Materials, Components, & Fabricated

C.) Industrial Supplies

A.) Installations & Accessory Equipment - Items that are part of the production process, not the product. (Examples include drill presses, computers, etc.)

B.) Raw Materials, Components, &

Fabricated Parts:

Items consumed in the production

process or items used in the new

product(ex. Include oil, flour, etc.)

C.) Industrial Supplies - Items that support/facilitate the use of a business’s equipment. (ex. Include computer paper, paint, cleaning products).

1.) Keys to Selling

a.) Hire & train a knowledgeable workforceb.) Emphasize product’s durability

& dependabilityc.) Plan for customer follow-up & maintenance

III.) Industrial Services - Things done for business’s to help them keep their business running smoothly

A.) Maintenance & Repair - general cleaning,

repair, painting, & decorating

B.) Business Advisory - includes management

consulting, engineering, legal, or accounting

assistance.

III.) Industrial Services -

1.) Keys to Selling(Same as Consumer Services)

a.) high quality standards

b.) flexible pricing

c.) effective personal selling

d.) promotion through testimonial

e.) “Image is everything” encourages

repeat sales

2.) Specify the Product MixOUTLINE

I.) Product Mix Terms

A.) Product Items & Lines

B.) Product Width & Depth

II.) Product Mix Strategies

A.) Types of Strategies

1.) Expand/Modify Product Current Lines/Items

2.) Developing New Products

III.) Product Life Cycle

A.) Managing a Product Throughout its Stages

I.) Product Mix - All the different products that a

company makes. All Ford Products, for example,

or all items manufactured by Harley/Davidson

I.) Product Mix

1.) Product Lines are groups of closely related products.

For example, all cars produced by Ford

2.) A Product Item is a specific brand, model, or size of a product. The Ford Mustang for

exampleB.) Product Width & Depth

I.) Product Mix

1.) Product Width refers to the number of

different product lines a store carries or

manufacturer produces. Ford offers several

different product lines - trucks, cars, vans,

buses, military vehicles, construction

equipment, etc.

I.) Product Mix

1.) Product Width

2.) Product Depth refers to the number of

product items offered within each product

line. Ford Mustang, for example, offers

convertibles, LX models, standard vs.

automatic transmissions, & different size

engines.

II.) Product Mix Strategies - deciding which products

a company will carry or make.

A.) Expand or Modify Existing Product Lines or

B.) Develop New Products

II.) Product Mix Strategies - deciding which products

a company will carry or make.

A.) Expand or Modify Existing Product Lines or

Items: Ford could, for example, add-solar

powered Mustangs to their product items

II.) Product Mix Stategies

A.) Expand or Modify Existing Product Lines or Items

B.) Develop New Products - means coming out with totally new products to increase market share. Could you, for example, imagine Ford motor boats or blaze orange Valley tees?

(Any Current examples?!)

1.) Product Development Process

a.) Generating ideas

b.) Screening ideas

c.) Developing the product

d.) Testing the product

e.) Introducing the Product

f.) Evaluating customer acceptance

II.) B.) Develop New Products

1.) Product Development Process:

a.) Generating Ideas - Use a variety of sources -

customers, employees, competition, suppliers.

b.) Screening Ideas - consider size of the market,

profit potential, & level of risk

c.) Developing the Product - develop prototypes,

marketing strategies, & plans for packaging,

labeling, branding, & distribution

d.) Testing the Product - tested in labs & w/ customers. Test marketing is done in specific geographic arease.) Introducing the Product - The cost to intro- duce is very high & the chance for success low. Conduct a promotional campaign & train salespeople.f.) Evaluate Customer Acceptance - Conduct market & sales research. Do a customer opinion survey.

(ACTIVITY)

1.) Form Four Groups

2.) Group A Generates Five Product Ideas

3.) Group B Narrows the Choices to Two

4.) Group C Designs or Draws Both Products

5.) Group D Picks the Winning Product

2.) Specify the Product Mix OUTLINE

III.) Managing a Product in its Product Life CycleA.) Defined - Just as the economy moves through stages, so do product sales. At different stages, try different marketing strategies.B.) Stages: 1.) Introduction 2.) Growth 3.) Maturity 4.) Decline

Product Life Cycle

Sales Profits

Introduction Growth Maturity Decline

III.) Managing a Product Throughout its Product Life CycleA.) Defined

B.) Stages: 1.) Introduction - The product is new

a.) Goal is to draw customer’s attention & to increase product awareness b.) Techniques include heavy promotion - ads, publicity, displays, sales promotion, etc.

2.) Specify the Product Mix III.) Managing a Product Throughout its Product Life Cycle

B.) Stages: 2.) Growth a.) The product begins to enjoy success; sales

& profits go up. Target Market is aware of product.

b.) Techniques used to market during this stage include ads that focus on customer satisfaction, meeting the competition, expand or modify the product line

III.) Managing a Product Throughout its Product Life Cycle

B.) Stages: 3.) Maturity

a.) Sales level off/slow down, competition is heavy, & the market might be saturated.b.) Ads focus on beating the competition, think about dropping or improving the item

III.) Managing a Product Throughout its Product Life Cycle

B.) Stages: 4.) Decline a.) Sales are falling, profits are low or

nonexistent b.) Management must decide to drop or to:

- sell, discount, or license the product- find a new use for the product- regionalize the product- modernize or alter the product

Product Life Cycle

Sales Profits

Introduction Growth Maturity Decline

3.) Develop Packaging & LabelingOUTLINE

I.) Branding

A.) Defined

B.) Types of Brands

C.) Branding Strategies

II.) Packaging

A.) Functions of Packaging

III.) Labeling

A.) Types

I.) Branding

A.) Defined - A name, design, or symbol

that identifies the products of a company. For

example, Coke products, Levi Jeans, Nike, etc.

1.) Related Terms include:

a.) Brand Name - words that can be spoken

b.) Brand Mark - a symbol, font, design, or color

c.) Trade Name - words that identify the

company

d.) Trade Character - brand mark given human

e.) Trademark - a brand name, mark, character

or combination of these protected by law

3.) Develop Packaging & Labeling

Provide an example for each:

a.) Brand Name - Levi’s, Nike, Tylenol, etc.b.) Brand Mark - P. O. Eagle, Disney’s Castle, etc.c.) Trade Name - Kellogg's, Chevrolet, Xerox, etc.d.) Trade Character - Pillsbury Dough Boy, Bird’s

Eye’s Jolly Green Giant, etc.e.) Trademark - Frito Lay’s Doritos, Kellogg's Rice

Krispies Treats, Nike’s Swoosh, VISA, etc.

3.) Develop Packaging & LabelingACTIVITY

Provide an example for each:

a.) Brand Name -

b.) Brand Mark -

c.) Trade Name -

d.) Trade Character -

e.) Trademark -

I.) Branding

A.) Defined

B.) Types of Brands:

1.) National - called “manufacturer

brands,” are owned by manufacturers.

2.) Private - owned by wholesalers &

retailers

3.) Generic - “no frills” products that don’t

carry a brand name

I.) Branding

A.) Defined

C.) Brand Strategies:

1.) Brand Extension - Improving an existing

brand name (ex adding flavors to Fig Newtons)

2.) Brand Licensing - allowing another company

to use your to use its name, marks, &

characters for a fee. (ex. Caterpillar lets over 700

companies use its name)

I.) Branding

A.) Defined

C.) Brand Strategies: (cont.)

3.) Co-branding - Two companies combining to

form another product. (Ex. The “GM Card) is

a Master Card offered by General Motors

4.) Mixed Brands - Offering a combination of

national, private, & generic products (ex. Any

grocery store)

II.) Packaging

A.) Functions of Packaging

1.) Promoting & Selling the Product -

a.) Displays the brand name

b.) Attractive, colorful & artistic

c.) Makes it easy to use

2.) Defining Product Identify

a.) Unique packages sell the product

(Leggs)

II.) Packaging

A.) Functions of Packaging (cont.)

3.) Providing Information

a.) Directions

b.) Ingredients

c.) Nutritional Value

d.) Hazards

e.) Prices

f.) Inventory Control

II.) Packaging

4.) Meeting Customer Needs

a.) Various Sizes (Family Size/Singles)

b.) Practical Needs (Microwaveable)

5.) Ensuring Safe Use

a.) Plastic vs. glass

b.) Tamper-proof lids

c.) Child-proof containers

II.) Packaging

6.) Protecting the product from:

a.) breaking during shipping

b.) from spoilage

c.) excessive costs (rectangles save money)

B.) Types:

a.) cardboard, glass, metal, plastic,

wood, wraps, etc.

III.) Labeling - a information tag, wrapper,

seal, or imprinted message

4.) Identify Features & BenefitsOUTLINE

I.) Extended Product Features

A.) Types:

1.) Warranties & Guarantees

2.) Others

II.) Consumer Laws & Agencies

A.) Federal & State

B.) Consumer Rights & Responsibilities

III.) Credit

A.) Types

A.) Types:

1.) Warranties & Guarantees Defined:

a.) Warranty - a promise that a product

will meet certain standards or it

will be fixed.

b.) Guarantee - is a warranty that offers a

“money back” clause “if not completely

satisfied.”

A.) Types:

a.) Express Warranty - stated in writing

or spoken

i.) Full - Repaired or replaced

ii.) Limited - certain provisions are

excluded

A.) Types:

a.) Express Warranty

b.) Implied - not clearly indicated,

offers assurance that the product

will work the way it is supposed to

A.) Types:

a.) Express Warranty

b.) Implied

c.) Disclaimers - limits company liability.

For example, to the cost of the product,

not the damage done by the product

A.) Types:

2.) Others:

a.) delivery

b.) installation

c.) service after the sale

d.) directions & training

e.) billing

f.) credit

A.) Types:

2.) Others:

f.) credit:

i.) Bank Credit Cards

ii.) Retail Credit Cards

iii.) Debit Cards

iv.) Secured Loans

v.) Unsecured Loans

II.) Consumer Laws & AgenciesA.) Federal & State

1.) Federal: a.) Magnuson - Moss Consumer Product Warranty Act of 1975 - Sets minimum standards for warranties. b.) Consumer Product Safety Act of 1972

- Monitors the safety of products c.) Etc.

II.) Consumer Laws & Agencies

A.) Federal & State

1.) Federal:

2.) State:

a.) Lemon Laws - protects buyers from

chronically defective merchandise

b.) Arbitration Programs - Encourages

the use of third parties to resolve

differences

PRODUCT PRICING

OBJECTIVE

Be Able to Define Money & Price

Money & Price

• Money

–A Measuring Device. It Measures Value

• Price

–A Specific Measurement of Value

OBJECTIVE

Be able to define

Retail Price, Cost, & Markup

Pricing Terms• Retail Price - The amount of money a

customercustomer pays for a product/service

• Cost - The amount of money a businessbusiness pays for a product/service

• Markup - The amount of money added to added to costcost to cover a business’ expenses & desired net profit

What is Markup???• Any Business Expense (Besides the Cost of Goods):

Utilities (Heat, Elec., Phone) Donations

Salaries Employee Benefits

Promotions Rent

Taxes Fixtures (Furniture)

Industrial Services (Cleaning) Etc., Etc., Etc. !!!

• Any Desired Net Profit.

Abbreviating Pricing Terms

Retail Price = RP

Cost = C

Markup = M

Dollars

Retail Price = RP$

Cost = C$

Markup = M$

Percentages

Retail Price = RP%

Cost = C%

Markup = M%

Pricing TermsFormulas

Retail Price = Cost + Markup

Pricing TermsFormulas in Dollars

RP$ = C$ + M$

$ ??? = $6.00 + $4.00

RP$ = C$ + M$

$10.00 = $6.00 + $4.00

Pricing TermsFormulas in Percentages

RP% = C% + M%

Pricing TermsFormulas in Percentages

Retail Price % ???What the Heck is Retail Price %

Pricing Terms Formulas in Percentages

Retail Price %=

100%ALWAYS!!!

Retail Price % = Cost% + Markup%

Retail Price % = C% + M%

RP% = C% + M%

Retail Price % = C% + M%

RP% = C% + M%100% = C% + M%Because RP% is Always 100%

(Example)

RP% = C% + M%

100% = 60% + M%Because RP% is Always 100%

Representing the Cost of Goods

(Example)

100% = 60% + M%

What Must M% Be?

(Example)

100% = 60% + M%

What Must M% Be?

M% = 40%

Pricing Terms Formulas

(Examples)

RP$ = C$ + M$ RP% = C% + M%

$____ = $45.00 + $30.00 100% = 30% + ____

$____ = $22.00 + $68.00 100% = 80% + ____

$75.00 = $____ + $10.00 100% = ___% + 75%

$10.00 = $____ + $ 4.00 100% = ___% + 50%

(Examples)

RP$ = C$ + M$ RP% = C% + M%

$75.00 = $45.00 + $30.00 100% = 30% + 70%

$90.00 = $22.00 + $68.00 100% = 80% + 20%

$75.00 = $65.00 + $10.00 100% = 25% + 75%

$10.00 = $ 6.00 + $ 4.00 100% = 50% + 50%

But What if you Have Apples & Oranges???

Dollars & PercentagesDollars & Percentages

RP$ = $25.00RP$ = $25.00RP% = 100%RP% = 100% C$ = C$ = ?? C% = C% = ?? M$ = M$ = ?? M% = 40%M% = 40%

WHAT ARE PERCENTAGES?

Fractions!!!

What is 1/2 of 100%?

What is 1/4 of 100%?

What is 3/4 of 100%

WHAT ARE PERCENTAGES?

Fractions!!!

What is 1/2 of 100%? 50%

What is 1/4 of 100%? 25%

What is 3/4 of 100% 75%

How Do You Calculate PERCENTAGES?

Multiply!!

What is 50% of $10.00? $5.00

What is 25% of $10.00? $2.50

What is 75% of $10.00? $7.50

RP$ = $25.00RP$ = $25.00RP% = 100%RP% = 100% C$ = C$ = ?? C% = C% = ?? M$ = M$ = ?? M% = 40%M% = 40%

How Much is Markup $???

M $ = M% X RP$

How Much is Markup $???

M$ = 40% X $25.00

RP$ = $25.00RP$ = $25.00RP% = 100%RP% = 100% C$ = ?C$ = ? C% = ? C% = ? M$ = M$ = $10.00$10.00 M% = 40%M% = 40%

RP$ = $25.00RP$ = $25.00RP% = 100%RP% = 100%C$ = C$ = $15.00$15.00C% = ?C% = ?M$ = $10.00 M$ = $10.00 M% = 40%M% = 40%

RP$ = $25.00RP$ = $25.00RP% = 100%RP% = 100% C$ = $15.00C$ = $15.00 C% = C% = 60%60% M$ = $10.00 M$ = $10.00 M% = 40%M% = 40%

OBJECTIVE

Be Able to Identify the Factors That Determine

Retail Price

PRODUCT PRICING FACTORS

• Supply & Demand

• Consumer Perception of Value

• # of Channel Members

• Competition

• Costs & Expenses

• Government Regulation:* Price Fixing

* Price Discrimination

* Minimum Price Laws

* Unit Pricing

* Price Advertising

OBJECTIVE

Be Able to Describe the Goals of Pricing for a Business

The Goals of Pricing

• Get a Share of the Market

• Beat/Meet the Competition

• Get a Return on Your Investment

OBJECTIVE

Be Able to Describe How You Can Achieve Your Goals

“PRICING STRATEGIES”

• “Cost Plus Method”:– Add all of your costs,

expenses, (FIXED & VARIABLE) & desired net profit

– Estimate Your Sales

– Divide

• Cost Plus Method: (Example)

– Costs, expenses, & desired net profit = $100,000

– You estimate your sales to be one item this year

– Determine your Retail Price by dividing $100,000 by 1

• “Cost Plus Method”:– Costs, expenses, & desired net

profit = $100,000

– You estimate your sales to be 24,025 items this year

– Determine your Retail Price by dividing $100,000 by 24,025 items

RECOMMENDED RETAIL PRICE!!!

$ 4.16

RECOMMENDED RETAIL PRICE!!!

At $ 4.16 per item sold, assuming every item sells, you will cover your costs, expenses, & desired net profit

$ 4.16

• Demand Oriented:– Determine what the

customers will pay & charge that amount

• Competition Oriented:– Determine what the

competition is charging and that is your price!

– (Make sure you control your costs & expenses though)

Other StrategiesOdd Cent Pricing

Prestige Pricing

Price Lining

Promotional Pricing

PROMOTION

Objective

• Be able to define the term promotion and provide examples of each of its six tools

PROMOTION• Any activity

designed to let the target market know more about your product including why they should buy

PROMOTION• Advertising

• Sales Promotion

• Visual Merchandising– Display Building

• Public Relations

• Publicity

• Personal Selling

OBJECTIVE

Be Able to Identify Each Member of the “Primary Channel of

Distribution”

Describe Their Roles

(DONE!!!)

• Objective:–Be able to define Physical

Distribution and identify the advantages & disadvantages of the various transport methods available

• Boat

• Truck

• Plane

• Pipeline

• Train

introduction to marketing introduction to business & marketing

marketing activities

business activities

relationship marketing

product mix

new product

ps of marketingthe

consumerobjectivebe

consumersobjectivebe

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