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=4A2
27Cr_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
• 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=RzT
oNo7A-94
• Top Ten Super Bowl Commercials