THE ECONOMIC BENEFITS OF MARKETING

THE ECONOMIC BENEFITS OF MARKETING

Marketing serves as a bridge between the customer and the seller of products and services. Marketing makes buying easy for customers. Marketing creates new and improved products at lower prices.

Utility The functions of marketing add value to a product The added value is called Utility Utilities are the attributes of a product or service that make it capable of satisfying consumer’s wants and needs There are 5 utilities involved with all products Form Time Place Possession Information

Form Utility Involves changing raw material or putting parts together to make them more useful Form Utility deals with making or producing things

An Example of Form Utility A Tree In its original state it has value as an object of beauty, supplies oxygen, prevents soil erosion, and provides a home for animals. When a tree is cut down and used in making other products its usefulness changes. The raw material becomes part of a new product that has a different value Form Utility takes place also when a manufacturer assembles parts into a product pieces of wood assembled into furniture

Place Utility Having a product where customers can buy it Businesses study consumer shopping habits to determine the best sales outlets for their products Outlets include catalogs, the internet, retail stores

Time Utility Having the product available at a certain time of the year or a convenient time of day The value of the product is increased by having it available when consumers want them Time Utility requires the marketer to plan ahead in order to have the right product at the right time Toy companies introduce new toys for Christmas every February at the Toy Fair in New York City

Possession Utility The exchange of a product for some monetary value Alternatives to cash may be accepted these include: In business to business situations companies also grant customers credit Credit Cards Checks Installment Plans Layaway Possession Utility is involved every time legal ownership of a product changes hands

Information Utility Involves communication with the consumer Examples of sources of information: Sales Associates Packaging Tags and Labels Advertising Owner’s Manuals Internet Sites Telephone Customer Service

DEFINE 7 FUNCTIONS USING 1 WORD: channel management distribution marketing-information management data Pricing price product/service management lifecycle Promotion communication Selling personal (1 on 1) Financing capital (investment, backing)

Marketing IS EVERYWHERE!

Product Service Management – Designing, producing, maintaining, improving, and obtaining products to meet customer’s wants and needs

Product/Service Management Helps to determine which products a business will offer and in what quantities Aids in determining and developing a company’s/product’s image Provides direction for other marketing activities based on changes in a product’s life cycle

PRODUCT PLANNING Making decisions about features that are needed to sell a business’s products, services or ideas Product Features Packaging Labeling Branding Services Warranties

PRODUCT PLANNING Allows a business to Coordinate existing products and features Add new products Delete products that are no longer attracting customers

PRODUCT MIX All the different products that a company makes or sells KRAFT Company: Kraft Kool-Aid Nabisco Maxwell House Oscar Mayer Post Cereal products

PRODUCT MIX ANOTHER EXAMPLE SC Johnson

PRODUCT MIX ANOTHER EXAMPLE Procter and Gamble

PRODUCT MIX To determine a company’s product mix, a business needs to identify: Its target market Its competitors The image it wants to project The product mix must be periodically reviewed to determine if products need to be expanded, modified, decreased, or eliminated

PRODUCT LINES Product line – a group of closely related products sold by a business

PRODUCT ITEMS Product item – a specific model, brand, or size of a product within a product line

PRODUCT WIDTH AND DEPTH The width and depth of a company’s product offerings defines the product mix

PRODUCT WIDTH The number of different product lines sold by one manufacturer

Product Depth The number of product items within each specific product line From depth one brand name

GILLETTE PRODUCT MIX WIDTH VS. DEPTH Width Depth Oral Care Blades & Razors Personal Care Batteries Appliances

PRODUCT MIX STRATEGIES Develop completely new products for existing lines Drop existing product to allow room for new products Expand or modify existing product lines

DEVELOPING NEW PRODUCTS 7 Key Steps to New Product Development 1. Generate idea – focus groups, idea sessions 2. Screening ideas – evaluated for potential conflicts and profitability 3. Developing a business proposal – production requirements are considered 4. Developing the product – takes on a physical shape, develop marketing strategy

DEVELOPING NEW PRODUCTS 7 Key Steps to New Product Development 5. Testing the product with consumers – test on small groups 6. Introducing the product (commercialization) – must introduce product to public ASAP 7. Evaluating customer acceptance – study sales information

DEVELOPING EXISTING PRODUCTS Companies constantly evaluate their product mix to see if they can further expand their product lines or modify existing products Helps to reach new markets and increase overall sales Can be very expensive Increased inventory More promotion Additional storage and distribution

LINE EXTENSIONS Introducing new product items, or services to meet customer needs

PRODUCT MODIFICATIONS An alteration in a company’s existing products

DELETING A PRODUCT There are several reasons why a company may decide to eliminate a product item or line Obsolescence Loss of Appeal Change in company objective Replacement with new products Lack of profit Conflict with other products in the line