FBLA Introduction to Marketing Concepts

Convenience goods and services

Goods that the consumer wants to buy regularly and conveniently

Physical risk

The product poses a physical risk to the health of the consumer and to others (explosives, flammable solvents)

Seasonal risk

when a service only runs during a certain season (ski resort) or a product has seasonal peaks (winter coats)

Performance risk

danger associated with a product not performing properly (airplane engine not functioning)

Social risk

consumer's fear of what others will think of their purchase

Markup

- $ increased to cost to establish the selling price.

- Difference between cost and selling price

- Cost + Markup = Selling price

Expenses

$ required/spent on something

Gross Profit Margin

$ made after subtracting COGS from money made in total (gross profit as %)

Net Profit margin

$ made after subtracting COGS, OPEX, tax (net profit as %)

Revenue

Total $ made without subtracting any costs

Net Profit

$ gained after ALL costs are subtracted from revenue

Monopoly

When a company has complete control in a certain industry (no competitors)

Gross Profit

$ made after subtracting ONLY COGS from revenue

Anti-trust laws

- Laws that promote competition and prevent monopolies

- Protects smaller businesses from going out of business

- Gives customers many options/competitors to choose from

- Protects customers from misleading/dangerous products

Market Observation

experts observe how consumers interact/behave in a certain market

Focus group

a small group of people used to collect opinions/feedback on a certain product/service

Random sampling

each member/sample of a population has an equal chance of being chosen

Negotiate

bargain for a lower price

Specializing

concentrating on the production of one or a few products

Outsourcing

obtaining goods or services from an outside/foreign supplier

Delegate

To divide up responsibilities and have each person assume a role

Assets

money and other valuables belonging to a business

Liability

a debt company owes

Cash flow statement

- Shows exactly where/how the company's money is gained and spent over a period of time

- Shows how money "flows" through a company (where it goes and comes from)

Income statement

- Summary of the company's profit, revenue, and expenses over a period of time

- Revenues/expenses are reported and show profits

Balance Sheet

Assets and liabilities are reported and shows how much something is worth

Budget

plan for spending money

Quality control services

Set of procedures in the production process to make sure that products meet a certain standard

Field trial

testing the performance of a product under the conditions that consumers will use it

Personal interview

survey where questions are asked face to face

Specialty products

items that a consumer makes a special effort to buy

Internet advertising

promoting a product/service online

Consumer Bill of Rights

regulations that protect consumers from dangerous/misleading products

Right to safety

Protected against hazardous products

Right to choose

Choose from competitive products.

Right to be heard

Voice complaints and concerns.

Right to be informed

Know product ingredients, hazards, and performance.

Advertising

interests consumers in buying a product or service

Marketing

creating, advertising, selling goods and services that have value for customers

Prospecting

company identifies potential customers

Order fulfillment

process involved in responding to customers orders (packing, shipping, delivering, etc)

Outdoor advertising

billboards, signs, ads on buses/taxis, etc

Gross impressions

used to measure the total # of times an ad is displayed to someone

Gross rating points

(% of target audience reached)*(# of times the ad is displayed to them)

Ex: Ad was displayed 5 times. 30,000 people watched the ad out of 150,00 target audience. ((30,000/150,000)100)5 = 100 points.

Transit advertising

advertisement seen on public transportation

E-commerce

buying/sellling goods over the internet

Channels of distribution

routes that goods/services take from producer to consumer

- Wholesalers

- Retailers

- Distributors

- Internet

Wholesalers

buy bulk products from distributors or manufacturers at a lower price to sell them to retailers

Retailers

businesses that sell products directly to consumers (walmart, amazon, target)

Distributors

businesses that are intermediaries between manufacturers and wholesalers/retailers.

Help manufacturers reach a wider audience.

Direct distribution channel

manufacturers sell goods/services directly to consumer

Indirect distribution channel

when there is one or more middlemen between manufacturer and consumers

Marketing concept

idea that reaching a business goal depends on knowing the needs/wants of target markets and delivering better than competitors do

Seven functions involved in marketing

Marketing information management

Financing

product/service management

Pricing

Promotion

selling

distribution

Marketing information management

collecting/analyzing/distributing info about a company's products to potential customers

Financing

getting the necessary funds to start/operate a business

product/service management

developing products that can meet the needs of customers

Pricing

setting prices for products that are competitive and profitable

Promotion

advertising products to potential customers

Selling

exchanging goods or services for money.

Distribution

delivering products to customers in a timely/efficient manner

Marketing Mix (4 P's)

framework that uses the 4 Ps to create a marketing plan

- Product

- price

- promotion

- place

Patent

legal rights over an invention

Copyright

prevents others from making/using/selling a copyrighted item/music/art without permission of the original creator

Trademark

a logo/slogan that distinguishes a company and prevents others from using it

Product selling

highlight/focus is on the product alone

Ex: this sweater is made of high quality cotton

3 Selling techniques

product selling

solution selling

insight selling

Solution selling

highlight/focus is on a customer's problem and providing a solution

Ex: this sweater will keep you warm in the winter and prevent the cold

Insight selling

provides customer with new insights/perspectives; building a relationship with the customer to help them see the value of a product

Ex: "this sweater would look really good on you"

Promotional mix

ways to get a consumer to buy a product

Advertising (TV, newspapers, mail)

Direct Marketing - personal approach; targeting customers directly (e-mail/calls)

Sales promotion - short term incentives to get customer to buy smth (sale/deal)

Public relation - maintaining positive image of a company through the media

Primary market research

collecting original data about a product/market/target audience

Secondary market research

obtaining info/data that already exists

Market segmentation

dividing a market into similar groups; allows companies to target different types of consumers and see differences between groups

Private enterprise

a business that is privately owned rather than the government

Capital

$ or other assets that a business can use

Labor groups

organizations which protect and promote the interests of workers

Special interest group

group of people who have concerns about particular products

Product mix

complete set of products and/or services offered by a company

Product Mix Width

# of product lines offered by a company

Product mix Length

# of products in the entire product mix

Product mix depth

# of products in each product line

Product mix Consistency

How closely related each product line is

Branding

helps businesses to differentiate their products from those of their competitors

7 steps in the selling process

Prospecting

Preparation

Approach

Presentation

Handling objections

Closing

Follow-up

Point of Purchase Displays (POP)

Any display that is separate from standard shelving that a product is featured on.

POP displays are primarily trying to draw extra attention to a brand or product with eye-catching visual elements or 3D components in a sea of other displays.

Value

comparison of costs to benefits

Utility

ability of goods/services to meet customer needs

Form utility

increasing value by converting inputs/raw materials into a finished form that the customer can use

Time Utility

provide goods/services at times that are convenient

Place utility

offering goods/services in convenient locations

Ownership utility

offering favoring terms of purchase for goods/services

product life cycle

Introduction - when product is first introduced

Growth - investments made during the introduction stage translate into increased sales and profits

Maturity - sales/profit growth begins to peak and slow down

Decline - sales/profits continue to decline and product might be taken off shelves

FOB (Free On Board)

- Defines the point when a buyer or seller becomes liable for goods being transported

- ownership of goods belong to seller until they reach final destination