FBLA

Marketing

is everything a business does to find out what customers need and want, and then

create, promote, and deliver products that satisfy them at a profit.

A need

is something you must have to survive (food, shelter, clothing).

A want

is something you would like to have but could live without.

Marketing mix

is the set of decisions a business makes to sell its product. There are four

Ps:

Product (what it means & ex.)

The good or service being sold, including its features, quality, packaging, and brand

ex. A smartphone with a great camera

Price (what it means & ex.)

The amount customers pay for the product

ex. $799 for the phone

Place (what it means & ex.)

How and where products are made available to customers (distribution)

ex. Sold in stores and online

Promotion (what it means & ex.)

How the business communicates with customers to persuade them to buy

ex. TV ads, social media, coupons

Target market

is the specific group of customers a business aims its products at.

Market segmentation

means dividing a large market into smaller groups of people who have similar needs or characteristics.

There are four common ways to segment:

Demographic (based on & ex.)

Age, gender, income, education, occupation, family size

ex. Toys designed for children ages 3 to 6

Geographic (based on & ex.)

Where people live: region, climate, city size

ex. Winter coats sold in cold-weather states

Psychographic (based on & ex.)

Lifestyle, values, interests, personality, attitudes

ex. Yoga clothing for people who value wellness and mindfulness

Behavioral (based on & ex.)

How people buy or use products: loyalty, how often, occasions

ex. A rewards program for frequent customers

Market research

is gathering and studying information about customers, competitors, and the market.

primary & secondary

Primary research

is new information a business collects itself, firsthand. Examples: surveys, interviews, focus groups, and observations of customers. It is specific to the business, but takes more time and money.

Secondary research

(secondary data) is information that someone else already collected. Examples: government reports, trade magazines, industry studies, and purchased research reports. It is cheaper and faster, but may be outdated or not exactly what the business needs.

SWOT analysis

helps a business look at its situation.

Inside the company

helpful & harmful

Strengths: strong brand, skilled employees, loyal customers

Weaknesses: outdated equipment, small budget, poor training

Outside the company

helpful & harmful

Opportunities: growing demand, new technology, a new market opening up

Threats: new competitors, rising costs, changing laws

Every product moves through four stages, in this order:

1. introduction

2. growth

3. maturity

4. decline

Introduction

sales & what is happening?

Low and slow

Product is new. Heavy promotion, high costs, few or no competitors.

Growth

sales & what is happening?

Rising quickly

More customers buy. Profits increase and competitors enter the market.

Maturity

sales & what is happening?

Peak, then level off

Sales growth slows. Competition is intense and companies often cut prices.

Decline

sales & what is happening?

Falling

Customers switch to newer products. The company may update or drop the product.

Pricing strategies?

• price skimming

• penetration pricing

• cost-plus pricing

• prestige pricing

• loss leader

• bundle pricing

Price skimming

setting a high price when a product is new, then lowering it over time. Used for new or high-tech products to earn big profits from early buyers.

Penetration pricing

setting a low price at first to attract customers quickly and gain market share.

Cost-plus pricing

adding a markup to the cost of making the product.

Prestige pricing

setting a high price to make a product seem high-quality or luxurious.

Loss leader

selling a product at or below cost to get customers into the store to buy other things.

Bundle pricing

selling several products together for one price.

Distribution channel

is the path a product takes from the producer to the consumer.

Direct channel:

the producer sells straight to the consumer with no middlemen (for

example, through its own website or its own stores).

Indirect channel:

uses one or more intermediaries (middlemen), such as producer →retailer → consumer, or producer → wholesaler → retailer → consumer.

Wholesaler

buys large quantities from producers and sells smaller quantities to retailers.

Retailer

sells products to the final consumer.

Advertising (what it is? & ex.)

Paid, non-personal messages sent through the media

ex. TV, radio, social media, billboards

Personal selling (what it is? & ex.)

Face-to-face or direct sales presentations. Allows two-way communication and can be

tailored to each customer, but costs more per customer.

ex. A salesperson at a car dealership

Sales promotion (what it is? & ex.)

Short-term incentives that encourage people to buy now

ex. Coupons, discounts, contests, free samples, rebates

Public relations (what it is? & ex.)

Efforts to build a positive image and good relationships with the public

ex. Sponsoring events, charity work, press releases

Direct marketing (what it is? & ex.)

Communicating directly with individual customers

ex. Emails, text messages, catalogs mailed to homes

A brand

is a name, symbol, or design that identifies a product and sets it apart from others.

Brand equity

is the extra value a well-known brand gives a product beyond its physical features. People will often pay more for a trusted name.

A competitive advantage

is something that makes a business better than its competitors.

A differentiation strategy

means offering something unique (special features, higher quality, outstanding service) instead of competing only on price.

A cost leadership strategy

means competing by having the lowest prices.

Market share

is the percentage of total industry sales that one company makes. Formula: Market share = (company sales ÷ total industry sales) × 100. Example: $2 million ÷ $10 million = 0.20, or 20%.

An entrepreneur

is a person who starts a business and takes on the risk of running it in hopes of earning a profit.

Liability

means who is responsible for the business's debts.

With unlimited liability,

owners can lose personal property to pay business debts.

With limited liability,

owners can lose only what they invested.

Sole proprietorship (owners & key points)

One person

Easy and cheap to start. Owner makes all decisions and keeps all profits, but has unlimited liability and may find it hard to raise money.

General partnership (owners & key points)

Two or more people

Partners share money, skills, and work. Each partner has unlimited liability and can be held responsible for the debts and actions of the business. Disagreements are possible.

Corporation (owners & key points)

Shareholders (stockholders)

Has limited liability. Can raise money by selling stock. More costly and complicated to set up and more heavily regulated.

Limited liability company (LLC) (owners & key points)

One or more “members”

Combines the limited liability of a corporation with simpler rules and paperwork and flexible taxes.

The four functions of management

planning, organizing, leading, controlling

Planning (what it means? & ex.)

Setting goals and deciding how to reach them

ex. A manager sets a goal to raise sales 10% and maps out the steps

Organizing (what it means? & ex.)

Arranging people, tasks, and resources to carry out the plan

ex. Assigning employees to teams and roles

Leading (what it means? & ex.)

Guiding, motivating, and directing employees

ex. Encouraging the team and setting an example

Controlling (what it means? & ex.)

Comparing actual results with goals and taking corrective action

ex. Reviewing monthly sales and changing the strategy if the goal is missed

A mission statement describes

a company’s purpose: why it exists, what it does, and who it serves.

A vision statement describes

what the company hopes to become or achieve in the future.

SMART goals are

Specific, Measurable, Achievable, Relevant, and Time-bound.

Example: “Increase monthly sales by 10% within six months.”

Leadership styles

Autocratic, Democratic (participative), Laissez-faire

Autocratic (how it works & pros and cons)

The leader makes decisions alone and expects orders to be followed

Fast decisions, but employees have no input and morale can suffer

Democratic (participative) (how it works & pros and cons)

The leader asks for employee input and considers it before deciding

Higher morale and better ideas, but decisions take longer

Laissez-faire (how it works & pros and cons)

The leader is hands-off and lets employees make their own decisions with very little supervision

Works well with skilled, self-motivated people, but can lack direction

An organizational chart

is a diagram that shows the structure of a company and the chain of command (who reports to whom).

Delegation

means assigning a task to someone else and giving that person the authority to complete it. It frees managers for more important work and helps employees build skills. The manager is still accountable for the results.

Abraham Maslow said people are motivated by five levels of needs. Lower needs must be

mostly met before…

people focus on higher ones.

1 (first) (need & workplace ex.)

Physiological

Food, water, shelter, rest, a paycheck that covers basics

2 (need & workplace ex.)

Safety

Job security, safe working conditions

3 (need & workplace ex.)

Belonging (social)

Friendships, teamwork, being part of a group

4 (need & workplace ex.)

Esteem

Respect, recognition, achievement

5 (top) (need & workplace ex.)

Self-actualization

Reaching your full potential, personal growth

The communication process has these parts:

the sender creates a message (encoding it) and sends it through a channel (email, phone, in person) to the receiver.

The receiver’s response is called feedback, and it shows

whether the message was understood.

Noise

is anything that interferes with the message, such as a loud room or unclear wording.

Verbal communication uses

words (spoken or written).

Nonverbal communication uses

body language, eye contact, facial expressions, and tone of voice.

Business ethics

are the principles that guide decisions about what is right and wrong in business, such as honesty, fairness, and responsibility.

Social responsibility

is a business’s obligation to act in ways that benefit society.

Revenue:

money a business earns from selling its products.

Expenses:

the costs of running the business.

Profit = Revenue − Expenses. If expenses are greater than revenue,

the business has a loss.

Accounting equation: Assets = Liabilities + Owner’s Equity.

Assets are what the business owns, liabilities are what it owes, and owner’s equity is the owner’s share.

Fixed costs

stay the same no matter how much is produced or sold (rent, insurance, salaries).

Variable costs

change with production or sales (ingredients, packaging, hourly pay for extra workers).

The break-even point is where

total revenue equals total costs, so the business has no profit and no loss. Break-even units = fixed costs ÷ (price per unit − variable cost per unit).

Example: fixed costs of $2,000, price of $10, variable cost of $6 gives $2,000 ÷ $4 = 500 units.

Scarcity

means resources are limited but human wants are unlimited. Because of scarcity, everyone must make choices.

Opportunity cost

is the value of the next-best alternative you give up when you make a choice. It is only the single next-best option, not everything you gave up. Example: you have one free evening and rank your options 1) studying, 2) watching a movie, 3) playing video games. If you study, your opportunity cost is watching the movie.

Land (what it is & ex.)

Natural resources

Oil, water, forests, farmland

Labor (what it is & ex.)

Human effort, both physical and mental

A factory worker, a designer

Capital (what it is & ex.)

Manufactured goods used to produce other goods and services. Not money.

Machinery, tools, buildings, delivery trucks

Entrepreneurship (what it is & ex.)

Organizing the other factors and taking the risk of starting a business

A person who opens a restaurant

Market economy:

individuals and businesses make most decisions. Prices and production are set by supply, demand, and competition.

Command economy:

the central government makes the major decisions about what to produce and at what price.

Mixed economy:

a combination of the two. Most countries, including the United States, have a mixed economy that leans toward the market.

Demand

is how much of a product consumers are willing and able to buy at different prices.