Marketing Management Chapter 1

Interactive Corporate Interface for Business

Production of Goods and Services

• Production refers to the process of creating goods and services to satisfy human wants and needs.
• Factors of production, also known as inputs or resources, are the elements required in the production process, including:
  • Land: natural resources, physical space, and infrastructure.
  • Labor: human effort, skills, and knowledge.
  • Capital: man-made resources, such as machinery, equipment, and infrastructure.
  • Entrepreneurship: the ability to organize and combine the other factors of production to create and operate a business.

Cost of Production

• Cost of production refers to all the costs associated with manufacturing a product or providing a service.
• Types of costs:
  • Average cost: the total cost of one unit in the production line.
  • Fixed cost: a cost that doesn't change over time, such as rent and salaries.
  • Variable cost: a cost that changes with the production process, such as raw materials and labor.
  • Direct cost: a cost directly associated with the production of a product, such as labor and materials.
  • Indirect cost: a cost not directly associated with the production of a product, such as overhead and utilities.
  • Overhead cost: the total of all indirect costs.
  • Marginal cost: the cost of producing one additional unit.

Making Production, Planning, and Producing Quality

• Effective production planning and management require:
  • Clear production goals and timelines.
  • Conducting demand forecasting to accurately plan production levels.
  • Developing a production schedule and optimizing resource allocation.
  • Implementing lean manufacturing principles and fostering a culture of collaboration and continuous improvement.
  • Conducting quality control and assurance processes.
• Quality control involves:
  • Setting quality standards and benchmarks.
  • Implementing quality assurance processes to prevent defects and monitor production stages.
  • Training employees on quality control techniques and encouraging a culture of ownership.

How to Develop Product and Management on How to Control Inventory

• Developing a new product involves:
  • Researching and planning the product.
  • Defining and describing the product and its benefits.
  • Identifying the target market and competition.
  • Creating a prototype and testing it.
  • Writing a marketing strategy and plan.
  • Launching the product.
• Managing inventory involves:
  • Segregating inventory into A, B, and C groups based on importance and turnover.
  • Tracking product information, including SKUs, barcode data, and supplier information.
  • Conducting regular inventory audits and analyzing supplier performance.
  • Practicing the 80/20 inventory rule, prioritizing the most profitable items.
  • Being consistent in receiving and processing stock.
  • Tracking sales and ordering restocks accordingly.
  • Investing in inventory management technology and tools that integrate with other systems.

Marketing Concept and Philosophy, Market Research, and Need for Marketing Plan

• Marketing concept and philosophy:
  • Production orientation: focusing on making products efficiently to reduce costs.
  • Product orientation: focusing on creating high-quality products with superior features.
  • Sales orientation: focusing on creating offers and promotions to drive sales.
  • Marketing orientation: focusing on the customer and their needs.
  • Holistic marketing orientation: a comprehensive approach that considers all aspects of the business.
• Market research:
  • Gathering information to better understand the target market.
  • Using research to design better products, improve user experience, and craft marketing strategies.
• Marketing plan:
  • A strategy to sell a product or service.
  • Involves designing and implementing marketing strategies to attract quality leads and improve conversion rates.### The Importance of a Marketing Plan
• A marketing plan helps determine the target market, how to reach them, the product or service's price point, and how to measure efforts.
• A marketing plan is necessary to identify the target market, attract new customers, retain existing ones, and set goals and time frames for marketing activities.

Steps in Creating a Marketing Plan

• Conduct research
• Write a brand summary
• Define the target audience
• Add a situational analysis
• Outline marketing objectives
• Create the marketing strategy
• List tactics and implementation

Pricing Concepts

• The price concept is an economic theory that states the price of a good or service is determined by the relationship between supply and demand.
• Prices rise if demand exceeds supply and fall if supply exceeds demand.

Fair Pricing

• Fair pricing is the price at which the seller and buyer agree to transact.
• Fair pricing is influenced by the market, niche, competitors, and brand.

Types of Pricing Methods

• Cost-oriented pricing method: sets prices based on production costs.
• Market-oriented pricing method: sets prices based on market trends and research.

Role of Pricing

• Pricing is crucial in launching a new product.
• Pricing too high may not generate enough sales, while pricing too low may not generate enough profit.
• Market maturity is a key factor in pricing.

Pricing Principles

• Three fundamental pricing principles:
• Cost-plus pricing
• Competitive pricing
• Value pricing

Cost-Plus Pricing

• Takes the product cost and adds a percentage to it.

Competitive Pricing

• Uses competitors' pricing as a benchmark and prices the product at or below that benchmark.

Value Pricing

• Sets the price based on the customer's perceived value of the product.
• Companies selling unique products are well-positioned to use value pricing.