Introduction to Management EB PDF

Introduction to Management EB 1  Class Participation (20%) Quizzes (40%) Class Assignments (40%) Lecture...

Introduction to Management EB 1  Class Participation (20%) Quizzes (40%) Class Assignments (40%) Lecture Note-taking Class Date Class and Topic Quiz Group Presentation Assignment 1 8-Apr Ch.1. World of Business 2 15-Apr Ch.3: Exploring Global Business o 3 22-Apr Ch.2: Ethical and Social Responsibility of Business o 4 29-Apr Ch.4&5: Forms of Business Ownership o o 5 6-May Ch.6: Understanding the Management Process o 6 13-May Ch.7: Creating Flexible Organization o 7 20-May Ch.9: Human Resource Management o 8 10-Jun Ch.10: Motivating and Satisfying Employees o o 9 17-Jun Ch.8: Production and Operations Management o 10 24-Jun Ch.11: Marketing and Consumer Behavior o 11 1-Jul Ch.12&13: Product, Pricing Decisions, Distribution, and Promotion o Due before class 11 12 8-Jul Ch.15: Using Management and Accounting Information o o 13 15-Jul Ch.16: Financial Management o 14 22-Jul Presentation & Course Review o Quiz #3 (on Class 12) ▪Total questions: about 20 (1 point each) ▪Coverage of Quiz 3: Chapter 8, 10, 11, 12, 13 (Class 8 to 11)  Course Project Evaluation Sub-points ( 1 to 10): 10 - 9: Outstanding (Exceeds expect ations) Team No. Evaluation Questions 8 - 7: Satisfactory (Meets expectatio Total Points ns) 6 and below: Poor (Below expectati ons) Does the report provide sufficient information on the topic? 0 Is information logically organized? Are effective and various examples used? Are the slides well designed?  Grade Evaluation Items Mark Participation in class and attitude 20% Class Assignments 40% Examination/Report 40% 100% ・4 absences -> F 5  Participation in class and attitude (20%) Participation in class and attitude includes actively listening to lectures, participating in class discussions through note-taking and speaking up, and self and time management in class. Class Participation Attendance pre-requsite Lecture Note-taking Assignment (in class) 20% Total 20% Weekly summary note submission will be ope n right after class 13 and due is Friday night of that week. Exams(Quizzes, 40%) based on three quizzes (1 to 3) Ch.12&13: Product, Pricing Decisions, Distribution, and Promotion 8 Product Life-Cycle Strategies Product Life-Cycle (PLC) Every product progresses through a product life cycle, in which its sales revenue and profit increase, reach a peak and then decline. ex) Feature phone 9 Product Life-Cycle Strategies Product Life-Cycle (PLC) Complicated version of PLC. Product development: During product development, sales are zero, and the company’s investment costs mount. Introduction: A period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. Growth: A period of rapid market acceptance and increasing profits. Maturity: A period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition. Decline: The period when sales fall off and profits drop. 10 Product Life-Cycle Strategies Product Life-Cycle (PLC) Not all products follow all five stages of the PLC. Some products are introduced Other stays in the mature and die quickly. stage for a long, long time. 6 months ~ 1 year 250 years 140 years 11 Product Line and Product Mix Product Line A group of similar products that differ only in minor characteristics. Product Mix All products that a firm offers for sale. 12 Managing the Product Mix There are 3 ways to improve a product mix: Change or manage existing product – Product Modification Develop a new product – Line Extension Delete a product – Product Deletion Changing one or more of a product’s Product characteristics. Modification Ex) Quality, Functional (safety, convenient), Aesthetic (sound, taste…) Developing a product that is similar to the Line existing product line but serves different Extension customer needs. Product Eliminating products to maintain an Deletion effective product mix. 13 New Product Development New Product Development: The development of original products, product improvements, product modifications, and new brands. 66 percent of all new products fail within two years. 96 percent of all innovations fail to return their development costs. Q. Why? The company may overestimate market size, the actual product may be poorly designed, or it might be incorrectly positioned, launched at wrong time, priced too high, or poorly advertised… etc. How should we develop the new product? 14 New Product Development Major Stages in New Product Development New Product development starts with good new product ideas. Using internal sources, the company can find new ideas through formal R&D. Many companies have developed new successful internal social networks and intrapreneurial programs that encourage employees to develop new product ideas. 15 New Product Development Although, developing and introducing new products is time consuming, expensive, and risky… But successful new products can benefits firm in many ways! Profits, gain a competitive advantage, favor public image, survival… 16 Branding 17 Branding V.S. Brand? 18 Branding Brand : A name, term, symbol, design, or any combination of these that identifies a seller’s products as distinct from those of other sellers. In practice, a brand is more than the definition: a certain level of recognition, reputation, and presence in the market. The modern word Brand is derived from the word “Brandr”, a word from Ancient Norse meaning “to burn”. 19 Branding Benefit of Branding From consumer perspective ???: Easily recognizable, reduce the searching time. Help consumers judge quality, reduce perceive risk, gain psychological rewards. From business/firm perspective: Helps firms introduce new products with the same brand name. Aids in promotional efforts. Create customer loyalty Raise brand equity: Marketing and financial value associated with a brand’s strength in a market. 20 Branding Branding Strategies How to brand a product or service. Individual branding : Firm uses a different brand for each of its products. Family branding : Firm uses the same brand for all or most of its products 21 Packaging Packaging consists of all activities involved in developing and providing a container with graphics for a product. Functions of packaging: Protect the product Maintain its functional form Offer consumer convenience Promote the product by communicating its features, uses, benefits and image. 22 Labeling Labeling is the presentation of information on a product or its package. Must include information specified by federal regulations: Brand name and registered trademark Package size and Ingredient contents Directions for use and safety precautions The name and address of the manufacturer Product claims Universal Product Code (UPC) symbol, which is used for automated checkout and inventory control (QR code)… 23 Price 24 Pricing Product & Service Price : Amount of money that a seller is willing to sell and buyer is willing to pay in exchange for a product/ service. 3 common pricing methods are: Cost-based pricing Demand-based pricing Competition-based pricing 25 Pricing Product & Service Cost-based pricing : the seller determines the total cost of producing one unit of a product (fixed cost + variable cost). Then adds expected profit. Markup :An amount a seller adds 26 Pricing Product & Service Cost-Based Pricing :Setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk. (1) Types of Costs Fixed Costs: Costs that do not vary with production or sales level. Variable costs: Costs that vary directly with the level of production. Total costs: The sum of the fixed and variable costs for any given level of production. 27 Pricing Product & Service Cost-based pricing Cost based pricing can be calculated through the use of breakeven analysis! 28 Pricing Product & Service Cost-Based Pricing (1) Cost-Plus Pricing = Markup Pricing Adding a standard markup to the cost of the product. Variable cost $10 Fixed costs $300,000 = Markup + Expected unit sales 50,000 20% Unit cost $16 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠 $300,000 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 = 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 + = $10 + = $16 𝑢𝑛𝑖𝑡 𝑠𝑎𝑙𝑒𝑠 50,000 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 $16 𝑚𝑎𝑟𝑘𝑢𝑝 𝑝𝑟𝑖𝑐𝑒 = = = $20 (1 − 𝑑𝑒𝑠𝑖𝑟𝑒𝑑 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑠𝑎𝑙𝑒𝑠) (1 − 0.2) 29 Three Major Pricing Strategies Cost-Based Pricing (2) Break-Even Pricing Setting price to break even on the cost of making and marketing a product, or setting price to make a target return. Variable cost $10 Fixed costs $300,000 Expected unit sales 50,000 Unit cost $16 $20 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 $300,000 𝑏𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑣𝑜𝑙𝑢𝑚𝑒 = = = 30,000 (𝑝𝑟𝑖𝑐𝑒 − 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡) $20 − $10 The company must sell more than 30,000 units at $20 each! 30 QUIZ (1) Cost-Based Pricing : markup price How much is the markup price of a doughnut? Variable cost ￥20 Fixed costs ￥5000 = Markup + Expected unit sales 100 30% Unit cost ￥70 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 𝑚𝑎𝑟𝑘𝑢𝑝 𝑝𝑟𝑖𝑐𝑒 = (1 − 𝑑𝑒𝑠𝑖𝑟𝑒𝑑 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑠𝑎𝑙𝑒𝑠) ① ￥80 ② ￥100 ③ ￥120 ④ ￥140 31 QUIZ (2) Cost-Based Pricing : break even amount How many doughnuts should be sold to make a profit? Variable cost ￥20 Fixed costs ￥5000 = Markup + Expected unit sales 100 30% Unit cost ￥70 ￥100 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 𝑏𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑣𝑜𝑙𝑢𝑚𝑒 = (𝑝𝑟𝑖𝑐𝑒 − 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡) ① 62.5 ② 72.5 ③ 82.5 ④ 92.5 32 Pricing Product & Service Demand-based pricing Based on the level of customer demand for the product. Higher price when product demand is strong and a lower price when demand is weak. 33 Pricing Product & Service Competition-based pricing Based on meeting the challenge of competitors’ prices in markets. A firm that uses competition-based pricing may choose to sell below competitors’ prices, slightly above competitors’ prices, or at the same level. 34 Place 35 What Is a Channel? Marketing Channel: =Distribution channel. A set of interdependent organizations that help make a product or service available for use or consumption. ex) Retail, wholesale, eCommerce, etc. ex) Apple’s music business retailer: iTunes 36 What Is a Channel? Number of Channel Levels The length of a channel. Channel 1: Direct marketing channel. No intermediary. ex) Door-to-door sales - Amway The producer may hire traveling salesmen who go out to the field where the consumer is and try to sell the product to them on the spot. ex) Direct online selling - ZARA 37 What Is a Channel? Number of Channel Levels The length of a channel. Channel 2&3: Indirect marketing channel. One or more intermediaries. ex) One layer: Automobile manufacturers sell their cars through authorised dealers. ex) Two layers: the most commonly used channel for distributing goods like soap, rice, wheat, etc. 38 Promotion 39 What Is a Promotion? Promotion: The entire set of activities, which communicate the product, brand or service to the user. Companies must communicate their value propositions to customers. PRODUCT COMPANY CONSUMER 40 What Is a Promotion? Promotion mix: The specific blend of promotion tools 1) Advertising: Any paid form of nonpersonal presentation. Newspapers, catalogs, magazines, etc. 2) Sales promotion: Short-term incentives. Displays, sales, and loyalty programs. 3) Personal selling: Personal customer interactions. 4) Public relations: PR. Special events, newsletters, blogs, and public service activities. 5) Direct and digital marketing: Engaging directly with consumers via social media online communities. 41 Integrated Marketing Communications In the past decades… Companies just created and placed “TV ads”, “print ads”, or “Facebook display ads”. But nowadays… The need for “integrated marketing communications” The mix of paid, owned, earned, and shared channel. The shift toward a richer mix of media. 42 The Digital Marketing Mix 43 Communication Process 1. Identifying the Target Audience The audience may be current users or potential buyers. 2. Determining the Communication Objectives Marketers need to know where the target audience now stands and to what stage it needs to be moved. Buyer-readiness stages: The stages consumers normally pass through on their way to a purchase. 44 Communication Process 3. Designing a Message AIDA model: Ideally, the message should get attention, hold interest, arouse desire, and obtain action. The consumer becomes aware of a category, product or brand (through advertising) The consumer becomes interested by learning about brand benefits & how the brand fits with lifestyle The consumer develops a favorable disposition towards the brand The consumer forms a purchase intention, shops around, engages in trial or makes a purchase 45 Communication Process 4. Choosing Communication Channels and Media Personal Communication Channels : Channels through which two or more people communicate directly with each other, including face to face, on the phone, via e-mail, or chat. Buzz Marketing : Cultivating opinion leaders and getting them to spread information about a product or service to others in their communities. A method of selling a product by getting people to talk about it to other people, especially over the internet. 46 Communication Process 4. Choosing Communication Channels and Media Nonpersonal Communication Channels : Media that carry messages without personal contact or feedback, including major media, atmospheres, and events. 47 Communication Process 5. Selecting the Message Source Messages delivered by highly credible sources are more persuasive. Picking the wrong spokesperson can result in tarnished image. Q. Which commercial is more trustworthy? Which one is more attractive? 48 Communication Process 6. Collecting Feedback After sending the message, marketers need to research its effect. Asking target audience whether they remember the content, what points they recall, how they felt about the content, and their attitude toward the brand. An American department store chain “Macy’s”. According to their research, 60% of ads aware shoppers have visited a Macy’s in the past month, but only 20% of those who visited were satisfied with the shopping experience. needs to improve the shopping experience! 49 Reviewing the Concepts Product Life Cycle (PLC) Introduction → Growth → Maturity → Decline What is branding? A name, term, symbol, design, or any combination of these that identifies a seller’s products as distinct from those of other sellers. Three common pricing method: Cost-based pricing Demand-based pricing Competition-based pricing 50 Reviewing the Concepts What is channel? A set of interdependent organizations that help make a product or service available for use or consumption. What is promotion? The entire set of activities, which communicate the product, brand or service to the user. Digital marketing mix: paid, owned, earned, and shared channel. 51