INTRODUCTION TO
MARKETING

ASSIGNMENT
1.
Read Chapter 13, Pages 214 – 227
2.
Read Complete the Crossword Puzzle
Provided
3.
On the Puzzle sheet, answer any one “Critical
Thinking” question from the text. Use complete sentences. Summarize the question in the first sentence.

OBJECTIVE
Be Able to Define Marketing

• All of the business activities involved with moving goods & services from producers to consumers

OBJECTIVE

• To satisfy the wants & needs of our customers
• To make Money !!

“A Business Philosophy”

OBJECTIVE

The “Four P’s” of Marketing
• Product Planning
• Pricing
• Promotion
• Physical
Distribution

The “Four P’s” of Marketing
•
Product Planning
• Pricing
• Promotion
• Physical
Distribution

• Any Business Activity
That Helps to Design a
New Product or Change the Characteristics of an
Old Product

PRODUCT PLANNING
• Important Concept:
–FEATURES - Facts about your product, physical description (size, color, material used, etc)
–BENEFITS What the product can do for you!!!

The “Four P’s” of Marketing
• Product Planning
•
Pricing
• Promotion
• Physical
Distribution

• Any Activity Used to Assign a Value to a Product or Service

The “Four P’s” of Marketing
• Product Planning
• Pricing
• Promotion
• Physical
Distribution

• Any Activity Designed to
Let the Customers Know
About a Product or Service
–Personal Selling
–Advertising
–Publicity
–Public Relations
–Visual Merchandising
–Sales Promotion

The “Four P’s” of Marketing
• Product Planning
• Pricing
• Promotion
•
Physical
Distribution

Physical Distribution
• Involves the Actual
Movement of
Merchandise as it
Moves From the
Producer to Consumer

OBJECTIVE
Be Able to Match the Seven Marketing
Activities With Their Definition or
Examples

• Market
Information
Management
• Financing
• Pricing
• Promotion
• Distribution
• Selling
• Product/Service
Management

Distribution
The process of getting goods & services to customers. This includes purchasing, stock handling, inventory control, & physical distribution
> (transportation & warehousing).

Financing
Financing is getting the money that is necessary for setting up & running a business. Finance also includes protecting investments through risk management.

Marketing Information
Management
(MIS)
An effective MIS gathers and analyzes information about customers, trends,
& competitor’s products.

Pricing
Determining the amounts a customer will be charged for a good or service so that a business can earn a profit

Product/Service Management
Obtaining, developing, maintaining, & improving a product or product mix in response to market opportunities

Promotion
Promotion is any effort to inform, persuade, or remind potential customers about a business’s products or services

Selling
Personally matching customers wants
& needs with products & services available for sale.
(An important associated concept is
“Relationship Marketing.”)

• Market
Information
Management
• Financing
• Pricing
• Promotion
• Distribution
• Selling
• Product/Service
Management

OBJECTIVE
Be Able to Identify Each Member of the “Primary Channel of
Distribution”
&
Describe Their Roles

The Primary Channel of
Distribution
Producer Wholesaler Retailer Consumer

The Primary Channel of
Distribution
• Primarily Makes
Products to Sell
• But Also Must:
– Buy & Sell
– Finance
– Store & Transport
– Insure
– Etc. Etc. Etc.
Producer

The Primary Channel of
Distribution
• Breaks Down Bulk
Quantities Into Smaller Lots
Wholesaler
• But Also Must:
– Buy & Sell
– Buy Real Estate
– Store
– Do Market Research
– Etc. Etc. Etc.

The Primary Channel of
Distribution
• Primarily Sells to the
Consumer
• But Also Must:
Retailer
– Display
– Advertise
– Make a Profit
– Package Goods
– Provide Services
– Etc. Etc. Etc.

The Primary Channel of
Distribution
• Most Importantly, Buys
Our Products & Services
• But Also:
– Provides Market
Research Information
– Uses Our Products &
Services Up & Buys
Again
Consumer

Sugar
The Primary Channel of
Distribution
Chemicals
Producer
Milk Cocoa

OBJECTIVE
Be able to describe, in an essay, how marketing activities benefit our society

How Marketing Activities
Benefit Our Society
• Raises the Standard of Living
• Adds Value to What We Buy
– Form Utility
– Place Utility
– Time Utility
– Possession Utility
– Information Utility

How Marketing Activities
Benefit Our Society
• Makes Shopping More
Convenient
• Keeps Prices Reasonable
• Helps Society to Keep Up
With Change
• Provides Public Service
Activities

Marketing Trivia
• 1/4 to 1/3 of all Jobs are Marketing Related
• $ .50 of Every Dollar Goes to Cover the
Cost of Marketing Activities
• Marketing Creates Jobs Which Allows
Consumers to Have More Money to Spend on Items That Will Improve Their Standard of Living

PRODUCT PLANNING
PROCESS

OBJECTIVE
Be able to outline the product planning process and identify the associated terms

FEATURE/BENEFIT
ANALYSIS

Facts About the Product
Size, Color, Materials, Warranties,
Construction Methods, Manufacturer, Etc.

Benefits = Buying Motives
Buying Motives:
– What a product does for you
– The reasons why people buy products or services

BENEFITS
• Will it make you rich?
• Will it make you successful?
• Will it make you happy?
• Will it relax you?
• Will it make you healthier?
• Will it make you attractive?
• Etc. etc. etc.

BUYING MOTIVES
Activity
• If you were to design a new car, what buying motives would you appeal to?
– Safety?
– Excitement?
– Cost Savings?
– Comfort?
– Other

BUYING MOTIVES
Activity
• What “features” would you have on your new car?
– Safety
– Excitement
– Cost Savings
– Comfort
– Other?

BUYING MOTIVES
Assignment With a Partner
• If you were to design a new
____, what buying motives would you appeal to?
– ______________?
– ______________?
– ______________?
– ______________?

BUYING MOTIVES
Assignment With a Partner
• What “features” will you have on your new _____?
– ____________
– ____________
– ____________
– ____________
– ____________

• Market Segmentation
• Demographics
– Family Life Cycle
– Trends in Demographics
• Target Marketing

Common Demographics
• Age
• Sex
• Occupation
• Religion
• Interests
• Income
• Family Size
• Geographic Location
• Attitudes
• Educational Background
• Race
• Ethnic Background
• Wealth
• Etc.

???
???
???
???
???

• Age
• Incomes
• Geographic Location
• Family Size
• ???

Family Life Cycle
• Stages
– Early Childhood
– Teen
– Young Adult/Single
– Married w/out Children “Dinks”
– Married w/ Children
– Maturity
– Empty Nest
– Sole Survivor

Product Planning Process
1.) Select general type of product
2.) Specify the product mix
3.) Develop packaging & labeling
4.) Identify features & benefits

1.) Select General Type of Product
(OUTLINE)
I.) Consumer Goods
A.) Types
B.) How to Market
II.) Consumer Services
A.) Types
B.) How to Market

Select General Type of Product
OUTLINE
III.) Industrial Goods
A.) Types
B.) How to Market
IV.) Industrial Services
A.) Types
B.) How to Market

1.) Select General Type of Product
OUTLINE
I.) Consumer Goods - Products used for personal, family, or household purposes
A.) Convenience - _________________
B.) Shopping - _________________
C.) Specialty - _________________

Select General Type of Product
OUTLINE
I.) Consumer Goods
A.) Convenience Goods - Inexpensive products purchased regularly, little effort spent on decision. Many grocery items fall into this group. Customer will substitute.

1.) Types of Convenience Goods:
Staples - Basic food items used often
` (ex. Bread)
Impulse - Unplanned purchases
(ex. Candy)
Emergency - Items purchased because of immediate need
(ex. Batteries)

Select General Type of Product
OUTLINE
2.) Keys to Selling Convenience Goods: a.) have convenient locations b.) have extended hours c.) layout is conducive to self-service d.) have a wide variety of merchandise e.) heavy use of print/broadcast media
& displays

Think Seven Eleven!!!
LOCATION!
HOURS!
7/11
ADVERTISING
!
Help
Wanted
VARIETY!
SELF-SERVICE!

1.) Select General Type of Product
OUTLINE
I.) Consumer Goods - Products used for personal, family, or household purposes
A.) Convenience - _______________
B.) Shopping - _________________
C.) Specialty - _________________

1.) Select General Type of Product
OUTLINE
I.) Consumer Goods
B.) Shopping Goods - Purchases made by a consumer after a great deal of searching
& comparison (ex. furniture)

1.) Types of Shopping Goods: a.) higher priced merchandise b.) risky purchases (if something isn’t just right) c.) the consumer has time to make a decision

1.) Select General Type of Product
OUTLINE
2.) Keys to selling shopping goods: a.) quality design, development, & manufacturing b.) knowledgeable/well trained salespeople c.) extensive brand advertising

1.) Select General Type of Product
OUTLINE
2.) Keys to selling shopping goods (cont.): d.) warranties/services after purchase are important e.) special promotions & “POP” displays are helpful

1.) Select General Type of Product
OUTLINE
I.) Consumer Goods - Products used for personal, family, or household purposes
A.) Convenience - _______________
B.) Shopping - _________________
C.) Specialty - _________________

1.) Select General Type of Product
OUTLINE
I.) Consumer Goods
C.) Specialty Goods - goods purchased by customers who desire a particular product and/or brand and will accept no substitutes.
(ex. Ford cars, Levi Jeans, Skippy peanut butter)

1.) Select General Type of Product
OUTLINE
I.) Consumer Goods
C.) Specialty Goods
1.) Keys to Selling Specialty Goods: a.) Keeping Product Available
(Product is Pre-sold)

1.) Select General Type of Product
OUTLINE
II.) Consumer Services - Things done for people to help them in their daily lives:
A.) Rented Goods Services - _____________
B.) Owned Goods Services - _____________
C.) Non Goods Services - _____________

1.) Select General Type of Product
OUTLINE
II.) Consumer Services
A.) Rented Goods Services - provides a product that the customer rents & uses. (ex. cars, videos)
B.) Owned Goods Service - one that alters or improves on a good owned by the customer (car wash, shoe shine)
C.) Non Goods Service - provides personal & professional services to customers for a fee. (tax prep., bridal)

1.) Select General Type of Product
OUTLINE
II.) Consumer Services
A.), B.), & C.) Rented, Owned, & Non-goods
Services
1.) Keys to selling: a.) high quality standards b.) flexible pricing c.) effective personal selling d.) promotion through word-of-mouth testimonial e.) “Image is everything” encourages repeat sales

1.) Select General Type of Product
OUTLINE
III.) Industrial Goods - items purchased for the production of other goods
A.) Installations & Accessory Equipment
B.) Raw Materials, Components, & Fabricated
Parts
C.) Industrial Supplies

1.) Select General Type of Product
OUTLINE
III.) Industrial Goods
A.) Installations & Accessory Equipment -
Items that are part of the production process, not the product. (Examples include drill presses, computers, etc.)

1.) Select General Type of Product
OUTLINE
III.) Industrial Goods
B.) Raw Materials, Components, &
Fabricated Parts:
Items consumed in the production process or items used in the new product(ex. Include oil, flour, etc.)

1.) Select General Type of Product
OUTLINE
III.) Industrial Goods
C.) Industrial Supplies - Items that support/facilitate the use of a business’s equipment. (ex. Include computer paper, paint, cleaning products).

1.) Keys to Selling a.) Hire & train a knowledgeable workforce b.) Emphasize product’s durability & dependability c.) Plan for customer follow-up & maintenance

1.) Select General Type of Product
OUTLINE
III.) Industrial Services - Things done for business’s to help them keep their business running smoothly
A.) Maintenance & Repair - general cleaning, repair, painting, & decorating
B.) Business Advisory - includes management consulting, engineering, legal, or accounting assistance.

1.) Select General Type of Product
OUTLINE
III.) Industrial Services -
1.) Keys to Selling (Same as Consumer Services) a.) high quality standards b.) flexible pricing c.) effective personal selling d.) promotion through testimonial e.) “Image is everything” encourages repeat sales

2.) Specify the Product Mix
OUTLINE
I.) Product Mix Terms
A.) Product Items & Lines
B.) Product Width & Depth
II.) Product Mix Strategies
A.) Types of Strategies
1.) Expand/Modify Product Current Lines/Items
2.) Developing New Products
III.) Product Life Cycle
A.) Managing a Product Throughout its Stages

2.) Specify the Product Mix
OUTLINE
I.) Product Mix - All the different products that a company makes. All Ford Products, for example, or all items manufactured by Harley/Davidson
A.) Product Items & Lines
B.) Product Width & Depth

2.) Specify the Product Mix
OUTLINE
I.) Product Mix
A.) Product Items & Lines
1.) Product Lines are groups of closely related products.
For example, all cars produced by Ford
2.) A Product Item is a specific brand, model, or size of a product. The Ford Mustang for example
B.) Product Width & Depth

2.) Specify the Product Mix
OUTLINE
I.) Product Mix
A.) Product Items & Lines
B.) Product Width & Depth
1.) Product Width refers to the number of different product lines a store carries or manufacturer produces. Ford offers several different product lines - trucks,cars, vans, buses, military vehicles, construction equipment, etc.

2.) Specify the Product Mix
OUTLINE
I.) Product Mix
A.) Product Items & Lines
B.) Product Width & Depth
1.) Product Width
2.) Product Depth refers to the number of product items offered within each product line. Ford Mustang, for example, offers convertibles, LX models, standard vs. automatic transmissions, & different size engines .

2.) Specify the Product Mix
OUTLINE
II.) Product Mix Strategies - deciding which products a company will carry or make.
A.) Expand or Modify Existing Product Lines or
Items
B.) Develop New Products

2.) Specify the Product Mix
OUTLINE
II.) Product Mix Strategies - deciding which products a company will carry or make.
A.) Expand or Modify Existing Product Lines or
Items: Ford could, for example, add-solar powered Mustangs to their product items

2.) Specify the Product Mix
OUTLINE
II.) Product Mix Stategies
A.) Expand or Modify Existing Product Lines or Items
B.) Develop New Products - means coming out with totally new products to increase market share. Could you, for example, imagine Ford motor boats or the “ ty ” Co. coming out w/ r
“babies” for the “Beanie Babies?”
(Current example?!)

2.) Specify the Product Mix
OUTLINE
II.) Product Mix Strategies
B.) Develop New Products
1.) Product Development Process a.) Generating ideas b.) Screening ideas c.) Developing the product d.) Testing the product e.) Introducing the Product f.) Evaluating customer acceptance

2.) Specify the Product Mix
OUTLINE
II.) B.) Develop New Products
1.) Product Development Process: a.) Generating Ideas - Use a variety of sources customers, employees, competition, suppliers.
b.) Screening Ideas - consider size of the market, profit potential, & level of risk c.) Developing the Product - develop prototypes, marketing strategies, & plans for packaging, labeling, branding, & distribution

2.) Specify the Product Mix
OUTLINE d.) Testing the Product - tested in labs & w/ customers. Test marketing is done in specific geographic areas e.) Introducing the Product - The cost to introduce is very high & the chance for success low. Conduct a promotional campaign & train salespeople.
f.) Evaluate Customer Acceptance - Conduct market & sales research. Do a customer opinion survey .

2.) Specify the Product Mix
OUTLINE
III.) Managing a Product in its Product Life Cycle
A.) Defined - Just as the economy moves through stages, so do product sales. At different stages, try different marketing strategies.
B.) Stages:
1.) Introduction
2.) Growth
3.) Maturity
4.) Decline

Product Life Cycle
Sales Profits
Introduction Growth Maturity Decline

2.) Specify the Product Mix
OUTLINE
III.) Managing a Product Throughout its Product Life Cycle
A.) Defined
B.) Stages:
1.) Introduction - The product is new a.) Goal is to draw customer’s attention & to increase product awareness b.) Techniques include heavy promotion ads, publicity, displays, sales promotion, etc.

2.) Specify the Product Mix
III.) Managing a Product Throughout its Product Life Cycle
B.) Stages:
2.) Growth a.) The product begins to enjoy success; sales
& profits go up. Target Market is aware of product.
b.) Techniques used to market during this stage include ads that focus on customer satisfaction, meeting the competition, expand or modify the product line

2.) Specify the Product Mix
OUTLINE
III.) Managing a Product Throughout its Product Life Cycle
B.) Stages:
3.) Maturity a.) Sales level off/slow down, competition is heavy, & the market might be saturated.
b.) Ads focus on beating the competition, think about dropping or improving the item

2.) Specify the Product Mix
OUTLINE
III.) Managing a Product Throughout its Product Life Cycle
B.) Stages:
4.) Decline a.) Sales are falling, profits are low or nonexistent b.) Management must decide to drop or to:
- sell, discount, or license the product
- find a new use for the product
- regionalize the product
- modernize or alter the product

Product Life Cycle
Sales Profits
Introduction Growth Maturity Decline

3.) Develop Packaging & Labeling
OUTLINE
I.) Branding
A.) Defined
B.) Types of Brands
C.) Branding Strategies
II.) Packaging
A.) Functions of Packaging
III.) Labeling
A.) Types

3.) Develop Packaging & Labeling
OUTLINE
I.) Branding
A.) Defined - A name, design, or symbol that identifies the products of a company. For example, Coke products, Levi Jeans, Nike, etc.
1.) Related Terms include:

3.) Develop Packaging & Labeling
OUTLINE
1.) Related Terms include: a.) Brand Name - words that can be spoken b.) Brand Mark - a symbol, font, design, or color c.) Trade Name - words that identify the company d.) Trade Character - brand mark given human form e.) Trademark - a brand name, mark, character or combination of these protected by law

3.) Develop Packaging & Labeling
ACTIVITY
Provide an example for each : a.) Brand Name b.) Brand Mark c.) Trade Name d.) Trade Character e.) Trademark -

3.) Develop Packaging & Labeling
ACTIVITY
Provide an example for each : a.) Brand Name - Levi’s, Nike, Tylenol, etc.
b.) Brand Mark - P. O. Eagle, Disney’s Castle, etc.
c.) Trade Name - Kellogg's, Chevrolet, Xerox, etc.
d.) Trade Character - Pillsbury Dough Boy, Bird’s
Eye’s Jolly Green Giant, etc.
e.) Trademark - Frito Lay’s Doritos, Kellogg's Rice
Krispies Treats, Nike’s Swoosh,
VISA, etc.

3.) Develop Packaging & Labeling
OUTLINE
I.) Branding
A.) Defined
B.) Types of Brands:
1.) National - called “manufacturer brands,” are owned by manufacturers.
2.) Private - owned by wholesalers & retailers
3.) Generic - “no frills” products that don’t carry a brand name

3.) Develop Packaging & Labeling
OUTLINE
I.) Branding
A.) Defined
B.) Types of Brands:
C.) Brand Strategies:
1.) Brand Extension - Improving an existing brand name (ex adding flavors to Fig Newtons)
2.) Brand Licensing - allowing another company to use your to use its name, marks, & characters for a fee. (ex. Caterpillar lets over 700 companies use its name)

3.) Develop Packaging & Labeling
OUTLINE
I.) Branding
A.) Defined
B.) Types of Brands:
C.) Brand Strategies: (cont.)
3.) Co-branding - Two companies combining to form another product. (Ex. The “GM Card) is a Master Card offered by General Motors
4.) Mixed Brands - Offering a combination of national, private, & generic products (ex. Any grocery store)

3.) Develop Packaging & Labeling
OUTLINE
II.) Packaging
A.) Functions of Packaging
1.) Promoting & Selling the Product a.) Displays the brand name b.) Attractive, colorful & artistic c.) Makes it easy to use
2.) Defining Product Identify a.) Unique packages sell the product
(Leggs)

3.) Develop Packaging & Labeling
OUTLINE
II.) Packaging
A.) Functions of Packaging (cont.)
3.) Providing Information a.) Directions b.) Ingredients c.) Nutritional Value d.) Hazards e.) Prices f.) Inventory Control

3.) Develop Packaging & Labeling
OUTLINE
II.) Packaging
A.) Functions of Packaging (cont.)
4.) Meeting Customer Needs a.) Various Sizes (Family Size/Singles) b.) Practical Needs (Microwaveable)
5.) Ensuring Safe Use a.) Plastic vs. glass b.) Tamper-proof lids c.) Child-proof containers

3.) Develop Packaging & Labeling
OUTLINE
II.) Packaging
A.) Functions of Packaging (cont.)
6.) Protecting the product from: a.) breaking during shipping b.) from spoilage c.) excessive costs (rectangles save money)
B.) Types: a.) cardboard, glass, metal, plastic, wood, wraps, etc.

3.) Develop Packaging & Labeling
OUTLINE
III.) Labeling - a information tag, wrapper, seal, or imprinted message

4.) Identify Features & Benefits
OUTLINE
I.) Extended Product Features
A.) Types:
1.) Warranties & Guarantees
2.) Others
II.) Consumer Laws & Agencies
A.) Federal & State
B.) Consumer Rights & Responsibilities
III.) Credit
A.) Types

4.) Identify Features & Benefits
OUTLINE
I.) Extended Product Features
A.) Types:
1.) Warranties & Guarantees Defined: a.) Warranty - a promise that a product will meet certain standards or it will be fixed.
b.) Guarantee - is a warranty that offers a
“money back” clause “if not completely satisfied.”

4.) Identify Features & Benefits
OUTLINE
I.) Extended Product Features
A.) Types:
1.) Warranties & Guarantees Defined: a.) Express Warranty - stated in writing or spoken i.) Full - Repaired or replaced ii.) Limited - certain provisions are excluded

4.) Identify Features & Benefits
OUTLINE
I.) Extended Product Features
A.) Types:
1.) Warranties & Guarantees Defined: a.) Express Warranty b.) Implied - not clearly indicated, offers assurance that the product will work the way it is supposed to work

4.) Identify Features & Benefits
OUTLINE
I.) Extended Product Features
A.) Types:
1.) Warranties & Guarantees Defined: a.) Express Warranty b.) Implied c.) Disclaimers - limits company liability.
For example, to the cost of the product, not the damage done by the product

4.) Identify Features & Benefits
OUTLINE
I.) Extended Product Features
A.) Types:
2.) Others: a.) delivery b.) installation c.) service after the sale d.) directions & training e.) billing f.) credit

4.) Identify Features & Benefits
OUTLINE
I.) Extended Product Features
A.) Types:
2.) Others: f.) credit: i.) Bank Credit Cards ii.) Retail Credit Cards iii.) Debit Cards iv.) Secured Loans v.) Unsecured Loans

4.) Identify Features & Benefits
OUTLINE
II.) Consumer Laws & Agencies
A.) Federal & State
1.) Federal: a.) Magnuson - Moss Consumer Product
Warranty Act of 1975 - Sets minimum standards for warranties. b.) Consumer Product Safety Act of 1972 -
Monitors the safety of products c.) Etc.

4.) Identify Features & Benefits
OUTLINE
II.) Consumer Laws & Agencies
A.) Federal & State
1.) Federal:
2.) State: a.) Lemon Laws - protects buyers from chronically defective merchandise b.) Arbitration Programs - Encourages the use of third parties to resolve differences

$

• Money
Money & Price
• Price
–A Measuring
Device. It
Measures Value
–A Specific
Measurement of Value

OBJECTIVE

Pricing Terms
• Retail Price
- The amount of money a customer pays for a product/service
• Cost
- The amount of money a business pays for a product/service
• Markup
- The amount of money added to cost to cover a business’ expenses
& desired net profit

What is Markup???
• Any Business Expense
(Besides the Cost of Goods) :
Utilities (Heat, Elec., Phone) Donations
Salaries
Promotions
Employee Benefits
Rent
Taxes Fixtures (Furniture)
Industrial Services (Cleaning) Etc., Etc., Etc. !!!
• Any Desired Net Profit.

Abbreviating Pricing Terms

Abbreviating Pricing Terms
Dollars

Abbreviating Pricing Terms
Percentages

Pricing Terms
Formulas
Retail Price = Cost + Markup

Pricing Terms
Formulas in Dollars
Retail Price = Cost + Markup
RP$ = C$ + M$

Pricing Terms
Formulas in Dollars
Retail Price = Cost + Markup
RP$ = C$ + M$
$ ???
= $6.00 + $4.00

Pricing Terms
Formulas in Dollars
Retail Price = Cost + Markup
RP$ = C$ + M$
$10.00 = $6.00 + $4.00

Pricing Terms
Formulas in Percentages
Retail Price = Cost + Markup
RP% = C% + M%

Pricing Terms
Formulas in Percentages
What the Heck is Retail Price %

Pricing Terms
Formulas in Percentages
Retail Price %
=
100%
ALWAYS!!!

Pricing Terms
Formulas in Percentages

Pricing Terms
Formulas in Percentages
Retail Price % = C% + M%
RP% = C% + M%

Pricing Terms
Formulas in Percentages
Retail Price % = C% + M%
RP% = C% + M%
100% = C% + M%
Because RP% is
Always 100%

Pricing Terms
Formulas in Percentages
(Example)
RP% = C% + M%
100% = 60% + M%
Because RP% is
Always 100%
Representing the
Cost of Goods

Pricing Terms
Formulas in Percentages
(Example)
100% = 60% + M%
What Must M% Be?

Pricing Terms
Formulas in Percentages
(Example)
100% = 60% + M%
What Must M% Be?
M% = 40%

Pricing Terms
Formulas
(Examples)
RP$ = C$ + M$ RP% = C% + M%
$____ = $45.00 + $30.00 100% = 30% + ____
$____ = $22.00 + $68.00 100% = 80% + ____
$75.00 = $____ + $10.00 100% = ___% + 75%
$10.00 = $____ + $ 4.00 100% = ___% + 50%

Pricing Terms
Formulas
(Examples)
RP$ = C$ + M$ RP% = C% + M%
$75.00
= $45.00 + $30.00 100% = 30% + 70%
$90.00
= $22.00 + $68.00 100% = 80% + 20%
$75.00 = $65.00
+ $10.00 100% = 25% + 75%
$10.00 = $ 6.00
+ $ 4.00
100% = 50% + 50%

Pricing Terms
Formulas
But What if you Have Apples & Oranges???
Dollars & Percentages

Pricing Terms
Formulas
Dollars & Percentages
RP$ = $25.00
RP% = 100%
C$ = ?
C% = ?
M$ = ?
M% = 40%

WHAT ARE PERCENTAGES?
Fractions!!!
What is 1/2 of 100%?
What is 1/4 of 100%?
What is 3/4 of 100%

WHAT ARE PERCENTAGES?
What is 1/2 of 100%?
50%
What is 1/4 of 100%?
25%
What is 3/4 of 100% 75%

How Do You Calculate
PERCENTAGES?
What is 50% of $10.00?
$5.00
What is 25% of $10.00?
$2.50
What is 75% of $10.00?
$7.50

Pricing Terms
Formulas
Dollars & Percentages
RP$ = $25.00
RP% = 100%
C$ = ?
C% = ?
M$ = ?
M% = 40%

How Much is Markup $???
M $ = M% X RP$

How Much is Markup $???
M$ = 40% X $25.00

Pricing Terms
Formulas
Dollars & Percentages
RP$ = $25.00
RP% = 100%
C$ = ?
C% = ?
M$ = $10.00
M% = 40%

Pricing Terms
Formulas
Dollars & Percentages
RP$ = $25.00
RP% = 100%
C$ = $15.00
C% = ?
M$ = $10.00
M% = 40%

Pricing Terms
Formulas
Dollars & Percentages
RP$ = $25.00
RP% = 100%
C$ = $15.00
C% = 60%
M$ = $10.00
M% = 40%

OBJECTIVE

$
•

$
•

$
• Government Regulation:
* Price Fixing
* Price Discrimination
* Minimum Price Laws
* Unit Pricing
* Price Advertising

OBJECTIVE

The Goals of Pricing
• Get a Share of the Market
• Beat/Meet the
Competition
• Get a Return on
Your Investment

OBJECTIVE
“PRICING STRATEGIES”

“PRICING STRATEGIES”
– Add all of your costs, expenses, (FIXED & VARIABLE)
& desired net profit
– Estimate Your Sales
– Divide

“PRICING STRATEGIES”
(Example)
– Costs, expenses, & desired net profit = $100,000
– You estimate your sales to be one item this year
– Determine your Retail Price by dividing $100,000 by 1

“PRICING STRATEGIES”
– Costs, expenses, & desired net profit = $100,000
– You estimate your sales to be
24,025 items this year
– Determine your Retail Price by dividing $100,000 by 24,025 items

RECOMMENDED
RETAIL PRICE!!!
$ 4.16

RECOMMENDED
RETAIL PRICE!!!
$ 4.16
At $ 4.16 per item sold, assuming every item sells, you will cover your costs, expenses, & desired net profit

“PRICING STRATEGIES”
– Determine what the customers will pay & charge that amount

“PRICING STRATEGIES”
– Determine what the competition is charging and that is your price!
–
(Make sure you control your costs & expenses though)

Other Strategies
Odd Cent Pricing
Prestige Pricing
Price Lining
Promotional Pricing

Objective
• Be able to define the term promotion and provide examples of each of its six tools

PROMOTION
• Any activity designed to let the target market know more about your product including why they should buy

• Advertising
• Sales Promotion
• Visual Merchandising
– Display Building
• Public Relations
• Publicity
• Personal Selling

OBJECTIVE
Be Able to Identify Each Member of the “Primary Channel of
Distribution”
&
Describe Their Roles
(DONE!!!)

The Primary Channel of
Distribution
Producer Wholesaler Retailer Consumer

–Be able to define Physical
Distribution and identify the advantages & disadvantages of the various transport methods available

• Boat
• Truck
• Plane
• Pipeline
• Train