Basic Marketing Functions

A. Basic Marketing Functions 1. Analyze the differences between a production-oriented company, a sales-oriented company, and a marketing-oriented company. Production oriented - focused on making the production of product as cost efficient as possible ->no mind for what consumers actually want ->quantity over quality Sales oriented - aggressive sales tactics, promotional activities, training of their sales force -> prioritizes high volume short term selling, NOT long term consumer loyalty. Market oriented - prioritizes understanding and fulfilling its customers' needs and desires to achieve success, trust and loyalty 2. Explain the marketing concept and describe the benefits of marketing and their Importance. Marketing concept: business philosophy that focuses on understanding and satisfying customer needs to achieve organizational goals -> 5 concepts that guide organizational activities -​ Production Concept - consumers will prefer products that are widely available and inexpensive -> focus on achieving high production efficiency, low cost, and mass distribution -> developing countries -​ Product Concept - focus on quality of the product, performance, innovative features. Managers would focus on making superior products and improving them over time.-> expect buyers to admire well-made products, but sometimes forget what the market needs. -​ Selling Concepts - consumers and businesses, if left alone, will not ordinarily buy enough of selling company’ products. Need for aggressive selling and promotion effort. Consumers show buying inertia and must be coaxed into buying. Selling of what is made rather than what market wants (esp. Occurs during overcapacity) -​ Marketing Concept - comprising of all three above (finalized in 1950s) holds key to being more effective than competitors in creating, delivering, and communicating customer value -> helps in achieving competitive advantage (consultative selling: where customers needs are prioritized) -​ Four pillars -​ Target Marketing -​ Customer Needs -​ Integrated Marketing -> unified brand image through all communication/advertising platforms -​ Profitability -​ *Sales Concept (focuses on needs of the seller) vs Marketing Concept (focuses on needs of the buyer). -​ Societal Marketing Concept - focus on determining needs, wants, and interests of target markets -> done so more effectively and efficiently than competitors; done in a way that preserves and enhances the society’s well-being. (ex: fast food restaurants advertising unhealthy food does not fit this concept) 3. Explain the functions involved in marketing goods and services. 1)​ Marketing Research and Info Management a)​ Identifying and understanding target audience b)​ Target market sizing 2)​ 3)​ 4)​ 5)​ 6)​ c)​ Competitor analysis and benchmarking (SWOT) d)​ consumer sentiment analysis Product and Service Management a)​ Increasing product-market fitness b)​ Evaluating commercial viability based on addressing unmet needs or demands c)​ Product and service innovation and testing Pricing a)​ Perceived value of a product -> if high, then consumers will more likely be willing to purchase more expensive option b)​ Consider competitor pricing c)​ Production costs d)​ Value offered by company e)​ Business goals and branding f)​ Pricing techniques: i)​ Penetration pricing – introductory low prices to aid in rapid market share gains ii)​ Price skimming – higher introductory pricing to recoup development investments faster before competitors catch up. It’s suitable for radically innovative products. iii)​ Dynamic pricing – helps factor in peak vs. off-peak demand cycles. iv)​ Using psychological tactics – charm pricing tactics, like $49 instead of $50, make your products seem more affordable, especially if you’re targeting price-conscious consumers. Promotion: a)​ Running advertising campaigns b)​ Public Relations c)​ Personal selling -> Trained salesforce demonstrates brand value in one-on-one interactions d)​ Direct marketing through catalog distribution (email marketing, direct mail, social media, and telemarketing -> Basically anything to avoid mass media) or text marketing to qualified leads (customers who seem more willing to buy/convert) e)​ Indirect marketing (social media marketing, pr, search engine optimization, influencer marketing, referral programs) BTW this is more cost effective and allows businesses to find higher quality leads Selling: the sales team facilitates closing a sale a)​ Uses CRM (Customer Relationship Management) software systems to track lead quality, conversion rates, anc effectiveness of marketing. i)​ organizational ii)​ analytical iii)​ Collaborative Distribution: accessibility of products to customers -> physical or digital distribution channels a)​ E-commerce stores b)​ Brick and mortar stores c)​ Types of Distribution Channels: d)​ Direct Distribution:​ The manufacturer sells directly to the consumer, eliminating intermediaries. e)​ Indirect Distribution:​ The manufacturer uses intermediaries (wholesalers, retailers, distributors) to reach the consumer. f)​ Hybrid Distribution:​ A combination of direct and indirect channels. g)​ Exclusive Distribution:​ A company chooses to sell its products through a limited number of retailers, often to maintain a premium brand image. h)​ Dual Distribution:​ A company uses two or more different channels to reach the same target market, such as both online and brick-and-mortar stores. 7)​ Financing - Data from the marketing department can help demonstrate quantifiable positive returns. It can also create accurate financial projections for the finance department to secure funds to grow the company. 4. Identify, explain, compare, and contrast the different types of business ownership (e.g., sole-proprietorship, partnership, corporation, franchise, and licensing). 1. Sole Proprietorship ●​ ●​ ●​ ●​ ●​ ●​ ○​ ○​ ○​ ●​ ○​ ○​ ○​ Definition: A business owned and operated by one individual. Formation: Easiest and least expensive to form; minimal legal formalities. Control: Full control by the owner. Liability: Unlimited liability — the owner is personally responsible for all business debts and obligations. Taxation: Pass-through taxation — profits and losses are reported on the owner’s personal tax return (Schedule C of IRS Form 1040). Pros: Simple to start and manage. Owner keeps all profits. Few regulations. Cons: Personal assets are at risk. Limited access to capital. Business ends upon owner’s death. 2. Partnership ●​ ●​ ○​ ○​ ○​ ●​ ○​ ○​ ○​ ●​ ●​ ○​ Definition: A business owned by two or more people who share ownership, profits, and liabilities. Types: General Partnership (GP): Equal responsibility for management and liability. Limited Partnership (LP): One or more general partners manage and assume liability; limited partners contribute capital but have limited liability and no management role. Limited Liability Partnership (LLP): Partners have limited liability and some protection from the actions of other partners. Liability: GP: Unlimited liability for all partners. LP: General partners have unlimited liability; limited partners have limited liability. LLP: Typically limited liability for all partners (depends on state laws). Taxation: Pass-through taxation — income is taxed on each partner’s personal tax return. Pros: Shared workload and resources. ○​ ●​ ○​ ○​ Easy to form (though a partnership agreement is advised). Cons: Disagreements can arise. Joint liability can be risky in a general partnership. 3. Corporation (C-Corp and S-Corp) ●​ ●​ ○​ ○​ ●​ ●​ ○​ ○​ ●​ ○​ ○​ ○​ ●​ ○​ ○​ ○​ Definition: A legal entity separate from its owners (shareholders). Managed by a board of directors. Types: C Corporation: The standard corporation. S Corporation: A special tax status allowing pass-through taxation if certain criteria are met (limited number of shareholders usually less than 100, U.S. citizens only, etc.). Liability: Limited liability — shareholders are not personally liable for business debts. Taxation: C-Corp: Double taxation — profits are taxed at the corporate level and again when distributed as dividends. S-Corp: Pass-through taxation, avoiding double taxation. Pros: Limited liability. Can raise capital by issuing stock. Continuity even if ownership changes. Cons: More regulations and paperwork. C-Corps face double taxation. Costly and complex to set up. 3. Benefit Corporation (B Corp) ●​ ●​ ●​ ●​ ●​ ○​ ○​ ●​ ○​ ○​ Definition: A for-profit corporation that is legally required to pursue both profit and public benefit (social or environmental mission). Ownership: Shareholders, like a C Corp. Liability: Limited liability. Taxation: Treated like a C Corp or S Corp, depending on how it's filed. Pros: Combines profit and purpose. Attractive to mission-driven investors and customers. Cons: Must report on social/environmental performance. Can be more complex to manage due to dual goals.​ 4. Close Corporation ●​ ●​ ●​ ●​ ●​ ○​ ○​ ●​ ○​ ○​ Definition: A corporation with a small number of shareholders, often family-owned, and not publicly traded. Ownership: Limited number of shareholders (varies by state, often ≤30). Liability: Limited liability. Taxation: Can elect to be taxed as C Corp or S Corp. Pros: Less formal than a typical C Corp. Greater control over share transfers. Cons: Not available in all states. Harder to raise capital compared to public corporations.​ 5. Nonprofit Corporation ●​ ●​ ●​ ●​ ●​ ○​ ○​ ●​ ○​ ○​ Definition: A legal entity organized for a charitable, religious, educational, or scientific purpose. Profits must be reinvested in the mission. Ownership: No shareholders; governed by a board of directors. Liability: Limited liability for directors and officers. Taxation: Can apply for 501(c)(3) status for federal tax exemption; donors may receive tax deductions. Pros: Eligible for public and private grants. Tax-exempt status if approved. Cons: Strict rules about how funds are used. Must adhere to transparency and reporting standards. 6. Limited Liability Company (LLC) ●​ ●​ ●​ ●​ ○​ ○​ ●​ ○​ ○​ ○​ ●​ ○​ ○​ Definition: A hybrid business structure combining the limited liability of a corporation with the flexibility of a partnership. Ownership: Owners are called members; can be individuals, corporations, or other LLCs. Liability: Limited liability — members are protected from business debts and liabilities. Taxation: Default: Pass-through taxation — profits taxed on members’ personal returns. Can elect to be taxed as a C Corp or S Corp. Pros: Flexible management and structure. Fewer formalities than a corporation. Can choose a taxation method. Cons: Some states impose LLC-specific fees or franchise taxes. Investors may prefer corporation structure for equity funding. 4. Franchise ●​ ●​ ●​ ●​ ●​ ○​ ○​ ○​ ●​ ○​ ○​ ○​ Definition: A legal agreement in which a franchisee buys the right to operate a business using the franchisor’s brand, model, and systems. Structure: Franchisee operates an independently-owned location under a larger brand. Liability: Usually limited liability through a corporation or LLC structure (depends on how the franchisee forms their business). Taxation: Depends on the franchisee’s legal structure — commonly pass-through taxation if the franchise is operated as an LLC or S-Corp. Pros: Established brand recognition. Ongoing training and support. Easier access to funding. Cons: High initial fees and royalties. Less control and creativity. Must follow franchisor rules and systems.​ 5. Licensing ●​ ●​ Definition: An agreement where one company (the licensor) gives another company (the licensee) permission to use its intellectual property (IP), such as trademarks or patents, for a fee. Structure: Not a full business format like a franchise. It allows use of a product/brand while remaining independent. ●​ ●​ ●​ ○​ ○​ ●​ ○​ ○​ ○​ Liability: Licensees operate as independent businesses, so liability depends on their chosen structure (e.g., LLC = limited liability). Taxation: Also depends on the licensee’s business type (e.g., sole proprietorship = personal taxes). Pros: Flexible and less restrictive than franchising. Can leverage brand/IP while maintaining independence. Cons: No operational support like a franchise. The license can be revoked or expire. Less control over brand representation for the licensor. 5. Identify the elements of the marketing mix (e.g., product, price, place, and promotion) and describe its contribution to successful marketing. 1)​ Product: The good/service that satisfies consumer needs 2)​ Price: The amount charged to the customer 3)​ Place: How and where the product is distributed (see above >distribution<) 4)​ Promotion: How customers are informed and persuaded (see above >promotion<) -​ Ensures alignment of all elements to meet target market needs -​ Helps build brand identity 6. Explain the concept of product mix and describe types of product mix strategies for various product classifications. 7. Describe the process for new product and service development (e.g., conception, development, and test marketing). 8. Explain the advantages and disadvantages of extending product lines and of product line diversification. 9. Examine the legal aspects of product development (e.g., patents, copyrights, and trademarks). 10. Explain the functions of packaging and why each is important. 11. Describe the importance of branding, packaging, and labeling. 12. Describe factors (e.g., features/benefits, price/quality, competition) used by marketers to position product/business. 13. Identify and explain the factors that influence a product’s price (e.g., cost, quality, competition, and brand loyalty). 14. Explain how consumer practices (e.g., shoplifting, improper returns, and product liability claims) affect prices. 15. Explain ways that government regulations/laws affect pricing practices (e.g., price discrimination and collusion). 16. Describe the influences of supply and demand on pricing and the concept of price Elasticity. Here’s a summary of key U.S. consumer protection laws you should know for the FBLA Marketing test: Law Purpose What It Covers Federal Trade Commission Act (1914) Prevents unfair/deceptive business practices False advertising, antitrust violations, fraud Consumer Product Safety Act (1972) Ensures product safety Sets standards & recalls unsafe products Truth in Lending Act (1968) Promotes clear disclosure of credit terms Credit card offers, loan terms, interest rates Fair Packaging and Labeling Act (1966) Requires honest labeling of products Net weight, ingredients, manufacturer info Food, Drug, and Cosmetic Act (1938) Protects health via regulation Food safety, drug approval, cosmetic standards Gramm-Leach-Bliley Act (1999) Protects consumers' financial privacy Requires disclosure of data sharing policies CAN-SPAM Act (2003) Regulates commercial emails Opt-out rules, truthful subject lines Children’s Online Privacy Protection Act (COPPA, 1998) Protects kids under 13 online Limits data collection without parental consent Fair Credit Reporting Act (1970) Promotes accurate credit info Credit reporting, dispute rights The personal selling process typically involves seven key steps: prospecting, pre-approach, approach, presentation, handling objections, closing, and follow-up. These steps guide a salesperson from identifying potential customers to securing a sale and building a long-term relationship. Here's a more detailed breakdown of each step: ​ 1. Prospecting:​ This involves identifying potential customers who might be interested in the product or service being offered. This can be done through various methods like referrals, cold calling, or networking. ​ ​ ​ ​ ​ 2. Pre-Approach:​ Before making a sales call, the salesperson needs to research and gather information about the prospect and their needs. This preparation helps tailor the approach and presentation. 3. Approach:​ This is the initial contact with the prospect, where the salesperson aims to build rapport and gauge their interest. 4. Presentation:​ The salesperson presents the product or service, highlighting its features and benefits and how it aligns with the prospect's needs. 5. Handling Objections:​ Prospects may have concerns or questions about the product or service. The salesperson needs to address these objections thoughtfully and provide solutions. 6. Closing:​ Once the prospect is satisfied with the offer, the salesperson aims to secure a commitment or finalize the sale. ​ 7. Follow-Up:​ Even after the sale, the salesperson needs to maintain the relationship with the customer by providing ongoing support and ensuring their satisfaction.