Professional Documents
Culture Documents
FACULTY OF ECONOMICS
AND SCIENCE OF MANAGEMENT
OPTION: MARKETING
MARKETING MIX
AND
BASIC ECONOMIC PROBLEMS
STUDENT:
KHERRI ABDENACER
:SUPERVISOR
Pr. MOHAMED TOUHAMI TOUAHAR
2005/200
1
SUMMARY
Marketing mix.
Definition of marketing.
Product.
Pricing.
Promotion.
Place (distribution).
Cannel of distribution.
Scarcity.
• Unlimited wants.
• Limited resources.
• Types of commodity.
• The economic problem.
Opportunity cost.
Economic systems.
• Market economies.
• Command economies.
• Mixed economies.
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What is Marketing?
The term marketing has changed and evolved over a period of time, today
marketing is based around providing continual benefits to the customer,
these benefits will be provided and a transactional exchange will take
place.
Within this exchange transaction customers will only exchange what they
value (money) if they feel that their needs are being fully satisfied, clearly
the greater the benefit provided the higher transactional value an
organisation can charge.
3
Product strategies
Level 1: Core Product. What is the core benefit your product offers?.
Customers who purchase a camera are buying more then just a camera
they are purchasing memories.
4
Product Decisions
When placing a product within a market many factors and decisions have
to be taken into consideration. These include:
Product design – Will the design be the selling point for the organisation
as we have seen with the iMAC, the new VW Beetle or the Dyson
vacuum cleaner.
Product features: What features will you add that may increase the
benefit offered to your target market? Will the organisation use a
discriminatory pricing policy for offering these additional benefits?
Brands have to be managed well, as some brands can be cash cows for
organisations. In many organisations they are represented by brand
managers, who have hugh resources to ensure their success within the
market.
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Pricing
Pricing Strategies
Skimming pricing: The organisation sets an initial high price and then
slowly lowers the price to make the product available to a wider market.
The objective is to skim profits of the market layer by layer.
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Psychological pricing: The seller here will consider the psychology of
price and the positioning of price within the market place. The seller will
therefore charge 99p instead £1 or $199 instead of $200
Premium pricing: The price set is high to reflect the exclusiveness of the
product. An example of products using this strategy would be Harrods,
first class airline services, porsche etc.
Optional pricing: The organisation sells optional extras along with the product to
maximise its turnover. This strategy is used commonly within the car industry.
Place
Place strategies
7
Above indirect distribution (left) and direct distribution (right).
Distribution Strategies
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Basic economic problems
1. Scarcity
Unlimited Wants
Humans have many different types of wants and needs. Economics looks
only at man's material wants and needs. These are satisfied by consuming
(using) either goods (physical items such as food) or services (non-
physical items such as heating).
There are three reasons why wants and needs are virtually unlimited:
Limited Resources
Types of Commodity
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A free good is available without the use of resources. There is zero
opportunity cost, for example air. An economic good is a commodity in
limited supply.
2. Opportunity Cost
The opportunity cost principle states the cost of one good in terms of the
next best alternative. For example, a gardener decides to grow carrots on
his allotment. The opportunity cost of his carrot harvest is the alternative
crop that might have been grown instead (eg potatoes). Further examples
are given in Table 1.2.
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Group Decision
Individual Should I buy a record or a revision book?
School Should we build a music block or tennis courts?
Country Should we increase police pay or pensions?
3. Economic Systems
Market Economies
Command Economies
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In a command-planned or socialist economy the government owns most
resources and decides on the type and quantity of a good to be made. The
USSR and North Korea are examples of command economies. The
government sets output targets for each district and factory and allocates
the necessary resources. Incomes are often more evenly spread out than in
other types of economy.
Mixed Economies
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