Chapter 11 Principals Of Marketing - Faculty.piercecollege.edu

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11-4 Marketing Strategy [CH 11 Figure 11.2 The Functions of Marketing Facilitating Functions: Standardization and Grading Financing Risk Taking Marketing Information Exhange Functions: Buying Selling Physical Distribution Functions: Transporting Storing Eight Functions of Marketing Marketing entails a lot more than just advertising and selling, it is the whole spectrum of business from conception to consumption. The neophyte thinks of marketing as beginning with the product they want to produce and sell. However, thinking from that locus of thought generally leads to failure, for marketing actually needs to being with the consumer and becomes a complex activity that reaches into many aspects of an organization. Marketing actually involves eight functions: buying, selling, transporting, storing, standardization and grading, financing, risk taking, and market information. These eight marketing functions add to the utility created by marketing with some performed by manufacturers, some by wholesalers, and others by retailers. These functions are grouped as exchange functions, physical distribution functions, and facilitating functions. Exchange functions of marketing is buying and selling. Buying is important as marketers study purchasing habits of consumers for goods and services. Knowing consumer purchasing behavior is critical to a firms success because they firm is able to best decide how to meet the needs of their customers. Retail outlets will buy for the fall season in March and the Christmas season in July. This amount of lead time requires that they have an understanding of their buyers to make their own purchase decisions. The Industrial market purchases replacement machinery, raw materials and equipment upgrades to complete production deadlines and meet their customers needs. Obviously, to succeed, these firms must sell their goods and services to someone. Their selling is accomplished through their promotional strategy; advertising, promotions, sales representatives to the client are the standard sales methods. Physical distribution functions include transportion and storing. Physically moving the product from manufacturer to outlet is transportation. This can occur at all levels of productivity; from primary producer (farmer) to secondary producer (food processor — Green Giant canary); from secondary producer to tertiary producer (retail outlet — A&P grocery store). In industrial production the retailer cannot store all of the production, so warehousing of goods until the retail consumer/ultimate consumer will take the goods becomes a factor. Storing is accomplished at all three levels of productivity. Facilitating functions is a term that is used to describe those acts that facilitate the market place. Facilitating functions include financing, risk taking, securing market information, standardization and grading. These functions assist the market place perform the exchange function and the physical distribution function. Extending credit to consumers, wholesalers, and retailers is the financing function. Sales always increases the ability to produce more goods and services.
CH 11] Business 101 — The Basics 11-5 How a cracked out egg spreads on the plate via grade. When the manufacturer receives funds from the wholesaler then the manufacturer can produce additional goods. When retailers extend credit to their customers, they may increase total sales through credit arrangements. Risk taking is dealing with the uncertainties of future market forces and consumer behavior. Farmers grow soybeans without the guarantee that their will be a market for their crop and with the hope that their crop will be able to be harvested without damage or loss. Wholesalers and retailers acquire inventory for resale on the basis of their research of what retail consumers will buy. This action removes the manufacturer's risk and gives it to marketing intermediaries. There is no guarantee for the automotive industry that their new car model will sell in quantity or as rapidly as they manufacture. Manufacturers accept risk when they schedule production of a product speculatively before consumers have entered orders. Standardization and grading deals with standardizing the products in terms of use, size, and form. Many industries standardize their products with modifications to differentiate their product from the competition. There are many different tire manufacturers from which one may select the same size, shape and functionality of tire for an automobile. Grading standards deals with the quality of the product. Eggs are sold in grocery stores by standardized size (weight) and grade. These standards, grades, and weight classes have been developed and are promulgated pursuant to the authorities contained in the Agricultural Marketing Act of 1946, as amended, (7 U.S.C. 1621 et seq.) and are now maintained by the Agricultural Marketing Service, U.S. Department of Agriculture. To illustrate: the standard size of eggs are X-Large, Large, Medium, Small and Pee-Wee, though one generally does not purchase the small and Pee-Wee in grocery stores. Egg grades that may be sold in retail outlets include AA, A, and B. The size of an egg is established by its weight and the grade of the egg is established by its shell characteristics, clarity in candling, and freedom from defects and diseases. Marketers collect and analyze market information to determine what will sell and who will buy it. Marketers are concerned with the buyer behavior and consumer patterns. Organizations that focus on discovering consumer needs and then GRADE: AA GRADE: A GRADE: B
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Chapter 11 Principals Of Marketing - Faculty.piercecollege.edu

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