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MKT 2 06 ppt Ebner by ICJ1H4Zm

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									        Obj. 2.06
Describe the uses of grades and
    standards in marketing
        Grades and Standards

• Why learn about Standards and Grades?

• How do Standards and Grades affect YOU?
         Grades and Standards
• What did you eat for Breakfast or Lunch?
          Grades and Standards
• How did Grades and Standards affect your
  food?
                                  Fresh Fruit


      Milk
             Inspected


          Eggs
                 Quality         Appearance
                                and Condition
  WHAT ARE GRADES AND STANDARDS?
    = measures of product quality.
• Standards =           • Grades =
  statements that         are ratings
  specify a product’s     assigned to
  size, contents,         products that tell
  and/or quality;         to what extent
  used as a basis for     standards
  comparing or
  judging goods or
  services
  Other Examples of How Companies
      Use Grades and Standards
• Specific tire sizes to fit
  our specific cars

• ALL children’s fever-
reducing medicine
contains:
   • same ingredients
   • same doses
   (regardless of what brand it is)
 Other Examples of How Companies
     Use Grades and Standards
• Movies:          •Restaurants:
  – Ratings          –Ratings




                     Andy’s
   Rated: R          Rated: 97.5
                    REVIEW
• Grades: Ratings
  assigned to products
  that tell to what extent
  standards were met


• Standards:
  Specifications that are
  used as a basis for
  comparing or judging
  goods or services
    INTERRELATIONSHIP BETWEEN
      GRADES AND STANDARDS
• Standards are set. Each product is rated
  against these preset standards and assigned a
  grade. Products that don’t meet the lowest
  standard are scrapped, reworked or sold at a
  discounted price.
• Example: School grading system – standards
  are set. You have to do this to earn an “A” in
  this class. Your work is compared to the
  standards and your grade is determined.
        Grades and Standards
• What are
  some                         •What do
  standards                    you have to
  being                        do to earn a
  used in                      good grade?
  your
  classes?


              A = Excellent!
       Grades and Standards
• These requirements now become
  your standards that the teacher uses
  as her evaluation tool

• Your work compared to standards =
  GRADE
        Grades and Standards
• How do Businesses use Grades and
  Standards?

  – Standards are set

  – Products are rated against standards and
    assigned a grade
         Grades and Standards
• Why do we use grades and standards?

– To make sure products are reliable

– How to use a product correctly and safely

– Where certain products can be sold
   WHY ARE STANDARDS USED?

• Standards are used
  to establish uniform,
  consistent products.

• Example: CD’s made
  in the USA, Japan,
  and Mexico all have
  to fit into the same
  disc player
     GRADES AND STANDARDS CAN
             INDICATE…
• How the product can be     • How much the product
  used                         will cost its buyer
  –Ex. Grades on milk          –Ex. Buyers will pay
    and motor oil                more for top grade
• Where the product will     • Who the user
  be sold                      can/should be
  –Ex. Gap, Inc. places        –Ex. Movie ratings
    higher quality clothes       indicate the audience:
    at the Gap and their         G, PG, PG13, and R
    lower grade clothing
    at Old Navy
        Grades and Standards
• How do Grades and Standards aid in the
  buying and selling process?
           Speeds things up!
•G&S facilitate trade as buyers know what they
will receive without physically handling or
seeing the product. Consumers do not have to
inspect.
•G&S tell them what products rank higher than
others.
GRADES AND STANDARDS AID BUYING
          AND SELLING
• Their use speeds up
  the process because
  consumers can buy
  products without
  having to inspect

• Consumers rely on
  grades and
  standards for
  product information
       Grades and Standards
• What do businesses do with products
  that fail to meet lowest standards?

– Products are disposed of or revamped
        Grades and Standards
• Do you think the GAP will offer low standard
  clothes at their store?

                     NO!
• What would the GAP do with these clothes?

      Sell at Outlet or Old Navy
         Grades and Standards
• What are 4 types of standards that businesses
  use?
     1. Quantity
     - ex. how much will be produced in 1 day
     2. Quality
     -ex. no returns or defective products
     3. Time
     -ex. how many products can be made per hour
     4. Cost
     -ex. how much do the products cost to make
Identify examples of graded products.
1.   What is graded according to its octane rating?
2.   What is graded according to hardwood and softwood?
3.   Prime, choice, and select grades refer to what product?
4.   This grades for bacteria count, odor, and taste in what
     product?
5.   This product is assigned numbers according to its
     thickness.
6.   This product is graded according to its carbon and sulfur
     content.
7.   This product is graded for profanity, violence, and nudity.
8.   This product is graded for adult content, especially
     violence and blood.
                   ANSWERS
1.   Video games
2.   Gasoline
3.   Milk
4.   Coal
5.   Lumber
6.   Meat
7.   Oil
8.   Movies
               Grades and Standards
• Examples of Graded Products
1. Agricultural raw materials- like cotton

2. Food Products:
    a. USDA - Meat
    b. Dairy (IE Milk – whole, skim, non-fat, 2%)
    c. Fresh Produce
    d. Fish

3. Oil- Graded according to its thickness

4. Fuel- Graded according to its octane rating

5. Coal- Graded according to its carbon and sulfur content

6. Lumber- Hardwoods are graded according to size, quality, and type of wood
WHO SETS GRADES AND STANDARDS?

• Government agencies       • Businesses
  –Ex. FDA – food and        –Ex. McDonalds
   drugs, FCA –               buns have an exact
   communication,             size and color, Ford
   County Health Dept. -
   restaurants                requires suppliers
                              to meet certain
                              standards when
• Trade and professional
  organizations (to
                              making “Q1” parts.
  promote product safety)
  –Ex. AAA - motels
Professional Standards
Nurses trust ANA because of
our dedication to standards,
guidelines, and principals.
We work hard to elevate the
nursing profession by
defining the values and
priorities for registered
nurses across the nation.
Through this work, ANA can
provide direction to nurses
across the nation, influence
legislation, and implement a
framework to objectively
evaluate nursing excellence.
             EXAMPLE - EGGS
• STANDARDS FOR QUALITY OF INDIVIDUAL
  SHELL EGGS
  – 87.11. Individual eggs with clean unbroken shells.
  – 87.12. Individual eggs with stained or dirty,
    unbroken shells.
  – 87.13. Individual eggs with checked, cracked or
    broken shells.
• STANDARDS AND WEIGHT CLASSES FOR
  WHOLESALE GRADES OF SHELL EGGS
• MARKING OF CONSUMER RECEPTACLES OF
  SHELL EGGS
How are grades & standards important in a
             Global Market?
 • Improved Grades and Standards
 (G&S) have the potential to
 increase trade by improving the
 flow and consistency

 –By using certain requirements,
  products are known safe to use
  internationally.

 –The standard is known as 1S0 9000
  GRADES & STANDARDS IN GLOBAL
              TRADE
• The ISO 9000 are international standards for
  quality
• This standard guarantees that manufacturers
  have meet certain requirements for producing
  and shipping their products
           What is a warranty?
• Warranty is a defined
  promise made by the
  seller to the consumer
  that the seller will
  repair or replace a
  product that does not
  perform as expected
         4 types of Warranties
• Express – specific statement

• Implied – A toaster should toast

• Full – covers ENTIRE product

• Limited – only certain repairs/parts covered
               Types of warranties
Express Warranty              Implied Warranty
• Defined as promises         • Defined as an unwritten,
  expressed in a specific       unstated warranty
  statement concerning the      understood by the
  quality of the product        consumer and the seller
   – Can be written or oral     that a product will perform
                                as expected
                                 – The product will do what it is
                                   designed and recommended
                                   to do
                Types of warranties
Full Warranty                         Limited Warranty
                                      • Defined as warranties that
• Defined as warranties that             do not contain the
  cover the entire product               provisions of full warranties,
   – If the product doesn’t work it      may cover only certain
     must be made good in a
                                         repairs or specific parts
     reasonable time if not the
     customer can choose a
     replacement or refund
   – No time limits on implied
     warranties
   – The customer need only
     notify the warrantor in order
     to obtain repairs
         What is a guarantee?
• Defined as a promise made by the seller to the
  consumer that the seller will refund the
  consumer’s purchase price if the product
  doesn’t perform as expected.
• AKA – “Money-back guarantees”
• While warranties usually apply to goods,
  guarantees are given for both goods and
  services
      Characteristics of an effective
               guarantee
• Unconditional                • Easy for the customer
  – No conditions for the        to implement
    customer to meet              – Not a lot of forms,
• Understandable                    people to see , and
                                    different locations
  – Clear language and no
    difficulty understanding   • Easy for the customer
    the promises                 to collect
                                  – When possible money
                                    should be refunded on
                                    the spot
Purposes of warranties and guarantees
• To reassure prospective   • To use as a promotional
  customers                   tool
• To protect the producer   • To use as a competitive
  and seller                  tool
• To gain repeat            • To use as a image
  customers                   builder
• To increase sales
   BENEFITS OF WARRANTIES AND
           GUARANTEES
 Consumer Benefits        Business Benefits
• Reduced anxiety       • A customer-oriented
  about purchases         focus
• Free repairs          • Establishment of
• Service information     clear standards
• Legal recourse        • Feedback from
                          customers
                        • Increased profits
 WHY ARE WARRANTIES & GUARANTEES
REGULATED & CONTROLLED BY THE LAW?
 • They can cause problems for producers
  –Consumers misuse the product
  –Customers expect problems to be fixed that are
   not under warranty
 • There have been times when companies have
   “guaranteed” their products without living up
   to the terms of the warranty or guarantee and
   the customer was cheated.
    MAGNUSON-MOSS WARRANTY ACT
             OF 1975
• This Act provides guidelines for businesses offering
  warranties and guarantees with their product.
 –Protects consumers
 –Makes warranties stronger & easier for consumers to
  understand
 –Covers all consumer products & requires marketers to
  provide product information to consumers even before
  they make the purchase
 –FTC has the authority to regulate warranties on products
  that sell for more than $15
           PRODUCT LIABILITY
• Product liability is
  the area of law in      • 3 major types of
  which manufacturers,      claims:
  distributors,            –manufacturing
  suppliers, retailers,     defect
  and others who make      –design defect
  products available to    –a failure to warn
  the public are held       (also known as
  responsible for the       marketing defects)
  injuries those
  products cause.
            PRODUCT RECALLS
• A product recall is a   • Recalls are costly to a
  request to return to      company because they
  the maker a batch or      often entail replacing
  an entire production      the recalled product or
  run of a product,         paying for damage
  usually due to the        caused by use,
  discovery of safety       although possibly less
  issues. The recall is     costly than
  an effort to limit        consequential costs
                            caused by damage to
  liability (which can      brand name and
  cause costly legal        reduced trust in the
  penalties & damage        manufacturer
  in reputation)
         PRODUCT RECALL AGENCIES
• US Coast Guard: Marine              • Food and Drug Administration
  vehicles and related products         (FDA): Food, pharmaceutical
  (e.g. boats, personal watercraft,     drugs, health supplements,
  life jackets)                         cosmetics.
• Consumer Product Safety             • United States Department of
  Commission (CPSC): Consumer           Agriculture (USDA): Meat,
  products (e.g. toys, household        poultry, eggs.
  goods, bicycles, off-road           • National Highway Traffic Safety
  vehicles, etc.)                       Administration (NHTSA): On-
• Environmental Protection              road vehicles and related
  Agency (EPA): Pesticides,             products (e.g. cars, trucks,
  fertilizers, and anything harmful     vans, recreational vehicles,
  to the environment                    motorcycles, tires, motorcycle
• Federal Aviation Administration       helmets, children's safety
  (FAA): Aircraft                       seats)
           BP ACTIVITY – DUE….?
• Use the Internet to locate information about a
  recent case involving the Consumer Product
  Safety Commission (CPSC). Record the
  following information:
   •   Name of the company
   •   Nature of the product safety issue
   •   Outcome of the case
   •   You will present your findings to the class

								
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