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Manufacturing Material Processing Mass Production Marketing
Materials and Processes l Manufactured products are made from four categories of materials: • Polymers: plastics • Metallic Minerals: iron, copper • Alloys: One or more minerals mixed together • • to form new metal. Ceramic: Sand, clay or glass Composites: Fiberglass, plywood, drywall
Material and Processes l Materials are seldom used in their raw state. They are processed into “STANDARD STOCK”. Standard stock is a material that has been processed to a standard size and shape (4’x 8’ plywood, or 2”x 4” boards)
Materials and Processes l Manufacturing a product, standard stock materials are cut and/or machined to a required size.
Material and Processes l Using working drawings “blue prints” of a product and continuous line “Job-Lot” manufacturing. Identically sized and shaped parts can be made.
Material and Processing l Jigs and fixtures are special production tools fastened to machines to make identically shaped parts. Jig: A devise used to hold a part being made and guide a cutting took. Fixture: A devise used to hold a part in place while it is being machined or assembled.
Organizing a Franchise: Forms of Ownership l l l Proprietorship: A business owned by one person. Partnership: An association of two or more people to run a business. Corporation: A business owned by a large group of people (shareholders) who share the profits.
Organizing a Franchise: Forming a Company l l l Filing Corporate Charter: The actual filing for incorporation with the state. Adopting Corporate Bylaws: Specific rules and regulations that the company will run under. Develop Management Structure: Appoint managers and directors
Product Design and Development l l Before a product can be manufactured it must be designed, Before it can be designed, a need for the product must be established.
Establishing a Need l l Production Approach: A product is designed and then produced in quantity. After, advertising is produced to convince people they need it. Consumer Approach: Identifies a product need from the people. Then the product is designed and produced.
Determining Consumer Wants l l l Companies need to produce products with “mass appeal”. Everyone likes it! Companies must determine what type of product a particular group “demographic” will buy. Companies need to determine how they are going to design the product (imitation, adaptation, or innovation).
Determining Marketability l Market Research: A study that gathers information for the producer about the potential product like: what people think about the product, choices of color, size, and function what group of people are interested
Consumer Surveys as Market Research l l Consumer surveys: A short questionnaire with 5 -8 questions that pertain to the product and its use. Should always have: • Short to the point questions • True/False, multiple choice questions • Go from very basic concepts to specific topics • Hint at the need for the product
Consumer Surveys: Who gets surveyed l l The target consumers demographic! OR…. . who you intend on selling the product too!
Product Design and Development l l l Designs are proposed taking the market research into account A design is chosen and prototyped Refined as needed till desired product is achieved.
Marketing l "the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. "
Remembering the Product • Slogans/Catch Phrase: • • American Express: "Don't leave home without it" AT&T: "Reach out and touch someone" Timex: "Takes a licking and keeps on ticking" Wheaties: "The breakfast of champions" • Trademarks • Jingles • • • Mc. Donalds: I’m Lovin’ it! "What would you do for a Klondyke bar? " Campbell Soup: “Um Um Good, Um Um Good"
Graphic Marketing: • A method of marketing using a variety of graphic orientated techniques, which is located in high traffic areas to draw attention to the company’s product.
Broadcast Marketing • An audio/visual method of advertising, which is aired to create a familiarity with a product.
Pricing l Product cost is based upon many factors. First and foremost is material cost. Material cost is based on the price of the raw material used to fabricate the product. In most cases the material is purchased in bulk to bring cost down. In this assignment all cost calculations are based on the material cost.
Pricing / Material Cost l l Figure out how much of each material you actually used to create your product. Calculating the total amount of material needed for each type of material. (You will need to break it down into how many feet, or inches of any particular material you need. ) l l Multiply the amount of material needed (per/foot) by the cost of the material (per/foot). Add all the material cost together, this will give you the base
Pricing / Material Cost Material need to make a widget 2”x 4’ = 4 ft of 2”x 4’ material 2”x 4” material is $0. 20 per/ft 4 x $0. 20 = $0. 80 + $2. 52 = $3. 32 (BMC) 1”x 36” dowel Rod = 36” of dowel rod 1” material = $0. 07 per inch 36 x $0. 07 = $2. 52 To add in the cost of the fasteners and glue multiply the BMC by 5% to get the total material cost (TMC). (BMC x 1. 05 = TMC). $3. 32 (BMC) x 1. 05 = $3. 49 (TMC)
Pricing / Labor l The cost of labor is another factor that must be factored in when determining the final cost of material. Labor includes the cost of hiring personnel (wages, insurance, and health coverage), insurance, utilities, and the purchase of equipment and facilities.
Pricing / Labor l Labor costs can fluctuate periodically, and depending on the industry can be 20 – 60% of the final cost of the product. In this assignment the total labor cost (TLC) will be calculated by multiplying the TMC by 20%. $3. 49 (TMC) x 0. 20 = $0. 70 (TLC)
Pricing / Profit l Profit is the amount of money your company makes above and beyond the cost of doing business. Profit itself is determined by the supply and demand of your product.
Pricing / Supply & Demand l l If everyone wants what you are making and there is a limited supply (Demand is High / Supply is Low) you can create a large profit margin (percentage of profit per unit sold). If some people want your product and there a lot of them (Demand is Low / Supply is High) the profit margins will be considerably less.
Pricing / profit margins l l Sometimes profit margins can be raised several hundred times. This is called “setting the price to what the market will bear”. A company sets it price as high as possible, while still having the consumer think that they are paying a fair price. Example. Mc. Donalds sells the large drink for a $1. 50. However, it only costs them $0. 34 to produce the soft drink (cup included). That is approximately a 400% profit margin.
Pricing / Profit In this assignment profit will be determined by adding the TMC and the TLC, then multiplying the sum by a predetermined profit percentage (PP), the product of this equation will be the profit margin (PM). $3. 49 (TMC) + $0. 70 (TLC) x 45% (PP) = $2. 05 (PM) To calculate the final total cost, simply add the TMC + TLC and the PM together. $3. 49 (TMC) + $0. 70 (TLC) + $2. 05 (PM) = $6. 24 Most times prices are rounded off to make the price more appealing, or to make it easier to purchase