Unit 2. Production, mass production and marketing. Marketing mix. Lean operations and JIT.
Learning objectives
1. Explain the necessity of mass production for the contemporary world
2. Give the definition of the term “marketing”
3. Summarize 5 M’s of operations management
4. Describe 4 P-s of marketing
5. Outline the benefits of lean operations
Terms to learn________________________________________________________
Craft manufacturing, mass production, lean production, JIT, TQM, marketing mix, placement, pricing, promotion, publicity, unit cost, mark-up, net profit, goodwill, branding, workforce, inventory, market penetration
Pre-texts discussions
1. What is craft manufacturing?
2. Why is marketing necessary for businesses?
3. Why is marketing a very complex activity?
4. How does branding help to increase sales?
Reading______________________________________________________________
Text I.
In many industries, craft manufacturing began to be replaced by mass production in the 19th century. Mass production involves producing goods in high volume with low variety – the opposite of craft manufacturing. Customers are expected to buy what is supplied, rather than goods made to their own specifications. Producers concentrated on keeping costs, and hence prices, down by minimizing the variety of both components and products and setting up large production runs. They developed aggressive advertising and employed sales forces to market their products.
Mass production worked well as long as high volumes of mass-produced goods could be produced and sold in predictable and slowly changing markets. However, during the 1970s, markets became highly fragmented, product life cycles reduced dramatically and consumers had far greater choice than ever before.
An unforeseen challenge to Western manufacturers emerged from Japan. New Japanese production techniques, such as total quality management (TQM), just-in-time (JIT) and employee involvement were emulated elsewhere in the developed world, with mixed results.
Production management can be summarized by the 5 M’s:
· men refer to HR
· machines refer to the equipment and technology
· methods refer to the use of the machines
· materials refer to raw materials and information
· money refers to capital.
Text II. Marketing mix
The marketing mix deals with the way in which a business uses price, product, distribution and promotion to market and sell its product. The basic marketing mix is often referred to as the "Four P's" - since the most important elements of marketing are concerned with:
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· product - the product (or service) that the customer obtains
· pricing - how much the customer pays for the product
· placement – how the product is distributed to the customer
· promotion - how the customer is found and persuaded to buy the product
It is known as a "mix" because each ingredient affects the other and the mix must overall be suitable to the target customer. An effective marketing mix meets customer needs, achieves marketing objectives, creates a competitive advantage.
The marketing mix for each business will vary; it will also vary over time. For most businesses, one or two elements of the mix will be seen as relatively more important than the others.
Text III. Lean production
Lean operation is a means of running an organization by focusing on providing greater customer satisfaction while using as few resources as possible. The objective of lean operations is twofold: creating value for customers and eliminating waste. Companies that use lean operations are highly concerned with efficiency. There are several areas of waste that companies should consider reviewing when taking on lean operations. They are:
· Jobs: Salaries and benefits are not cheap for an organization. Lean operations identify that each employee is doing a necessary job to the best of their ability.
· Inventory: Having too much stock on hand is a waste of money for a company because it costs money to store inventory. The company should keep an optimal level of inventory, and no more and no less, to ensure lean operations.
· Production times: Inefficiency and waste can rear their heads in the production process. Lean operations require that the company eliminates any inefficiencies or delays in the production process.
· Transportation: A company shouldn’t be transporting goods unnecessarily or transporting them at the wrong times. It can cause inventory problems, or simply incur unnecessary expenses.
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Multiple Choice Questions______________________________________________
1. All of the functions involved in producing and delivering goods or services, including all support functions are called:
a. manufacturing
b. operations
c. mass production
d. promotion
2. A system permitting the manufacture of large quantities of identical goods using repetitive actions by people or machines is called:
a. manufacturing
b. operations
c. mass production
d. assembly line
3. An approach that tries to match the output of manufacturing with market demand, in order to minimize inventories is called:
a. JIT
b. LLC
c. MNC
d. GDP
4. Marketing is the process which aims at:
a. production
b. profit making
c. satisfaction of customer needs
d. selling products
5. The term marketing refers to:
a. advertising and publicity
b. selling new products
c. sales planning, strategy and implementation
d. a philosophy that stresses customer value and satisfaction
6 . Which one of these is NOT one of the four P-s of the original marketing mix:
a. placement
b. publication
c. pricing
d. promotion
7. The way how the product is distributed to the customer is called:
a. promotion
b. packaging
c. pricing
d. placement
8. Email marketing is an example of:
a. sales promotion
b. direct marketing
c. sponsorship
d. branding
9. Placement focuses on distribution. Which of the following is not part of place/placements?
a. channels of distribution
b. convenience or accessibility value
c. logistics
d. all are part of placement
10. Just-in-Time production implies:
a. that products will be pulled through the operations system to meet customer demand
b. a wide range of suppliers will be needed to meet increased demand
c. processes must be controlled using computer-based production systems
d. an increase in total inventory is expected
Vocabulary test_______________________________________________________
1. American companies have developed versions of JIT, which they call … production, or stockless production, or continuous flow manufacture.
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A) line B) low C) lane D) lean
2. …industries cast workers into unemployment, misery and personal indignity.
A) lazy B) idle C) ideal D) standing
3. They opened one more gate to speed up the … of traffic.
A) congestion B) stream C) flow D) density
4. …shows customer’s satisfaction and loyalty to a certain company.
A) favor B) fame C) goodwill D) gratitude
5. If the solution to the problem is not found, then relative earnings would probably ….
A) soar B) leap C) stumble D) plummet
6. It’s not good business practice to eliminate necessary positions or to … your workforce.
A) press B) squeezeC) clench D) convert
7. Eliminating inefficiencies such as unnecessary meetings and production issues is a … way to make workers happier.
A) sure B) unsure C) surefire D) sheer
8. These principles that form the … of any lean operations.
A) backbone B) background C) drawback D) backup
9. Operations management …… perfection, improving everything that you can about the product and process.
A) suffers from B) caters for C) hunts for D) strives for
10. The main pillars of JIT are supported by the … of all staff within the company.
A) ignorance B) participation C) publicity D) indifference
Translating__________________________________________________________
Use the following words and expressions:
· Spare- запасной
· To be idle- простаивать
· Provision – положение, пункт
· Current - действующий
· Inventory - запасы сырья
1. Из-за нехватки квалифицированных рабочих и недостатка запасных частей, оборудование на предприятии простаивало.
2. Соглашение содержит ряд положений, которые облегчают поток товаров через границу.
3. Этот прогноз основывается на действующем объёме поставок в страну.
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4. Компания должна сохранять оптимальный уровень запасов сырья, для того, чтобы обеспечивать производство.
5. Такое производство достигается с помощью снижения расходов на сырьё.
6. Ценообразование включает в себя: номинальную стоимость производства товара, маркетинговые расходы, уплату налога и наценку - чистую прибыль, которую зарабатывает компания.
7. На этапе разработки нового продукта маркетологам необходимо просчитать «жизненный цикл продукта».
8. При ценообразовании используется стратегия «проникновения на рынок», когда новый продукт получает долю на рынке и потребителей за счет более низкой, чем у конкурентов, цены. В дальнейшем, цена может увеличиться.
Writing______________________________________________________________
1. Marketing and promotion is the key to a successful business. To what extent do you agree?
2. Discuss the role of JIT systems, relative to inventory reduction, in the identification of problems for continuous improvement. Are there any down sides in the system?
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