Marketing and Economics
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Transcript Marketing and Economics
Chapter 3
Marketing Begins With
Economics
Scarcity and Private Enterprise
Identifying the basic economic problem
How our private enterprise economy works.
Understanding Economics
Creativity fuels effective marketing methods
Generating the customer’s awareness.
Effective marketing relies on the principles
and concepts of economics.
How simple decisions are made.
Understanding your competition helps improve
decision making skills.
Basic Economic Problem
Unlimited wants and needs of the
consumer.
Not enough resources to satisfy the needs
and wants of the consumer.
Scarcity
How will limited resources be used to satisfy
people’s wants and needs?
Trade-Off or Opportunity Cost
Something equal value or the next best
alternative.
Decision Makers
Who actually makes the decisions?
Economic Systems:
Controlled Economy
Government Controlled
Traditional Economy
Doing things how they have always been done.
Market Economy
Private Ownership
Mixed Economy
Combines controlled and market economy.
Private Enterprise System
Based on independent decision by a
businesses and/or a consumers with only a
limited government role regulating those
relationship.
Characteristics
Resources are owned by the individual.
Use of profit motive to generate more profit.
Consumers purchase goods that will satisfy
their needs.
Consumers use value in deciding what to
consume.
Demand
Supply
What the consumer is willing to buy?
$ =
Demand
What the producer is willing to produce?
$
=
Supply
Government
Allows consumer and producers to make decisions without any
interference.
Ensure equal treatment by enforcing laws and regulations.
Economic Forces
Decision-Making Process in a Private
Enterprise System determines how a
market operates.
See a need for a business opportunity,
pursue that opportunity.
Economic Resources
4 Factors of Production:
Natural: Comes from the earth
Labor: Human action involved in producing
goods and services.
Captial: Building, Equipment, etc…
Entrepreneurial: Idea for a product or service.
Types of Economic Conditions
Define competition and monopoly.
Identify the characteristics of oligopolies
and monopolistic competition.
All In….or Not
Competition affects consumers and
suppliers alike…
Excessive competition limits increase in
prices
Two characteristics to determine economic
competition:
Number of firms competing in the market
Similarity between the products
Pure Competition
Large number of suppliers offering very
similar products.
Price
Quantity
Monopoly
One supplier offering a unique product.
Price
Quantity
Monopoly
Government attempts to control any
business to maintain their products at a
reasonable price.
Between the Extremes
Oligopoly
Few businesses offer very similar products and
services.
Competitive market gives the consumer a
choice about what they want.
Oligopolies
One business in an oligopoly will have little
influence over the price it can charge.
Price
Quantity
Oligopolies
When there are a few firms in an oligopoly,
the total industry has much more control
over price.
Price
Quantity
Monopolistic Competition
Many firms competing with products that
are somewhat different.
Monopolistic Competition with few
differences amongst products.
Price
Quantity
Great product differences, businesses
have much more control over prices.
Price
Quantity
Understanding Competition
Businesses in pure competition will not be
able to exercise much control in the market.
Marketers will look for ways to differentiate
a product similar to the competitions.
Enhancing Economic Utility
Define types of economic utility
Explain how marketers use utility to
increase customer satisfaction.
Utility = Satisfaction
Economic Utility:
Amount of satisfaction a consumer receives from
the consumption of particular products or
services.
Types of Utility
Form Utility:
Time Utility:
Making the product or service available when the
consumer wants it.
Place Utility:
Change in the tangible part of a product or services.
Where the product and services is available.
Possession Utility:
Affordability of the product or service.