Transcript Marketing is All Around Us 1.2

Chapter 1
marketing is
all around us
Section 1.1
Marketing and the
Marketing Concept
Section 1.2
The Importance of
Marketing
Section 1.3
Fundamentals of
Marketing
Section 1.2
The Importance of Marketing
Do NOW
What promotions did you see the last time you
went shopping?
How did these promotions affect your decision to
buy?
Section 1.2
The Importance of Marketing
• Describe the benefits of marketing.
• Explain the concept of utility.
• Cite examples of types of utilities.
Section 1.2
The Importance of Marketing
Marketing supports competition and offers
benefits to consumers.
Section 1.2
• utility
The Importance of Marketing
Economic Benefits of Marketing
• Marketing is a global force that affects economies and standards of
living around the world.
• Marketing provides the means for competition which
• Encourages companies to create new and improved products
• Reduces prices
• Adds value (Economic Utility) to the shopping experience
New and
Improved
Products
Lower
Prices
Economic
Utility
New and Improved Products
• To gain a competitive advantage over other companies, businesses
must continually look for ways to satisfy consumers’ wants and needs.
• As peoples desires change, a larger variety of goods and services are
offered to meet those wants and needs
• Competition fosters new ideas
• Businesses must constantly update and improve products to stay
ahead of their competition
Lower Prices
• Marketing tends to lead to higher demand for products which results in
lower prices
• Law of supply and demand:
• Demand goes  Price goes 
• When demand is high, manufacturers can produce products in
larger quantities which reduces the unit cost of each product.
The IBM 610 Auto-Point Computer
Cost: $55,000 (in 1957)
13-inch MacBook Pro
Cost: $1,300 - $1,800 (in 2015)
Unit Cost Math Problem
• If it costs a company $300,000 in fixed costs (such as rent) to
produce its products and the company increases production from
15,000 to 150,000 how much less could the company afford to
price their products at?
• 15,000 Units w/ $300,000 fixed costs
• $300,000 ÷ 15,000 units = $20 per unit
• 150,000 Units w/ $300,000 fixed costs
• $300,000 ÷ 150,000 units = $2 per unit
• The fixed cost per unit
decreased by $18
• If the product cost $65
originally, it can now be sold
for $47
Economic Utility
• Economic Utilities
• The attributes of goods or services that make them capable of
satisfying consumers’ wants and needs
• Changing the economic utilities of goods and services
increases value and enhances satisfaction to the consumer
Section 1.2
The Importance of Marketing
Form
Utility
Changing raw materials into usable goods or putting
parts together to make them more useful
Place
Utility
Having a product where customers can buy it
Time
Utility
Having a product or service available at a certain time
of year or a convenient time of day
Possession
Utility
The exchange of a product for money
Information
Utility
Communication with consumer
Form Utility
• Offering a movie in DVD format is an
improvement over the same movie in VHS format.
• A DVD is easily transported – can be mailed
(Netflix) – where as a VHS film is transported in a
bulky container.
Place Utility
• Consumers want convenience when shopping
• Companies study consumer shopping habits to determine the
most convenient and efficient locations to sell products
• Retail store, catalogue, online, phone app, TV rental
Time Utility
• Consumers want products available to them at a time when it is
convenient for them
• Marketers increase the value of products by extending the times
when they are available
• Price Chopper - open 24 hours a day
• TD Bank - open 7 days/week and has extended hours each day
• Black Friday shopping hours – have been extended into
Thursday night
Possession Utility
• In order to ensure an exchange occurs, marketers may accept
alternative to cash.
• Checks
• Debit cards
• Credit
• Installment plans
• Layaway
• Rent - To – Own
• Lease
Information Utility
• Sales people provide information to consumers
• In-store displays communicate information
• Packaging provides information about qualities and uses
• Labeling displays ingredient/nutritional
information/directions/safety
• Advertising informs about products, where to buy products, and
how much they cost
• Manufacturers provide owners manuals
• Businesses have websites to inform consumers
Section 1.2
The Importance of Marketing
Section 1.2
1.
Explain the role that marketing plays in an economy.
Marketing plays an important role in an economy because it provides
the means for competition to take place. In a competitive marketplace,
businesses try to create new or improved products at lower prices than
their competitors. Those efforts force them to be efficient and
responsive to consumers. In addition, businesses look for ways to add
value to a consumer’s shopping experience.
Section 1.2
The Importance of Marketing
Section 1.2
2.
How does increased demand for a product help lower its price
to consumers?
When demand is high, manufacturers can produce products in
larger quantities. This reduces the unit cost of each product. This is
because the fixed costs (such as the rent on a building) remain the
same whether the company produces 1,500 units or 15,000 units.
When a company produces a larger quantity of a product, it spends
less per unit on fixed costs. The company can charge a lower price
per unit, sell more units, and make more money.
Section 1.2
The Importance of Marketing
Section 1.2
3.
Identify the five economic utilities
Form, Place, Time, Possession, Information
Economic Utility Activity
Product/Service #1 ____________________________________________
Briefly describe the 4 types of utility for this product/service
1. Form utility
2. Time utility
3. Place utility
4. Possession utility
5. Information
How could one of the above utilities be improved upon? BE SPECIFIC!
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