Economics of Marketing What Is Marketing? Economics of Marketing 2

Chapter Objectives Define marketing. Explain the marketing concept. Define demographics. Explain the marketing mix. Explain economics and free enterprise. Identify intellectual property rights. Explain the different types of business ownership. Explain the economic impact of sports and entertainment. 3

The Importance of Sports and Entertainment Marketing The sports and entertainment industries have become two of the most profitable industries in the United States. 4

Marketing Defined Because of competition, an organized marketing plan is essential. marketing the process of developing, promoting, and distributing products, or goods and services, to satisfy customers’ needs and wants Goods are tangible items, such as sports equipment. Services are intangible products, such as theater tickets. 5

Marketing Defined Successful organizations follow a marketing concept. marketing concept idea that organizations need to satisfy their customers while also trying to reach their organizations’ goals The first step in creating a marketing concept involves identifying the market. market potential customers with shared needs who have the desire and ability to buy a product 6

Marketing Defined Organizations spend lots of money to learn about their customers needs and wants. needs a lack of basic necessities such as food, clothing, or shelter wants things that people desire based on personality, experiences, or information about a product Having a clear picture about the target market makes developing a marketing plan easier to accomplish. target market specific group of consumers that an organization selects as the focus of its marketing plan 7

Marketing Defined The United States census provides useful information about the demographics of our nation. demographics statistics that describe population in terms of personal characteristics Businesses use demographic information to develop their marketing plans. 8

The Marketing Mix Marketers use a tool to develop strategies called the marketing mix. marketing mix a combination of four basic strategies known as the 4 Ps—product, price, place, and promotion To be effective, all 4 Ps in a marketing plan must focus on the target market. 9

The Marketing Mix Marketing mix strategies involve product, price, place, and promotion decisions. channel of distribution path a product takes from the producer to the consumer Place decisions include determining a channel of distribution. 10

The Marketing Mix—The Four Ps involve the goods, services, or ideas used to satisfy consumer needs. Product Decisions P involve the exchange process between the customer and the seller. Price Decisions P involve making the product available to the customer. Place Decisions P P involve how the goods or services are communicated to the consumer. Promotion Decisions 11

Buzz Power “Word-of-mouth ramped up to warp speed” is one definition of Internet buzz, says BusinessWeek. It’s the marketing by-product of e-mail, instant messaging, bulletin boards, and chat rooms. Operating an e-tail business on an electronic channel—the Web—can be costly, due to design, delivery, returns, and operating expenses. Though Many larger dot-com companies crashed in the 1990’s, small stores like Harris Cyclery of West Newton, Massachusetts, actually increase sales using a basic Web site. Today, a third of Harris’s bicycle business rides in on the Web to get hard-to-find parts and personal service. Describe an e-business’s home page to your class after viewing one through marketingseries.glencoe.com. The influence of buzz is so powerful that researchers monitor consumer opinions online. Positive buzz can increase profits for products, books, films, TV, music, and fashion, and determine popularity of athletes and celebrities. With public resistance to banner ads and pop-ups, a little buzz “zooms” a long way. For more information on sports and entertainment marketing, go to marketingseries.glencoe.com. 12

Define marketing and the marketing concept. 1. Define marketing and the marketing concept. Explain the concept of a market. What is the marketing mix and what is its relationship to a target market? 2. Quick Check Answers Marketing is the process of developing, promoting, and distributing products or goods and services. Marketing concept is how organizations satisfy their customers while also trying to reach their organization’s goals. A market consists of people with shared needs who have the desire and ability to buy a product. The marketing mix is a combination of four basic marketing strategies—product, price, place and promotion. To be effective these must focus on the target market. 3. 13

Economic Basics The economics of marketing sports and entertainment have a great impact globally as well as locally. economics the study of the choices and decisions that affect making, distributing, and using goods and services A measure of economic growth is the gross domestic product (GDP). GDP (gross domestic product) the value of all goods and services produced within a country 14

Economic Basics Profit allows companies to stay in business. profit the money left after all costs and expenses of a business are paid As with most businesses, there is a financial risk involved with sports and entertainment events. competition as a characteristic of free enterprise, the struggle among companies for customers Competition is the basis of the free enterprise system. 15

Property Ownership and Intellectual Property Rights Inherent in the free enterprise system is the right to own property and start a business. copyright legal protection of a creator’s intellectual property or products Intellectual property rights are protected by the following: Copyrights Patents Trademarks 16

Types of Business Ownership Types of business ownership include: Sole proprietorship Partnership Corporation Subchapter S Corporation 17

Economic Impact Locations benefit economically from sports and/or entertainment events and marketing. On a local level, sporting events and entertainment venues economically impact areas in which they operate because they draw audiences. Hosting the Olympics has a huge economic impact on a region before, during, and after the event. 18

Explain the concept of economics. 1. Explain the concept of economics. What are three characteristics of a free enterprise system? What is the economic impact of sports and entertainment events on a community? 2. Quick Check Answers It is the study of the choices and decisions that affect making, distributing, and using goods and services. profit, risk, and competition The economic impact of sports and entertainment events on a community is usually positive; communities and related businesses make money. 3. 19

Checking Concepts 1. Define and give an example of the term marketing. The marketing concept states that organizations need to satisfy their customers while also trying to reach their organization’s goals.  2. The marketing mix is a combination of product, price, place, and promotion decisions.  4. Demographics are statistical characteristics that help describe people and target markets. 3. Marketing is the process of developing, promoting, and distributing products, or goods and services, to satisfy customer needs and wants.  1. 2. Explain the marketing concept. Checking Concepts Answers Marketing is the process of developing, promoting, and distributing products, or goods and services, to satisfy customer needs and wants.  The marketing concept states that organizations need to satisfy their customers while also trying to reach their organization’s goals. Demographics are statistical characteristics that help describe people and target markets. The marketing mix is a combination of product, price, place, and promotion decisions.  3. Describe the concept of demographics. 4. Explain the marketing mix. continued 20

Checking Concepts Explain the concept of economics. 5. The four types of business ownership are sole proprietorship, partnership, limited partnership, and corporation. 6. Intellectual property rights are intangible and are protected by patents, copyrights, and trademarks. 7. Economics is the study of the choices and decisions that affect making, distributing, and using goods and services. 5. Name four types of business ownership. 6. Checking Concepts Answers Economics is the study of the choices and decisions that affect making, distributing, and using goods and services. The four types of business ownership are sole proprietorship, partnership, limited partnership, and corporation. Intellectual property rights are intangible and are protected by patents, copyrights, and trademarks. Define intellectual property rights. 7. continued 21

Checking Concepts Critical Thinking 8. Sports and entertainment local events draw audiences. That means workers are needed for crowd control, ticket collection, concession sales, and security. These customers may also hire local people to work for them. Nationally, events that increase tourism contribute to the GDP. 8. 8. Describe how sports and entertainment impact national and local economies. Checking Concepts Answers Sports and entertainment local events draw audiences.  That means workers are needed for crowd control, ticket collection, concession sales, and security.  These customers may also hire local people to work for them.  Nationally, events that increase tourism contribute to the GDP. 22

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