Agenda Chapter 1.2 Notes Mini Activity – Functions of Marketing

The Importance of Marketing Chapter 1, Section 1.2

Key Term Utility

Think Critically… Take 2-3 minutes to brainstorm why prices drop when products become more popular… We will discuss shortly! http://www.youtube.com/watch?v=hsEUBLIJvmE

Why Marketing is Important… Micro-level: It can positively affect your life Macro-level: It provides the means for competition to take place in the marketplace, thus helping the economy as a whole

Economic Benefits of Marketing New and Improved Products: In a competitive marketplace, businesses try to create new or improved products at lower prices than their competition. Example: Pepsi vs. Coke Diet Pepsi Max has about one-third more caffeine than Diet Mountain Dew Diet Coke Plus is supposed to be “good” for you, supplementing the drink w/ vitamins

Economic Benefits of Marketing, cont. Lower Prices: Marketing activities increase demand and this helps to lower prices When demand is high, manufacturers can produce products in larger quantities Unit costs are reduced

Economic Benefits of Marketing, cont. Added Value and Utility: Competition forces companies to be efficient and responsive to consumers Competition also forces companies to TRY TO ADD VALUE to a consumer’s shopping experience Example: U.S. Bank offers online banking, a 24- hour customer service hotline, and free check cards

Economic Benefits of Marketing, cont. Utility Definition: Added value in economic terms Utilities are the attributes of a product or service that make it capable of satisfying a consumers’ wants and needs Five economic utilities involved with all products Form Place Time Possession Information

Form Utility Changing raw materials or putting parts together to make them more useful. (i.e., making or producing things) Example: zipper spool of thread three yards of cloth --------------------------- Some Value Example: creating a jacket from these materials -------------------------- MORE Value!

Place Utility Involves having a product where customers can buy it. Businesses study consumer shopping habits to determine the most convenient and efficient locations to buy products. Examples: Catalogs Retail Stores (Brick & Mortar) Internet (Click & Order) Case Study Example: Macy’s They have retail stores, catalogs, and a pretty awesome website!!

Mini-Project Visit my website and refresh what you need for your “Marketing Functions – Mini-Project” This is due next class – Tuesday, Aug. 28th

Agenda Review Finish Chapter 1.2 Notes Utility Activity Professional Development (if time) **Note: Quiz on Thursday!! Remember, it’s Open Note!! **1st Test: Tuesday, Sept. 3rd

Review What are three economic benefits of utility? New and improved products Lower prices Think iPhone Added value Paying bills online at U.S. Bank

What is utility? Added value in economic terms

What is form utility? Changing raw materials or putting parts together to make them more useful. (i.e., making or producing things) Example: Baskin Robbins turning milk, sugar, cream, and some flavoring into ice cream

What is place utility? Involves having a product where customers can buy it. Businesses study consumer behavior in order to create the most convenient and efficient shopping experience possible.

Three (3) slides Review Activity Now on to the NEW stuff!... Three (3) slides Review Activity

Time Utility Having a product available at a certain time of year or a convenient time of day Examples: Gold’s Gym staying open 24 hours Starbucks offering the pumpkin spice latte from September thru February

Possession Utility The exchange of a product for money There are many variations today: Cash Personal checks Credit and Debit cards Layaway and Installment Plans (delayed possession for gradual payment) Each option adds value, as it gives the customer greater flexibility (i.e., greater opportunity to BUY)

Information Utility Involves communication with the consumer Examples: Salespeople provide information by offering features and benefits of products Advertising communicates messages about specials, how much a product costs, and sometimes where to buy the product Packaging and labeling inform consumers about qualities and uses of a product Websites provide detailed information about their companies and their products

Review Questions… Which utility is added by drive-through windows at Starbucks? How does marketing help to lower prices?

Activity: - Here’s where the rubber meets the road… Activity: - Here’s where the rubber meets the road… 1) You are responsible for creating a PPT that shows how businesses utilize each utility in “real life” A) Example: Baskin Robbins turning milk, sugar, cream, and some flavoring into ice cream B) Print it out on 5 slides per page and three-hole punch to put it in your binder!!