The Role of the….

Basic Terms Producers – businesses that make goods and services Consumers – people who buy the goods and services Marketplace – location where producers and consumers come together Consuming habits tell business what customers want, when, how much they want to pay Businesses used to dictate to consumer what they wanted, but now because of competition, consumers drive the market

Shift from businesses controlling the market, to consumers controlling, took place in the 1950’s Obsolete – Goods that are no longer wanted by consumers What are obsolete goods that you can think of? Pricing power – When businesses are in control and can charge high prices, as well as raise prices See discussion p. 13

Consumer Influence on Service Consumer purchasing power – Customers who have the pwer to choose where they will buy goods/services Increasing choices for consumers force businesses to improve Consumers are thought to be in charge of the market today

Starting Out Entrepeneurs must be: self-confident, innovative, self-disciplined, able to manage others Needs – Things that are necessary for survival (food, water, clothing, shelter) Wants – Things not necessary for survival, but add comfort and pleasure to our lives Identify the competition, and how you will attract customers See pg. 18 for Food and Beverage illustration

Consumer Interest Existing businesses come up with ‘new and improved’ products to generate interest Businesses also try to promote existing products through advertising Research is critical to understanding consumers Timing is also key to fulfilling consumer demands

Good Business Decisions Inventory – Called stock; quantity of goods on hand Too much inventory = money tied up Too little inventory = consumer unhappiness Businesses must determine how much inventory to keep on hand (accountants!) Use the Decision Making Model for Inventory

Inventory Decision Making Model 1.What decision has to be made? How many of one type of product should be kept on hand to satisfy consumer demand? 2.Identify the alternatives. E.x. how many of each model should be on hand? 3.Evaluate the advantages and disadvantages of each alternative 4.Make a decision and take action 5.Evaluate the decision