CHAPTER 2 MARKETS. Definition of Markets Consumer Market Segments Gray Markets.

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Presentation transcript:

CHAPTER 2 MARKETS

Definition of Markets Consumer Market Segments Gray Markets

DEFINITION OF MARKETS Buyers Ability to Buy Willingness to Buy

BUYERS Consumer Markets Business Markets

CHARACTERISTICS OF MARKETS Consumer Business Many buyers Few buyers Smaller purchases Larger purchases Direct demand Derived demand Geographically Dispersed Geographically concentrated

DERIVED DEMAND EXAMPLES  Intel  U.S. Steel  Component parts

ABILITY TO BUY  Income  Credit/Debit  Bartering

CONSUMER INCOME Gross Income – Total income before any deductions Disposable Income – Total income minus taxes Discretionary Income – Total income minus taxes and basic needs

U.S. RETAIL SALES BY PAYMENT Store Payment Cash 60% 20% Checks 30% 0% Credit/Debit Cards 10% 80% 100% 100%

AVERAGE CREDIT CARD DEBT (per U.S. Household) 1996 $5, $8, $10, ?

CREDIT/DEBIT PROBLEM Student Loans NINJA Loans Overdraft Fees

NINJA MORTGAGE LOANS IN CALIFORNIA No income No job No assets

PREPAID DEBIT CARDS Billion Billion

BARTERING Negotiated exchange of products and services for other products or services instead of cash or credit

BARTERING EXAMPLES Radio ads for Astros tickets Bartering on E-bay Showrooming Bartering

ULTIMATE BARTERING BY CALIFORNIA TEEN Started with a cell phone Ended with a Porsche automobile

WILLINGNESS TO BUY Consumer Spending U.S. Beverage Market U.S. Favorite Sport

CONSUMER SPENDING Category Examples Durable Goods Furniture, TV Nondurable Goods Food, Beer Services Travel, Education

U.S. BEVERAGE MARKET Beverage Milk 34% 13% Beer 14% 20% Soft Drinks 11% 36%

U.S. FAVORITE SPORT Time Pro Football Pro Baseball % 23% % 16%

CONSUMER MARKET SEGMENTS Geographic Demographic Lifestyle Cultural/Racial

GEOGRAPHIC MARKET SEGMENTS Cities Rural Areas Suburbs

DEMOGRAPHIC MARKET SEGMENTS Age Income Sex Education

LIFESTYLE MARKET SEGMENTS Harley-Davidson Motorcycles for Women Tattoos Condos for singles

CULTURAL/RACIAL MARKET SEGMENTS African American Hispanic Asian Gay

AFRICAN AMERICAN ENTREPRENEURS George Foreman Beyonce Knowles Jay-Z Oprah Winfrey

Hispanic Rice Users CubanPuerto RicanMexican White RiceWhite RiceMexican Rice Black BeansPink BeansPinto Beans CrackersNoneTortillas

GROWTH OF IMMIGRANT ENTREPRENEURS IN HOUSTON Inexpensive real estate No zoning regulations Relatively low labor costs Affordable housing

GRAY MARKETS Buying in low-price markets and selling in high-price markets (concept of arbitrage)

GRAY MARKET EXAMPLES Wine Prescription Drugs College Textbooks