1. Economic Benefits of Marketing

2. Economic Benefits of Marketing
Why do customers care about marketing?
1) ADDS VALUE
Bridges the gap between:
MARKETING
- SELLER -
Making the Product
- CUSTOMER -
Buying the Product

3. Economic Benefits of Marketing
Why do customers care about marketing?
2) Reduces Prices for products / services
3) Creates NEW and IMPROVED products

4. Economic Benefits of Marketing
Why do customers care about marketing?
1) ADDS VALUE Makes Products More Useful
FORM
INFORMATION
Economic Utility
PLACE
TIME
POSSESSION

5. Economic Benefits of Marketing
FORM UTILITY
Changing raw materials or putting parts together to make them more useful.
Example: The parts of a lounge chair— the wood frame, the fabric, the glue and nails, and the reclining mechanism—are less useful by themselves. Putting them together adds form utility.
NOTE: This is a manufacturing function
NOT MARKETING function.

6. Economic Benefits of Marketing
PLACE UTILITY
Having Product Where Customers Can Buy It
Example: Selling directly to the customer through catalogs.
Example: Selling to customers over the internet.
Example: Having product available in your area.

7. Economic Benefits of Marketing
TIME UTILITY
Having product available at a time convenient for customers
Example: Retailers offer large supplies of backpacks in the late summer, near the beginning of the school year.
Example: Convenient Shopping Hours

8. Economic Benefits of Marketing
POSSESSION UTILITY
Exchange of a product for some monetary value.
Example: Taking credit cards and checks rather than just cash enables customers to buy products.
Example: Offer installment or layaway plans.

9. Economic Benefits of Marketing
INFORMATION UTILITY
Providing information so the customer is comfortable buying.
Example: Salespeople explain features of
products.
Example: Packaging explains qualities and uses.
Example: Advertising informs consumers about products.

10. Economic Benefits of Marketing
2) Lower Prices for Consumers
hmmmm…HOW does marketing lower prices?
Demand Increases
Lower Fixed Costs
Produce More
Demand Increases
Lower Prices
Competitors Enter

11. Economic Benefits of Marketing
LOWERING PRICES (COSTS)
When demand is high,
manufacturers make larger quantities,
which reduces the unit cost of each product.
Example: Assume fixed costs are $20,000:
Quantity Produced Fixed Cost Per Unit
10, $ 2.00
100,000 $ 0.20

12. Economic Benefits of Marketing
3) New and Improved Products
Marketing Increases Demand
More Competitors Enter
Find New Ways to Attract Customers

13. Economic Benefits of Marketing
Why do customers care about marketing?
SUMMARY
Makes Product More Useful (Adds Value)
Economic Utility
Lowers Prices
Reduced Unit Costs and Competition
New and Improved Products
Competition Breeds Innovation

14. Economic Benefits of Marketing
Reviewing Key Terms and Concepts - Quiz
1. What is meant by the economic concept of utility?
2. Which economic utility is not classified as a marketing utility? Why?
3. Besides added value, what are two other benefits of marketing?