1. MARKETING BEGINS WITH ECONOMICS
CHAPTER 03
11/21/2018
MARKETING BEGINS WITH ECONOMICS
MARKETING

2. What is an economy? The way a nation makes choices.
These choices involve how the nation will use its resources to produce and distribute goods and services.

3. What Makes Up an Economy?
Resources/Factors of Production: All things used in producing goods and services
Land
Labor
Capital
Entrepreneurship

4. Land and Labor
Land: Everything on the earth in its natural state / the earth’s natural resources
Natural Resources!
Labor: All the people who work in the economy
Labor includes:
Full and Part-time Workers
Both the Public and the Private sector

5. Capital and Entrepreneurship
Capital: The money needed to start and operate a business; The goods used in the production process
Entrepreneurship: The skills of the people willing to risk their time and money to run a business

6. Scarcity Unlimited wants and needs but limited resources
FORCES US TO MAKE DECISIONS!
Drives economic choices
The basic economic problem

7. The Importance of Economic Understanding
The basic economic problem
Scarcity
Who makes the decisions?
Controlled economy (AKA Command Economies) —government
Free economy—individuals
Mixed economy—government and private enterprise

8. How Strong is an Economy?
In order to see how well an economy is doing we look at 3 things!
GDP: gross domestic product—how much is produced within a nations borders
GNP: Gross National Product—how much is produced by a nation including foreign production
Standard of Living: what people in that economy are used to having
Chapter 3

9. Economic Cycle Peak Recession Recovery Depression
Also known as the business cycle!
Recession: a period of economic decline; 6 months or less
Depression/Trough: a long recession; more than 6 months
Recovery/Expansion: a period of economic growth following a recession or depression
Peak: Height of economic prosperity
Peak
Recession
Recovery
Depression

10. Current Event Go to my teacher blog Assignment is under Unit 3
Focus on a resource!
Employment
Natural Resources
Droughts, oil

11. Where is America We are in a RECOVERY?
Why does it not necessarily feel like we are in a recovery?
How is this impacting businesses and their marketing activities here in town?
How is the recovery impacting businesses and marketing activities as a whole in the U.S.?

12. Supply and Demand

13. Supply/Demand
The 4 economic resources all go into creating products for consumers to buy in an economy
We measure the amount of product and the desire for a product in an economy through supply and demand

14. What is Supply and Demand?
Supply: How much of a product is available in relation to price
Demand: How much a product is desired by consumers in relation to price

15. Demand Curve for Movies Tickets
Price
$10.50
9.00
7.50
6.00
4.50
3.00
1.50
1,000
Quantity
2,000
3,000
4,000
5,000
6,000
7,000

16. Supply Curve for Movies Tickets
Price
$105 90 75 60 45 30 15
10,000
Quantity
20,000
30,000
40,000
50,000
60,000
70,000
80,000

17. Intersecting Supply and Demand
Supply meets Demand=
Market Equilibrium: The optimum price at which a product should be sold

18. Demand Curve for Tablets
Price
$2,100
1,800
1,500
1,200
900
600
300
100
Quantity (in 000s)
200
400
500
700
800

19. Supply Curve for Tablets
Price
$2,100
1,800
1,500
1,200
900
600
300
100
Quantity (in 000s)
200
400
500
700
800
Chapter 3

20. Market Price (Equilibrium) for Tablets
$2,100
1,800
1,500
1,200
900
600
300
100
Quantity (in 000s)
200
400
500
700
800
Demand
Supply
Market Price

21. Supply and Demand Activity Equilibrium--$4.00 at 5,000,000 cases
Chapter 3

22. Elastic and Inelastic Demand
Some products demand changes when price changes
Price goes up demand goes down
Price goes down demand goes up
THIS IS KNOWN AS ELASTIC DEMAND
Inelastic Demand
Some products demand does not change with increases in price
THIS IS INELASTIC
Example: gasoline

23. Review Questions What is an economy?
What are the 4 economic resources?
What are 3 indicators that show the strength of an economy?
Chapter 3

24. Types of Economies
Chapter 3

25. Types of Economies
Determined by how economy answers these three questions regarding resources:
What to make?
How to make it?
Whom to make it for?

26. Controlled/Command Economy
Government controls the economy and answers 3 economic questions
Countries with this economic system have a communist government

27. Free Economy/Market Businesses owned by individuals not government
Decisions are based on consumers
Countries with this type of economy are Capitalist!

28. Mixed Economies
Economies that contain elements of both free and controlled economies
Most countries are considered to have mixed economies but tend to lean more towards one type

29. Left of center but right of communism
Economic Spectrum
Command Economy
Communism
On the far left
Market Economy
Capitalism
On the far right
Socialism
Left of center but right of communism
Chapter 3

30. Economic Systems
Chapter 3

31. Socialism Increased government involvement in..
Individual lives and the economy
The government runs key industries
makes economic decisions
More social services for all and free or low cost medical care
Examples:
Canada, Germany, Sweden, Australia and Great Britain are all examples of socialist economies

32. Communism The government runs everything (Totalitarian government)
Only one political party, the Communist party, runs the government
All people able to work are assigned jobs – there is virtually no unemployment
The government assigns housing, schools, and occupations
There is little to no economic freedom
Examples
Cuba, North Korea

33. Capitalism
An government characterized by
private ownership of businesses
marketplace competition
The government is concerned about its people and takes care of those who cannot care for themselves
The political system
democracy
The United States and Japan are examples of a Capitalist Economy

34. America’s Private Enterprise Economy
In America we have Private Enterprise
Businesses are based on independent decisions by businesses and consumers
Creates additional resources

35. How strong is an economy?
GDP: how much is produced in a with in the borders of a nation in a year
GNP: how much is produced within the nation and by businesses owned by a nation in other countries
Includes foreign production
Standard of Living—what is the “norm” for people in that nation
Chapter 3

36. Economies In Transition
Economies change over time
China—transitioning from communist to socialist
State owned industries have been privatized (government owned businesses are sold to private citizens)
USA—how do you see our system transitioning?

37. Opening Take a graphic organizer and note guide from the round table
Chapter 3

38. Economic Utility and Marketing

39. Pure Competition
The market condition where there is a large number of suppliers offering very similar products
Price
Quantity

40. Monopoly
The market condition in which one supplier offers a unique product
Price
Quantity

41. Oligopolies
The market in which a few businesses offer very similar products or services
Price
Quantity

42. Monopolistic Competition
The market in which there are many firms competing with products that are somewhat different.
Price
Quantity

43. Each player is given $1500 divided as follows: 2 $500's, 2 $100's, 2 $50's, 6 $20's, 5 $10's, 5 $5's, and 5 $1's. All remaining money and other equipment go to the Bank. Select as Banker a player who will also make a good Auctioneer.
Chapter 3

44. Utility Means Satisfaction
Economic utility
Form utility
Time utility
Place utility
Possession utility
Information utility

45. Utility The functions of marketing add value to a product
The added value is called Utility
Utilities are the attributes of a product or service that make it capable of satisfying consumer’s wants and needs
There are 5 utilities involved with all products
Form
Time
Place
Possession
Information

46. Form Utility
Involves changing raw material or putting parts together to make them more useful
Form Utility deals with making or producing things

47. An Example of Form Utility
A Tree
In its original state it has value as an object of beauty,
supplies oxygen, prevents soil erosion, and provides a home for animals.
When a tree is cut down and used in making other products its usefulness changes. The raw material becomes part of a new product that has a different value
Form Utility takes place also when a manufacturer assembles parts into a product pieces of wood assembled into furniture

48. Place Utility Having a product where customers can buy it
Businesses study consumer shopping habits to determine the best sales outlets for their products
Outlets include catalogs, the internet, retail stores

49. Time Utility
Having the product available at a certain time of the year or a convenient time of day
Time Utility requires the marketer to plan ahead in order to have the right product at the right time

50. Possession Utility The exchange of a product for some monetary value
Alternatives to cash may be accepted these include:
In business to business situations companies also grant customers credit
Credit Cards
Checks
Possession Utility is involved every time legal ownership of a product changes hands

51. Information Utility Involves communication with the consumer
Examples of sources of information:
Packaging
Tags and Labels
Advertising
Owner’s Manuals
Websites

52. Benefits of Product Utility
Added value Increases demand
When a product becomes popular
the number of suppliers of the product will increase
this increases competition
reduces the price
Competition also makes manufacturers improve products to better satisfy customer wants and needs