1. CHAPTER 2 MARKETS

2. Definition of Markets Consumer Market Segments Gray Markets

3. DEFINITION OF MARKETS Buyers Ability to Buy Willingness to Buy

4. BUYERS Consumer Markets Business Markets

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

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

7. ABILITY TO BUY  Income  Credit/Debit  Bartering

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

9. U.S. RETAIL SALES BY PAYMENT Store Payment 1995 2010 Cash 60% 20% Checks 30% 0% Credit/Debit Cards 10% 80% 100% 100%

10. AVERAGE CREDIT CARD DEBT (per U.S. Household) 1996 $5,900 2001 $8,200 2008 $10,600 2014 ?

11. CREDIT/DEBIT PROBLEM Student Loans NINJA Loans Overdraft Fees

12. NINJA MORTGAGE LOANS IN CALIFORNIA No income No job No assets

13. PREPAID DEBIT CARDS 2009 29 Billion 2014 90 Billion

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

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

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

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

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

19. U.S. BEVERAGE MARKET Beverage 1960 2000 Milk 34% 13% Beer 14% 20% Soft Drinks 11% 36%

20. U.S. FAVORITE SPORT Time Pro Football Pro Baseball 1985 24% 23% 2010 30% 16%

21. CONSUMER MARKET SEGMENTS Geographic Demographic Lifestyle Cultural/Racial

22. GEOGRAPHIC MARKET SEGMENTS Cities Rural Areas Suburbs

23. DEMOGRAPHIC MARKET SEGMENTS Age Income Sex Education

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

25. CULTURAL/RACIAL MARKET SEGMENTS African American Hispanic Asian Gay

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

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

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

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

30. GRAY MARKET EXAMPLES Wine Prescription Drugs College Textbooks