Marketing Begins with Economics

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Marketing Begins with Economics

• Marketing
• Chapter 3

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Warm-Up

• Using the worksheet tell what you know about
  economics and what you want or need to learn
  about it. LEAVE the THIRD COLUMN Blank.

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The Importance of Economic Understanding

• The basic economic problem
• Scarcity
• Unlimited wants/needs with limited resources
• Economic System
• A collection of laws, institutions and activities
  that provide a framework for economic activity

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Who makes the decisions?

• Controlled (Command) economy
• government
• Regulated economy
• Shared between government and individuals
• Free (Market) economy
• individuals

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Americas Private Enterprise Economy

• Profit Motive
• Use of resources toward the greatest profit for
  the producers
• Characteristics
• Consumers (demand)
• Producers (supply)
• Government (regulate)

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Answer the following

• What if the U.S. Economy was strictly a
  free/market economy and not regulated by
  government? Predict how the lack of government
  regulations might affect the environment,
  consumers, and workers.

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OBSERVING THE LAW OF SUPPLY AND DEMAND

• Supply
• Quantity of product the producer is willing and
  able to provide for a price
• Demand
• Quantity of products consumers are willing and
  able to purchase for a price

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Whats So Special About a Rose?

• Gather therefore the Rose,
• Whilst yet is prime,
• For soon comes age,
• That will her pride deflower
• Gather the Rose of Love,
• Whilst yet is time
• Edmund Spenser
• 1552 - 1599

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• Whats in a name?
• That which we call a rose
• By any other name would smell as sweet
• William Shakespeare
• 1564 - 1616

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• O, my Luve is like a red, red rose,
• Thats newly spring in June.
• O, my Luve is like a melodie,
• Thats sweetly played in tune.
• Robert Burns
• 1759 - 1796

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Determinants of Demand

• Number of Consumers
• More buyers more demand
• Consumer Tastes and Preferences
• When this changes so will demand
• Consumer Income
• More income more demand
• Prices of Related Goods
• If the substitute has a better price the demand
  for the other product will decrease
• Consumer Expectations
• When consumers expect something about the future
  it can change demand for a product

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Demand Curve for Movies
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Determinants of Supply

• Number of Producers
• More producers more supply
• Resource Prices
• Higher cost of resources less supply (unless
  they can make the cost up in the increase of
  price)
• Technological Changes
• Better productivity more supply
• Prices of other Products of the business
• If one products price raises supply increases
  but could cause a decrease of supply of another
  product
• Producer Expectation
• Expectations of future changes could decrease
  current supplies

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Supply Curve for Notebook Computers
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Market Price for Notebook Computers
Demand
Supply
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Macroeconomics

• Macroeconomics studies the economic behavior and
  relationships of the entire society.

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Microeconomics

• Microeconomics is the study of relationships
  between individual customers and producers.

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Warm-Up

• Why is an understanding of economics more
  important to marketing now than it was in the
  past?

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All-Out Competition or No Competition At All

• Pure competition
• Large number of suppliers offering very similar
  products
• Monopoly
• One supplier offering a unique product

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Between the Extremes

• Oligopolies
• Few businesses offering very similar products
• Monopolistic competition
• Many firms competing with products that are
  somewhat different
• Understanding the competition
• Must know what type of competition to maximize
  profits

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Warm-Up

• How does the marketing concept relate to the
  concept of economic utility.

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Utility Means Satisfaction

• Economic utility (the amount of satisfaction a
  consumer receives from the consumption of a
  product)
• Form utility changes in tangible parts of
  product
• Time utility available when customer wants it
• Place utility available where the customer
  wants to buy it
• Possession utility affordability of the product

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