Download The Importance of Marketing

The Importance of Marketing
Chapter 1, Section 1.2
Key Term
• Utility
Think Critically…
• Take 2-3 minutes to brainstorm why prices
drop when products become more popular…
• We will discuss shortly!
Why Marketing is Important…
1. Micro-level: It can positively affect your
life
2. Macro-level: It provides the means for
competition to take place in the
marketplace, thus helping the economy as
a whole
Economic Benefits of Marketing
• New and Improved Products:
• In a competitive marketplace, businesses try to create new or
improved products at lower prices than their competition.
• Example: Pepsi vs. Coke
Economic Benefits of Marketing, cont.
• Lower Prices:
• Marketing activities increase demand and this
helps to lower prices
• When demand is high, manufacturers can
produce products in larger quantities
• Unit costs are reduced
Economic Benefits of Marketing, cont.
• Added Value and Utility:
• Competition forces companies to be efficient and
responsive to consumers
• Competition also forces companies to TRY TO ADD
VALUE to a consumer’s shopping experience
• Example: U.S. Bank offers online banking, a 24- hour
customer service hotline, and free check cards
Economic Benefits of Marketing, cont.
Utility
• Definition: Added value in economic terms
• Utilities are the attributes of a product or service that
make it capable of satisfying a consumers’ wants and
needs
• Five economic utilities involved with all products
•
•
•
•
•
Form
Place
Time
Possession
Information
Form Utility
•Changing raw materials or putting parts
together to make them more useful. (i.e.,
making or producing things)
Example:
• zipper
• spool of thread
• three yards of cloth
--------------------------Some Value
Example:
• creating a jacket
from these materials
-------------------------MORE Value!
Place Utility
• Involves having a product where customers can buy it.
• Businesses study consumer shopping habits to determine
the most convenient and efficient locations to buy
products.
• Examples:
• Catalogs
• Retail Stores (Brick & Mortar)
• Internet (Click & Order)
Case Study Example:
Blockbuster
They have retail stores
and now Blockbuster
online!!
Time Utility
• Having a product available at a certain time
of year or a convenient time of day
Examples:
• Gold’s Gym staying open 24 hours
• Starbucks offering the pumpkin spice latte from
September thru February
Possession Utility
• The exchange of a product for money
• There are many variations today:
• Cash
• Personal checks
• Credit and Debit cards
• Layaway and Installment Plans (delayed possession for gradual payment)
• Each option adds value, as it gives the
customer greater flexibility (i.e., greater
opportunity to BUY)
Information Utility
• Involves communication with the
consumer
Examples:
• Salespeople provide info by offering
features and benefits of products
• Advertising communicates messages
about specials, how much a product costs,
and sometimes where to buy it
• Packaging and labeling inform consumers
about qualities and uses of a product
• Websites provide detailed information
about their companies and their products
Review Questions…
• Which utility is added by drive-through
windows at Starbucks?
• How does marketing help to lower prices?
Five economic utilities
involved with all
products
Form
Place
Time
Possession
Information