THE IMPORTANCE OF

MARKETINGChapter 1.2

WHY IS MARKETING IMPORTANT? Increased production capacity

Increased buying power of consumers

Need for coordinating production and consumption

¼ to 1/3 of all workers are in marketing jobs

WHY IS MARKETING IMPORTANT? Majority of businesses in the United

States are marketing type businesses

50 to 60 cent out of every sales dollar goes to cover the costs of marketing

WITHOUT MARKETING Increased personal contact with

businesses

Less variety in products

Fewer product improvements

Fewer products developed

Increased stock shortages or overages

BENEFITS OF MARKETING Raises the standard of living

Adds utility to goods and services

Makes buying convenient

Maintains reasonable prices

BENEFITS OF MARKETING Improves the quality of life

Provides a variety of goods and services

Increases production

ECONOMIC BENEFITS OF MARKETING New and Improved Products Lower Prices Added Value and Utility

ECONOMIC BENEFITS OF MARKETING 1) New and Improved Products

Generates competitionCreates a larger variety of goods and

services

2) Lower Prices Increases demand which helps lower pricesDemand is high producers can make more

products at a lower fixed cost

ECONOMIC BENEFITS OF MARKETING 3) Added Value and Utility

Value in economic terms is called Utility

Utilities are attributes of a product or service that make it capable of satisfying customers’ wants and needs

5 ECONOMIC UTILITIES 1) Form Utility (not directly related to

marketing – production) Involves changing raw materials or

putting parts together to make them more usefulMaking or producing thingsCreating new productsMarketing ResearchProduct Design

5 ECONOMIC UTILITIES 2) Place Utility – having a product

where customers can buy it (Distribution Function)Store LocationCatalog Internet

5 ECONOMIC UTILITIES Time Utility – having product available

at a certain time of year or convenient time of day (Distribution Function)Extended shopping hours for ChristmasOpen 24-hours a dayDrive-through window at fast-food

restaurant

5 ECONOMIC UTILITIES 4) Possession Utility – involved every

time legal ownership of a product changes hands

Increases as purchase options increase (Pricing Function)Accepting personal checks, credit or debit

cards Installment payments or layawaysOffering a discount for paying bill early

5 ECONOMIC UTILITIES 5) Information Utility – communication

with the customer (Promotion Function)Packaging and labelingSales Representative explains features and

benefits of productAdvertisingOwner’s manual

IDENTIFY THE UTILITY #1 Adding bleach to a liquid clothes

detergent

Accepting credit cards and debit card at a store

Offering overnight delivery

IDENTIFY THE UTILITY #2 A company website offers to sell

products directly to the customers

Old tires are ground up and made into benches

A company website has a link that explains how to return empty laser ink cartridges

IDENTIFY THE UTILITY #3 A gas station opens beside an interstate

highway.

The above gas station is open 24-hours a day.

A sweater has a tag attached which explain how to clean and store the garment.

IDENTIFY THE UTILITY #1 Adding bleach to a liquid clothes

detergentForm

Accepting credit cards and debit card at a storePossession

Offering overnight deliveryTime

IDENTIFY THE UTILITY #2 A company website offers to sell products

directly to the customers Place

Old tires are ground up and made into benches Form

A company website has a link that explains how to return empty laser ink cartridges Information

IDENTIFY THE UTILITY #3 A gas station opens beside an interstate

highway.Place

The above gas station is open 24-hours a day.Time

A sweater has a tag attached which explain how to clean and store the garment. Information