LESSON 1.2The importance of Marketing

The Importance of Marketing

Objectives Learn Three benefits of marketing Apply the concept of Utility List and Understand 5 types of Utility

Marketing Essentials Chapter 1, Section 1.2

Economic Benefits of Marketing

Marketing is important to the economy because it provides a means for competition to take place•Based on this concept, what are some benefits that result from competition?

Student Contributions:

Marketing Essentials Chapter 1, Section 1.2

Economic Benefits of Marketing

Three Marketing benefits to the economy and consumers are: New and improved products Lower prices Added value

1. New and Improved Products

To satisfy customer wants and needs at a profit

•Marketing generates competition

•Competition leads to new and improved products

What are some example of recent Products to the Market that are new or improved?

Answers: Iphone 5, XBOX One , PS4, Kindle HD

New and Improved Products

What is this ad showing as new/improved?

New and innovative paint container

Dutch Boy Paints won an award for its new container design that makes the container easy to hold and open as paint is poured.

Marketing Essentials Chapter 1, Section 1.2

2. Lower Prices

Marketing increases demand (desire to purchase). When demand is high what happens?

Produce and Sell more units Charge a Lower Price per Unit

More units produced reduces the unit cost per item Fixed costs remain the same = unit cost of each

item is lower Fixed costs (i.e. rent, insurance etc).

Marketers Make more money

2. Lower Prices

Examples: What is the cost per unit? Fixed costs =$7,500, produce 300 scarves

Fixed costs =$7,500, produce 1000 scarves

$7500/300 = $25.00

7500/1000 = $7.50

Lower Prices

In addition, when demand for products increase:

More companies enter the marketplace

Companies must lower prices to remain competitive

Marketing Essentials Chapter 1, Section 1.2

3. Added Value and Utility

Marketing adds value to products - features that make people desire the product, leading to demand.

The value that marketing adds to a product or service is called utility.

•Utility: An attribute of a product or service that makes it capable of satisfying consumers’ wants and needs

What attribute of a product determines if you buy it?

Added Value and Utility

Five utilities of a product /service contribute to satisfying customers’ wants and needs. What attribute of a product determines if you buy it?

1. Form

2. Place

3. Time

4. Possession

5. Information

1. Form Utility: Changing raw materials or putting parts together to make them more useful

Take things with little value by themselves to make/have value when together

A zipper, yards of cloth, thread = jacket together

Special features added to increase value Want the item because of new features/extras

What are some examples you can think of?

i.e. Smartphone to download apps, take photos, link to Facebook etc.

i.e. electronic controls on a steering wheel

Marketing Essentials Chapter 1, Section 1.2

2. Place Utility: Offering a product where consumers can buy it

What are some places businesses may offer products to consumers?

Direct via catalogs

Retail stores

Web site

Seeing Vending Machines beginning to be a large venuefor purchasing products

3. Time Utility: Offering a product at a convenient time of day or year for consumers (hours of operation)

Think about time utility, what are some things marketers do to offer products to consumers when they want them?

Student Responses:

Time Utility

Answer:

Convenient shopping hours Evenings hours

Supermarkets, hairstylists etc.

Malls open until 9:00 p.m.

Store hours until 6:00 p.m. to meet working market

Open Monday through Sunday

Open Monday through Friday – Until noon on Saturday

Extended holiday hours

Open 24 hours a day

4. Possession Utility: the exchange of money for a product allowing consumers to take legal ownership of a product

What are some ways you take possession?

Student Answers:

Possession Utility

Ways to take Possession include:

Cash

Checks

debit cards

credit cards

installment/layaway plans

credit for business-to business

Credit via the internet

5. Information Utility: communicating information about a product with the consumer

What are ways to communicate product information and benefits to a consumer?

Student responses:

Information Utility

Ways to communicate product info:

salesperson talks/demonstrations

store displays

through package labeling

Advertising – tv, radio, mail flyers etc.

owners’ manual

web sites

Social media

Economic Benefits of MarketingWhat is the result of each of the three benefits?

Study Organizer:

Marketing Essentials Chapter 1, Section 1.2

List each Utility and an example of each

Lesson 1-1 Review

Complete Real-World Application Worksheet

Marketing Madness:

In a short paragraph, define each of the five utilities and give one real example of each that you have encountered as a consumer. Reflect on how you have personally benefited from marketing.