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Marketing Begins with Economics. Marketing Chapter 3. 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. The Importance of Economic Understanding. The basic economic problem Scarcity

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Marketing begins with economics

Marketing Begins with Economics

Marketing

Chapter 3


Warm up
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.


The importance of economic understanding
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


Who makes the decisions
Who makes the decisions?

  • Controlled (Command) economy

    • government

  • Regulated economy

    • Shared between government and individuals

  • Free (Market) economy

    • individuals


America s private enterprise economy
America’s Private Enterprise Economy

  • Profit Motive

    • Use of resources toward the greatest profit for the producers

  • Characteristics

    • Consumers (demand)

    • Producers (supply)

    • Government (regulate)


Answer the following
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.


Observing the law of supply and demand
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


What s so special about a rose
What’s 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


What’s in a name?

That which we call a rose

By any other name would smell as sweet

William Shakespeare

1564 - 1616


O, my Luve is like a red, red rose,

That’s newly spring in June.

O, my Luve is like a melodie,

That’s sweetly played in tune.

Robert Burns

1759 - 1796


Determinants of demand
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


Demand curve for movies

Price

$10.50

9.00

7.50

6.00

4.50

3.00

1.50

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Quantity

Demand Curve for Movies


Determinants of supply
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 product’s price raises supply increases but could cause a decrease of supply of another product

  • Producer Expectation

    • Expectations of future changes could decrease current supplies


Supply curve for notebook computers

Price

$2,100

1,800

1,500

1,200

900

600

300

100

200

300

400

500

600

700

800

Quantity

Supply Curve for Notebook Computers


Market price for notebook computers

Price

$2,100

1,800

1,500

1,200

900

600

300

100

200

300

400

500

600

700

800

Quantity

Market Price for Notebook Computers

Demand

Supply


Macroeconomics
Macroeconomics

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


Microeconomics
Microeconomics

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


Warm up1
Warm-Up

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


All out competition or no competition at all
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


Between the extremes
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


Warm up2
Warm-Up

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


Utility means satisfaction
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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