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CHAPTER 2

CHAPTER 2. MARKETS. MARKETS. Definition of Markets Consumer Market Segments Gray Markets. DEFINITION OF MARKETS. Buyers Ability to Buy Willingness to Buy. BUYERS. Consumer Markets Business Markets. CHARACTERISTICS OF MARKETS. Consumer Business

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CHAPTER 2

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  1. CHAPTER 2 MARKETS

  2. MARKETS • Definition of Markets • Consumer Market Segments • Gray Markets

  3. DEFINITION OF MARKETS • Buyers • Ability to Buy • Willingness to Buy

  4. BUYERS • Consumer Markets • Business Markets

  5. CHARACTERISTICS OF MARKETS ConsumerBusiness Many buyers Few buyers Smaller purchases Larger purchases Direct demand Derived demand Geographically Dispersed Geographically concentrated

  6. DERIVED DEMAND EXAMPLES • Intel • U.S. Steel • Component parts

  7. ABILITY TO BUY • Income • Credit/Debit • Bartering

  8. CONSUMER INCOME • Gross Income – Total income before any deductions • Disposable Income – Total income minus taxes • Discretionary Income – Total income minus taxes and basic needs

  9. U.S. RETAIL SALES BY PAYMENT Store Payment19952010 Cash 60% 20% Checks 30% 0% Credit/Debit Cards 10%80% 100% 100%

  10. AVERAGE CREDIT CARD DEBT(per U.S. Household) • $5,900 • $8,200 • $10,600 2014 ?

  11. CREDIT/DEBIT PROBLEM • Student Loans • NINJA Loans • Overdraft Fees

  12. NINJA MORTGAGE LOANS IN CALIFORNIA • No income • No job • No assets

  13. PREPAID DEBIT CARDS • 29 Billion 2014 90 Billion

  14. BARTERING Negotiated exchange of products and services for other products or services instead of cash or credit

  15. BARTERING EXAMPLES • Radio ads for Astros tickets • Bartering on E-bay • Showrooming Bartering

  16. ULTIMATE BARTERING BYCALIFORNIA TEEN Started with a cell phone Ended with a Porsche automobile

  17. WILLINGNESS TO BUY • Consumer Spending • U.S. Beverage Market • U.S. Favorite Sport

  18. CONSUMER SPENDING CategoryExamples Durable Goods Furniture, TV Nondurable Goods Food, Beer Services Travel, Education

  19. U.S. BEVERAGE MARKET Beverage19602000 Milk 34% 13% Beer 14% 20% Soft Drinks 11% 36%

  20. U.S. FAVORITE SPORT TimePro FootballPro Baseball 1985 24% 23% 2010 30% 16%

  21. CONSUMER MARKET SEGMENTS • Geographic • Demographic • Lifestyle • Cultural/Racial

  22. GEOGRAPHIC MARKET SEGMENTS • Cities • Rural Areas • Suburbs

  23. DEMOGRAPHIC MARKET SEGMENTS • Age • Income • Sex • Education

  24. LIFESTYLE MARKET SEGMENTS • Harley-Davidson Motorcycles for Women • Tattoos • Condos for singles

  25. CULTURAL/RACIAL MARKET SEGMENTS • African American • Hispanic • Asian • Gay

  26. AFRICAN AMERICAN ENTREPRENEURS • George Foreman • Beyonce Knowles • Jay-Z • Oprah Winfrey

  27. Hispanic Rice Users CubanPuerto RicanMexican White Rice White Rice Mexican Rice Black Beans Pink Beans Pinto Beans Crackers None Tortillas

  28. GROWTH OF IMMIGRANT ENTREPRENEURS IN HOUSTON • Inexpensive real estate • No zoning regulations • Relatively low labor costs • Affordable housing

  29. GRAY MARKETS Buying in low-price markets and selling in high-price markets (concept of arbitrage)

  30. GRAY MARKET EXAMPLES • Wine • Prescription Drugs • College Textbooks

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