1 Marketing Essentials - PowerPoint Presentation

1. 1Marketing EssentialsEconomic Utilities

2. SECTION 1.2What You'll LearnThe benefits of marketingThe meaning of economic utilityThe five economic utilities and how to distinguish the four that are related to marketingEconomic Utilities

3. 3The Marketing ConceptBusinesses must satisfy customers’ needs and wants in order to make a profit.

4. 4SECTION 1.2Economic UtilitiesWhy It's ImportantBy understanding the benefits of marketing, you will see how the functions of marketing add value to products. You will also see how marketing activities lead to lower prices and new and improved products.

5. 5SECTION 1.2Economic UtilitiesKey Termsutilityform utilityplace utilitytime utilitypossession utilityinformation utility

6. 6SECTION 1.2Economic UtilitiesBridges the gap between you and the maker or seller of an item.Makes buying easy for customers.Creates new and improved products at lower prices. Economic Benefits of Marketing

7. 7Economic utilitythe amount of satisfaction a person receives from the consumption of a particular product or serviceEconomic utilitiesreflect the value that producers and marketers add to raw materials when they make them into products and offer them for sale to the public.SECTION 1.2Economic UtilitiesEconomic Benefits of Marketing

8. 8SECTION 1.2Economic UtilitiesEconomic UtilitiesForm utility (production)Place utility (marketing)Time utility (marketing)Possession utility (marketing)Information utility (marketing)Attributes of a product or service that make it capable of satisfying consumers’ wants and needs.

9. 9SECTION 1.2Economic UtilitiesChanging raw materials or putting parts together to make them more useful.Form UtilityExample: The parts of a lounge chair— the wood frame, the fabric, the glue and nails, and the reclining mechanism—are less useful by themselves. Putting them together adds form utility.

10. 10Form UtilityChanging raw materials into goods– making and producing things. Sand into glass Wood into paper Silk into fabric

11. Click on the Model T Ford to see Henry Ford’s thoughts about car color in the early 1900’s.When Henry Ford first created the Model T, he was the only one mass producing cars. He didn’t have to think about “The Marketing Concept.” But, as more and more producers started making cars, they had to think about what customers need and want in order to stay in business.

12. Imagine if, in today’s world, you could only buy black. Many customers would not be very happy!

13. Today’s buyer wants a choice!

14. The Marketing ConceptIf automobile manufactures do not give their consumers a choice (what they want), they will not stay in business.That concept is true for all businesses.Companies sell what Customers want.

15. 15SECTION 1.2Economic UtilitiesHaving a product where customers can buy it.Example: Selling directly to the customer through catalogs. It Includes:Location –at a retailer (actual store) – or, InternetTransporting the product to the location.Place Utility

16. 16SECTION 1.2Economic UtilitiesIf you are selling products in a huge warehouse style store, like Home Depot of Costco, the utility of "place utility" can be as simple as having the product in boxes on pallets ready to be picked up and the customer can simply walk directly to the cashier to make payment.Place Utility

17. 17SECTION 1.2Economic UtilitiesPlace UtilityWhen so many products are sold online, or in a marketing situation which may be partly online, and partly in a store, it is more and more important to make sure the "place utility" is as competitive as possible because sometimes the final decision about whether to buy, or not buy, is made by the customer based on how they can physically get their hands on the product as soon as possible. For example, it is no good having a detailed YouTube video of how your low priced air-conditioner works, if the customer has to drive many miles to find a store with one actually in stock

18. 18SECTION 1.2Economic UtilitiesHaving a product available at a timeconvenient for customers. Example: Retailers offer large supplies of backpacks in the late summer, near the beginning of the school year. Planning and orderingTime of day and weekTime of year: holidays and seasonsTime Utility

19. 19SECTION 1.2Economic UtilitiesChallenge: The "social-cultural environment" of customers in the current marketing climate is one in which people often are quite impatient to take possession of the product once they have made the final decision to buy. It is important, in a competitive environment, to use every opportunity to streamline your supply chain and distribution channels to allow a customer to physically obtain the chosen product as quickly as possible.Time Utility

20. 20SECTION 1.2Economic UtilitiesTime UtilityIn the case of food service items, you can't have the burger ready and have the customers wait many minutes for the fries, they just won't come to your drive-through next time.This is one of the reasons why (say some fast food experts) that McDonald's fries are skinnier and smaller and are designed to cook faster so McDonald's can serve customers faster because the McDonald's focus is on the "Fast" in fastfood.

21. 21SECTION 1.2Economic UtilitiesExchange of a product for some monetary value. Example: Taking credit cards and checks rather than just cash enables customers to buy products. Possession UtilityCashPersonal checksCredit cardsInstallments (layaway)

22. 22SECTION 1.2Economic UtilitiesThe utility of Place and Possession are very much inter-related and depend on each other. When someone buys something from a vendor, essentially, it is a "transfer of ownership". Part of being successful in the competitive world of "selling stuff" is to make it easy for the customer to pay, and take possession.  Having a variety of easy payment methods, is part of facilitating possession as is the physical location of the product and how it is delivered to the customer. Possession Utility

23. 23SECTION 1.2Economic UtilitiesProviding information so the customer is comfortable buying.Information UtilityExample: Salespeople explain features of products.Example: Packaging explains qualities and uses.Example: Advertising informs consumers about products. Ads Packaging Signs Displays Owner’s Manuals

24. 24SECTION 1.2Economic UtilitiesWhen demand is high, manufacturers can make products in larger quantities, which reduces the unit cost of each product. Example: When fixed costs are $20,000: Quantity Produced Fixed Cost Per Unit 10,000 $2.00 200,000 10¢Lower Prices

25. 25SECTION 1.2Economic UtilitiesAs businesses continue to look for opportunities to better satisfy customers' wants and needs, the result is a larger variety of goods and services.New and Improved ProductsExample: Personal computers have become smaller, more powerful, and less expensive through competition between makers.

26. 26Which types of utility are related to marketing?Form utility is a function of production, NOT marketing

27. 27These utilities ARE directly related to marketing:PlaceTimePossessionInformation

28. 281.2ASSESSMENTReviewing Key Terms and Concepts1. What is meant by the economic concept of utility?2. Which economic utility is not classified as a marketing utility? Why?3. Besides added value, what are two otherbenefits of marketing?

29. 291.2ASSESSMENTThinking CriticallyHow would you explain the following statement? Marketing is more than just promotion.

30. 30End of Section 1.2Marketing Essentials

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