1. Chapter 3 Marketing Begins With Economics

2. Scarcity and Private Enterprise Identifying the basic economic problem How our private enterprise economy works.

3. Understanding Economics Creativity fuels effective marketing methods Generating the customer’s awareness. Effective marketing relies on the principles and concepts of economics. How simple decisions are made. Understanding your competition helps improve decision making skills.

4. Basic Economic Problem Unlimited wants and needs of the consumer. Not enough resources to satisfy the needs and wants of the consumer. Scarcity How will limited resources be used to satisfy people’s wants and needs? Trade-Off or Opportunity Cost Something equal value or the next best alternative.

5. Decision Makers Who actually makes the decisions? Economic Systems: Controlled Economy Government Controlled Traditional Economy Doing things how they have always been done. Market Economy Private Ownership Mixed Economy Combines controlled and market economy.

6. Private Enterprise System Based on independent decision by a businesses and/or a consumers with only a limited government role regulating those relationship.

7. Characteristics Resources are owned by the individual. Use of profit motive to generate more profit. Consumers purchase goods that will satisfy their needs. Consumers use value in deciding what to consume.

8. Demand What the consumer is willing to buy? $= Demand Supply What the producer is willing to produce? $= Supply Government Allows consumer and producers to make decisions without any interference. Ensure equal treatment by enforcing laws and regulations.

10. Economic Forces Decision-Making Process in a Private Enterprise System determines how a market operates. See a need for a business opportunity, pursue that opportunity.

11. Economic Resources 4 Factors of Production: Natural: Comes from the earth Labor: Human action involved in producing goods and services. Captial: Building, Equipment, etc… Entrepreneurial: Idea for a product or service.

13. Types of Economic Conditions Define competition and monopoly. Identify the characteristics of oligopolies and monopolistic competition.

14. All In….or Not Competition affects consumers and suppliers alike… Excessive competition limits increase in prices Two characteristics to determine economic competition: Number of firms competing in the market Similarity between the products

15. Pure Competition Large number of suppliers offering very similar products. Price Quantity

16. Monopoly One supplier offering a unique product. Price Quantity

17. Monopoly Government attempts to control any business to maintain their products at a reasonable price.

18. Between the Extremes Oligopoly Few businesses offer very similar products and services. Competitive market gives the consumer a choice about what they want.

19. Oligopolies One business in an oligopoly will have little influence over the price it can charge. Price Quantity

20. Oligopolies When there are a few firms in an oligopoly, the total industry has much more control over price. Price Quantity

21. Monopolistic Competition Many firms competing with products that are somewhat different.

22. Monopolistic Competition with few differences amongst products. Price Quantity

23. Great product differences, businesses have much more control over prices. Price Quantity

24. Understanding Competition Businesses in pure competition will not be able to exercise much control in the market. Marketers will look for ways to differentiate a product similar to the competitions.

25. Enhancing Economic Utility Define types of economic utility Explain how marketers use utility to increase customer satisfaction.

26. Utility = Satisfaction Economic Utility: Amount of satisfaction a consumer receives from the consumption of particular products or services.

27. Types of Utility Form Utility: Change in the tangible part of a product or services. Time Utility: Making the product or service available when the consumer wants it. Place Utility: Where the product and services is available. Possession Utility: Affordability of the product or service.