MARKETING MR. LOCKE Scarcity and Private Enterprise

Importance of Understanding Economics Improves marketing decision making  Increased customer satisfaction  Higher profits

Basic Economic Problem Needs and wants are unlimited Products require several resources  Car  Glass, rubber, steel, plastic, human work, etc…

Scarcity Unlimited needs and wants + limited resources = SCARCITY Scarcity requires people to make choices  What do you need?  What do you want?  Which of these are important enough for you to act on?

Scarcity Wants and needs will always outnumber resources  Choices and tradeoffs must be made Problem results in companies producing the correct amount of what people want and need while still earning a profit

Who Makes Decisions Not all economies run the same Economies must answer  1. What goods and services will be produced?  2. How will they be produced?  3. For whom will they be produced?

Who Makes Decisions Those 3 questions will determine what type of economy a country is in  Controlled  Free  Mixed  Private enterprise

Controlled Economy Government answers all 3 questions Attempts to own and control important resources to make decisions about what will be produced and consumed

Free Economy Resources are owned by individuals rather than the government The market answers all 3 questions Decisions are made with NO government intervention

Mixed Economy Some goods and services are provided by the government and some by private enterprise

Private Enterprise Based on independent decisions by businesses and consumers with only a limited amount of government control US is a private enterprise

Private Enterprise Characteristics  Resources of production controlled by individual producers  Producers use the profit motive to decide what and how much to produce  Individual consumers make decisions about what and how much to consume  Consumers use value in deciding what to consume

Private Enterprise Value-An additional view of the worth of the product or service (to a consumer)

Consumers Consumers-Individuals who purchase products and services to satisfy needs Demand-A relationship between the quantity of a product consumers are willing and able to purchase and the price

Producers Producers-Businesses that use their resources to develop products and services are producers Supply-A relationship between the quantity of a product that producers are willing and able to provide at that price