Marketing Is All Around Us

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What You'll Learn
The benefits of marketing
The meaning of economic utility
The five economic utilities and how to distinguish the four that are related
to marketing
Economic Utilities

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Economic Utilities
Why It's Important
By 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.

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Economic Utilities
Key Terms
utility
form utility
place utility
time utility
possession utility
information utility

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Economic Utilities
Bridges 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

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Economic Utilities
Economic utilities reflect the value that producers and marketers add to raw materials when they make them into products and offer them for sale to the public.
Economic Utilities
Form utility
Place utility
Time utility
Possession utility
Information utility

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Economic Utilities
Changing raw materials or putting parts together to make them more useful.
Form Utility
Example: 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.

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Economic Utilities
Having a product where customers can buy it.
Example: Selling directly to the customer
through catalogs.
Place Utility

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Economic Utilities
Having a product available at a time
convenient for customers.
Example: Retailers offer large supplies of backpacks in the late summer, near the beginning of the school year.
Time Utility

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Economic Utilities
Exchange of a product for some monetary value.
Example: Taking credit cards and checks rather than just cash enables customers to buy products.
Possession Utility

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Economic Utilities
Providing information so the customer is comfortable buying.
Information Utility
Example: Salespeople explain
features of products.
Example: Packaging explains qualities
and uses.
Example: Advertising informs consumers
about products.

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Economic Utilities
When 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

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Economic Utilities
As 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 Products
Example: Personal computers have become
smaller, more powerful, and less expensive
through competition between makers.

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ASSESSMENT
Reviewing Key Terms and Concepts
1. 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 other
benefits of marketing?

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ASSESSMENT
Thinking Critically
How would you explain the following
statement?
Marketing is more than just promotion.