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Presentation Plus! Economics: Today and TomorrowCopyright © by The McGraw-Hill Companies, Inc.

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Contents

CHAPTER FOCUS

SECTION 1 The Changing Role ofMarketing

SECTION 2 The Marketing Mix

SECTION 3 Distribution Channels

CHAPTER SUMMARY

CHAPTER ASSESSMENT

Click a hyperlink to go to the corresponding section.Press the ESC key at any time to exit the presentation.

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Chapter Focus 1

Why It’s ImportantDo you think advertisements influence your buying habits? Marketers hope so–they spend billions of dollars every year toward this purpose! This chapter will explain how businesses market and distribute their goods and services.

Click the Speaker button to listen to Why It’s Important.

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Chapter Focus 2

Chapter OverviewOver the last 100 years, marketing has changed from an aspect of production to a way of creating–and predicting– demand for a product. Marketing research, therefore, has become ever more important, and marketers have become more sophisticated in using that research.

End of Chapter Focus

Click the mouse button to return to the Contents slide.

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Section 1-1

Reader’s GuideSection Overview

Section 1 describes or explains the development of marketing in the United States and the elements of market research.

Objectives

– What elements make up market research?

– How has the role of marketing changed in the United States?

Click the mouse button or press the Space Bar to display the information. Section 1 begins on page 289 of your textbook.

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Terms to Know

– consumer sovereignty

– utility

– market research

– market survey

– test-marketing

– marketing

Section 1-2

Reader’s Guide (cont.)

Click the Speaker button to listen to the Cover Story.

Click the mouse button or press the Space Bar to display the information. Section 1 begins on page 289 of your textbook

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Section 1-3

• In addition to financing and producing product, businesses must promote and eventually sell their products and services.

• Marketing involves all of the activities needed to move goods and services from the producer to the consumer.

Introduction

marketingall the activities needed to move goods and services from the producer to the consumer

Click the mouse button or press the Space Bar to display the information.

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Section 1-3

• In this section, you’ll learn that these activities include market research, advertising and promotion, and distribution.

Introduction (cont.)


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Section 1-3

• In 1962, a McDonald’s franchise owner introduced the Filet-O-Fish sandwich. He noticed he was losing business on Fridays from Catholic customers and wanted to regain that business.

Lecture Launcher


• What marketing activities brought the Filet-O-Fish sandwich to the consumer.

• What are form, place, time, and ownership utility? A typical visit to McDonald’s adds to which of these utilities?

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Section 1-4

The Development of Marketing• The sole purpose of marketing is to

convince consumers that a certain product or service will add to their utility.

• Form utility is converting raw materials into desired/needed products.

• Place utility is providing the good/service where the customer wants it to be.

• Time utility is providing the good/service at precisely the time the customer wants it.

• Ownership utility is providing goods/services that people are pleased to own.

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Section 1-Assessment 1

Discussion Question

Rank the four types of consumer utility in order of importance. Explain your reasoning.

Answers will vary, but students should be able to clearly explain why they ranked the items in the order they did.

Click the mouse button or press the Space Bar to display the answer.

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Section 1-7


Market Research

• Should be done before the product is made or service is offered.

• Timing—before, during production (samples), after product/service hits market.

• Surveys-gather information about who might buy the product.

• Testing new products—offer the item for sale in a small market before selling it to larger area.

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Discussion Question

Create a plan to test market a new ice cream flavor. How will you make sure the product is available for your target customer?


How will you respond to signs that the product is not doing well?

How will you decide if the product is a success?

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Discussion Question

Answers will vary. Students may decide to sell it in select stores where their target customer is likely to shop. They may decide to lower/raise the price if the product doesn’t seem to be doing well. They may decide it’s a success if they see a profit even in that small market.


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Section Assessment

What steps are involved in market research?

The steps include gathering, recording, and analyzing information on a product, then test-marketing the product.


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Section Assessment (cont.)


Categorizing Information Select 10 businesses in your community. Categorize each business according to the type of utility it provides.

Answers will vary.

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Write a paragraph beginning with the following topic sentence:

Market research is very helpful at every stage of product development.

Section Close

End of Section 1


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Section 2-1

Reader’s Guide


Section OverviewSection 2 explains or describes the “four Ps” of marketing–product, price, place, and promotion– and the product life cycle.

Objectives

– Which market strategies depend on price?

– How does a firm decide where to sell its products?

– What are four types of promotion that a firm may use?

– What is the importance of product identification?

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Section 2-2




Terms to Know

– penetration pricing

– promotion

– direct-mail advertising

– product life cycle

– price leadership

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Section 2-3


• In today’s highly competitive world, simply producing a product and offering it for sale is not enough.

Introduction

• Through their marketing departments, companies plan a marketing strategy, which details how the company will sell the product effectively.

• In this section, you’ll learn that a marketing strategy, or plan, combines the “four Ps” of marketing: product, price, place, and promotion. Decisions about each are based on the data collected through the company’s market research.

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Section 2-3


• Sometimes a corporation will start a secondary business under a different name. Both companies might actually sell similar products, but be marketed to different target groups. For example, Gap, Inc. created the company Old Navy, which also sells clothing. The marketing strategy to form two companies can almost always be traced back to the four “Ps” of marketing.

Lecture Launcher

• What are the four “Ps” of marketing?

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Section 2-4


Product• What good or service should be

produced? • What services should be offered with the

product? • How should product be packaged?

Consider size, design, color, catch phrases and coupons or rebates.

• How should product be identified? Consider logos, songs, celebrity endorsements, and packaging.

• Additional services may be provided to help make a sale.

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Discussion Question


Consider a product or service that you bought recently. Describe how the product was marketed.

Answers will vary. Students should take into account the packaging, product identification, additional services offered, and the target market.

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Section 2-8


Price

• Determined by law of supply and demand.

• Price leadership occurs when competing companies sell their products for similar prices.

• Selling a new product for a low price to entice people to buy it is called penetration pricing.

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Discussion Question


Have you ever bought an item that was sold via penetration pricing? If so, did you continue to buy the item when the price went up?

Answers may vary. Students should consider their motivations behind purchasing the item and if the item was worth its later increase in price.

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Section 2-10


Place

• Where should the product be sold?

• Past experience with similar products will help the marketing department make this decision.

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Discussion Question


What types of products are best sold on the Internet? Explain your reasoning.

Possible response: Products that are really for “niche” markets, or that few people would want to buy should do best on the Internet. Trying to sell them in a local store could be difficult because there will be so few buyers. Selling it nationally without the cost of retail space should bring the most buyers.

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Section 2-11


Promotion

• Informing customers about product or service.

• Type of promotion depends upon the product, the target customer, and amount of money the company wants to spend.

• Examples of promotions: direct-mail advertising, free samples, cents-off coupons, and rebates.

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Discussion Question


Which type of promotion works most effectively with you as a consumer? Why do you think this is so?

Possible responses: Free samples because I will buy the item once I know that I like it. Rebates work well because I like to get a discount for trying something new.

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Section 2-16


Product Life Cycle

• A series of stages from first introduction to complete withdrawal from the market.

• Marketing programs are different for each stage.

• Pricing can be different for each stage.

• Marketers try to extend the life of product by changing its looks, uses, and the advertising focus.

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Discussion Question


What types of products would have a short life cycle? Why?

Answers will vary, but students should consider the target market, the usefulness of the product over time, and how trends in popular taste may affect the life of a product.

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Section Assessment


How does packaging contribute to product identification?

Packaging attracts new customers and creates brand identification.

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What two marketing strategies depend on price?

Price leadership and price penetration depend on price.

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How does a firm decide where to sell its products?

A firm decides by looking at past experience with similar products.

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Distinguishing Fact From Opinion Analyze the validity of 10 print advertisements in newspapers or magazines. Identify the facts and the bias found in each one.

Answers will vary.

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Discuss how the marketing of a product–the computer, for example–might change over its life cycle.

Section Close

End of Section 2


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Section 3-1


Reader’s GuideSection Overview

Section 3 explains the role of producers, wholesalers, and retailers in distribution; the difference between wholesale and retail; and various channels of distribution.

Objectives

– What are two new types of distribution channels?

– What is the difference between wholesale and retail distribution?

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Section 3-2




Terms to Know

– wholesalers

– retailers

– e-commerce

– channels of distribution

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Section 3-3


• Decisions about distribution, or moving goods from where they are produced to the people who will buy them, is another function of marketing.

• In this section, you’ll learn about channels of distribution, or the routes by which goods are moved.

Introduction

channels of distributionroutes by which goods are moved from producers to consumers

Figure11.7

Introduction (cont.)

Figure 11.7 Channels of Distribution

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Section 3-4


Lecture Launcher• Montgomery Ward & Company, Inc.

began as a mail-order catalog in 1872. Their first catalog was only one sheet long. Over the next few years the catalog expanded and the company began to offer more products. Just 16 years later, the company’s annual sales were $1 million.

• What are the channels of distribution used by a mail-order catalog like Montgomery Ward?

• Would Montgomery Ward be considered a retailer or a wholesaler?

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Section 3-4


Wholesalers and Retailers

• Wholesalers sell goods to retailers, not to consumers.

• Retailers sell goods directly to the public.

• Full service wholesalers warehouse goods and deliver them after retailers pay for them.

• Drop shippers are wholesalers that buy the goods under the condition that the producer will store and ship the goods after the wholesaler has sold them.

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Section 3-4


Wholesalers and Retailers

• A cash-and-carry wholesaler sells merchandise, but buyer must pay shipping.

• A truck wholesaler sells and delivers at the same time.

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Discussion Question


Why do you think wholesalers do not sell their products to the general public?

If wholesalers sold to the general public, they would be competing against their main customers—the other businesses. This would make the businesses look elsewhere for products and could ultimately destroy the wholesaler’s business.

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Section 3-7


Storage and Transportation

• Storing goods for future sales.

• Moving goods from producers and/or sellers to buyers.

• The type, size, weight of the good and how fast it is needed factor into storage and transportation.

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Discussion Question


What must a company consider when thinking about transportation?

They must consider the product and how well it will travel; does it need refrigeration, does it have a short shelf-life and need to get to consumer quickly, does the customer expect immediate delivery or will the customer wait for a 2 week truck trip across country?

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Section 3-9

Distribution Channels

• Warehouse club shopping lets people buy a limited number of models and brands in huge quantities so the warehouse will get favorable prices from manufacturers.

• Direct marketing is done through catalogs, the Internet, and “space ads.”

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Discussion Question


Some food companies offer grocery shopping on the Internet.

Do you think this will ever replace the grocery store? Why or why not?

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Discussion Question


Possible responses: Yes, because many people consider grocery shopping a chore. If they could just have a standing order on-line that they changed minimally from week to week they would probably be thrilled. No, because people like to touch and see their food—perishables in particular. They like to read the sell-by dates on their dairy products and buy the freshest ones. You cannot do this on-line.

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Section Assessment


What is the difference between wholesalers and retailers?

Wholesalers buy large quantities of goods to sell to sell to other businesses. Retailers buy goods to sell directly to the public.

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Summarizing Information Type e-commerce into your search engine. Research and write a paragraph on the advantages or disadvantages of this type of retailing.

Answers will vary.

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Analyze how the technological innovations–the jet airplane or the computer, for example–have affected distribution channels.

Section Close

End of Section 3


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Chapter Summary 1

Section 1: The Changing Role of Marketing

• Marketing involves all of the activities needed to move goods and services from the producer to the consumer.

• In today’s economy, marketing’s sole purpose is to convince consumers that a certain product or service will add to their utility.

• Utility–the ability of any good or service to satisfy consumer wants–can be divided into four major types: form utility, place utility, time utility, and ownership utility.


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Chapter Summary 2

Section 1: The Changing Role of Marketing (cont.)

• Through market research a company gathers, records, and analyzes data about the types of goods and services that people want.

• The first step in market research is performing a market survey.

• Before offering a product for national distribution, market researchers will often test-market a product.


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Chapter Summary 3


Section 2: The Marketing Mix• A marketing plan combines the “four Ps” of

marketing: product, price, place, and promotion.

• “Product” means determining what services to offer with the product, how to package it, and what kind of product identification to use.

• In setting a price, a company has to consider the costs of producing, advertising, selling, and distributing, as well as the amount of profit it hopes to make.

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Chapter Summary 4


Section 2: The Marketing Mix (cont.)

• “Place” means determining where a product should be sold.

• Promotion is the use of advertising and other methods to inform consumers that a new product is currently available and to convince them to buy it.

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Chapter Summary 5


Section 3: Distribution Channels• Deciding what channels of distribution to

use is another function of marketing.

• Businesses that purchase large quantities of goods from producers for resale to other businesses are called wholesalers.

• Businesses that sell consumer goods directly to the public are retailers.

• In the last 10 to 15 years, distribution channels have expanded due to the growth of club warehouse stores and direct marketing, including catalog shopping and e-commerce.

End of Chapter Summary


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Chapter Assessment 1


What is the relationship between marketing and utility?

Recalling Facts and Ideas

Marketing involves activities that add to the utility of a product.

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Recalling Facts and Ideas (cont.)


What are the historic stages in the development of marketing in the United States?

announcement advertising; advertising the virtues or benefits of the product; creating demand through advertising; recognition of consumer sovereignty; advertising on the Internet

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How is market research conducted?

Researchers find out what consumers want through surveys. Researchers conduct surveys at the planning stage, upon customer purchase of goods, and when the product has been on the market for some time.

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List and describe the “four Ps” of planning a marketing strategy.

Product–what product to sell, what services to offer with the product, how to package it, and how to develop product identification; Price–what pricing strategy to use; Place–where to sell product; Promotion–using advertising and other methods to inform consumers of product and to persuade them to buy it.

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How are goods and services promoted?

through direct mail; advertisements in newspapers, magazines, radio, television, and Internet; free samples; gifts; coupons; rebates; store displays

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What does place mean, when referring to marketing?

Place refers to where the product is sold–mail or telephone order, department stores, specialty shops, supermarkets, discount stores, door-to-door, Internet.

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What are the last two stages of a typical product life cycle?

maturity, decline

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What are distribution channels?

routes by which goods are moved to the customer

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How does a club warehouse store differ from a standard retail outlet?

Club warehouses offer less variety, bigger sizes, and greater savings than standard retail stores.

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Who may perform the storage function of distribution?

producer, wholesaler, or retailer

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What are the factors that a business must consider in choosing a method of transporting goods?

size, weight, and type of good; speed with which delivery must be made; costs of different types of transportation

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Sequencing Information Suppose you must do a market survey for a new type of running shoe. Use a chart like the one on page 309 of your textbook to list the questions you would ask, and of whom and where you would ask the questions.

Thinking Critically

Answers will vary.

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Thinking Critically (cont.)

Making Generalizations What are alternative ways to extend the life of an old product that is in its declining stage?

Finding new uses for the product, changing product packaging and labeling, and changing the focus of the advertising are ways to extend life of a product that is in decline.

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Reviewing SkillsDeveloping a Multimedia Presentation

• Use multimedia to develop a video commercial, then show the commercial to the rest of the class.

• Based on your advertising, would they buy the product? Why or why not?

• Working with a partner, create an advertisement that you think will successfully market a new product.

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What marketing tool might a hospital use to improve care given to patients?

a market survey of patients


End of Chapter Assessment


Economic Concepts 1

Focus Activity 1.1

Continued on next slide.

Focus Activity 1.2

Focus Activity 2.1


Focus Activity 2.2

Focus Activity 3.1


Focus Activity 3.2

Chapter Launch Activity


Imagine that you have just designed a new fashion belt using discarded industrial strapping. Who do you think your main customers would be? List ways that you might create demand for the new product. How would you use promotion?

Economics Online

Explore online information about the topics introduced in this chapter.

Click on the Connect button to launch your browser and go to the Economics: Today and Tomorrow Web site. At this site, you will find interactive activities, current events information, and Web sites correlated with the chapters and units in the textbook. When you finish exploring, exit the browser program to return to this presentation. If you experience difficulty connecting to the Web site, manually launch your Web browser and go to http://glencoe.com/sec/socialstudies/economics/econtoday2005/index.php

BusinessWeek Online

Explore online information about the topics introduced in this chapter.

Click on the Connect button to launch your browser and go to the BusinessWeek Web site. At this site, you will find up-to-date information dealing with all aspects of economics. When you finish exploring, exit the browser program to return to this presentation. If you experience difficulty connecting to the Web site, manually launch your Web browser and go to http://www.businessweek.com

BW Spotlight 1


Why are market researchers so interested in Generation Y? Teenagers–a large segment of that group–spend about $172 billion each year. And they are extremely brand loyal.

Read the BusinessWeek Spotlight on the Economy article on page 295 of your textbook. Learn how advertisers are marketing their products toward your generation.

This feature is found on page 295 of your textbook.

Generation Y

BW Spotlight 2


What market does “Generation Y” make up?

the 60 million young people born between the years 1979 and 1994

Click the mouse button or press the Space Bar to display the answer. This feature is found on page 295 of your textbook.

Generation Y


BW Spotlight 3

According to the article, how can advertisers reach Gen Yers?

Advertisers should bring the messages to the places where Generation Yers congregate–such as the Internet, a snowboarding tournament, and cable TV. Also, messages should not suggest that the advertiser knows Generation Yers better than these young people know themselves.

Generation Y

NBR 1.1

• define test marketing. • explain the importance of distribution.

• examine the Internet’s role in marketing and distribution.

After viewing Marketing and Distribution, you should be able to...

Economics and YouVideo 17: Marketing and

Distribution

Click the mouse button or press the Space Barto display the information.


NBR 1.2

Click the Videodisc button anytime throughout this section to play the complete video if you have a videodisc player attached to your computer.

Click the Forward button to view the discussion questions and other related slides.

Click inside the box to play the preview.Continued on next slide.

Disc 1, Side 2Chapter 17


Distribution

NBR 1.3

Why has marketing and selling music on the Internet grown so rapidly?

Because of new recording technologies, music can be cheaply and easily distributed over the Internet directly to people’s homes.

Disc 1, Side 2Chapter 17

Click the mouse button or press the Space Barto display the answer.


Distribution

TS 1


Your economics teacher has assigned a presentation about the history of commercials and advertising. You want to develop a presentation that really holds your classmates’ attention.


Developing Multimedia Presentations

TS 2


Learning the Skill

• A multimedia presentation involves using several types of media, including photographs, videos, or sound recordings.

• The equipment can range from simple cassette players, to overhead projectors, to VCRs, to computers, and beyond.

• Multimedia, as it relates to computer technology, is the combination of text, video, audio, and animation in an interactive computer program.

Click the mouse button or press the Space Bar to display the information. This feature is found on page 306 of your textbook.


TS 3


Learning the Skill (cont.)

• You need certain tools to create multimedia presentations on a computer, including computer graphics tools and draw programs, animation programs, and authoring systems that tie everything together.

• Your computer manual will tell you which tools your computer can support.



TS 4


Practicing the Skill

• Plan and create a multimedia presentation on a topic found in the chapter, such as product promotion.

• List three or four major ideas you would like to cover.

• Then think about how multimedia resources could enhance your presentation.

• Use the questions on the following slides as a guide when planning your presentation.



TS 5

Which forms of media do I want to include? Video? Sound? Animation? Photographs? Graphics?

Click the mouse button or press the Space Bar to display the next question. This feature is found on page 306 of your textbook.



Which kinds of media equipment are available at my school or local library?

TS 6


What types of media can I create to enhance my presentation?

Which of the media forms does my computer support?

Click the mouse button or press the Space Bar to display the next question. This feature is found on page 306 of your textbook.

Economic Connection 1.1

Technology: Virtual Market Research

Some companies now use computer simulations in their market research. For example, they employ a virtual supermarket to gauge consumer preferences. Volunteer shoppers wander through the supermarket on the computer screen, clicking on the items they would like to buy. Using this market research method, one snack-food company discovered that end-of-aisle displays generated more sales than banner advertising above the shelves where the snacks normally were stocked.

DYK 2.1

Some retailers–especially supermarkets–use a special kind of penetration pricing called the loss leader. A loss leader is a product priced at a very low price–and sometimes negative–profit margin to attract customers away from competing stores. When in the store, customers will buy other products priced at a normal profit margin. This will make up for the loss on the loss leader.

Click the picture to listen to the selection on page 301 of your textbook to find out more about Margaret Whitman. Be prepared to answer questions that appear on the next two slides.

People and Perspectives 1.1


Margaret Whitman1957–


Whitman refers to a community-commerce model. Why do you think she uses this characterization?

eBay started out as a commercial venture. However, the nature of the venture–an online auction house–helped to create a community where people communicated with one another.






What changes in marketing strategy does Whitman foresee for eBay?

Possible changes include getting into merchandise that is not necessarily shippable–large items or items that consumers want to view before buying, reviewing the method of selling, and adding storefronts with fixed prices to the auction approach.

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