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Marketing Economic Foundations

Marketing Economic Foundations. Unit 4. An understanding of the economy is essential in order to make effective marketing decisions. Economics. Economy. Understanding economic information is important to businesses and effective marketing.

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Marketing Economic Foundations

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  1. MarketingEconomic Foundations Unit 4 An understanding of the economy is essential in order to make effective marketing decisions.

  2. Economics Economy • Understanding economic information is important to businesses and effective marketing. • The way a nation makes economic choices about how the nation will use its resources to produce and distribute goods and services 4.1

  3. 4.2 Identify the basic factors/ economic resources of production Resources (economic resources) • Factors of production • All things used in producing goods and services 4.2

  4. Factors of Production Factors of Production the resources available to develop products and services; classified as land, capital, entrepreneurship, and labor • Category Activity 4.4.1

  5. Activity • List everything that went into the making of… 1.7

  6. 4.2.1Differentiate between the basic factors of production Land Labor Capital 4.4.1

  7. Factors of Production Land/Natural • All the natural resources of a nation • Examples: • Coal • Crude oil • Lake • All living things in a lake 4.4.1

  8. Factors of Production Labor/Human • All the people who work in the economy • Full time and part time • Public and private sector 4.4.1

  9. Factors of Production Capital • Money needed to start and operate a business • Goods used in production process • Examples: • Factories • Office buildings • Computers 1.4, 1.4.1 4.4.1

  10. Factors of Production • Another factor of production is Entrepreneurship. • Without entrepreneurship, no good or service would be produced. 4.4.1

  11. Factors of Production Entrepreneurship Entrepreneurship: “the engine” • The skills of people who are willing to risk their time and money to run a business • Entrepreneurs organize the other factors of production to create the goods and services desired in an economy 4.4.1

  12. 4.3 List the four types of economic utilities Economic Utilities • Attribute of a product or service that makes it capable of satisfying consumers wants and needs • Form utility • Place utility • Possession utility • Time Utility 4.3

  13. 4.3.1 Differentiate between the four types of economic utilities • Form utility • Results from changes in the tangible parts of a good or service • Place utility • Making products and services available where the consumer wants them 4.3

  14. Economic Utility • Time utility • Making products and services available when the consumer wants them • Possession utility • Results from the affordability of the product or service 4.3

  15. 4.4 Explain the concepts of scarcity • People’s wants and needs—unlimited. • Resources—limited. • Unlimited wants and needs combined with limited resources result in scarcity. 4.4

  16. 4.4.1 Discuss the concept of scarcity Scarcity • Difference between what consumers want and need and what the available resources are 4.4

  17. Scarcity www.youtube.com/watch?v=OS_9A_EA30Mutube.com/watch?v=OS_9A_EA30M Click for video explaining scarcity 4.4

  18. 4.5 Identify the economic systems • Type of system determines… • WHAT goods/services should be produced? • HOW should the goods/services be produced? • FOR WHOM should the goods/services be produced and distributed? 4.5

  19. 4.5.1 Compare the economic systems Command/controlled economy • An economic system where resources are owned by the government and the government answers the economic questions • Government • attempts to own and control resources • decides what will be produced/consumed 4.5.1

  20. Economic Systems Capitalism • An economic system where resources are owned by individuals and the marketplace answers the economic questions • “Free Enterprise” • Market Economy • Resources—Individuals • Decisions made independently • No regulation/control 4.5.1

  21. Economic Systems • Mixed economy • Some goods/services government provided • Some by private enterprise 4.4.1

  22. Mixed Economy Give some examples of how the U. S. is a mixed economy. The United States is a mixed economy, containing features of both a market economy and a command economy 4.5

  23. Economic Systems How do the economies of these countries compare? China Taiwan South Korea North Korea Sweden Mexico 4.5.1

  24. 4.6 Discuss supply and demand Supply Demand • Amount of goods producers are willing to make/sell. • Consumer willingness/ability to buy products. 4.6

  25. 4.6.1 Identify factors that affect supply and its relationship to demand Changes in factors of production Availability of substitutes Number of suppliers 1.7

  26. Surplus 4.6 http://www.freeshipping.org/blog/best-time-to-buy-guide/ Occurs when supply exceeds demand

  27. Supply & Demand Shortage • When demand exceeds supply • Wii, Christmas 2007 • http://www.wired.com/gaming/hardware/news/2007/12/get_wii 4.6

  28. Supply & Demand Equilibrium • Exists when the amount of product supplied is equal to the amount of product demanded 4.6

  29. Supply & Demand Simple Supply and Demand Chart 4.6

  30. 4.6 Explain elasticity of demand • Click for elasticity of demand explanation. 4.7

  31. Elasticity of Demand Elastic Demand • Market situation in which a price decrease will increase revenue 4.7

  32. Elasticity of Demand Inelastic Demand • Market situation in which a price decrease will decrease revenue 4.7

  33. 4.7.1 Differentiate between products that have elastic and inelastic demand Elastic or Inelastic? 4.7

  34. 4.8 Discuss economic measurements Gross Domestic Product • Total value of goods and services produced within a country during the year 4.8

  35. 4.8.1 Differentiate between GDP, Productivity, Inflation, Consumer Price Index and Unemployment Rate Productivity • Average output by workers for a specific period of time 4.8

  36. Economic Measurements Productivity 4.8

  37. Economic Measurements Inflation • When prices increase faster than the value of goods and services 4.8

  38. Economic Measurements Consumer Price Index • Change in the cost of a specified set of goods and services over time 4.8

  39. Economic Measurements Unemployment Rate • Percentage of the work force that is unemployed at any given date 4.8

  40. 4.9 Explain the business cycle Business Cycles • The recurring changes in an economy 4.9

  41. Business Cycle Prosperity/Expansion • When the economy is flourishing 4.9

  42. Business Cycle Recession • Period of economic slowdown 4.9

  43. Business Cycle Depression/Trough • Period of prolonged recession 4.9

  44. Business Cycle • Recovery • End of recession or decline 4.9

  45. 4.9.1 Create a graph showing the phases of the business 4.9

  46. 4.10 Discuss government involvement in Global Trade Balance of Trade • Difference between the amount of a country’s imports and exports 4.10

  47. 4.10.1 Interpret a table on balance of trade illustrating exports and imports 1.7

  48. 4.10.2 Differentiate between different types of trade barriers Tariffs • Taxes placed on imported products to increase the price for which they are sold 4.10

  49. Global Trade Quotas • Limits on the numbers of specific types of products that foreign companies can sell in the country 4.10

  50. Global Trade Embargo • Government prohibition against the shipment of certain products to a particular country for economic or political reasons 4.10

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