Questions & Answers: Economics - Marketing

Review the four major factors to any marketing plan.

1. Product—any elements pertaining directly to the product, including packaging, presentation, or services to include along with it.

2. Price—calculates cost of production, distribution, advertising, etc. as well as the desired profit to determine the final price.

3. Place—what outlets will be used to sell the product, whether traditional outlets such as brick and mortar stores or through direct mail or Internet marketing.

4. Promotion—ways to let consumers know the product is available, through advertising and other means.
Once these elements have all been determined, the producer can proceed with production and distribution of his product.

Define marketing and name the four types of utility.
Marketing consists of all of the activity necessary to convince consumers to acquire goods. One major way to move products into the hands of consumers is to convince them that any single product will satisfy a need. The ability of a product or service to satisfy the need of a consumer is called utility.
There are four types of utility:
· Form utility—a product’s desirability lies in its physical characteristics.
· Place utility—a product’s desirability is connected to its location and convenience.
· Time utility—a product’s desirability is determined by its availability at a certain time.
· Ownership utility—a product’s desirability is increased because ownership of the product passes to the consumer.
Marketing behavior will stress any or all of the types of utility to the consumer to which the product is being marketed.

What three steps are taken to check a product’s market?
There are three steps usually taken to evaluate a product’s market:
· Market research—researching a market to determine if the market will be receptive to the product.
· Market surveys—a part of market research, market surveys ask specific questions of consumers to help determine the marketability of a product to a specific group.
· Test marketing—releasing the product into a small geographical area to see how it sells. Often test marketing is followed by wider marketing if the product does well.

What are two things that determine successful marketing?
Successful marketing depends not only on convincing customers they need the product, but also on focusing the marketing towards those who have a need or desire for the product. Before releasing a product into the general marketplace, many producers will test markets to determine which will be the most receptive to the product.

Explain distribution of income.
Distribution of income in any society lies in a range from poorest to richest. In most societies, income is not distributed evenly. To determine income distribution, family incomes are ranked, lowest to highest. These rankings are divided into sections called quintiles, which are compared to each other. The uneven distribution of income is often linked to higher levels of education and ability in the upper classes, but can also be due to other factors such as discrimination and existing monopolies. The income gap in America continues to grow, largely due to growth in the service industry, changes in the American family unit and reduced influence of labor unions.
Poverty is defined by comparing incomes to poverty guidelines. Poverty guidelines determine the level of income necessary for a family to function. Those below the poverty line are often eligible for assistance from government agencies.

Explain distribution channels.
Distribution channels determine the route a product takes on its journey from producer to consumer, and can also influenced the final price and availability of the product. There are two major forms of distributions: wholesale and retail. A wholesale distributor buys in large quantities and then resells smaller amounts to other businesses. Retailers sell directly to the consumers rather than to businesses.
In the modern marketplace, additional distribution channels have grown up with the rise of markets such as club warehouse stores as well as purchasing through catalogs or over the Internet. Most of these newer distribution channels bring products more directly to the consumer, eliminating the need for middlemen.