1.2 The Importance of Marketing MARKETING MR. PAVONE Economic Benefits of Marketing The study of marketing allows you to realize how important marketing is and how much it affects your life and the lives of other consumers. Marketing allows competition to take place, staking an important role in the economy. New and Improved Products Marketing generates competition, which in turn fosters new and improved products to satisfy customers’ wants and needs, also creating a larger variety of new goods and services. Example: Personal computers becoming smaller, lighter, more powerful and less expensive. Lower Prices Marketing increases demand, helping to lower prices because when demand is high, manufacturers can produce products in large quantities and this in turn reduces the unit cost of the product and ultimately, the price paid by the consumer. When products become more popular, more competitors enter the marketplace and marketers lower their costs to remain competitive. Example: Introduction of DVD players in 1997. Added Value and Utility The functions of marketing add value to a product, this is called utility. Utility – An attribute of a product or service that makes it capable of satisfying consumers’ wants and needs. There are five economic utilities involved with all products: Form Utility – Changing raw materials or putting parts together to make them more useful and making products that consumers need or want. Place Utility – Having a product where customers can buy it. Time Utility – Having a product available at a certain time of year or a convenient time of day. Possession Utility – The exchange of a product for money and the options given for taking legal ownership of a product. Information Utility – Communication with the customer, explanation of features and benefits of products.