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Marketing Essentials n Chapter 5 Business and Social Responsibility Section 5. 1 Defining Business Marketing Essentials n Chapter 5 Business and Social Responsibility Section 5. 1 Defining Business Chapter 5 n Business and Social Responsibility 1

SECTION 5. 1 Defining Business What You'll Learn = What a business is = SECTION 5. 1 Defining Business What You'll Learn = What a business is = The basic functions of a business = How to distinguish businesses from each other based on general characteristics = The importance of e-commerce = The concept of derived demand = The six major types of business that comprise the industrial market Chapter 5 n Business and Social Responsibility 2

SECTION 5. 1 Defining Business Why It's Important Marketing is part of doing business. SECTION 5. 1 Defining Business Why It's Important Marketing is part of doing business. In order to understand the world of marketing, you will want to understand what's involved in doing business and some of the different types of businesses. Chapter 5 n Business and Social Responsibility 3

SECTION 5. 1 Defining Business Key Terms = business = private sector = production SECTION 5. 1 Defining Business Key Terms = business = private sector = production = e-commerce = marketplace = industrial market = management = derived demand = finance = wholesalers = nonprofit organizations = retailers = public sector Chapter 5 n Business and Social Responsibility 4

SECTION 5. 1 Defining Business The Functions of Business is all of the activities SECTION 5. 1 Defining Business The Functions of Business is all of the activities involved in producing and marketing goods and services. Business has two primary functions: = Production of goods and services = Marketing of goods and services Slide 1 of 2 Chapter 5 n Business and Social Responsibility 5

SECTION 5. 1 Defining Business The Functions of Business Production is the process of SECTION 5. 1 Defining Business The Functions of Business Production is the process of creating, growing, manufacturing, or improving on goods and services. Marketing is selling goods and services in the marketplace. The marketplace exists wherever a product is sold to a customer. Slide 2 of 2 Chapter 5 n Business and Social Responsibility 6

SECTION 5. 1 Defining Business Management is the process of achieving company goals by SECTION 5. 1 Defining Business Management is the process of achieving company goals by effective use of resources through planning, organizing, and controlling. Chapter 5 n Business and Social Responsibility 7

SECTION 5. 1 Defining Business Finance The word finance has several meanings in business. SECTION 5. 1 Defining Business Finance The word finance has several meanings in business. It can mean money or anything that can be sold very quickly to get money. It can also mean borrowing money and money management. Chapter 5 n Business and Social Responsibility 8

SECTION 5. 1 Defining Business Types of Businesses can be categorized in the following SECTION 5. 1 Defining Business Types of Businesses can be categorized in the following ways: = By size = By profit orientation = By market served = By kind of product provided Chapter 5 n Business and Social Responsibility 9

SECTION 5. 1 Defining Business Large vs. Small A small business is generally operated SECTION 5. 1 Defining Business Large vs. Small A small business is generally operated by only one or a few individuals, and generally has less than 100 employees. About 95 percent of U. S. businesses are classified as small. A large business generally employs over 1, 000 people, is usually national or global, and has many different departments. Chapter 5 n Business and Social Responsibility 10

SECTION 5. 1 Defining Business Domestic vs. Global Domestic business means doing business within SECTION 5. 1 Defining Business Domestic vs. Global Domestic business means doing business within a single country. Global business means doing business among nations. The Internet makes global business easier. Domestic businesses face competition from foreign global businesses. Chapter 5 n Business and Social Responsibility 11

SECTION 5. 1 Defining Business Profit vs. Nonprofit Although profit is the motivating factor SECTION 5. 1 Defining Business Profit vs. Nonprofit Although profit is the motivating factor in starting most businesses, this is not always the case. Nonprofit organizations are not operated for the purpose of making a profit. All profit goes to the organization’s charitable cause. Chapter 5 n Business and Social Responsibility 12

SECTION 5. 1 Defining Business Public vs. Private Public sector agencies include local, state, SECTION 5. 1 Defining Business Public vs. Private Public sector agencies include local, state, and federal government agencies and services. They are not intended to make a profit. They purchase one-third of goods and services in the U. S. Private sector businesses are not associated with government agencies. Chapter 5 n Business and Social Responsibility 13

SECTION 5. 1 Defining Business Goods or Services Businesses provide either goods such as SECTION 5. 1 Defining Business Goods or Services Businesses provide either goods such as the bread sold in the supermarket, or services like dry cleaning or security. = Business services include financial planning, insurance, real estate, transportation. = Professional services include lawyers, doctors, and dentists. = Information services include newspapers and magazines. Chapter 5 n Business and Social Responsibility 14

SECTION 5. 1 Defining Business Consumer vs. Industrial Consumer products satisfy our own needs SECTION 5. 1 Defining Business Consumer vs. Industrial Consumer products satisfy our own needs and wants. The industrial market is business-to-business. Industrial demand is derived from consumer demand. It is called derived demand. Chapter 5 n Business and Social Responsibility 15

SECTION 5. 1 Defining Business Types of Businesses Wholesalers obtain goods from manufacturers and SECTION 5. 1 Defining Business Types of Businesses Wholesalers obtain goods from manufacturers and resell them to industrial users, other wholesalers, and retailers. Wholesalers are also called distributors. Retailers buy goods from wholesalers or directly from manufacturers and resell them to the consumer. Chapter 5 n Business and Social Responsibility 16

SECTION 5. 1 Defining Business E-commerce allows consumers to buy products over the Internet SECTION 5. 1 Defining Business E-commerce allows consumers to buy products over the Internet without ever setting foot in an actual store. Traditional retailers are adapting their marketing to e-commerce. This is called e-tailing. Chapter 5 n Business and Social Responsibility 17

5. 1 ASSESSMENT Reviewing Key Terms and Concepts 1. What is a business? 2. 5. 1 ASSESSMENT Reviewing Key Terms and Concepts 1. What is a business? 2. What are the two primary functions of business? 3. List four ways that businesses can be categorized. 4. Discuss the significance of e-commerce. Chapter 5 n Business and Social Responsibility 18

5. 1 ASSESSMENT Thinking Critically Why would someone want to start a small business? 5. 1 ASSESSMENT Thinking Critically Why would someone want to start a small business? Describe the success of a small business with which you are familiar. Chapter 5 n Business and Social Responsibility 19

5. 1 Graphic Organizer Business Classifications Microsoft Both Industrial Private Goods Consumer Profit Services 5. 1 Graphic Organizer Business Classifications Microsoft Both Industrial Private Goods Consumer Profit Services Global Large Metropolitan Opera Non-Profit Domestic Small Chapter 5 n Business and Social Responsibility 20

Marketing Essentials End of Section 5. 1 Chapter 5 n Business and Social Responsibility Marketing Essentials End of Section 5. 1 Chapter 5 n Business and Social Responsibility 21