Economic and marketing

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BLIDA UNIVERSITY

FACULTY OF ECONOMIC AND MANAGEMENT

ENGLISH SEARCH .

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2004/2005

SECTION 1 : ECONOMIC



1/-DEFINITION OF ECONOMIC

2/-ECONOMIC PROBLEMS

3/- HOW THE ECONOMY GROWS

4/- KINDS OF ECONOMIC SYSTEMS

5/-THE DEVELOPMENT OF ECONOMICS



SECTION 2 : MARKETING



1/- MARKETING

2/- MARKET RESEARCH

3/- PRODUCT DEVELOPMENT

4/- DISTRIBUTION

5/- PRICING

6/- PROMOTION

7/- CANALISE PRODUCT





SECTION 1 : ECONOMIC



1/-DEFINITION OF ECONOMIC


Economics is the social science concerned with the analysis of commercial activities and with how goods and services are produced. The field of economics studies how the things people need and want are made and brought to them. It also studies how people and nations choose the things they buy from among the many things they want.

In all countries, the resources used to produce goods and services are scarce. That is, no nation has enough farms, factories, or workers to produce everything that everyone would like. Money is also scarce. Few people have enough money to buy everything they want when they want it. Therefore, people everywhere must choose the best possible way to use their resources and money. Children may have to choose whether to spend their allowance on a film or a hamburger. Shopkeepers may have to choose whether to take a summer holiday or to use their savings to buy more goods. A nation may have to choose whether to use tax-payers' money to build more roads or more submarines. In economic terms, the children, the shopkeepers, and the nation all must economize in order to satisfy their most important needs and wants. This means they must try to use the resources they have to produce the things they most want.

Economists (specialists in economics) define economics as the study of how goods and services get produced and how they are distributed. By goods and services, economists mean everything that can be bought and sold. By produced, they mean the processing and making of goods and services. By distributed, they mean the way in which goods and services are divided among people.
2/-ECONOMIC PROBLEMS


Every nation must organize the production and distribution of goods and services wanted by its citizens. To do this, a nation's economic system must solve four basic problems: (1) What shall be produced? (2) How shall goods and services be produced? (3) Who shall get the goods and services? and (4) How fast shall the economy grow?

What shall be produced? No nation can produce enough goods and services to satisfy all its people. But which goods and services are most important? Should land be used to rear animals or grow wheat? Should factories be used to produce tractors, or television sets?

How shall goods and services be produced? Should each family grow its own food and make its own clothing? Or should special industries be developed to provide these products? Should many workers be used in an industry? Or should more machines be used instead?

Who shall get the goods and services? Should everyone have an equal share of goods and services? Which goods and services should go only to people who can afford to buy them? Which goods and services should be distributed in some other way?

How fast shall the economy grow? An economy grows when it produces more goods and services. A nation must decide what proportion of its scarce resources should be used to build factories and machines and provide more education, all of which will increase future production. How much of a nation's resources should be used to produce goods and services, such as food and clothing, for immediate use? In addition, the nation must decide how to avoid unemployment and other economic setbacks that waste resources.


3/- HOW THE ECONOMY GROWS


An economy must grow to provide people with an increasing standard of living--that is, more and better goods and services.

Making the economy grow. Four main elements make it possible for nations to produce goods and services. These elements, called productive resources, are: (1) natural resources, (2) capital, (3) a labour force, and (4) technology. Economists define natural resources as all land and raw materials, such as minerals, water, and sunlight. Capital includes factories, tools, supplies, and equipment. Labour force means all people who work or are seeking work, and their education and skills. Technology refers to scientific and business research and inventions.

In order to grow, a nation's economy must add to its productive resources. For example, a nation must use some of its resources to build factories, heavy equipment, and other capital goods. A nation also must develop additional natural resources, create new technologies, and train scientists, workers, and business managers, who will direct future production. The knowledge of these people is known as human capital.

Measuring economic growth. The value of all goods and services produced in any year makes up a nation's gross domestic product. An economy's rate of growth is measured by the change in its gross domestic product over a period, usually year on year. In the period 1970 to 1988, the gross domestic products of different countries grew at widely different average rates, after adjustments were made for inflation. The following rates were achieved: the United Kingdom (UK) 2.2 per cent, the United States 2.9 per cent, Ireland 3.0 per cent, Australia 3.3 per cent, Canada 4.4 per cent, Malaysia 6.5 per cent, Singapore 8.0 per cent, and South Africa 9.2 per cent.

Another way of measuring a nation's economic growth is to study the standard of living of its people. To judge standard of living, economists sometimes divide a nation's total gross domestic product by its entire population. The resulting figure is called the per capita GNP. The per capita GNP of a nation is the value of goods and services each person would receive if all the goods and services produced in the nation that year were divided evenly among all the people.

4/- KINDS OF ECONOMIC SYSTEMS


Different economic systems have developed because nations have never agreed on how to solve their basic economic problems. Three important economic systems today are (1) capitalism, (2) mixed economies, and (3) Communism. The economies of many countries include elements from several different economic systems.

Capitalism is the economic system of many countries throughout the world. It is called capitalism because an individual can own land and such capital as factories, buildings, and railways. Capitalism is also known as free enterprise because it allows people to carry out their economic activities largely free from government control.

The Scottish economist Adam Smith first stated the principles of the capitalist system in the 1700's. Smith believed that governments should not interfere in most business affairs. He said the desire of business people to earn a profit, when regulated by competition, would work almost like an "invisible hand" to produce what consumers want. Smith's philosophy is known as laissez faire (noninterference).

Adam Smith's emphasis on individual economic freedom still forms the basis of capitalism. But the growth and complexity of modern businesses, cities, and technologies have led people to give the government more economic duties than Smith gave it.

Mixed economies involve more government control and planning than do capitalist economies. In a mixed economy, the government often owns and runs such important industries as transport, electricity, gas, and water. Most other industries may be privately owned.

Communism, in its traditional form, is based on government ownership of nearly all productive resources and government control of all important economic activity. Government planners make all decisions about producing, pricing, and distributing goods. However, in many countries where this system has been adopted, the economy has not prospered. In the mid-1980's, China began to relax its governmental control over business activity and prices. In the late 1980's and early 1990's, governments rejecting Communist principles succeeded Communist governments in many Eastern European countries and the Soviet Union.

5/-THE DEVELOPMENT OF ECONOMICS


Early beginnings. People have been interested in economic problems since earliest times. One of the earliest socio-economic systems (systems that involve both social and economic factors) was manorialism. Under the manorial system, landlords rented out land to tenants or employed people to do work on the land in return for wages. This system still operates in some countries today. Manorialism started at the end of the Roman Empire and became widespread in western Europe.

The first major theories about a nation's economy were not developed until the 1500's, the beginning of the period of mercantilism. The mercantilists believed that a government should regulate economic activities to establish a favourable balance of trade. They said nations could increase money supply by exporting more products than they imported.
During the 1700's, a group of French writers known as physiocrats attacked mercantilism. The physiocrats believed that governments should interfere less in economic life. They were the first economists to use the term laissez faire to mean noninterference by the government. The physiocrats also began the first organized study of how economies work.

The classical economists. Most economists today consider Adam Smith to be the father of modern economics. Smith, a Scottish professor of philosophy, built on some of the ideas of the physiocrats. Smith's book The Wealth of Nations (1776) includes many ideas that economists still accept as the basis for private enterprise. Smith believed that free competition and free trade help an economy grow. He said the government's main role in economic life should be to assure effective competition. Smith and his followers became known as classical economists.

Three British economists of the late 1700's and the 1800's wrote particularly influential works. David Ricardo published strong arguments for free trade among nations. Thomas Robert Malthus challenged some of Smith's ideas but developed others further. Malthus warned that if populations continued to grow, nations someday would not be able to produce enough to feed all the people. John Stuart Mill proposed that profits be divided more equally among employers and workers.

Karl Marx and Communism. Some writers disagreed with the idea that competition would lead to economic progress. The most influential was Karl Marx, a German philosopher of the 1800's. In his book Das Kapital (Capital), Marx interpreted human history as a struggle between the ruling class and the working class. He declared that free enterprise would lead to increasingly severe depressions, and eventually to a revolution by the workers. In the Communist Manifesto, Marx and his friend Friedrich Engels called for an economy in which the government would own most of the property. Marx's theories provided the basis for the development of Communism.

New solutions for old problems. During the late 1800's and the early 1900's, economists began to use scientific methods to study economic problems. In France, Leon Walras worked out a mathematical statement to show how each part of an economy is related to all the other parts. Wesley Clair Mitchell, an American, urged economists to use statistics in testing their theories. Mitchell also studied booms and depressions.

The Great Depression of the 1930's caused economists to seek a new explanation of depressions. John Maynard Keynes, a British economist, attacked the idea that free markets always lead to prosperity and full employment. In The General Theory of Employment, Interest and Money, Keynes suggested that governments could help end depressions by increasing their own spending.

During the 1960's and 1970's, a group of economists called monetarists rejected many of the theories of Keynes and his followers. Instead, the monetarists urged that governments increase the money supply at a constant rate to stabilize prices and promote economic growth. Milton Friedman, an American economist, became the leading spokesman for monetarism.

Research today generally centres on understanding the relationship between various parts of the economy. Economists base their findings on observation, on case studies, and on other methods of research. Many economists emphasize the use of mathematics and statistics in testing economic theories. Their method is known as econometrics. Economic analysis has been applied to many problems that seem unrelated to production, such as education, family life, and government. Whenever resources available to achieve an objective are limited, economic analysis may be useful.



SECTION 2 : MARKETING


1/- MARKETING


Marketing is the process by which sellers find buyers and by which goods and services move from producers to consumers. There are many marketing activities. For example, advertising and selling are part of the marketing process. Other marketing activities include financing by banks and deliveries to shops and homes. Marketing is so important to industry that about half the cost of goods and services results from the marketing process.

Consumers in most countries can choose from a huge variety of products and services. Therefore, a company must have an effective marketing programme to make its products and services attractive to customers. Every growing business engages in five major marketing activities: (1) market research, (2) product development, (3) distribution, (4) pricing, and (5) promotion.


2/- MARKET RESEARCH


Market research is the study of the probable users of a product or service. Such potential customers are called a market. It also examines competitive products and the way in which they are sold and distributed. There are many sources of market information. For example, government statistics about population and income indicate the size of a market and its purchasing power.

3/- PRODUCT DEVELOPMENT


Product development includes determining the various goods to be offered, as well as developing the products themselves. Manufacturers continually meet the demands of the public by adding new products, changing existing ones, and dropping others.

4/- DISTRIBUTION


Distribution is the movement of goods and services from producer to consumer. A manufacturer must establish a system that keeps products moving steadily from the factory to the customer. Such a system is called a marketing channel or a channel of distribution.

Many types of companies take part in distribution. They include wholesalers, who sell large quantities of goods to retailers. The retailers, in turn, sell small numbers of products to consumers. Independent dealers and agents buy goods from manufacturers in large quantities and sell them to retail dealers in small quantities. Other firms provide such services as financing, transportation, and storage.
5/- PRICING


Pricing. When setting the price of a product, most manufacturers start with their unit production cost, the expense of making one unit of the item. They add a percentage of this cost to provide a profit for themselves. Each firm adds an amount that covers its expenses and enables it to make a profit. The amount added at each stage is called a markup. The final selling price of an item equals its production cost plus the total of the markups. See PRICE; PROFIT.

Some people believe a large part of the money spent on marketing is wasted. But most economists believe the marketing process actually benefits consumers. For example, market research helps industry offer what customers need and want. Marketing also provides consumers with shopping information and makes products available in convenient quantities at nearby ********s.

6/- PROMOTION

Promotion includes advertising, catalogues, coupons, direct-mail, in-store displays, and door-to-door sales. Companies engage in a variety of promotional activities to inform customers about products and services and to persuade them to buy. See the articles on ADVERTISING and SALESMANSHIP for more information about this phase of marketing

7/- CANALISE PRODUCT


Market research is the process of gathering and analysing information to help business firms and other organizations make marketing decisions. Business executives use market research to help them identify markets (potential customers) for their products and decide what marketing methods to use. Government officials use such research to develop regulations regarding advertising, other sales practices, and product safety.

Market research services are provided by several kinds of companies, including advertising agencies, management consultants, and specialized market research organizations. In addition, many large business companies have their own market research department.

Market researchers estimate the demand for new products and services, describe the characteristics of probable customers, and measure potential sales. They determine how prices influence demand, and they test the effectiveness of current and proposed advertising. Market researchers also assess a company's sales personnel and analyse the public "image" of a company and its products.

A market research study begins with a statement of the problem that the client wants to solve. This statement leads to a detailed definition of the information to be gathered. There are two types of market research information, secondary data and primarydata.

Secondary data are statistics and other information that are already available from such sources as government agencies and universities. To save time and money, market researchers use secondary sources as much as they can. Primary data are data that must be obtained through research. The chief techniques for gathering such data include mail questionnaires, interviews, retail store ****f audits, use of electronic scanners at retail checkout counters, and direct observation in stores. The researchers design and test research materials, such as questionnaires or guides for interviewers. Finally, they collect the data, analyse the information, and report the results of their study. The computer is an important tool in analysing market research data. Market research can reduce the risk involved in many business decisions, but some risk always remains.


Additional resources



Bungum, Jane. Money and Financial Institutions. Lerner 1991.

Gall. Junior Worldmark Encyclopedia of the Nations. Gale Research, Detroit, Michigan, U.S.A., 1995.

Rendon, Marion and Kranz, Rachel. Straight Talk About Money. Facts On File 1992. Guidelines for managing personal finances.

Silk, Leonard. Economics in Plain English. Rev. ed. Simon & Schuster 1986. Paperback.

Young, Robin R. The Stock Market. Lerner 1991. Explains the basics of stock market investment.

Backhouse, Roger. The History of Modern Economic Analysis. Blackwell, Cambridge, Massachusetts, U.S.A., 1997.

Blinder, Alan S. Hard Heads Soft Hearts: Tough-Minded Economics for a Just Society. Addison-Wesley 1987. Argues in favour of economic policy that promotes both efficiency and social welfare.

Calleo, David P. The Bankrupting of America: How the Federal Budget Is Impoverishing the Nation. Morrow 1992. Analysis of the causes and consequences of the federal deficit.

Friedman, Milton and Rose. Free to Choose. Harcourt 1980. Argues for free market economy.

Galbraith, John K. Economics in Perspective: A Critical History. Houghton 1988.

Heilbroner, Robert L. and Thurow, Lester C. Economics Explained. Simon & Schuster 1994. Discusses international monetary systems, currency fluctuations, inflation, and unemployment.

Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Harcourt 1965.

Smith, Adam. The Wealth of Nations. Random House. 1993.

Thurow, Lester C. Head to Head: The Coming Economic Battle Among Japan, Europe, and America. Morrow 1992. A look at the possible future of global economic competition.

Baker, Michael J. Marketing - Theory and Practice. MacMillan, Basingstoke, Hampshire, UK, 1983.

Bennet, Peter D. Marketing. McGraw Hill, Maidenhead, Berkshire, UK, 1988.

Butler, J.T.F. Marketing - An Introduction. Oxford Business Publishing, Oxford, UK, 1990.

Hassan. Global Marketing. Ed 2. Harcourt Brace College Publishers, Orlando, Florida, U.S.A., 1996.

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