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17-4 Principles of Marketing [CH 17

Figure 17.2 The Functions of Marketing

Exhange
Functions:
Buying
Selling

Facilitating Functions:
Standardization and Grading Physical Distribution
Financing Functions:
Risk Taking Transporting
Marketing Information Storing

check to Home Depot for $541.24 to purchase an industrial shop vacuum; obviously
the exchange is the money for the vacuum. So where does marketing fit in?
To simplify the explanation, consider a society with only two family units and
each capable of producing its own food, clothing, and shelter. Are there any unique
qualities or skills that these family production units possess? That is, is there any
expertise that gives one unit an advantage over the other, or are they better at
producing products than the other. In our example, assume that one of the families is
an expert at weaving clothing and that the others are skilled farmers. Without
exchange, each family must satisfy all of its own food, clothing, and shelter needs,
even though the members excel in only one of these areas.
The exchange process allows the families to concentrate production on their
strengths and then to trade clothing for food and vice versa. This specialization and
concentration of labor leads to increased total production and a higher standard of
living for both families. Unless each family markets its over-production, the
exchange process would not occur. By concentrating in specialized abilities and
engaging in exchange, the standard of living for all is raised.

Marketing Adds Value, it Creates Utility

Through the activities that enable exchange to take place, marketing adds value
to products. This added value is termed utility, the want-satisfying power of a good
or service. For example, through the use of raw materials, labor and other inputs,
confectioners produce ice cream, which possesses utility. By making ice cream

form utility available in a consumable form and when the consumer wants an ice cream, the
Converting raw materials and function of marketing creates utility. The consumer will make buying decisions
other inputs into finished based on how well the ice cream meets their demands.
goods and services. In this process, making ice cream, form utility is produced by converting the raw

time utility materials and other inputs into finished goods and services. The marketing function
Utility created by making also creates three other utilities: time, place, and ownership.
goods and services available Time utility is created by having a good or service available when the consumer
when the consumer wants to wants to purchase it. The modern society easily achieves time utility. To have milk
purchase them.
and butter available, one need not have a milk cow, milking her twice a day. Instead
one need only make a quick trip to the local grocery store pick up a gallon of milk
and a pound of butter, and that need is met. Go to any drive-through restaurant and
order hamburger, such as at McDonalds, place your order, pay your money, proceed

place utility to the next window and your order is delivered to you in a paper bag, fully prepared
Utility created by making and ready to eat.
goods and services available Place utility is created by having goods or service available in a convenient
where the consumer wants to location, easily accessible, when the consumer wants to purchase it. A symphony
purchase them.
performance in a park illustrates this utility, as the park is in a convenient location
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