n Chapter 5 Business and Social Responsibility

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Marketing Essentials
n Chapter 5 Business and Social Responsibility
Section 5.1 Defining Business
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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

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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.
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SECTION 5.1
Defining Business
Key Terms

• business
• production
• marketplace
• management
• finance
• nonprofit organizations
• public sector

• private sector
• e-commerce
• industrial market
• derived demand
• wholesalers
• retailers

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SECTION 5.1
Defining Business
The Functions of Business
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
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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
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SECTION 5.1
Defining Business
Management
Management is the process of achieving company
goals by effective use of resources through
planning, organizing, and controlling.
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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.
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SECTION 5.1
Defining Business
Types of Businesses
Businesses can be categorized in the following
ways

• By size
• By profit orientation
• By market served
• By kind of product provided

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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.
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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.
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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 organizations charitable cause.
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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.
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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.

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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.
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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.
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SECTION 5.1
Defining Business
E-commerce
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.
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ASSESSMENT
5.1
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.
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ASSESSMENT
5.1
Thinking Critically
Why would someone want to start a small business?
Describe the success of a small business with
which you are familiar.
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5.1
Graphic Organizer
Business Classifications
Both
Microsoft
Metropolitan Opera
Industrial Goods Profit Global Large
Private Consumer Services
Non-Profit Domestic Small
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Marketing Essentials
End of Section 5.1