Chapter Eighteen

The American Economy

Goods and Services

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Distributing Goods

Distributionproduction

• businesses and industries produce goods and services that supply people's needs• after goods are made, they must be delivered to the people who

want them

distribution• the process of moving goods from manufacturers to markets• two sides

• transportation• moves goods

• marketing• convinces people to buy goods

transportation• has always been important in such a vast land as the U.S.

• early in its history a good system of transportation was necessary to unify the young country• experienced a long period of road, canal, and railroad building

• development made it possible for American businesses to sell their goods throughout the country

chief method of transportation for nearly a century• greatly helped American industry• helped create a single, large market for products

• long freight trains rolled from coast to coast carrying raw materials and finished products

• brought new goods to every U.S. city, to most towns, and within reach of many farms

• gave businesspeople a means of rapid travel and communication

mid-1900s• found it difficult to compete with trucks, buses, cars, and airplanes

1960s - 1970s• many railroads went out of business• Congress created Amtrak

• main provider of long-distance passenger trains

today• many tracks and trains in the railroad system are in poor condition• U.S. trains not as fast as more modern trains in some countries• still important to carry bulk cargo - coal and grain

Railroads

Air Transportationfirst flight in 1903

• Wright brothers

1910s - 1940s• primarily used for military purposes, mail transport, crop dusting

today• change from propeller to jet engines• have grown rapidly in passenger transportation• modern research, equipment, and management methods have

made airlines in the U.S. among the best in the world• carries all first-class mail between U.S. cities located over a

certain distance apart• important in quickly transporting freight long distances

• small packages, large industrial machinery, automobiles

problems• small load capacity• large airports necessary• expensive aviation fuel• increased security issues

automobile• leading means of transportation in the U.S.• carry about 85 percent of passengers

• more than all other kinds of transportation combined

trucks• leading means to transport goods

roads• U.S. maintains a vast highway system

• now has more than 4 million miles of roads• interstate highway system reaches every part of the country

• toll roads• highways where drivers must pay a fee to use the roads

• freeways• multi-lane roads used free of charge

• buses, cars, and trucks travel the highways at all hours

problems• traffic jams, accidents, air pollution, heavy use of fuels and oil• high fuel costs = higher prices

The Highway System

waterways• rivers, canals, lakes, oceans• boats, barges, ferries, container ships• moves smaller amounts than other methods

advantages• easy access for manufacturers and consumers located nearby

problems• weather issues

• drought, floods, ice, storms and hurricanes

Water Transport

Delivering Servicesmany different types of businesses in the service sector

• tourism, restaurants, retail, entertainment, personal care• news media, leisure industry, education, health care, consulting,

investment, legal advice

service delivery• in person• retail stores• telephone• Internet

selling goods in large quantities• modern supermarkets and large department stores use this kind of

large-scale selling

one-price system• prices are stamped or bar-coded onto products• standard practice almost everywhere

self-service shopping• efficient and inexpensive way to sell goods

• saves time and labor• customers select items themselves• clerk scans the purchases at a cash register

• some stores offer self-service checkout

standard packaging• goods come from factories already wrapped, packaged, weighed,

measured, etc.

bargaining• for large items such as houses, boats, and automobiles

bar-coding• used to collect information about products

• keeps track of how many items are being sold and the stock on hand

Mass Marketing

Wholesalers and Retailers• products may pass through several hands from the factory to

the customer• wholesaler

• also called distributors• buys large quantities of goods from a factory• owns a large warehouse where goods are stored• sells the goods to retail stores• perform the service of linking the factory and the retailer

• retailers• sells the goods directly to the public

• customers must pay for this transfer of goods• prices increase with every step

• chain stores, large department stores, and supermarkets often have their own warehouses and have no need for distributors• they can sometimes offer goods at lower prices

• distribution and marketing of goods costs a great deal of money• efficiency in mass distribution reduces the prices of the items you buy

Shopping Mallsshopping center

• large complexes featuring different types of stores, surrounded by parking areas or access to public transportation• anchor stores are usually a large supermarket or department store• there are often dozens of other stores and shops

• highly efficient marketing• customers can drive in, park their cars, and buy almost everything they need• many stores can afford to sell goods at lower prices because malls draw more

customers

chain stores• owned and operated by a company that has many of the same kind of store

• may purchase its goods directly from a factory or farm, or it may have its own production centers

• can offer its products at lower cost because it buys or produces those goods in large quantities

specialty shops• sell only certain kinds of goods or offer a particular kind of service

• women's or men's clothing, books, toys and games, coffee shops

internet sellers• shop online for goods and services

Advertising• makes mass marketing possible• informs people about products and tries to

persuade them to buy these products• cons

• some forms of advertising do not accurately represent products• encourages people to buy products that they do not need• shoppers are sometimes confused when several producers claim that

their product is best or most effective• pros

• competition among mass producers, marketers, and advertisers helps keep the quality of products high and prices low

• national advertising makes it possible for producers to sell their products throughout the country

• useful way for a producer to inform shoppers about a new product

brand names• a product that is widely advertised and distributed

• people often buy brand-name products they have heardabout most favorably or most often