American Marketing Association AMA defines marketing by focusing on Planning and executing Functions of marketing Conception pricing promotion and distribution o Things that sellers do o Finished goods market o Functions Ideas goods and services Example jobs Labor market o Seller you buyer firm o Both sides of marketing Alternative approach Any party not just sellers Utility Any market Anything done by a party that will increase the likelihood of striking the desired transaction Transaction Differentiation Basic concept Seller you want multiple job offers at max utility o Range of choices Buyer firm want multiple candidates at lowest cost Overlap in ranges transaction occurs Gap in ranges no transactions Try to overlap through negotiation o Locations benefits vacation relocation start date wages Problems in negotiation o No experience afraid to negotiate o Must be aggressive to strike transaction Verb process of bringing new products to market Noun new products Origin in PC and trying to avoid escape it by differentiation changing product o Requires investment and resources Investment o Using resources for new resources new product o Resources money skills work equipt etc Investments are risky Cost before benefits Issues Benefits may never occur Benefits may be too little or too late Develop criterion capital budgeting problem decide whether the investment is worth it or not Many most differentiation fails Utility what kind of preferences can this product satisfy o Marketing utilities time location form attributes transaction Time is the product available when you want need it Location is it available where you want to shop Form product characteristics Transaction can make the purchase in the form of money that you want to use Define differentiation o One or more of utility functions has been changed significantly enough for the customer to notice Type of Diff o Novel product rare o Modifications most Have never seen a product like this before Existing product that is tweaked enough to make a difference Product extension old product tweak product sell both in market Product refinement tweak product cars market Why is failure rate so high Tweak a product sell it in market drop old Period of overlap new and old will be in product from market market old drops Primary market new secondary market old 1 for 1 swap o Packaging sizes does differentiate a product o SKU stock keeping unit Number of differentiated versions of a product in A lot of things must go right need to happen o Need idea prototype ability to make prototype in production quantities make product known promotion put product in correct locations customer must want and buy and be the first mover o Many products fail before it enters the market Reduce failure Allocation problems learning about customers wants that o Market research they don t have access to inventing products o Research and development product development Do not need market research o Promotion o Distribution make customers know about product if it isn t available where you want to shop wont buy product wont succeed manufacturer to make product for you then buy it off manufacturer make product self work with o Make buy lease Make expensive easy to follow demand if successful Buy cheapest cant keep up with demand Segmentation about buyers Lease rent facility out to use Cheaper than make more expensive than buy More flexibility o Debt driven use as little money as possible because failure is so high Definition a segment is a group of buyers with similar o Segmentation is the process of making segments how we figure out what segments are there Market research studies o Surveys very broad inexpensive general o Focus groups get people together and discuss product More time and money potentially richer data o Taste testing produce prototypes more expensive know more info see what people prefer o Data mining observe what customers do and make inferences Tradeoff more expensive but get richer data Most expensive need specific type of tech to Make inferences about data statistics based off collect data research Segmentation variables data easy to access info about target market o Demographic age race education gender o Geography o Income economic o Psychology lifestyle Product lifecycles Intro stage o Before time zero all generic product o Someone enters market with differentiated product first mover Many differentiated products fail o If move out of intro stage can escape PC and enter monopolistic comp o More people will become second movers Growth stage Second movers enter o Early second movers Cloning copy product for lower price There is already a demand for product less likely to fail Have the capacity to make more Leapfrogging premium price higher price Improve product Same product with better features only needed attributes Camera on phone Demand increases price increases If insufficient capacity price increases Eventually ends no more additional Unstandardized same product but not attributes to add generic product o Late second movers Capacity Existing product spreading out by the time it reaches one area it less popular Store like macys picks it up and sells it at macys price No discernable impact on price Brands A brand is an identifier Brand name word o Must get brand name legally protected Make sure you aren t using anyone else s name vise versa Usually has if protected Protect name so no one else can use it If not protected goes into common use escalator o Sources of brand names last names of founders Honda or made up words acura Brand mark symbol logo o Can also be legally protected Emotional affective feeling Cognitive beliefs facts Predisposition to behave tendency to buy or repurchase product possibly advertise it to others Build associations by providing info by an emotional feel Associations Owners Manufacturing Pharmaceuticals Single product Unique individual Multiple products Family Food Kraft Heinz Retailer Big Mac Manufacturing brand Maker brand Producer brand National brand Retail brand Proprietary brand Store brand Private label Apparel American eagle doesn t have to be home of store primary market Secondary market TJ Maxx Brand equity Economic value of a brand forward estimate NOT the cost of producing the brand What drives brand equity o Brand recognition if people don t know what the brand is they probable will not buy your product o Brand loyalty recognize brand buy it regularly likely to indirectly advertise for your brand Is brand