American Marketing Association (AMA) defines marketing by focusing onPlanning and executingFunctions of marketing - Conception, pricing, promotion, and distributionThings that sellers doFinished goods marketFunctionsIdeas, goods, and servicesExample – jobsLabor marketSeller  you , buyer  firmBoth sides of marketingAlternative approachAny party (not just sellers)UtilityAny marketAnything done by a party that will increase the likelihood of striking the desired transactionTransactionSeller – you – want multiple job offers at max utilityRange of choicesBuyer – firm – want multiple candidates at lowest costOverlap in ranges – transaction occursGap in ranges – no transactionsTry to overlap through negotiationLocations, benefits (vacation), relocation, start date, wagesProblems in negotiationNo experience, afraid to negotiateMust be aggressive to strike transactionDifferentiationBasic conceptVerb – process of bringing new products to marketNoun – new productsOrigin – in PC and trying to avoid/escape it by differentiation (changing product)Requires investment and resourcesInvestment *********Using resources for new resources – new productResources – money, skills, work, equipt, etcInvestments are riskyCost before benefitsBenefits may never occurBenefits may be too little or too lateDevelop criterion – capital budgeting problem (decide whether the investment is worth it or not)Many/most differentiation failsIssuesUtility – what kind of preferences can this product satisfy?Marketing utilities – time, location, form (attributes), transactionTime – is the product available when you want/need it?Location – is it available where you want to shop?Form – product characteristicsTransaction –can make the purchase in the form of money that you want to use?Define differentiationOne or more of utility functions has been changed significantly enough for the customer to noticeType of DiffNovel product (rare)Have never seen a product like this beforeModifications (most)Existing product that is tweaked enough to make a differenceProduct extension – old product  tweak product  sell both in marketProduct refinement – tweak product – carsTweak a product, sell it in market, drop old product from marketPeriod of overlap (new and old will be in market) – old dropsPrimary market – new // secondary market – old1 for 1 swapPackaging sizes does differentiate a productSKU – stock keeping unitNumber of differentiated versions of a product in marketWhy is failure rate so high?A lot of things must go right/ need to happenNeed 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 moverMany products fail before it enters the marketReduce failure - Allocation problemsMarket research – learning about customers wants (that they don’t have access to)Research and development/ product development – inventing productsDo not need market researchPromotion – make customers know about productDistribution – if it isn’t available where you want to shop, wont buy product – wont succeedMake, buy, lease – make product self/ work with manufacturer to make product for you, then buy it off manufacturerMake  expensive, easy to follow demand if successfulBuy  cheapest, cant keep up with demandLease  rent facility out to useCheaper than make, more expensive than buyMore flexibilityDebt driven – use as little money as possible because failure is so highSegmentation – about buyersDefinition – a segment is a group of buyers with similarSegmentation is the process of making segments (how we figure out what segments are there)Market research studiesSurveys – very broad, inexpensive, generalFocus groups – get people together and discuss productMore time and money  potentially richer dataTaste testing – produce prototypes, more expensive, know more info, see what people preferData mining – observe what customers do, and make inferencesTradeoff  more expensive but get richer dataMost expensive – need specific type of tech to collect dataMake inferences about data (statistics) based off researchSegmentation variables – data, easy to access, info about target marketDemographic – age, race, education, genderGeographyIncome/economicPsychology/ lifestyleProduct lifecyclesIntro stageBefore time zero, all generic productSomeone enters market with differentiated product (first mover)Many differentiated products failIf move out of intro stage, can escape PC and enter monopolistic compMore people will become second moversGrowth stageSecond movers enterEarly second moversCloning – copy product for lower priceThere is already a demand for product – less likely to failHave the capacity to make moreLeapfrogging – premium price – higher priceImprove productSame product with better features – only needed attributesCamera on phoneDemand increases, price increasesIf insufficient capacity = price increasesEventually ends – no more additional attributes to addUnstandardized – same product but not generic productLate second moversCapacityExisting product spreading out, by the time it reaches one area it less popularStore like macys picks it up and sells it at macys priceNo discernable impact on priceBrandsA brand is an identifierBrand name (word)Must get brand name legally protectedMake sure you aren’t using anyone else’s name (vise versa)Usually has ® if protectedProtect name so no one else can use itIf not protected  goes into common use (escalator)Sources of brand names – last names of founders (Honda) or made up words (acura)Brand mark – symbol/logoCan also be legally protectedAssociationsEmotional/affective/feelingCognitive/beliefs/factsPredisposition to behave – tendency to buy or repurchase product – possibly advertise it to othersBuild associations by providing info by an emotional feelOwnersSingle productUnique/individualMultiple productsFamilyManufacturingPharmaceuticalsFood – Kraft, HeinzManufacturing brandMaker brandProducer brandNational brandRetailerBig MacApparel – American eagle (doesn’t have to be home of store – primary market)Secondary market – TJ MaxxRetail brandProprietary brandStore brandPrivate labelBrand equity ***********Economic value of a brand – forward estimateNOT the cost of producing the brandWhat drives brand equity?Brand recognition – if people don’t know