Marketing concepts Sellers in perfect competition generally have little or no control over prices and little to no opportunities for profit Sellers have significant incentives to be innovative to gain some level of control over pricing and profits This produces for possible strategies each with economic costs potential benefits and significant risk Product differentiation Can be achieved by o Development of a novel product o Modification of an existing product which can be accomplished via Product extension Product differentiation Firms may choose to differentiate products via being a first mover or a second movers and if a second mover as a fast or slow mover Many new products fail Differentiation tends to be more successful when there exists a customer segment which prefers the differentiated product to the existing generic or other differentiated product o Buyer preference utility can be subdivided to form place time and transaction utilities o Although each buyer has unique preferences for which any product we also assume that many buyers have similar utility functions Segments are sets of buyers with similar utility functions Utility functions are not directly visible or easily measured directly Therefore we use more visible surrogates to identify segments These segmentation variables include various demographic economic geographical and social psychological factors o Competition based on modification of the product s ability to deliver incremental aspects of any all of these utilities non price competition Buyers may shop on price value or status In practice buyers usually don t know all the sellers but shop from a constrained set Branding is an important aspect of product identification and value enhancement The total value of the brand to the producer or retailer brand equity Products have life cycles and at various points in the product life cycle there are different opportunities to differentiate further or to reduce costs Pricing is a decision making process that may be the purview of the seller or buyer which assumes there may be multiple possible objectives that each party is trying to achieve and multiple possible strategies Promotion mix marketing communication mix Marketing is the process by which one party in a market attempts to increase the likelihood that they strike the transactions that they wish to strike Elements if this process that we have discussed to far include o Pricing and price o Product differentiation and customer segmentation o Branding o Promotion mix Promotion mix is the communication linkage between the parties in the transaction Promotion mix refers to the set of methods used to manage the customer buying process over time happy after you have bought Many things that may cause you to buy aren t the same things that make you o Finding a balance among influence real satisfaction of need and customer retention is hard o Managing this balance involves use of marketing communication before during and after the purchase decision Promotion mix product mix and customer segments interdependent o Different types of communications promotion mix may be better or worse in influencing different kinds of customers segments to be attracted to and to buy different kinds of products product mix o The firm must carefully match promotion mix product mix and segmentation to achieve an effective and efficient increase in the likelihood that they strike the transaction that they wish to strike over the long run Elements in the promotion mix Standard elements of the promotion mix o Advertising All involve a paid unusually impersonal persuasive presentation of products product concepts or product relevant parties by a sponsor Advertising can use any of a number of different media ranking from tv to posters to print ads Advertising frequently makes use of celebrities to endorse products o Sales promotion short term incentives coupons contests free samples induce purchase or trial use of good or service Differentiation between sales promotion and advertising is that the former provides a tangible incentive o Personal selling personal face to face persuasive interaction using sales presentation order taking and customer assistance o Direct marketing various impersonal methods to communicate with and solicit orders from prospective customers including catalogs telemarketing and the internet o Public relations various programs to build maintain or change the image of a firm its brands or its products including sponsorships annual reports and other publications and press releases o Miscellaneous other factors can reinforce detract from the persuasive aspects of the traditional promotion mix elements including packaging styling and logos store location styling and general appearance A particularly item can simultaneously serve more than one of those elements o Catalog primarily a direct marketing tool Can also provide advertising provide a sales promotion helps project a public relations image The overall objective is to produce an optimally effective promotion mix constrained by budget The decision process concerns finding the particular set of these elements that will be most effective in managing the buying process across multiple products and multiple segments o There is no one best mix for all products and customer segments o Even within an industry there is considerable divergence across rivals o Different segments may require different promotion mix even for the same product o Effective promotion mix may vary across product life cycle o Budget constraints are real Promotion mix A decision process Selecting among many possible elements Constrained by a budget Where no one choice is ideal for all buyers products sellers or situations To manage a critical link between seller and buyer Channel mix basics Distribution refer to the general phenomenon of moving product from raw material through to manufacturers to end users Distribution system refer either to the distribution process of a part of a firm a single firm an entire industry or the economy as a whole Market channels refer to intermediaries between a seller and either its immediate buyers or the ultimate end user Supply channels are between the seller and its input vendors Channel mix refers to the specific set of decisions a firm uses to manage its market channels Supply chain and logistics o Logistics were referred to the formal study of distribution systems and applications of the results of these studies o