Marketing conceptsSellers in perfect competition generally have little or no control over prices and little to no opportunities for profitSellers have significant incentives to be innovative to gain some level of control over pricing and profitsThis produces for possible strategies, each with economic costs, potential benefits, and significant riskProduct differentiationCan be achieved byDevelopment of a novel productModification of an existing product, which can be accomplished viaProduct extensionProduct differentiationFirms may choose to differentiate products via being a first mover or a second movers, and if a second mover as a fast or slow moverMany 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) productBuyer preference (utility) can be subdivided to form, place, time, and transaction utilitiesAlthough 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 functionsUtility functions are not directly visible or easily measured directly. Therefore, we use more visible surrogates to identify segmentsThese segmentation variables include various demographic, economic, geographical, and social/psychological factorsCompetition based on modification of the product’s ability to deliver incremental aspects of any/all of these utilities – non-price competitionBuyers may shop on price, value, or status. In practice, buyers usually don’t know all the sellers, but shop from a constrained setBranding is an important aspect of product identification and value enhancement. The total value of the brand to the producer or retailer = brand equityProducts have life cycles and at various points in the product life cycle, there are different opportunities to differentiate further or to reduce costsPricing 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 strategiesPromotion 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 includePricing and priceProduct differentiation and customer segmentationBrandingPromotion mixPromotion 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 timeMany things that may cause you to “buy” aren’t the same things that make you happy after you have boughtFinding a balance among influence, real satisfaction of need, and customer retention is hardManaging this balance involves use of marketing communication before, during, and after the purchase decisionPromotion mix, product mix, and customer segments (interdependent)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)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 runElements in the promotion mixStandard elements of the promotion mixAdvertisingAll involve a paid, unusually impersonal persuasive presentation of products, product concepts, or product-relevant parties by a sponsorAdvertising can use any of a number of different media, ranking from tv to posters to print adsAdvertising frequently makes use of celebrities to endorse productsSales 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 incentivePersonal selling – personal, face to face, persuasive interaction using sales presentation, order taking, and customer assistanceDirect marketing – various impersonal methods to communicate with and solicit orders from prospective customers, including catalogs, telemarketing, and the internetPublic 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.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 appearanceA particularly item can simultaneously serve more than one of those elementsCatalog – primarily a direct marketing tool. Can also provide advertising, provide a sales promotion, helps project a public relations imageThe overall objective is to produce an optimally effective promotion mix constrained by budgetThe 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 segmentsThere is no one best mix for all products and customer segmentsEven within an industry, there is considerable divergence across rivalsDifferent segments may require different promotion mix even for the same productEffective promotion mix may vary across product life cycleBudget constraints are realPromotion mixA decision processSelecting among many possible elementsConstrained by a budgetTo manage a critical link between seller and buyerWhere no one choice is ideal for all buyers, products, sellers, or situationsChannel mix basicsDistribution – refer to the general phenomenon of moving product from raw material through to manufacturers to end usersDistribution system – refer either to the distribution process of a part of a firm, a single firm, an entire industry, or the economy as a wholeMarket channels – refer to intermediaries between a seller and either its immediate buyers or the ultimate end userSupply channels are between the seller and its input vendorsChannel mix – refers to the specific set of decisions a firm uses to manage its market channelsSupply chain and logisticsLogistics were referred to the formal study of distribution systems and