Final answer:
By setting a sales price, choosing distribution methods, and launching an advertising campaign, a company executes a marketing strategy. This can affect the product's demand elasticity or increase demand, impacting the sales volume or pricing power. These decisions are fundamental in the competitive market structure of an industry.
Step-by-step explanation:
After a company has developed a new product, set its sales price, figured out distribution channels, and crafted a promotional campaign, it is effectively creating a marketing strategy. This strategy encompasses a number of crucial decisions that impact the market presence and competitiveness of the product. By selecting an optimal price, the company determines its placement in the market—it may choose a premium price to suggest high quality, or a competitive price to attract cost-conscious customers. The distribution method ensures the product reaches the consumer effectively, possibly influencing the speed and convenience of purchase.
A well-planned advertising campaign is integral for raising consumer awareness and generating demand. In the context of monopolistic competition, where products are differentiated mainly through branding and marketing, advertising can make a perceived demand curve more inelastic, suggesting that consumers become less sensitive to price changes. Alternatively, advertising can increase demand by shifting the firm's perceived demand curve to the right, leading to the opportunity for higher sales volume or prices. These activities are crucial in an industry's competitive market structure, where each firm's market power, product similarity, and entry barriers for new competitors play a pivotal role.