Direct vs Indirect Substitution of Products
Direct Substitution: Products that can fulfill the same need as others, often similar in nature.
Examples: Different types of butter for toast such as stick butter, whipped butter, country crock (margarine), olive oil butter, spray butter, squeeze butter.
Indirect Substitution: Dissimilar products that can still satisfy the same consumer need.
Examples: Replacing butter on toast with jelly, peanut butter, avocado, or Nutella.
Marketing Mix: The 4 P's
Product: The item or service being offered to consumers.
Price: The amount charged for the product.
Promotion: The activities that communicate the product's features and benefits and persuade customers to purchase.
Place: The distribution channels through which the product is sold.
Importance of Marketing Research
Skipping detailed discussions on marketing research due to time constraints, but it's vital for understanding consumer behavior and market needs.
Consumer Behavior
Rational Motives: Logical reasons for purchasing products.
Emotional Motives: Personal reasons that influence purchases.
Example: Buying a shoe to fit in because a friend owned the same one or purchasing a specific color because of childhood memories associated with it.
Types of Goods
Convenience Goods: Frequently purchased items that are low-priced and easy to find, e.g., soap, toothpaste, food.
Shopping Goods: More expensive than convenience goods, purchased less frequently, e.g., clothing, shoes.
These goods are readily available, unlike specialty goods.
Specialty Goods: Rarely purchased physical products that are hard to find, e.g., specific car models, custom wedding dresses, etc.
Convenience Services: Services that are widely available and easy to access, e.g., gas stations, car washes, fast food.
Shopping Services: Services such as plumbing and landscaping that require more effort to obtain.
Specialty Services: Services that require specific timing and availability, e.g., concerts or cruises.
Cannibalization
Definition: A reduction in sales of a company's own products due to the introduction of a new, similar product.
Example: If a new Tropical Smoothie opens next to an existing competitor, it may divert customers, leading to decreased sales for both.
Product Importance in Business
Product Mix: The total variety of products offered by a company.
Example: Target's extensive range of products across different categories.
Product Lines: Groups of related products, e.g., Colgate-Palmolive’s lines like oral health, personal care.
Product Development Process
Business Analysis: A financial analysis to assess costs and benefits.
Key Steps in Product Development Process (know all 7 steps):
Product Ideas: Gathered from consumers and R&D departments.
Screening: The filtering stage where many ideas are rejected.
Concept Testing: Research with customers/focus groups to evaluate concepts.
Product Testing: Trial launch to see if it meets performance standards.
Business Analysis: Evaluate profitability and financial viability.
Prototype Development: Create initial product samples for testing.
Commercialization: Launching the product fully into the market.
Product Life Cycle (PLC) Stages
Introduction: Initial stage, not profitable due to high upfront costs.
Growth: Increased sales as the product gains market acceptance.
Maturity: Established sales with potential for discounts and updates as competition increases.
Decline: Profits start to decline as interest wanes.
Product Placement
Ways brands integrate their products into media to increase visibility, e.g., using Apple iPhones in TV shows.
Branding
Private Brands: Store names created to compete against national brands, e.g., Walmart's Great Value.
Packaging: Physical design and presentation of products in a retail setting. Key attributes include descriptions, colors, logos, and interactivity.
Pricing Strategies
Price Skimming: Setting a high initial price to recover costs and earn a profit.
Penetration Pricing: Introducing a product at a low price to quickly establish market share.
Bundling: Selling multiple products together to generate sales for each item.
Discounting: Offering reductions on base prices (e.g., BOGO offers).
Distribution Channels
Direct Channels: Products reach consumers without intermediaries.
Wholesalers: Purchase in bulk and resell at a markup to retailers.
Distribution Types:
Intensive Distribution: Products available in as many outlets as possible.
Example: Wide availability of convenience products like toothpaste.
Selective Distribution: Fewer specific outlets aimed at targeted sales efforts.
Exclusive Distribution: Selling products only through one or a limited number of retailers.
Promotion Strategies
Push Promotion: Encouraging retailers to display products prominently in stores, often through B2B sales and agent promotions.
Pull Promotion: Attracting customers into stores through advertising.
Integrated Marketing Strategy
Ensuring all marketing components work together to achieve objectives while aligning with the overall business strategy.
Consumer Buying Process
Recognizing a Need: Identification of a desire for a product or service.
Seeking Information: Developing an evoked set of options to consider.
Evaluating Alternatives: Analyzing pros and cons of the options.
Making a Purchase Decision: Influenced by rational or emotional motives.
Post-Purchase Evaluation: Reflecting on satisfaction and deciding to keep or return the product.
Marketing Mix vs Promotional Mix
Understanding the marketing mix (4 P's) in contrast to the promotional mix (focused on marketing communications).
Summary of Consumer Products
Convenience Goods, Shopping Goods, and Specialty Goods are key categories within consumer products.
Produced and distributed through strategies such as direct sales, intermediaries, or e-commerce methodologies.
National Brands: Manufactured and recognized widely across markets.
Private Brands: Store-created brands aimed at providing unique offerings and competition.
Additional Concepts
CRM (Customer Relationship Management): Techniques used to maintain and improve customer relations through personalized marketing.
Market Segmentation: Dividing the market into distinct segments based on characteristics like demographics, psychographic, and behavioral factors.