Commoditization and Consumer Power Shift

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Questions and Answers

What is the primary consequence of commoditization in mature industries?

Margins being pushed to the floor (correct)

Innovation and differentiation

Increase in product selection

Power shift to consumers

What is the primary reason for the power shift to consumers in today's economy?

Audience and media fragmentation

Changes in technology

Largely attributed to the Internet (correct)

Increase in product selection

What is the result of changing value propositions in situations where customers view goods and services as commodities?

Customers will seek out the most convenient and least expensive alternative (correct)

Customers will be more loyal to brands

Customers will prioritize product quality

Customers will demand more product features

What is a critical success factor in the 2005 definition of marketing?

Value and Customer Relationship Signup and view all the answers

What is the primary purpose of a product in marketing?

To satisfy a need or want Signup and view all the answers

What is the result of audience and media fragmentation?

Limited amount of time to devote to any one medium Signup and view all the answers

What is a critical success factor in the 2007 definition of marketing?

Meeting Human and Social Needs Signup and view all the answers

What is the result of changes in technology on customer demand?

Shift in demand patterns Signup and view all the answers

What is the primary function of utility in marketing?

To satisfy a customer's need or want Signup and view all the answers

Which type of utility is related to the availability of a product when the customer wants it?

Time Utility Signup and view all the answers

What is an example of an intangible product in marketing?

Acts or deeds directed toward people or their possessions Signup and view all the answers

Which type of marketing involves the exchange of athletes, politicians, and celebrities?

People Marketing Signup and view all the answers

What is a characteristic of digital products in marketing?

They can be easily copied and redistributed in violation of copyright law Signup and view all the answers

What is the main difference between form utility and time utility?

One is related to product features and the other is related to availability Signup and view all the answers

What is an example of a marketing concept that involves bringing together a combination of goods, services, ideas, or people?

Experiences and Events Signup and view all the answers

What is the primary goal of organization marketing?

To create a favorable image with the public Signup and view all the answers

Study Notes

Commoditization

Commoditization occurs in mature industries where innovation slows down, product assortment increases, and consumers become frugal, leading to reduced profit margins.
In commoditized markets, goods and services lack differentiation.

Challenges and Opportunities in Today's Economy

Power shift to consumers, largely due to the Internet.
Massive increase in product selection, with a vast variety of goods and services offered online and offline.
Audience and media fragmentation, resulting in limited time for individual media.
Changing value propositions, where customers seek convenience and lowest prices.
Shift in demand patterns, driven by technological changes.
Privacy, security, and ethical concerns, exacerbated by technological advancements.
Unclear legal jurisdiction, when companies operate in multiple countries.

Marketing Definitions and Critical Success Factors

Marketing (2005): Organizational function and processes for creating, communicating, and delivering value to customers.
- Critical success factors: Value and Customer Relationship.
Marketing (2007): Activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers and society.
- Critical success factors: Meeting Human and Social Needs.

Basic Marketing Concepts: Products

A product is something acquired through an exchange to satisfy a need or want.
Examples of products:
- Goods: Tangible items, such as food and fighter jets.
- Services: Intangible products, consisting of acts or deeds directed toward people or their possessions.
- Ideas: Issues aimed at promoting a benefit for customers.
- Information: Including websites, publishers, schools, and research firms.
- Digital products: Software, music, and movies, which can be easily copied and redistributed.
- People: Athletes, celebrities, and professionals, such as politicians and news reporters.
- Places: Cities, states, and nations, marketed to tourists, businesses, and potential residents.
- Experiences and Events: One-of-a-kind experiences or single events, combining goods, services, ideas, information, or people.
- Real or Financial Property: Exchange of stocks, bonds, and real estate.
- Organization: Organizations strive to create a favorable image with the public.

Types of Utility

Utility: The ability of a product to satisfy a customer's need or want.
Types of utility:
- Form Utility: Product contains distinguishing attributes, setting them apart from the competition.
- Time Utility: Product is available when the customer wants it.

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Description

Understand the consequences of mature industries and the power shift to consumers in today's economy, marked by slowing innovation and excess supply. Learn about the challenges and opportunities arising from the increased product selection and the impact on business margins.