Understanding Commoditization

Commoditization

• Commoditization occurs in mature markets where goods and services lack differentiation, leading to price being the primary factor in consumer decision-making.
• Examples of commoditization include Android-based smartphones and airline flights from Louisiana to Atlanta.

Challenges and Opportunities in Today's Economy

• Power shift to customers: The growth of the internet has given customers access to information, allowing them to comparison shop and control their spending.
• Massive increase in product selection: The internet has led to a staggering variety of goods and services, exposing marketers to global competition.
• Audience and media fragmentation: The increase in media choices has led to fragmented audiences, making it difficult for marketers to reach their target audience.
• Changing value propositions: Customers prioritize convenience and low prices, forcing marketers to adapt their strategies.
• Shift in demand patterns: Changes in technology have shifted customer demand for certain product categories, such as the movie rental industry.
• Privacy, security, and ethical concerns: Marketers must address concerns about security and privacy in both online and offline transactions.
• Unclear legal jurisdiction: Marketers face challenges in navigating legal jurisdictions when doing business in multiple countries.

Definitions of Marketing

• 2005 American Marketing Association definition: Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and managing customer relationships.
• 2007 American Marketing Association definition: Marketing is an activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Critical Success Factors in Marketing

• 2005: Value and customer relationship
• 2006: Meeting human and social needs, linking marketing to standard of living and society's well-being

Basic Marketing Concepts

• Products: Something acquired through an exchange to satisfy a need or want
• Goods: Tangible products, such as physical items
• Services: Intangible products, such as experiences or expertise