Discussion 1
Jones 123
231KotlerChapter1.pptxChapter #1. Creating Consumer Value and Engagement. What is Kotler’s definition of marketing? What is the AMA? What is the AMA definition of marketing? Who is Seth Godin? What is his definition of marketing? What can be marketed? How are products classified?
According to Kotler
“the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.”
AMA Definition of Marketing
The American Marketing Association offers formal definition of marketing.
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
American Marketing Association
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Seth Godin https://www.youtube.com/watch?v=rrNt3R_FTDo
Marketers start by investigating and understanding consumers the firm seeks to serve. We identify consumer needs, wants and desires. Only then can we create successful products.
What is a product?
We have been using the term product and it is important to define and understand the classification system. It is imperative to understand the concept of product, before examining theory regarding strategy.
What is a product? an item/object or system made available for consumer use; it is anything that can be offered to a market to satisfy a consumer need, want or desire.
Products are offered to two types of end-users: final consumers and/or organizational/institutional buyers
What is the difference between a final consumer and organizational/industrial consumers?
A final consumer is an end user of a finished product or service. A final consumer purchases products (goods and services) for self, family or household consumption.
What is the difference between a final consumer and organizational/industrial consumers?
Organizational or industrial consumers purchase capital equipment, raw materials, semi-finished goods, and other products for use in further production or operations or for resale to others. Incl. Manufacturers, Wholesalers, Retailers, Government and Non-profit Organizations.
The product classification system In this class we study the final consumer and the associated product classification system.
Final consumer products are goods or services
A final consumer good is a tangible item
A final consumer service is intangible
Final consumer products are classified in four ways
Final consumer services are classified in two ways
Final Consumer Goods (tangibles)
4 TYPES OF CONSUMER PRODUCTS AND MARKETING CONSIDERATIONS: CONVENIENCE, SHOPPING, SPECIALITY AND UNSOUGHT PRODUCTS
Convenience Goods
Shopping Goods
Specialty Goods
Unsought Goods
The four types of consumer products all have different characteristics and involve a different consumer purchasing behavior. Thus, the types of consumer products differ in the way consumers buy them and, for that reason, in the way they should be marketed.
Convenience goods
Among the four types of consumer products, the convenience product is bought most frequently. A convenience product is a consumer product or service that customers normally buy frequently, immediately and without great comparison or buying effort.
Examples include articles such as laundry detergents, fast food, sugar and magazines. Convenience products are those types of consumer products that are usually (1) low-priced, (2) distributed or placed in many locations to make them readily available when consumers need or want them, (3) represent low involvement and (4) may or may not hold high brand loyalty as consumers do not usually make comparisons of competing brands.
These products require some specific marketing strategies.
Final Consumer Convenience Goods
Final Consumer Convenience Good are further classified as:
Staples - food, drugs, beverages, tobacco, and basic household products. These are things that people are unlikely to reduce their demand for when times are tough because people see them as basic needs.
Impulse – an unplanned purchase. Examples might include fresh flowers, some OTC pharmaceuticals, lightbulbs
Emergency - are bought quickly when they are urgently needed in times of crisis. Examples might include snow shovels, umbrellas, tarps, tents, flashlights, lighters and candles.
Marketing Strategies for Convenience Products
As many of these products are quite generic and easily replaceable, competition is extremely high. At the same time, product differentiation is difficult. Think of e.g. sugar: how would one manufacturer make a brand of sugar brand stand out, while sugar is more or less the same across brands?
The primary marketing strategy for convenience products is extensive distribution. This means that the product must be placed in many different locations – across distribution channels, across retailers, and also within shops. The brand of would be placed as sugar prominently as possible in supermarkets, convenience stores, etc. The brand would not want to occupy the lowest shelf but be as visible as possible. And, the brand could be placed in various locations throughout the retail outlet to gain the highest level of exposure.
Another common marketing strategy for convenience products is the use of the Integrated Market Communications tool of sales promotion, i.e., coupons.
Finally, the packaging on a convenience product is generally very brightly colored or contains images that will easily attract the customer. Packaging is a very important aspect of marketing strategies for convenience products because it is what initially attracts the customer to the product for the first time that they make a purchase of this particular product. Once a consumer has bought the product, it will most likely be purchased again if the consumer is satisfied. This is the importance of the right impression.
Shopping Goods
Shopping goods are products that the customer usually compares on attributes such as quality, price and style in the process of selecting and purchasing.
Thus, a difference between the two types of consumer products presented so far is that the shopping product is usually less frequently purchased and more carefully compared. Therefore, consumers spend much more time and effort in gathering information and comparing alternatives.
The types of shopping goods are: furniture, clothing, used cars, airline services etc. As a matter of fact marketers usually distribute these products through fewer outlets, but provide deeper sales support in order to help customers in the comparison effort.
The two types of shopping goods are homogeneous and heterogeneous.
Heterogeneous shopping products are unique. Think about shopping for clothing or furniture. ... In contrast, homogeneous shopping products are very similar.
Specialty Goods
Specialty products possess unique characteristics or brand identifications for which a significant group of consumers is willing to make a special purchase effort.
Specialty product illustrate high involvement
Specialty products for many consumers (not all) represent once or twice in a lifetime purchases
Specialty products have high price tags
Specialty products typically do not hold brand loyalty – less likely for brand comparisons
Example:
Some cars, professional and high-prices photographic equipment, designer clothes etc. A perfect example for these types of consumer products is a Lamborghini.
Unsought Goods
Unsought products are those that a consumer either does not know about or knows about, but does not consider buying under normal conditions and/or do not buy until buyers become aware of them.
Most new innovations are unsought until consumers become aware of them.
Examples: life insurance, pre-planned funeral services etc.
What marketing strategies are effective for unsought goods?
Unsought products require much more promotion and marketing efforts than other types of consumer products. The focus of strategy includes:
Providing basic information about your products
Emphasizing benefits
Final Consumer Services (intangibles)
Services represent a large sector of the global economy.
Services offer intangible consumer value
| TYPE OF SERVICE: | EXAMPLES: |
| Restaurants | out-of-home dining |
| Travel | flights, cruises |
| Clubs | Theme Parks, Cinemas |
| Media | Streaming entertainment |
| Events | Concerts |
| E-commerce | Websites that allow the delivery of goods at home |
| Leasing | Access to capital for auto, rent etc. |
| Utilities | Services for water, gas, electric |
| Culture | Museums |
| Information Technology | Wireless communication networks |
| Leisure | Spa service |
| Insurance | transfer of risk for fee |
| Quality of Life | education and medical services |
| Professional services | legal |
| Finance | banking |
Check your understanding
Identify the specific classification of each of the final consumer products featured.
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2
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6 LG Washer
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Convenience impulse
Convenience staple
Specialty
Unsought
Shopping good – homogeneous
Shopping good – heterogeneous
Service
Service
Convenience emergency
Specialty
