Marketing Fundamentals: Segmentation, Product, Price, and Distribution

Market Segmentation and the Buyer's Journey

Market Segmentation: A marketing technique that categorizes consumers into groups, called segments, based on their socioeconomic, cultural, psychological, geographic, or behavioral characteristics.

Buyer's Journey: The process a consumer goes through from initially becoming aware of a product or service to eventually making a purchase and potentially becoming a loyal customer. Key considerations include: Where, When, What, How Often, Why.

Product Essentials: Definition, Characteristics, and Types

A product is any material good, service, or idea that holds value for the consumer or user and is capable of satisfying a need.

Product Characteristics

• Quality: Refers to how the product is made and its inherent excellence.
• Quantity: The amount or volume of the product.
• Design: Encompasses the specific shape and size that allow consumers to identify the product.
• Packaging: Physically protects the product and is essential for its preservation and presentation.
• Brand: Not merely an attribute of the product, but primarily a tool supporting the company's commercial strategy.

Product Types

• Consumer Products: Completely finished goods intended for the final consumer.
• Industrial Products: Products acquired by organizations and incorporated into the production process, often transformed before reaching the final consumer.
• Services: Intangible goods provided with the intention of earning revenue.

Product and Brand Strategy

Brand Strategies

• Single Brand Strategy: Uses the same brand name for all of the company's products.
• Multi-Brand Strategy: The same company markets different categories of products under different brands.
• Second Brands Strategy: Companies that already have other main brands in a product category introduce additional brands, often at a different price point or for a different market segment.

Product Life Cycle

• Introduction
• Growth
• Maturity
• Decline

New Product Categories

• Original or New Product
• Renewed Product or with a "New Formula"
• Repositioned Product

BCG Matrix (Boston Consulting Group Matrix)

• Question Mark: Low market share in a growing market.
• Star Product: High market share in a growing market.
• Dog: Low market share in a declining market.
• Cash Cow: High market share in a declining market.

Pricing Strategies and Factors

Price: The set of efforts and sacrifices (monetary or non-monetary) that a consumer makes in exchange for obtaining a certain level of utility or value.

Impact of Price

• Affects the company's level of demand.
• Influences the company's profitability.
• Contributes to the brand's positioning.
• Enables comparison between products and competitor brands.
• Must be compatible with other variables in the marketing mix.

Factors Affecting Price

• Internal Factors: Marketing objectives, fixed and variable expenses, and economies of scale.
• External Factors: Demand, competition, reactions of affected parties, and the product life cycle.

Price Strategies

• Parity Pricing: Pricing products similarly to competitors.
• Premium Pricing: Setting prices higher than the competition (e.g., Apple).
• Low-Cost Pricing: Setting prices lower than the competition, often betting on high volume.

Distribution Channels and Sales Roles

Distribution: The process of making a product or service available for use or consumption by a consumer or business user.

Types of Distribution Channels (by length)

• Short Channel: Producer → Consumer
• Mid Channel: Producer → Retailer → Consumer
• Long Channel: Producer → Exporter → Wholesaler → Retailer → Consumer

Common Distribution Channels

• Retail (Physical Stores)
• Direct Marketing (Direct to Consumer)
• Dealer Network (Outsourced Sales Team)
• Website Store
• Wholesale Distributor
• E-commerce Site
• Value-Added Reseller

Sales Agent vs. Distributor

A Sales Agent is a commission-based representative who connects buyers and sellers but never assumes ownership of the product. A Distributor, conversely, takes ownership of the product and then sells it to the end customer.