scottburgess said:
Steve said:
DSLRs and toothpaste are in no way comparable and aren't marketed the same way at all. That's absurd.
No, it's absurd to suggest that because products are different one can't reuse a marketing idea from another product. Again, it is obviously done all the time. Also, technically toothpaste would not really qualify as a commodity because it is specifically differentiated into types for different functions (whitening, cavity fighting, desensitizing, anti-plaque, etc...) and hence a particular toothpaste from a particular manufacturer is not interchangeable blindly with another in the eyes of a purchaser.
For the vast majority of purchasers, the purpose of toothpaste is to prevent cavities and gum disease. To that end, all toothpastes work pretty similarly, and there's not a dime's worth of difference between them. Yes, there are a few consumers who care about whether it has extra whitening ingredients, etc., but these users are in the tiny minority, similar to the number of consumers who care about whether a particular Blu-Ray player can also play streaming video from a particular website. It's an attempt to create differentiation, but not a very significant one, at least for a typical consumer.
Or, as Wikipedia puts it, "There is a spectrum of commoditization, rather than a binary distinction of 'commodity versus differentiable product'. Few products have complete undifferentiability and hence fungibility; even electricity can be differentiated in the market based on its method of generation (e.g., fossil fuel, wind, solar), in markets where energy choice lets a buyer pay more for renewable methods if desired. Many products' degree of commodification depends on the buyer's mentality and means."
For most users, toothpaste is fungible. DSLRs are not. The strict definition of a commodity is nothing more than a good that is fully or partially fungible. That's it.
scottburgess said:
While common usage of the term is something exchanged in commerce (which applies to most products), the technical usage of commodity is applied to products like oil or electricity or grain which are truly equal regardless of their origin and therefore can be traded on exchanges. Commodities in this sense are mostly used to manufacture other things, and when traded are usually held to a basis grade. But perhaps you can point to a basis grade for toothpaste on a trade exchange?
A basis grade is required
if a commodity is traded on an exchange, but not all commodities are exchange-traded commodities (ETCs). The mere existence of such a term should be ample proof of that fact.
scottburgess said:
The first line here is reasonably debatable. In my regional camera stores up to 3/4 of the shelf space allotted for DSLR cameras goes to Nikon and Canon. Canon and Nikon also dominate searches on popular websites I use. Perhaps your experience there is different.
Then again, these are mostly the products that customers want to buy, and as mentioned, cameras aren't nearly as fungible as toothpaste.
scottburgess said:
Adding product lines when in a dominant market position is a well-documented way to expand market share even further. What matters is that the consumer, when faced with a choice, concludes that a) several things your company offers might fit that choice, and b) your company's choices dominate the total number of acceptable choices in sight. The actual count of lines doesn't matter, it's the relative appearance which generates the desired psychological result in the consumer. The odds are outsized, in this case, that the consumer will pick one of your products.
But this strategy works a lot better for really cheap, non-differentiated goods than it does for products costing thousands of dollars. When you get into that territory, most customers can't afford to make a mistake, so what ends up mattering the most is not what's on store shelves, but rather what gear they've seen other people using whose opinions they trust, and what those people say about those cameras.
scottburgess said:
dgatwood said:
I'm quite familiar with all of those terms. I've been working in the computer industry for fifteen years. What you keep ignoring is the fact that toothpaste is a commodity, which means that any one toothpaste is almost exactly as good as another. They're literally interchangeable.
Your statements in this paragraph contradict one another: clearly you don't know how to identify a commodity, you don't know that toothpaste users exhibit some of the strongest brand loyalty of all products
Again, Your definition of commodity is way, way narrower than anything I've ever heard in any economics class. It might be a correct definition in some specific usage (market trading, perhaps), but it is
not the way that term is commonly used.
And yes, I know about brand loyalty. The reason for that strong brand loyalty is twofold:
1. The products are mostly undifferentiated, and even to the degree that they are differentiated, consumers have very little information about what would make one better than the other. In the absence, therefore, of any solid reason to choose one brand over another, the vast majority of new consumers choose whatever brand their parents used, assuming it is easy to find. Otherwise, they grab the first thing on the shelf, and they stick with it because they have no reason to change.
2. Customers see their toothpaste decision as mostly an unimportant, non-intellectual choice, and don't want to waste time and mental energy on finding a different brand of something that is so cheap and whose differences are so largely irrelevant to their lives.
If a brand ceased to exist outright, people wouldn't stop brushing their teeth. They would choose another brand. Yes, consumers will try to find the brand elsewhere, will complain about its absence, and will put off purchasing toothpaste in the vain hope that they'll see it again, but at some point, they'll be forced to buy toothpaste, and they will buy whatever is available. Very few people would pay the 100% markup that mail ordering toothpaste would entail (unless they have a more important reason to strongly prefer a particular kind of toothpaste).
And brand loyalty can also be broken by true differentiation. It only binds consumers who see no other, more meaningful difference between two similar products than the name on the package. When consumers read an article about some ingredient that significantly improves oral hygiene in some way (xylitol, for example), and when that ingredient is only found in specific brands, you'll see a fair percentage of those readers switch. Indeed, the very fact that strong brand loyalty is possible clearly indicates that the goods are highly fungible and poorly differentiated, which makes those goods effectively a commodity in every meaningful sense of the word.
scottburgess said:
... and you don't know that the differences you're trying to point up are irrelevant as noted above, so therefore you can't be "quite familiar" with marketing.
The differences I've pointed out are most certainly not irrelevant. You've said nothing that changes the fact that the more expensive the product, the more consumers will research their purchase, which eliminates the effects of brand loyalty and largely obviates the benefit of shelf presence. Consumers research car purchases. They research DSLR purchases. They don't research their initial toothpaste purchase.
That's a very crucial difference, particularly in the presence of substantial vendor lock-in from incompatible camera systems. Combine this with the fact that most users
do care about a camera's features (unlike toothpaste, where statistically most users make their initial buying decision based on what their parents bought), and you have an entirely different kind of market. The strategies that work in a small-ticket, highly commoditized market like toothpaste simply cannot work in a big-ticket, highly differentiated market like DSLRs, though many companies have tried it.
We could call it Orangutan's Law, if no one else has coined it yet. 
