Ch 9 Summary

The product evolution model, called the buying hierarchy says that customers buy in four phases: functionality, reliability, convenience, and price. First, when no available product satisfies the functionality requirements of the market, the criteria of which a product choice is made is based on functionality. Second, once two or more products satisfy the market for functionality, they customers buy based on reliability, which makes vendors able to charge a premium for it. When vendors improve enough to where they satisfy the market concerns for reliability, customers buy based on convenience, be it whether the product is convenient or the company is convenient to deal with. Then when multiple vendors are convenient to buyers, the basis of competition shifts to price. Companies have used this information to come up with strategies to make the most profits, however there is no clear evidence which strategy is the best.