Marketing Test 3

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what does market segmentation mean?

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Marketing

35 Terms

1

what does market segmentation mean?

aggregating buyers into groups that have common needs and will respond similarly to marketing action

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2

what are market segments?

groups of relatively homogeneous consumers drawn from the heterogeneous marketplace.

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3

what is product differentiation

the strategy of creating real or perceived differences between your product and the competitor’s

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4

when do you segment markets

  • when there is one product with multiple market segments (like a mini fridge that appeals to multiple types of people)

  • when there is multiple products and multiple market segments (Like Honda with several different vehicles that appeal to many different consumers)

  • when you have “segments of one” AKA mass customization (personalized stuff)

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5

what are the criteria to use in forming segments

  • similarity of needs of buyers in a segment

  • difference of needs of buyers between segments

  • the potential of a marketing action to reach a segment

  • simplicity of cost of assigning buyers to segments

The segment must be identifiable and reachable!

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6

bases for segmentation for consumer markets

  • geographic

  • demographic (race/ethnicity, religion, income, gender, family size, etc. NEVER USED BY ITSELF!)

  • psychographic (personality)

  • behavioristic/usage (based on product usage, for existing product users)

  • benefit (based on benefit customers seek)

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7

Criteria to use in picking the target segments

  • relevance to the product - make it make sense

  • fits with their image, objectives, and resources - don’t try to sell a rolex to a student

  • competitive position - how much room is in the market?

  • cost/benefit - is it worth it?

  • leverage to other segments - get your foot in the door with other segments. (like giving athletes branded clothes in order to reach their audience)

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8

what is positioning

the place an offering/brand occupies in a consumer’s minds on important attributes relative to competitors

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9

variations of products

  • consumer goods (business 2 consumer)

  • business goods ( B2B)

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10

explain the classification of consumer goods

  • convenience (purchased with little effort)

  • shopping (compare alternatives on important attributes)

  • specialty ( shopping good, but also luxury item)

  • unsought (goods you don’t think about)

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11

explain the classification of business goods

  • production goods/ components

  • support goods (raw materials used in the process of doing business)

  • installations (assembly line, equipment)

  • accessory equipment (office equipment, computers)

  • supplies ( frequently purchased items like paper)

  • industrial services (B2B services like cleaning)

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12

what are the degrees of tangibility

  • nondurable

  • durable

  • services

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13

why do products fail?

  • insignificant point of difference (not unique enough)

  • too little market attractiveness (test mkt is too small or too competitive)

  • poor execution of marketing mix

  • poor product quality or insensitivity to customer needs on critical factors (not what they want)

  • bad timing

  • no economical access to buyers (no distribution)

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14

newness from a customer’s perspective

there must be unique benefits

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15

the new product development process

  • new product strategy development (start defining roles of the new product within an organization)

  • idea generation (pool of concepts)

  • screening and evaluation (filter and evaluate new ideas)

  • business analysis (financial projections (demand, cost))

  • development (create prototype)

  • market testing (test market cities)

  • commercialization (full scale product launch)

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16

What is the product life cycle + name the steps

the lifespan of a product

  • introduction stage (product introduced to market)

  • growth stage (rapid increase in sales)

  • maturity stage (trying to maintain share)

  • decline stage (sales and profit drop)

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17

how does the marketing mix change throughout a product’s life cycle?

introduction: goal is to gain awareness and stimulate demand

growth: goal is to differentiate your brand

maturity: the goal is to maintain your share

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18

what are some alternative product life cycles

high learning product: long introduction stage

low learning product: short introduction stage, long growth stage

fashion product: multiple growth and decline stages

fad product: fast growth stage, short maturity stage, fast decline stage

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19

what does diffusion of innovation mean and what are the types of people within this?

how a product spreads through a population

  • innovators (risk takers, not trendy, not typical consumers)

  • early adopters (more normal, opinion leaders)

  • early majority (mainstream, most people)

  • late majority (the “wait and see”’s)

  • laggards (reluctant, conservative spenders, traditional)

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20

what is brand personality

associating human characteristics with a brand

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21

what is brand equity

commands higher prices and competitive advantages

value added to products beyond their functional benefits

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22

name the different branding strategies

  • multiproduct branding: one brand name for everything in a product class. (example: olay) a segment of multiproduct branding is subbranding: second brand that goes under a family brand

  • multibranding: each type of product gets its own brand name (like P&G)

  • private branding (resller branding/private labeling): store brand

  • mixed branding: producer has name brand and supply store brand (like green giant and store brand are the same)

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23

what are services

activities or benefits that an organization provides/offers to consumers

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24

what are the four I’s of services

intangibility, inseparability, inconsistency, inventory

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25

what is the price equation

final price = list price - incentives/allowances +extra fees

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26

what is value

perceived benefits


price

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27

what is value pricing

increase perceived benefits (numerator) or decrease price (denominator)

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28

what is the profit equation

profit = total revenue (sales) - total costs (expenses)

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29

what does it mean to move along the demand curve

price - quantity relationship

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30

what is the demand curve

shows the relationship between price and quantity demanded under certain conditions

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31

what are the factors of demand

  • consumer tastes (what the marketplace wants)

  • price and availability of similar products

  • consumer income (things feel more/less affordable)

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32

what is a shift in the demand curve

a move back or forward in demand

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33

what is price-elasticity of demand and explain elastic/inelastic demand

how sensitive are consumers to change in price?

  • elastic: change the price a little and see a big change in demand

  • inelastic: change the price and see small change; low sensitivity

  • unitary demand: theoretical where the change in price is perfectly offset by a change in demand

A large # of substitutes means more elasticity; necessities are less elastic

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34

what are the demand oriented approaches?

  • Skimming pricing (high initial price that goes down)

  • penetration pricing (low price to capture market share)

  • prestige pricing (high price to denote luxury)

  • penetration pricing (set the price points within the product line; works well with subbranding. Example: Olay with the different types of cream)

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35

Name and describe the different types of innovation

continuous - incremental improvements

dynamically continuous - middle of the road sort of changes

discontinuous innovation - new ideas

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