Intro to Marketing- Schwartz- Exam 2 (Ch 6-9)

4 types of customer-driven marketing strategies

- segmentation

- targeting

- differentiation

- positioning

which strategies belong to "select customers to serve"

- segmentation

- targeting

which strategies belong to "decide on a value proposition"

- differentiation

- positioning

market segmentation

- divide the total market into smaller segments

targeting

- select the segment or segments to enter

differentiation

- differentiate the market offering to create superior customer value

positioning

- position the market offering in the minds of target customers

market

- set of actual and potential buyers of a product or service

- share a particular want or need that can be satisfied through an exchange relationship

4 types of segmentation variables

- geographic

- demographic

- psychographic

- behavioral

geographic

- dividing a market into different geographical units

- ex: nations, states, regions, counties, etc

- ex: designated marketing areas and nielsen

demographic

- dividing a market into segments based on demographic variables

- ex: age, life-cycle stage, gender, income, etc

psychographic

- dividing a market into segments based on social class, lifestyle, or personality characteristics

- believes that products people buy reflect their lifestyles

behavioral

- dividing a market into segments based on their knowledge, attitudes, uses or responses about a product

occasion segmentation

segments by:

- when get idea to buy

- when make their purchase

- when use the product

benefit segmentation

- segment by different benefits buyers seek from the product

user status

segments by:

- non-users

- ex-users

- potential users

- first-time users

usage rate

segments by:

- light users

- medium users

- heavy users

loyalty status

segments by:

- loyal to brand

- loyal to store

- loyal to company

how do multiple segmentation bases help companies

- identify smaller, better-defined target groups

- identify and understand key customer segments

- reach customers more efficiently by tailoring market offerings and messages to customers' specific needs

- help marketers segment people/locations into marketable groups of like-minded consumers

3 types of behavioral segmentation in digital marketing

- contextual

- retargeting

- interest-based

contextual

- targeting based on content of a specific webpage

- focuses on: keyword, category, keyword/category combo

retargeting

- targeting based on previous interactions with specific cookies

- focuses on: site-based, ad-based, and email-based

interest-based

- targeting based on previous browsing activity

- focuses on: pages visited, content viewed, searches, clicks, purchases

other segmentation variables used by business marketers

- operating characteristics

- purchasing approaches

- situational factors

- personal characteristics

international market segmentation variables include

- geographic location

- economic factors

- political and legal factors

- cultural factors

intermarket (cross-market) segmentation

- grouping consumers with similar needs and buying behaviors irrespective of their location

5 requirements for effective segmentation

- measurable (size & profiles can be measured)

- accessible (segment can be effectively reached)

- substantial (large, profitable enough to serve)

- differentiable (distinguishable segments respond differently)

- actionable (programs can be developed into reach segments)

the social responsibility question

- do marketers have the responsibility to avoid targeting consumers based on their individual behavior?

- does this violate consumers' privacy, is this just a great way to do micromarketing?

- does your answer change if you give consumers full transparency and control over whether their data is used for targeting purposes?

- do marketers have the responsibility to avoid targeting vulnerable/disadvantaged with market offerings that are controversial/potentially harmful to them?

undifferentiated (mass) marketing

- less expensive, potentially ineffective

- targeting broadly

- focuses on needs that are common instead of needs that are different

- ex: ice

differentiated (segmented) marketing

- more expensive, more effective/relevant

- focuses on at several market segments, with separate offers for each

- ex: P&G laundry detergent

concentrated (niche) marketing

- less expensive, higher risk

- focuses on going after a large share of one or a few smaller segments

- clothing for plus-size women

micromarketing (local/individual marketing)

- most expensive, most relevant

- targeting narrowly

- focuses on tailoring products/marketing programs to the needs/wants of specific individuals/local customer segments

- ex: Groupon

factors to consider when choosing a targeting strategy

- company resources

- product variability

- product's life-cycle stage

- market variability

- competitors' marketing strategies

product position

- way a product is defined by consumers on important attributes

3 steps to choosing a differentiation and positioning strategy

- identifying a set of differentiating competitive advantages on which to build a position

- choosing the right competitive advantages

- selecting an overall positioning strategy

competitive advantage

- an advantage over competitors gained by offering greater customer value either by having lower prices or providing more benefits that justify higher prices

factors to consider when choosing the right competitive advantages

- how many differences to promote?

value proposition

- full mix of benefits on which a brand is differentiated and positioned

- why should I buy your brand?

"more for more" positioning

- more benefits vs competitors (most upscale)

- priced higher vs competitors (charges higher price to cover higher costs)

- ex: Northface

"more for the same" positioning

- more benefits vs competitors

- same price

- high quality at lower prices

- can used to attack a "more for more" positioning

- ex: iPhone

"more for less" positioning

- most ideal

- more benefits vs competitors

- lower price vs competitors

- very difficult for companies to sustain such best of both positiong

- ex: Nate Berkus for Target

"same for less" positioning

- same benefits vs competitors

- lower price vs competitors

- gives a good deal; used by discount stores that offer deep discounts based on superior purchasing power and lower-cost operations

- ex: Walmart

"less for much less" positioning

- less benefits vs competitors

- lower price vs competitors

- ex: Southwest Airlines

positioning statement format

- to [target segment and need] our [brand] is [concept] that [point of difference]

communicating and delivering the chosen position

- all the company's marketing mix efforts (4Ps) must support the positioning strategy

- firm must take care to maintain the position obtained through consistent performance and communication

- product's position should be monitored and adapted over time to match changes in consumer needs and competitors' strategies

marketing mix decisions (4P's)

- everything that the organization can do to influence demand for its products/services

- controllable factors

- product, price, promotion, place

product

- anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want/need

service

- an activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything

experiences

- not just products/services, but how these offerings will make customers feel

3 levels of a product

- core customer value

- actual product

- augmented product

core customer value

- what is the customer really buying?

- identify the problem-solving benefits that customers seek

actual product

- what are the benefits of the product itself?

- benefits include: brand name, quality, packaging, features, design

augmented product

- what are the additional consumer benefits/services?

- ex: after-sale service, delivery, warranty

4 types of consumer products

- convenience

- shopping

- speciality

- unsought

convenience

- frequent purchase, little planning/comparison; low customer involvement

- low price

- widespread distribution/convenient locations

- mass promotion by producer

- ex: toothpaste, magazines

shopping

- less frequent purchase, much planning/comparison

- higher price

- selective distribution in fewer outlets

- advertising and personal selling by both the producer and resellers

- ex: major appliances, TVs

speciality

- strong brand preference/loyalty; special purchase effort; little comparison

- high price

- exclusive distribution in only one/few outlets per market area

- more carefully targeted promotion by both the producer/resellers

- ex: luxury goods

unsought

- little product awareness/knowledge; little or negative interest

- price varies

- distribution varies

- aggressive advertising and personal selling by producer/resellers

- ex: life insurance, blood donations

3 types of product/service decisions

- individual product decisions

- product line decisions

- product mix decisions

individual product decisions

product attributes --> branding --> packaging --> labeling --> product support services

product line decisions

a product line is a group of products that are closely related because they:

- function in a similar manner

- sold to the same customer groups

- marketed the same way

- fall within given price range

2 ways to lengthen a product line

- line stretching

- line filling

line stretching

- make new products for upper/lower class users

- ex: Toyota --> Scion --> Lexus

line filling

- add more items within product range to get more profits, fill missing items, use excess capacity, keep out competitors

- ex: Oreo products

product mix decisions

- set of all product lines/items that a particular seller offers for sale

- width (# of different product lines), length (# of items a company carries within its product lines), depth (# of versions offered for each product in the line), consistency (relativity of the various product lines, production requirements, distribution channels)

4 service marketing characteristics

- intangibility

- variability

- inseparability

- perishability

intangibility

- services can't be seen, tasted, felt, heard, or smelled before purchase

variability

- quality of services depends on who provides them and when, where, and how

inseparability

- services cannot be separated from their providers

perishability

- services cannot be stored for later sale/use

service profit chain

- services are delivered in real time

- profits closely linked to employee and customer satisfaction

3 types of service marketing

- internal marketing

- external marketing

- interactive marketing

brand equity

- the differential effect that knowing the brand name has on customer response to the product or its marketing

factors of brand positioning

- attributes

- benefits

- beliefs/values

factors of brand name selection

- selection

- protection

factors of brand sponsorship

- manufacturer's brand

- private brand

- licensing

- co-branding

factors of brand development

- line extensions

- brand extensions

- multibrands

- new brands

brand positioning and brand name selection

- establish a mission and vision for the brand

- desirable qualities include:

easy to pronounce/remember, distinctive, translate easily into foreign languages, capable of registration and legal protection

brand sponsorship

- national brand (marketed under the manufacturer's own name)

- store brand (created and owned by a reseller of a product or service)

- licensing (uses names/symbols created by other companies or well known characters for a fee)

- co-branding (use the established brand names of 2 different companies on the same product)

brand development strategies

- line extension

- brand extension

- multibrands

- new brands

line extension

- existing/existing

- ex: new flavor of Oreos

brand extension

- existing/new

- ex: new type of Oreo product

multibrands

- new/existing

- ex: Chips Ahoy (new brand in an existing category)

new brands

- new/new

- ex: Pretzel Flatz (completely new brand in a new category)

managing brands

- communicate the brand's positioning

- manage all brand touch points

- train employees to be customer centered

- audit the brands' strengths and weaknesses

new products

- products developed through an org's own research and development efforts

- includes: new products, product improvements, product modifications, new brands

- can drive company's growth but can be risky/expensive

what does creating successful new products require?

- understanding consumers, markets, and competitors

- developing products that deliver superior value to customers

idea generation

- the systematic search for new product ideas

- made of internal and external ideas

- strategic intuition

internal idea sources

- intrapreneurial programs

- internal social networks

- R&D department

external idea sources

- customers

- distributors/suppliers

- competitors

- other industries

- crowdsourcing

idea screening

- spot good ideas and drop bad ones ASAP

ways of screening new ideas

- proposals reviewed by New Product Committee

- R-W-W framework

R-W-W framework

- Real: is there real customer need/desire for the product?

- Win: can we win? does the product offer real sustainable advantage?

- Worth: does the product fit the company's overall growth strategy?

product concept development

- develop alternative product concepts

- find out how attractive each concept is to customers

- choose the best

product concept testing

- test a group of target consumers to find out the degree of consumer appeal toward the concepts

- present concepts to consumers symbolically or physically or with a word/picture description

- ask customers about their reactions to each

marketing strategy development

- initial marketing strategy for introducing a new product to the market

- marketing strategy statement: target market, 4P's, strategic objectives

business analysis

- review of the sales, costs, and profit projections for a new product

- to find out whether the projections satisfy the company's objectives

product development

- develop the product concept into a physical product

- to ensure that the product idea can be turned into a workable market offering

- prototype versions for the testing stage

test marketing

- product and proposed marketing campaign are introduced into realistic marketing settings

- gives the marketer an experience with marketing a product before the introduction

- tests the product and its marketing program

- may use test markets (minimize costs and time needed)

commercialization

- introducing the new product into the market

- need to decide on timing of introduction and where to introduce