Marketing Exam 2

Segmentation

• group customers based on similar needs

• profile each segment

Targeting

• Assess attractiveness of each segment

• Select segments to target

Positioning

• Define value preposition for value segments

• Develop an action plan

Market

all the people or organizations with needs or wants and the ability and willingness to buy the company’s products/services

market segment

a more homogenous subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs

market segmentation

the process of dividing a market into meaningful, relatively similar, identifiable segments or groups

benefits of segmentation to organization

• identification of unfulfilled needs

• better product design

• more targeted promotions

• increased customer satisfaction

benefits of segmentation to customer

• convenience and time savings

• tailored products and services

• relevant offers

• personalized experience

criteria for good segmentation

• identifiable and measurable

• substantial (must be large enough)

• accessible (must be reachable)

• stable (individuals stay in their segments)

• differentiable (can tell diff btw segments)

• actionable (can create marketing plan)

dimensions for segmenting consumer markets

• geographic

• demographics

• psychographics (lifestyle, personality, activities, interests, opinions)

• behavioral (buying habits)

• benefits sought

family life cycle

age + marital status + children status

geodemographic segmentation

• segmenting potential customers into neighborhood lifestyle categories

• combines geographic, demographic, and lifestyle segmentation

dimensions for segmenting business markets

• geographic

• firmographic

• buying approach

• behavioral

• benefits sought

Bases for segmentation

• Who are the customers?

  • Demographic and psychographic

• What have the customers done?

  • RFM metrics (recency, frequency, monetary)

• Why do the customers make the decisions they do?

  • purchase drivers

Target market selection factors

• Competition

  • Competitors’ strengths

  • Competitive intensity

  • Competitors’ resources

• Segment Characteristics

  • Segment size

  • growth rate

  • profitability

• Company fit

  • Objectives

  • Competencies

  • Resources

Target marketing strategies

1. undifferentiated

2. multi-segment

3. concentrated (niche)

4. Mass customization (one to one)

Undifferentiated target market strategy

market is one big market and develop one marketing mix

multi-segment target marketing strategy

select two or more segments and develop distinct marketing mixes for each

concentrated (niche) target marketing strategy

select one segment for targeting marketing efforts

mass customization (one to one) target marketing strategy

customize marketing mix for individual customers (treat each customer as a unique segment)

brand positioning relationship

1. Aspiration: company’s desired brand positioning

2. Co-creation: what the consumer does

3. Reaction: company’s adjusted brand positioning

brand positioning

the art of stalking out a particular piece of mental real estate for a brand in the customer’s mind by crafting and communicating a differential positioning statement

positioning statement

a strategic document that communicates the unique value the brand would offer to a particular target market segment. They distill the brand’s value proposition into a compelling answer to the question “What should I buy?”

unique selling proposition

a type of value claim that offers a prospective customer a specific, unique, and superior reason to purchase a product

4 components of positioning statement

1. for whom, for when, for where?

2. what value are we creating?

3. why and how?

4. relative to whom?

3 cs of brand positioning

• consumer analysis

  • relevant

  • resonant (important)

  • realistic

• competitive analysis

  • distinctive (unique)

  • defensible (competitors can’t copy)

  • durable

• company analysis

  • feasible (deliverable)

  • favorable

  • faithful

resonance - laddering up

feature positioning → benefit positioning → value positioning

perceptual map

visual method of understanding your brand’s positioning, relative to competitors, along factors that are important to a particular customer segment

Brand

that which creates a certain amount of awareness, reputation, prominence, or loyalty - including the sensory, emotional, rational, and cultural images that you associate with a company or a product

Why do brands matter for customers?

• reduce risk

• reduce search cost

• serve as internal or external symbolic device

brand equity

defined in terms of the marketing effects uniquely attributable to the brand

customer-based brand equity

the value created by the brand comes directly from the response of the customers

• perceived or actual difference

• customers are aware of the brand and the difference

• customers respond positively the brand marketing

determinants of customer-based brand equity

• customer is aware of and familiar with the brand

• customer holds some strong, favorable, and unique brand associations in memory

Brand resonance pyramid

1. identity/salience/deep, broad brand awareness

2. Meaning/performance,imagery/points of parity and difference

3. response/judgements,feelings/accessible positive reactions

4. relationships/resonance/intense, active loyalty

brand salience components

• depth of brand awareness

  • ease of recognition and recall

  • strength and clarity of category membership

• breadth of brand awareness

  • range of purchase consideration

  • range of consumption consideration

effects of brand awareness

• create the memory node

• create consideration advantages

• create choice advantages

brand performance

features and benefits

brand imagery

personality

consumer judgements

• brand quality

• brand credibility

• brand superiority

consumer feelings

• brand consideration

• feelings

brand resonance

• behavioral loyalty: frequency and amount of repeat purchases

• attitudinal attachment: love the brand

• sense of community

• active engagement

branding hierarchy

1. corporate brand

2. family brand

3. individual brand

4. individual item or model

product mix

all products that an organization sells

product line

a group of closely-related product items

product item

a specific version of a product that can be designated as a distinct offering among

stock keeping unit

a specific unit of inventory that is carried as a separate, identifiable unit

benefits of product mix breadth

• offset risk

• leverage key assets

• tap into complementary offerings

benefits of product line depth

• advertising economies

• package uniformity

• standardized components

• efficient sales and distribution

• equivalent quality

product structure

• generic product: a combination of elements required to participate in the market

• expected product: generic product and the minimum the customer expects from a product in the category

• augmented product: goes beyond the expected product to include unexpected value-enhancing elements

• potential product: extension to the augmented product that includes “everything that might be done to attract and hold customers”

types of consumer products

• convenience product

• shopping product

• specialty product

• unsought product

new product strategy

first step in new product development process that outlines what new offering do we want to bring to the marketplace to serve whom and how are we going to create it

diffusion

the process by which adoption of an innovation spreads

factors affecting rate of adoption

• Complexity

• Trialability

• relative Advantage

• Compatibility

• Observability

categories of adopters

• innovators

• early adopters

• early majority

• late majority

• laggards

chasm in categories of adopters

between early adopters who want newest things and early majority who want solutions and convenience

product lifecycle

1. introduction

2. growth

3. maturity

4. decline

planned obsolescence

the practice of modifying products so those that have already been sold become obsolete before they actually need replacement

how services differ from goods

• intangible

• inseperable

• heterogenous (inconsistent)

• perishable (inventory)

indicators of service quality

• reliability

• responsiveness

• assurance

• empathy

• tangibles

value/supply chain

• supplier network

• marketing channel

marketing channels

a set of interdependent organizations that facilitate the transfer of ownership as products move from producer to business user or customer

channel alternatives

1. distributer/wholesaler→retailer→customer

2. jobber/broker→retailer→customer

3. retailer→customer

4. supplier’s own sales and distribution→ customer

channel intermediares

• retailer

• distribution/wholesaler

• jobber/broker (connect don’t own)

marketing channel benefits

• specialization and division of labor

• overcoming discrepancies

• providing contact efficiency

discrepancies

• discrepancy of quantity

• discrepancy of assortment

• temporal discrepancy

• spatial discrepancy

channel functions performed by intermediaries

• transactional functions

• logistical functions

• facilitating functions

$ margin

selling price - unit cost

% margin

$ margin / selling price

3 disciplines of channel stewardship

• mapping the industry channels

• building and updating the channel value chain

• aligning and influencing the channel system

4 forces affecting channel strategy

1. customer wants and needs

2. channel capabilities and costs

3. channel power and influence

4. competitive postures and actions

indirect vs direct

1. size and distribution of end customers

2. nature of the product or service

3. role and position of the product in the end customer’s purchasing basket

4. nature of the producer firm

levels of distribution intensity

• intensive: sell everywhere you can

• selective: work with a certain tier of channel members

• exclusive: work with only one or a few dealers

ownership of entities channel structure

• arms length network: each entitry is individually owned (multibrand retailer)

• franchised network: each entity is individually owned but contractually obliged to only serve supplier (independently owned but franchised retail outlet)

• integrated network: one company owns the whole channel (company owned retail outlets)

hard (legitimate) power

unique product/technology or brand vs market access and intelligence

soft (connection) power

trust and commitment

horizontal conflict

occur among firms at the same level

vertical conflict

occur between different levels of the same channel

strategic channel alliance

one company uses another company’s marketing channel to get branded products to customers when they don’t have the ability or resources themselves

RFM

• recency

• frequency

• monetary