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Market segmentation
dividing the market into segments of customers who have different needs, characteristics, or behaviors
Market targeting
evaluating each market segment attractiveness and choosing which segments to go after
Differentiation
differentiating the firm’s market offering to create superior customer value
Positioning
arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers
Segmenting consumer markets: Geographical
Where (country, region, climate zone)
E.g. Target selling red sox themed merchandise in the target next to fenway park
Segmenting consumer markets: Demographic
age, life-cycle stage, gender, income, generation, religion
E.g. credit card companies targeting affluent customers with an offering
Segmenting consumer markets: Psychographic
personality, lifestyle, interests, opinions
E.g. Panera planning to remove toxic additives from their food
Segmenting consumer markets: Behavioral
thoughts, usage rate, price sensitive consumers, product knowledge, benefits sought, loyalty status
E.g. starbucks selling a seasonal pumpkin spice latte
Intermarket segmentation
Group customers of similar needs and buying behaviors even if they are located in different countries
E.g. Zara targeting cost conscious customers but value seeking ones all around the world
Requirements for effective segmentation: Measurable
the size, purchasing power, and profiles of the segments can be measured
Requirements for effective segmentation: Accessible
The segments can be effectively reached and served
Requirements for effective segmentation: Substantial
the market segments are large or profitable enough to serve
Requirements for effective segmentation: Differentiable
consumers in a segment should have similar needs, and these needs should differ from the needs of consumers in other segments
Requirements for effective segmentation: Actionable
attracting and serving customers in the segments identified, having the capabilities to serve the identified segments
T/F: Selecting the largest, fastest growing segments is always the most attractive
False, smaller companies may lack the skills/resources needed to serve those segments
Undifferentiated marketing (mass marketing)
ignoring segment differences and go after the whole market with one offer
E.g. Massachusetts water resources authority (suppliers most of the east of Massachusetts water)
Differentiated marketing (segmented marketing)
a firm targets several market segments and designs separate offers for each
E.g. IHG offering different types of hotels (Westin, courtyard Marriott, the ritz)
Concentrated marketing (niche marketing)
a firm goes after a large share of one or a few segments or niches
T/F: When a firm’s resources are limited, concentrating marketing is best
True
Micromarketing
tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments
Local marketing
tailoring brands and marketing to the needs and wants of local customer segments (e.g. cities, neighborhoods, specific stores)
E.g. home depot suggesting different products from those who live in Oregon vs Florida
Individual marketing (mass customization)
tailoring products and marketing programs to the needs and wants of individual customers
Socially responsible target marketing
a way for companies to be accountable for their practices and to contribute to the interests of those being targeted
Value proposition
how the company creates different value for targeted segments and what positions it wants to occupy in those segments
Positioning maps
perceptual positioning maps show consumer perceptions of their brands vs. those of competing products on important buying dimensions
Positioning maps: buying dimensions
Luxury/performance on (orientation) x-axis, (price) on y-axis
Positioning maps: circle size
Size of each circle indicates the brand’s relative market share in the segment
Product differentiation
differentiated on features, performance, style, design
Services differentiation
speed, convenience, quality of customer service
Channels differentiation
channel coverage, expertise, performance
People differentiation
Hiring and training people better than others
Image differentiation
conveying a product’s benefits and positioning
Possible value propositions
Top and right cells are the winning propositions, center cell is a marginal proposition, lower left cells are losing proposition
Possible value propositions: More for more
providing the most upscale product or service and charging a higher price to cover the higher costs
E.g. starbucks charging premium prices for coffee, Whole Foods
Possible value propositions: More for the same
offering more for the same price
E.g. target positioning as the “upscale discounter”
Possible value propositions: The same for less
offering the same products and services for a cheaper price
E.g. Walmart
Possible value propositions: Less for much less
products that offer less and therefore, cost less to make
E.g. Aldi being cheap but offering less selections than typical groceries and private labels
Possible value propositions: More for less (most ideal)
best selection/service/products for the lowest price
e.g. Trader Joe’s
Positioning statement prompt
to (target segment and need) our (brand) is (concept) that (point of difference)
Product
anything that can be offered to the market for attention, acquisition, use, or consumption that can satisfy a want or need
Services (intangible)
activities, benefits, or satisfaction offered for sale
E.g. baking, hotels, massage, airline travel, repair services
Pure tangible good
no services accompany the good
Pure service
no tangible part of the offering
Consumer products
Products and services bought by final consumers for personal consumption
Convenience products
Products that customers buy frequently, low priced, readily available
E.g. laundry detergent, fast food, soft drinks
Shopping products
less frequently purchased
E.g. furniture, clothing, major appliances, hotel services
Specialty products
products and services with unique characteristics or brand identifications
E.g. specific car brands, designer clothes, gourmet foods
Unsought products
products that a consumer either does or does not know about but does not normally consider buying
E.g. life insurance, preplanned funeral services, blood donations
Industrial products
products purchased for further processing or for use in conducting business
E.g. buying a lawnmower used in a landscaping business
Organization marketing
activities taken to create, maintain, or change the attitudes and behavior of target consumers toward an organization
Person marketing
activities to create, maintain, or change attitudes or behavior toward particular people
E.g. presidential speeches
Place marketing
activities taken to create, maintain, or change attitudes and behavior towards particular places
E.g. cities promotional ads, “its more fun in the Philippines”
Idea (social) marketing
Using traditional business marketing concepts and tools to encourage behaviors that will create individual and societal well-being
E.g. Women in STEM ads
Private label brands
products manufactured by one company but sold under another company's brand
E.g. kirkland signature, great value, amazon basics
Product and service attributes
the benefits the product/service will offer (e.g. quality, features, style and design)
Branding
a name, term, sign, symbol, or design that identifies the maker or seller of a product or service
Packaging
designing or producing the container or wrapper for a product
Labeling and logos
the label identifies the product or brand, describe things about the product, helps promote the brand and engage customers
Product line
a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, marketed the same, or fall within given price ranges
Product line length
the number of items in a product line
Product line stretching
increasing a product line beyond its current range
Stretch downward
To plug a market hole or respond to a competitors offerings
Stretch upward
To add prestige to their current offerings
The nature and characteristics of a service: Intangibility
services that cannot be tasted, seen, or felt, smelled, or heard before purchase
E.g. restaurants showing what they have to offer, taking good photos of their food
The nature and characteristics of a service: Inseparability
services that cannot be separated from their providers
The nature and characteristics of a service: Variability
Quality of service that depends on who provides them and when, where, and how
E.g. A masseuse providing better service than another assigned masseuse
The nature and characteristics of a service: Perishability
services that cannot be stored for later sale or use
E.g. doctors charging patients for a missed appointment
The service profit chain
links profits with employee and customer satisfaction
Interactive marketing
training service employees to interact with customers to satisfy their needs
Customer retention
a service firm’s ability to hang on to its customers depends on how consistently it delivers value to them
Service recovery
companies can turn negative experiences into positive ones
Brand equity
the differential effect that knowing the brand name has on customer response to the product or its marketing
Brand value
The total financial value of a brand
Brand development
a framework for analyzing brand development opportunities
Brand development: Line extensions
(existing brand name, existing product category)
E.g. new quest bar flavor
Brand development: Brand extensions
(existing brand name, new product category):
E.g. snickers bars extending to ice cream bars/pints
Brand development: Multibrands
(new brand name, existing product category):
E.g. PepsiCo marketing 10+ brands of soft drinks (pepsi, mountain dew, root beer)
Brand development: New brands
(new brand name, new product category)
E.g. P&G selling JIF peanut butter, pringles chips, duracell batteries, etc.
