marketing final

segmentation - targeting - positioning process

1. strategy or objectives

2. segmentation bases

3. evaluate segment attractiveness

4. select target market

5. identify & develop positioning strategy

step 1) establish overall strategy or objectives

• get mission and objective of marketing strategy

• ensure strategy aligns with this and swot

step 2) segmentation bases

• develops descriptions of different target market segments —>needs, wants characteristics

• bases include geographic, demographic, psychographic & behavioural

geographic segmentation

• divide groups based on where they live

• based on country, region, climate, topography

• most useful for companies whose products satisfy needs that vary be region

demographic segmentation

• divide people based on who they are using easily measured & objective characteristic (ex. age, gender, home owner etc)

• most common bc easy to identify and easy to reach

psychographic segmentation

• divides based on how consumers describe themselves or how they live —> balance ideal with realistic

• self values (life goals)

• self concept (image ppl have of themselves)

• lifestyles (way we live)

• expensive to identify consumers this way

VALS - values and lifestyle

• vertical dimension: level of resources such as income or education —> upper (Innovator, thinker, etc) have more resources and innovation than bottom

• horizontal dimension: segment’s primary psychological motivation

  • ideals (knowledge/principles), achievements (shows success to peers), self expression

• innovators, thinkers, achievers, experiencers,

• believers, strivers, makers

behavioural segmentation

• divides groups based on why they buy, how often and how they plan to use

• looks at benefits, usage rates, loyalty & occasion segmentation (big chips for parties and snack size)

• loyalty most profitable in the long run —> loyalty segmentation

geodemographic segmentation

• combine geographic, demographic and lifestyle because they often relate

• useful for retailers

step 3: evaluate segment attractiveness

• identifiable: determine who is the market and that segments are distinct from each other

• reachable: reached or accessed through persuasive communications and distribution

• responsive: customers in segment react similar to each other and positively

• substantial & profitable: measure size and growth potential of segment —> small market or low buying power may have lower profits

formulas

• segment #

• segment adoption %: % likely to adopt product

• purchase behaviour: purchase price x # time customer would buy product in a time period

• profit margin %: (selling price - vc)/selling price

step 4: select target market

• marketeers ability to pursue opportunity —> use with SWOT analysis

• undifferentiated targeting strategy: everyone is a potential user, used for basic items

• differentiated targeting strategy: target several segments with different offerings for each —> increases market size & diversification

• concentrated targeting strategy: focus on single and primary market and focus all energy on it

• micro-marketing: one to one, change product for individual customers needs/wants (custom) & mass customization —→ easy with internet

step 5: identify & develop positioning strategy

• positioning: mental picture people have about org and its products

  • communicates products value proposition

• positioning statement: target market, name or brand, product category, unique point + benefits

positioning methods

• value: relationship of prices and quality —> not always ab low price

• product attributes: focus on benefits important to target market

• benefits & symbolism: benefits of brand and psychological meaning

• competition: head to head with another competitor —> avoid confusing consumer or legal issues

• market leadership: emphasize brands leadership int he industry, large companies

positioning with perceptual mapping

1. determine how consumers think of your product compared to competition

2. identify markets ideal points and size

3. competitions position (inside the map

4. consumer preferences

5. select the position

segmentation attractiveness acronyms

• CPM —> can we reach

• CAC —> can we acquire efficiently

• CLV —> are they valuable

• CLV:CAC —> is segment profitable

product complexity

• core customer value is at the core

• around it is actual product and its associated services (ex. warranties)

marketing strategy

• target market + marketing mix

• 7) product, price, place, promotion, people, process, physical evidence

product and types

• product is anything of value to consumer and can be marketed

• specialty products: for customers with specific preferences and want best suppliers

• shopping goods/services: like furniture or clothing —> spend time comparing alternatives

• convenience: consumer does not put effort in evaluating purchase decision

• unsought: ppl don’t usually think to buy or dont know (funeral service)—> need lots of marketing

product mix

• complete set of products offered by org

  • consists of product lines (groups of associated items, ex. oral care) —> which contains many product categories (sees as reasonable replacements for each other)

  • product mix breadth: number of product line in firm

    • increase/decrease breadth: add / delete product lines

    • increase/decrease depth: add / delete products in a line

branding

• how firms differentiates offering from competition

• elements of a brand: brand name, URLs, logos & symbols, characters, slogans, jingles

  • 3 areas: brand equity, brand ownership & brand names

value of branding

• facilitate purchasing: easily recognized and trusted for quick decisions

• establish loyalty

• Protected form competition and price competition

• Reduce marketing costs: because brand sells itself

• Assets: can legally protect trademark

• impact market value

brand equity

• brand awareness: how many consumers familiar of the brand, what it stands for and familiarity —> created throw repeated exposure of brand elements

• perceived value:

• brand associations: mental links consumers make between brand and key product attributes

• brand loyalty: less sensitive to price, marketing costs are lower for them and they do positive word of mouth

brand ownership

• manufacturer brands: owned and managed by manufacturer, they pay for marketing and distribution —> retain control and own brand equity

• Private label: owned and managed by retailers

• Generic: sold without brand names, going down in popularity bc consumers question origin and quality

• family brands: corporate name to brand similar product lines (ex. kellogs)

choosing brand name

• descriptive of qualities

• easy to pronounce and recognize

• registrable and trademark

• easy to translate if going international

brand extension

• use same brand name for new products

• brand dilution: when brand extension affects consumer perceptions negatively —> carefully evaluate fit, consumer perceptions, don’t extend to too many, do not distract from main brand

cobranding

• marketing two or more brands together on a product (ex. cibc areoplan card)

• enhance consumer perception with link but may not work when consumers of rands are too different of there are financial disputes

brand licensing

contract where one firm allows another to use brand name, logo etc.

packaging

• more tangible and physical benefits than other brand elements

• protects products, has UPC label, convinces ppl to buy

• trend for sustainable packaging and moving away from single use

labelling

• gives all necessary info for purchase

• comply with laws and regulations

product development process

• idea generation

• concept testing

• product development

• market testing

• product launch

• evaluation of results

4 types of innovation

• breakthrough innovation: new solutions to tough problems that cant be solved (well defined problem, not well domain)

• sustaining innovation: improving what we alr have (well defined domain, not problem)

• basic research: labs for academic research (not well problem or domain defined)

• disruptive innovation: new product that creates major changes (well defined domain, not well problem)

branding process

1. brand mission and purpose

2. target market

3. position strategy

4. brand story

5. brand messaging

6. brand personality (human characteristics)

7. brand name and tagline

8. visual identity

what is price

• the overall sacrifice willing to make to acquire something

• only element of marketing mix that creates revenue

• dont always want low price—> want high value for price

• also an indicator of quality for consumers in lack of info

the 5 c’s of pricing

competition, costs, company objectives, customers, channel members

company objectives

• profit oriented: higher margins —> target profits based pricing

  • maximizing profits strategy: collect all info to get profit max price

• sales oriented: believe increasing sales will help more than rising profits —> does not mean lowest price

• competitor orientation: measure against competition —> competition parity (prices like competition)

• customer orientation: showcase value of product to customer through price (high range, no-haggle)

customers —> reactions to different prices

• demand curve: how many unit of product demanded in a period of time as price changes

  • demand may increase as price increases & vice versa for luxury

• price elasticity of demand: how customers respond to price increases or decreases ( %change in q demand /% change in price)

  • less sensitive for necessity (inelastic)

  • less than 1 is inelastic, more than one is elastic

  • income effect

  • substitute effect

  • cross price elasticity

• costs: price should not be based on costs but consumer value

break even point

• fixed cost / (price per unit - Vc per unit)

• limitations: changing prices, economies of scale

competition

• monopoly: one firm

• oligopoly: few firms dominate → price war (ex. gas stations)

• monopolistic competition: many firms competing with differentiated products

• pure competition: alrge number of firms with standard products

pricing strategies for existing products

• cost-based: determine final price using average costs, simple, per unit, non varying costs

• competitor-based: set prices based on how you want consumers to see you against competitors —> similar price indicates similar product

• value-based: consider what customer believes value is and set price based on that —> improvement value, TCO

everyday low pricing

Stress how affordable there prices are —> customers spend less time verifying and buy (ex, walmart, things are cheaper on average)

high/low pricing

relies on sales —> prices reduced to encourage purchase

new product pricing

• price lining: establish a price floor and price ceiling for entire line of similar products

• skimming: launch with higher price and reduce as market evolves (for innovation and early movers) like apple

  • profits through margin

• penetration: initial low price for higher sales than increase over time —> can benefit from economies of scale

  • profits through volume

other common pricing strategies

• sales/dynamic pricing: changing price based on demand (uber)

• segmented pricing: charge diff price to diff customer segments based on time, location etc.

• shrinkflation: reduce amount of product, price is same

• buy now pay later: payment instillments

• leader pricing: one price super low and advertised to motivate other store purchases

• price bundling: more items are cheaper tgt

customer price reductions

• markdowns —> increase sales

• quantity or bulk is cheaper

• coupons & rebates

cost based pricing process

1. design good product

2. determine cost

3. set price based on cost

4. convince buyers of value

value based pricing process

• asses customer wants and needs

• set target price to meet perceived value

• determine costs

• design product to meet value for price

value based pricing 2 approaches

• improvement value method: willingness to pay for pridyct relative to other comparable products

• TCO: prices that show total cost of owning product over useful life

captive product pricing

one core item with attached accessories (ex. xbox)

price discrimination

• first degree: charge max price they are willing to pay (ex. auction)

• second degree: price varies on quantity of version (ex. gym membership)

• third degree: segmented pricing (ex. senior discount)

illegal or unethical price advertising

• descriptive reference pricing (ex. winners label)

• loss leader pricing: price below cost

• bait and switch: low price without intent to sell (very low supply)

• predatory pricing: very low price to drive competition out of business (illegal)

• price discrimination

• price fixing: join other firms to control prices

psychological pricing

• price as indicator of quality

• pain of paying

• affordability illusion (break down prices per day instead of year)

distributions channel

transfers ownership of good by moving from point of production to point of consumption. includes all things in that process

logistics management

process that controls movement of raw materials, in process inventory and finished goods

distribution strategy

• develop so you know how you will sell

• getting the right product, to the right place at the right time

• direct, indirect, multi-channel or combination

wholesaler, distributer & retailor

• wholesaler: third party between manufacturer and retailor who sells third party products

• distributer: independent contractor hired by manufacture to sell its products

• retailer: sells directly to customer

channel design and selection questions

1. will customers buy?

2. fits products & brands?

3. fits org?

4. profit potential?

channel design process

1. analyze customer needs

2. set channel objectives

3. identify channel alternatives (#, intensive, exclusive or selective dist)

4. execute distribution strategy (select channel partners, manage it, develop logistic strategies

1) analyzing customer needs

• what do they want

• buy nearby or willing to travel

• in-perso, phone or online

• assort or specialize

2)setting channel objectives

• level of customer service

• shelf life

• company size & finances

• competitors

3) identify channel alternatives

• types of intermediaries

• # of intermediaries

• responsibilities of channel members

market exposure decision

• # of intermediaries

• intensive: maximize product availability

• selective: limited number of outlet

• exclusive: sense of scarcity and exclusivity

channel evaluation alternatives

• economic criteria

• control issues

• adaptability

direct to consumer channel key decisions

1. focus on global, local or regional

2. offerings: full range or selected items, online only?

3. pricing: consistency, display

4. e-tools: whihc one

5. services: chat?

6. crm: emails?

retailers key decisions

• high street or mall, days of supply, franchising, owned and managed corporate chain

• retail strategy design & development

  • # of stores

  • structure: location & size

  • performance: what you sell

• retail ops

  • experience: display, ambience

  • management: buying, sales, training

some distribution channel kpis

• distribution coverage: how many stores carry

• in stock rate: how often its avlaiable to customers

• stock out rate

• channel sales

• inv turnover

distribution channel types

• sell directly to consumer (producer to consumer)

• selling through retailers (producer, retailer, consumer)

• selling through wholesalers (producer, wholesaler, retailer, consumer)

integrated channel strategy

• can be all channels avlaiable to consumer but not ingrained or connected

• vs, all channel avaliable and connected

upstream & downstream partners

• upstream: suppliers

• producers

• downstream: wholesalers, retailers

promotion

getting the right message to right audience through the right media

content marketing

POES 4 types of media

• paid: high control, low credibility on ig ads

• owned: high control, low credibility on website, built over time

• earned

• shared: med control, reposting user content is low cred,

the communication process

• sender encodes and sends a message through a channel and faces noise

• it is decoded an received by reciever who sends a repsonse

• this cycle continues with noise

7 steps in planning an integrated marketing campaign

1. identify target audience

2. set obj

3. budget

4. convey message

5. evaluate & select media

6. creare communication

7. assess impact

2) set objectives

• what is the desired response

• short term awareness (knowing & liking) or long term objective (considering & purchasing)

• where is buyer in their decision process

• aida model

aida model

• for setting objective —> promotion should move consumers toward action

• A: attention (think) —> reach kpi

• I: interest (feel) —> click thorugh rate kpi

• D:Desire (feel)—> add to cart kpi

• A: action (do)—> sales kpi

3) determine budget

• obj and task method

• competitive parity —> budget in line with competition

• percentage of sales method (fro forecasted sales)

• affordable methods: what is left over after operating costs

4) convey message and content strategy

define a message that is

• meaningful

• believable

• distinctive

• unique selling proposition (USP) —> central idea of campaign

how we connect with audience

• rational appeal: facts and key benefits

• emotional appeal: fulfill emotional desires

• moral appeal: sense of what right

7) asses impact using marketing metrics

• reach: %. of ppl in target market exposed to ad

• frequency: how many times avg person in target market is exposed to ad

• engagement

how advertising works

• advertising input (message content)

• filters/mediation (motivation & ability to process)

• consumer

  • cognition

  • affect

  • experience

  • attitude toward ad or brand

• consumer behaviour (loyalty, consumption)