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Segmentation
Group customers based on similar needs. Profiling each segment
Targeting
Assess the attractiveness of each segment. Selects which segments to target based on size of prize and right to win
Positioning
Defining the value proposition for target segment and develop an action plan
What are the different types of segmentation?
Geographic: zip code, country, city
Demographic: age, gender, income, race
Psychographic: interests, activities, opinions, values, needs, goals
Behavioral: Purchasing habits, customer loyalty, brand interactions
What makes the best segmentation?
Have many types of segmentation variables built in. Geographic, demographic, psychographic, behavioral
Keys to a good segmentation
ISASDS
identifiable (can find people that meet the criteria)
Substantial (large segment)
Accessible
Stable
Differential
Actionable
What factors should you consider when choosing a target?
market size
Expected growth
Competitive position
Cost of reaching
Company compatibility
Another way to select your target?
Size of prize: market size, expected growth, cost or reaching
Right to win: competitive position, company compatibility
Positioning
The act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market
What’s the difference between positioning and position?
Position: how you are perceived in the minds of your prospects
Positioning statement: how you wish to be perceived
Market segmentation
Aggregating prospective buyers into groups or segments that have
Common needs
Will respond similarly to a marketing action
Cannibalization
New products or new chains simply stealing customers and sales from older existing ones
Product differentiation
Firm using different marketing mix actions to help consumers perceive the product as being different and better than competing products
4 ps of marketing
product
Price
Promotion
Place
80/20 rule
Concept that suggests 80% of firm sales are obtained from 20% of it’s customers
Customer lifetime value
Represents the financial worth of a customer to a company over the course of their relationship
Preceptual maps
Positioning tool that visualizes how consumers perceive brands across key attributes
Product positioning
The place a product occupies in consumers minds based on important attributes relative to competitive products
Positioning statement
A strategic document that communicates the unique vale the brand offers to a particular target segment
answers “why should I buy?”
Reason to believe vs. benefit
RTBs tell what the product is, benefits sell the product with the experience the customer will gain
What are the six different types of new products and services?
New to the world products: meta quest
New category products: McCafé
Product line extensions: lemon Diet Coke
Product improvements: iPhone new generations
Product repositions: change how they talk about a product
Cost reduction: 50% less sugar
Why do new products fail?
relative advantage: degree to which consumers perceive the product as having superior benefits.
Compatibility: the extent to which a new product is consistent with cultural practices and values or brand
Complexity: the easier to adopt the more purchases
Trial ability: the easiness of trying the product
Observability: how easy is it to observe the benefit of this product or service
Stage gate process/ new product development process
Process that allows teams and organizations to get people to go and evaluate ideas and do research, then bring them back to share them
What does it mean to fail forward?
Embrace failure and use it as a learning curve
James Dyson
Thomas Edison
Steve Jobs
What are the steps within the stage gate process
Develop and scope: identify new business opportunities
Business case: validation of new product concepts via research
Develop: design the product and process to commercialize the product
Test and validate: test the product in market and develop marketing plan
Launch: execution production
Job to be done
A fundamental problem that your target customer needs to resolve
How to find the job to be done?
Watch the current customer
Study prospective customers
Watch for compensatory behavior
Ask why why why?
Product
Good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers needs and is received in exchange for something else of value
Services
Intangible actions benefits that an organization provides to satisfy consumers needs needs in exchange for money or something else of value
Consumer products
Products purchased by the ultimate consumer
Business products
Products organizations buy that assist in providing other products for resale
Convenience products
Items that the consumer purchases frequently, conveniently, and with a minimum shopping effort
Shopping products
Items for which consumers compares alternatives on criteria such as price, quality, and style
Specialty products
Items that the consumer makes a special effort to search out and buy
Unsought products
Items that the consumer does not know about or knows about but does not initially want
Product line
Group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group
Open innovation
Practices and processes that encourage the use of external as well as internal ideas
What are the stages of the product life cycle?
Introduction: new products are getting launched and building awareness
Growth: people are learning about the product and you experience rapid growth, but competitors join the market
Maturity: pretty good awareness, its all about repeat purchases
Decline: people used the product, sales drop off possibly because of competitors
Brand management
A function of marketing that uses techniques to increase the perceived value of a product line or brand over time
Brand manager
Oversees and is accountable for every aspect of the brand with a focus on driving incremental sales via brand building activities
Conductor of an orchestra, works with sales, market research, ect
What is brand equity?
Customers subjective and intangible assessment of the brand, above and beyond its objectively perceived value
NFL, snaple, gilette, apple #1, amazon #2
What are the three types of brand architecture and what are their pros and cons?
Masterbrand: google drive, google maps, google photos
Can be incredibly efficient, just have to advertise google, works if the brand with a clear meaning and well recognized
Endorsed: courtyard by mariott, residence inn by marriott
Makes it feel more unique, evolutionary process
Individual: P&G … crest, old spice, tide
Incredibly innconviniet, need to have a lot of money, creates tones of room to grow
Brand architecture
how organiztions groups brands within a business
Trading up
adding value to the product
trading down
reducing a products number of features, quality, or price
Brand equity
added value a brand name gives its product beyond the functional benefits
Brand personality
set of human characteristics associated with a brand name
Trademark
firm has legally registered its brand name or trade name so it has exclusive use
Market modification
strategies a company tries to find new customers
Product modification
altering one or more of a products characteristics such as quality and performance
Harvesting
company retains product but reduces marketing costs
Product bundling
the sale of two or more seperate products in one package
Brand purpose
why a brand exists
Brand licensing
contractual agreement where one company allows its brand name or trademark to be used by another company
Private branding
when it manufatures products but sell them under the brand name of wholesaler or retailer
What’s the role of services in the U.S. economy?
intangible
the largest part of the U.S. economy
Make up more than 45% of U.S. GDP
education, transportation, healthcare, insurance
less easy to evaluate if no product is recieved
Why are services more difficult to evaluate
Four I’s of services
Intangible: makes it hard for consumer to feel the benefit
Inconsistent: reliant on people
Inseparable: when you think of the service people are what you evaluate it on
Inventory: limited time when you can engage
The seven ps of services marketing
product
price
place
promotion
physical environment: online, offline… amenities provided to set the standard for what they should expect from the service
people: drives services marketing business
process: organization building out every touchpoint of interaction, maintaing a high ulitization rate
What are the three layers of a product and what are examples of each?
Core: the nuts and bolts, the physical anatomy, the basic features that solves the basic benefit or problem that the consumer is looking for
jeans, apple watch, flight, sandwhich
Augmented: add-ons to the physical product that add value
customer service, packaging, promotion, warranties, gaurantees, brand name, design
Symbolic: the psychological and emotional meaning of the product to a customer
exhilaration, pride, empowerment, safety, nostalgia
What is price and what are its different name?
The amount of money exchanged for products and services
rent, tuition, fee, premium, wage, dues, salary, interest
What is the difference between price and value?
price is what the consumer pays
value is what the consumer receives
Six steps in setting the price
Identifying pricing objectives and constraints: profit, market share, and survival, deman, product class
Estimate demand and revenue…. price vs. quanity
Determine cost, volume, and profit relationships: marginal analysis, break even analysis
Select an approximate price level
Set list or quoted price
Make special adjustments to list or quoted price
What are the different pricing objectives?
Price
Sales revenue
Market share : firms sales over category sales
Unit volume
Survival
Social responsibility
How to calculate unit and dollar market share?
Price elasticity of demand
Measures the relationship between price and the quantity demanded
High elastic: change in price changes demand… luxury items
Inelastic: Change in price does not change demand… necessities
Total cost equation
total cost= fixed cost (rent and salaried labor) + variable cost ( materials and direct labor)
Contribution margin equation
Price (per unit) - Variable coat ( per unit)
Break even analysis
technique that analyzes total revenue and total cost to determine profitability at various quantities
Break even point
shows the quanity sold needed to cover costs
BEP = Fixed cost / ( Unit price - Unit variable price)
Value pricing
the practice of simultaneously increasing product and service benefits while maintaining or decreasing price
Pricing objectives
specifying the role of process in an organizations marketing and strategic plans
Market share
the ratio of the firm’s sales revenue or unit sales to those of the industry
Unit volume
the quantity produced or sold as a pricing objective
Demand curve
a graph that relates the quantity sold and price
Demand factors
factors that determine consumers willingness and ability to pay for products and services
SWOT Analysis
Strengths, weaknesses, opportunities, threats
Situation Analysis ( 5Cs)
focus on internal forces
Company
products
Competitife advantages
brands
objectives
performance
Context
laws and regulations
social trends
economic trend
technological trends
Customers
target audience
motivations & behaviors
Communication channels
customer perceptions
Collaborators
suppliers
partners
investors
distributors
Competition
direct & indirect competitors
Competitive positioning
Strategies & tactics
Strengths and weaknesses
Primary research
qualitative research : discussion based, open ended, smaller sample size
Quantitative research: survey based, data, definitive results
Secondary research
already done research
What are common approaches for selecting an approximate price?
Three demand oriented pricing approaches
Skimming: apple, tesla, humira
Penetration: freemium, Netflix, spectrum, sheetz, amazon
Prestige: keeps high price, Rolex, Louis Vuitton, Hermes
Skimming
a firm introducing a new or innovative product setting the highest initial price that customers who really desire the product are willing to pay
Penetration pricing
setting a low initial price on new product to appeal immediately to the mass market
Prestige pricing
setting a high price so the quality is perceived to be higher
Standard markup pricing
adding fixed percentage to the cost of all items in a specific product class
Dynamic pricing
pricing that changes the price real time based on supply and demand
Quantity discounts
gives a better deal the more you buy
Seasonal discounts
sells at a discounts during peak season or off season
Cash discounts
discount for paying on time they got a discount for the product they purchased and translate it
Price customization
pricing strategy that improves price realization by varying price by type of customer
Main factors that affect value and price customization
tastes
nature of use
intensity of use
competition
Mass customization
tailoring products or services to the tastes of individual customers on a high volume scale
Build to order
manufacturing a product only when there is an order from a customer
Personas
character descriptions of a brand’s typical customers
Product repositioning
changing the place a product occupies in consumers minds based on important attributes relative to the competitive products
