Marketing Fundamentals: Strategies, Segmentation, and Consumer Behavior

Goal of marketing

To encourage the purchase or use of goods or services through various techniques.

Goods vs. Services

Goods are tangible, services are intangible.

Product

A term comprising both goods and services.

Four components of marketing exchange

1. At least two parties, 2. Both must find it desirable to deal with each other, 3. Each must have something of value the other desires, 4. Both must be free to accept or reject the exchange.

AMA definition of marketing

The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Formula for customer value

Value = Benefits Received - (Price + Hassle)

Product-Oriented philosophy

Focuses on what a company can do best; relies on innovation but doesn't address market needs.

Sales-Oriented philosophy

Uses sales techniques to stimulate growth but does not address market needs (e.g., telemarketing).

Market-Oriented philosophy

Focuses on what customers want or need; requires research and is relationship-oriented.

Societal Market-Oriented philosophy

Focuses on what customers want or need AND what is best for society.

4 Ps of the Marketing Mix

Product, Price, Place, Promotion.

Target Market

The individuals or groups most likely to buy your products.

Strategic Plan

A process that helps an organization allocate its resources to accomplish its objectives, deliver value, and be competitive.

Marketing Plan

A document designed to communicate the marketing strategy to influence stakeholders to invest money, time, and effort.

Mission Statement

It defines the purpose of the organization and how it defines its business.

Characteristics of good Objectives

They should be time-specific, measurable, and realistic.

Situation Analysis

An assessment of an organization's internal and external environments, often done via a SWOT analysis.

SWOT

Strengths, Weaknesses (Internal), Opportunities, Threats (External).

Porter's Five Forces model

Rivalry, Substitutes, Barriers to Entry, Buyer Power, Supplier Power.

Difference between Strategies and Tactics

Strategies are actions taken to accomplish objectives (the means). Tactics are the specific actions taken to execute strategies.

Four Product and Market Entry Strategies

Market Penetration, Product Development, Market Development, Diversification.

BCG Matrix - Star

An SBU with high market share in a high-growth market. It needs cash to keep growing.

BCG Matrix - Cash Cow

An SBU with high market share in a low-growth market. It generates cash.

BCG Matrix - Problem Child (Question Mark)

An SBU with low market share in a high-growth market. The company must decide to build or divest.

BCG Matrix - Dog

An SBU with low market share in a low-growth market. It should be eliminated or sold.

Four Resource Strategies

Build, Hold, Harvest, Divest.

Consumer Behavior

The study of when, where, and how people buy things and then dispose of them.

5 stages of the Buying Process

1. Need Recognition, 2. Search, 3. Evaluation, 4. Purchase, 5. Post-purchase.

Situational Factors

Factors that can influence a purchase, including presentation, sounds, color, smells, appearance of personnel, merchandise density, time, reason for purchase, and mood.

Personal Factors

Factors that can influence a purchase, including personality, self-concept, gender, age, stage of life, and lifestyle (psychographics).

Maslow's Hierarchy of Needs

A theory that outlines five levels of needs: 1. Physiological, 2. Safety, 3. Social, 4. Esteem, 5. Self-Actualization.

Perception

How people interpret stimuli; 'Perception is reality.'

Selective Perception

The three types include Selective Attention, Selective Retention, and Selective Distortion.

Learning (in consumer behavior)

The process by which consumers change their behavior after gaining information or experience with a product.

Attitudes

'Mental positions' or emotional feelings, favorable or unfavorable evaluations, and action tendencies people have about products, services, etc.

Societal Factors

Factors that influence consumer behavior, including culture, subculture, social class, reference groups (aspirational/non-aspirational), opinion leaders, and family.

Consumer Involvement

The three levels in the buying process are 1. Routine Response, 2. Limited Involvement, 3. High Involvement.

Market

Groups of individuals or organizations that are willing to buy your product AND have the ability to buy your product.

Market Segmentation

The process of breaking down all consumers into groups of potential buyers with similar characteristics.

Undifferentiated (Mass) Marketing

Essentially selling to anyone that has any interest in the product.

Reasons for Targeting a Market

1. More Precise, 2. Identify best customers, 3. Save money and resources, 4. Better customer interaction, 5. Stop wasting consumer time, 6. It is expensive due to research.

Segmentation Bases

Criteria used to classify and divide buyers into different groups.

Types of Segmentation Bases

The four main types are Behavioral, Demographic, Geographic, Psychographic.

Behavioral Segmentation

Segmenting based on benefits sought, usage rate, situation, or buyer type (e.g., loyal).

Demographic Segmentation

Segmenting based on age, gender, ethnicity, income, family life cycle.

Geographic Segmentation

Segmenting based on where people live.

Psychographic Segmentation

Segmenting by psychological characteristics and beliefs (Activities, Interests, Opinions, Values, Attitudes, Lifestyle).

Geodemographic Segmentation

A subset of psychographics that incorporates geography and demography.

Evaluating a Market Segment

Key factors include Substantiality, Growth potential, Competitors, Accessibility, Resources, Mission, Responsiveness.

Single Variable Segmentation

Using only one base to segment a market (e.g., All women).

Multivariable Segmentation

Using more than one base to segment a market (e.g., Men with incomes over $80,000). It is more precise and common.

Targeting Approaches

The three main approaches are Undifferentiated, Multisegment, Concentrated (Niche).

Positioning

How consumers view a product relative to the competition.

Perceptual Map

A two-dimensional graph that visually shows where a product stands relative to its competitors.

Repositioning

The deliberate process of 'moving' a product to a different place in the minds of consumers.