MKGT 2080 Chapter 9 Review Mcgraw Hill Connect

Segmentation consists of which steps in the STP Process?

Steps 1 and 2

Targeting consists of which steps in the STP Process?

Steps 3 and 4

Positioning consists of which steps in the STP Process?

Only Step 5

Is decision making linear or not linear?

Not linear

The first step in the segmentation process is....

to articulate the vision or objects of the company's marketing strategy clearly

The second step in the segmentation process is...

to use a particular method or combination of methods to segment the market

Using segmentation methods helps...

develop descriptions of the different segments, which helps firms better understand the customer profiles in each segment -> find customer similarities

Establishing the overall strategy or objective helps...

identify a potentially large and profitable market segment before mainstream competitors

Geographic segmentation

organizes customers into groups on the basis of where they live (country, region, etc)

Demographic segmentation

groups customers according to easily measure, objective characteristics such as age, gender, income, and education

What are the benefits of geographic segmentation?

most useful for companies whose products satisfy needs that vary by region

What are the benefits of demographic segmentation?

easy to identify and reach

What plays a huge role in how most firms market products and services?

Gender

ex. Video games

Psychographic segmentation

how customers actually describe themselves

Psychographics

studies how people self-select based on the characteristics of how they choose to occupy their time (behavior) and what underlying psychological reasons determine those choices

Self-values

goals for life, not just the goals one wants to accomplish in a day

What does identifying a customer's self-values do for marketers?

help determine the benefits the target market may be looking for from a product

Self-concept

the image people ideally have of themselves

What does identifying a customer's self-concept do for marketers?

make use through communication that show their products being used by groups of laughing people who are having a good time

Lifestyles

the ways we live

What does identifying a customer's lifestyle do for marketers?

creates a notion that vastly appeal to all sorts of people

ex. Harley way of life

Benefit segmentation

dividing the market into segments according to the different benefits that consumers seek from the product

ex. Hollywood movies (comedy, drama, etc)

Behavioral segmentation

dividing a market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product

Occasion segmentation

WHEN a product is being purchased or consumed

Loyalty segmentation

used to retain their most profitable customers

ex. loyalty programs

Market basket analysis

analyzes such items as websites and checkout scanner information to detect customers' buying behavior and predict future behavior by identifying affinities among customers' choices of products and services

What is the benefit of the market basket analysis?

enable the firm to classify customers into behaviorally oriented market segments

Geodemographic segmentation

"birds of a feather flock together"

uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers

What is the benefit of geodemographic segmentation?

groups can be sorted by many characteristics, including income, home value, occupation, education, household type, age, and several key lifestyle characteristics

Tapestry Segmentation system

classifies all US residential neighborhoods into 65 distinctive segments based on detailed demographic data and lifestyles of people who live in each US block tract

What is the third step in the segmentation process?

evaluating segment attractiveness

A segment is worth pursuing if it is...

identifiable

substantial

reachable

responsive

profitable

Identifiable

-firms must be able to identify who is in their market to design products

-too much overlap=bad

Substantial

-measure market size

-too small=low profit

Reachable

-persuasive communication and product distribution are CRUCIAL

-consumer must know the product exists

Responsive

customers in segment must act similarly and positively to the firms offering

Profitable

-current and future

-market growth

-market competitiveness

-maket access

Market growth

current size and expected growth rate

market competitiveness

the number of competitors, entry barriers, and product substitutes

Market access

ease of developing or accessing distribution channels and brand familiarity

Segment profitibility equation

segment size x adoption % x purchase behavior x profit margin %

Defection rate

percentage of customers who switch on a yearly basis

Undifferentiated Targeting Strategy or Mass Marketing

-focuses on similarities in needs

-not common today

-used for basic commodities such as salt or sugar

Differentiated Targeting Strategy

-target several markets with a different offering for each

-helps diversify the business and lowers companys overall risk

-helps firm obtain a bigger share of the market

Concentrated Targeting Strategy

-organization selects a single market and puts all its energy into it

-entrepreneurial start-ups benefit

-ex. Patagonia

Micromarketing

-one-to-one marketing

-custom-made

-ex P&G uses big data gathered from Google searches to target expectant mothers exclusively

What is the fourth step in the STP process?

select a target market

What is the fifth and final step in the STP process?

Identifying and Developing Positioning Strategy

Market positioning

involves a process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products

Value proposition

communicates the customer benefits to be received from a product or service and thereby provides reasons for wanting to purchase it

Circles for a Successful Value Proposition

#1: Firm's value proposition.

#2: Customer's unmet needs (marketing

opportunity).

#3: Firm's benefits that are not required -

educate customer or redesign product.

#4: Key benefits that both the firm and

competitor provide that customers

require - carefully monitor

performance relative to competitor

on these benefits.

#5: Competitor's value proposition -

monitor and imitate if needed.

#6: Benefits both firms provide that

customers do not appear to need.

#7: Competitor benefits that are not

required

What are the main value proposition components?

1. Target market

2. Offering name or brand

3. Product/service category or concept

4. Unique point of difference/benefits

What are the 3 positioning methods?

1. Salient attributes

2. Symbols

3. Competition

Salient attributes

focuses on product attributes most important to target market

Symbols

so strong an well known that they create a position for the brand that distinguishes it form its competition

ex. Ralph Lauren

Competition

firms can choose to position their product against a specific competitor

Perceptual map

displays, in two or more dimensions, the position of products or brands in the consumer's mind

Ideal points

where a particular market segment's ideal product would lie on the map

What are the six positioning steps?

1. Determine consumers' perceptions and evaluations of the product or service in relation to competitors'

2. Identify the market's ideal points and size

3. Identify competitors' positions

4. Determine consumer preferences

5. Select the position

6. Monitor the positioning strategy