Marketing: Exam #2

What are the first two steps of segmentation ?

-Establish Strategy or Objectives (missions) (SWOT)

-Use segmentation methods

What are the steps of positioning?

-Evaluate segment attractiveness

-Select target market

What is the last step of positioning?

-Identify and develop positioning strategy

Behavioral Segmentation

A segmentation method that divides customers into groups based on how they use a product or a service

Benefit segmentation

The grouping of consumers based on the benefits they derive from services or products

What is the equation for segment profitability?

Segment Profitability = (Segment size x segment adoption percentage x purchase behavior x profit margin percentage) - fixed costs

What are the key components in a value proposition statement ?

1.) Target Market

2.) Offering name or brand

3.) Product/service category or concept

4.) Unique point or difference benefits

Concentrated Targeting Strategy

Selecting a single/primary target market and focusing all energies on a product to fit that market’s needs

Demographic Segmentation

grouping of consumers based on age, gender, income, and education

Differentiated Targeted Strategy

Firm targets several market segments with a different offering for each

Geodemographic Segmentation

Geographic, demographic, and lifestyle characteristics

Geographic Segmentation

The grouping of consumers based off where they live

Ideal Point

The position at which a particular market segment’s ideal product would lie on a perceptual map

Perceptual Map

Displays, in two or more dimensions, the positions of products or brands in the consumer’s mind

Lifestyle

A way a person lives to achieve goals

Loyalty Segmentation

Strategy of investing in loyalty initiatives to retain the firm’s most profitable customers

Market Basket Analysis

A data mining method that identifies products customers frequently purchase together.

Market Positioning

Defining marketing mix variables so that target customers clearly understand a product's distinct value relative to competitors.

Micromarketing

Tailoring a product or service to suit an individual’s customer’s wants or needs

Occasion Segmentation

Based on WHEN a product or service is consumed or purchased

Psychographic segmentation

Based on how a consumer spends time/money, activities pursued, and attitudes and opinions in the world they currently live in

Psychographics

Delves into how a person describes themselves

Self-concept

image people have of themselves

Self-value

Goals in life

Undifferentiated Targeting Strategy

Product or service is perceived to provide the same benefits to everyone

Value

Reflects the relationships of benefits to costs, or what the consumer gets for what he or she gives

Value Proposition

The unique value that a product or service provides to its customers and how it is better than and different from those of competitors.

Actual Product

The physical attributes, features, and packaging of a product.

Associated Services (augmented product)

Non-physical attributes of a product: like product warranties, financing, etc.

Brand Association

Mental links consumers make between a brand/key attributes: logo or slogan

What is the number one most valuable brand in 2020 and 2022?

Apple

What happened to X/Twitter after Musk’s controversial message to advertisers and the company’s rebrand?

Musk told advertisers to “go f*ck themselves,” causing major companies to halt ad spending over brand-safety concerns. X’s rebrand also reportedly erased about $4 billion in brand value, showing that advertisers are willing to move their money and that a rebrand can harm a company’s image

Brand Awareness

How easily consumers recognize and remember a company or its products.

Brand Dilution

When using a brand name for a new product causes customers to view the original brand less positively.

Brand Equity

The set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.

Brand Extension

The use of the same brand name for new products being introduced to the same or new markets.

Brand Licensing

A contractual agreement between firms whereby one firm is allowed to use its brand name, logo, or any characteristic for a fee

Brand Loyalty

Where a consumer purchases the same brand’s product or service constantly instead of trying other chains.

Brand Repositioning

Changing a brand’s image or focus to attract new customers or better match current consumer preferences

Breadth

Number of product lines offered by a firm (variety)

Cannibalize

One product competes with a similar product offered by the same company

Co-branding

Two or more brands = same package or promotion

Consumer Product

Products and services used by people for their personal use.

Convenience products/services

Products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase.

Core customer value

The basic problem-solving benefits that consumers are seeking.

Depth

The number of categories within a product line.

Family Brand

A firm’s own corporate name used to brand its product lines and products.

Individual Brands

The use of individual brand names for each of a firm’s products

Line Extension

Same brand alongside the same product line to produce an increase in the product line’s depth (Coca-Cola = Coke Zero, Cherry Coke)

Manufacturer Brands

Brands owned and managed by the manufacturer.

Perceived Value

Relationship between the benefits of a service/product and costs

Primary Package

The first layer of material that directly touches and holds a product (toothpaste cap)

Product

Anything that is of value to a consumer and can be offered through a voluntary marketing exchange.

Product Line

Group of associated items, such as those that consumers use together or think of as part of a group of similar products.

Product Mix

The complete set of all products offered by a firm.

Retailer Store Brands

Brand developed and marketed by a retailer and available only from the retailer. Also called private-label brand.

Secondary Package

the outer layer that groups, contains, and protects multiple primary-packaged products without touching the item itself

Shopping products/services

Products or services for which consumers will spend time comparing alternatives, such as apparel, fragrances, and appliances.

Specialty Products or Services

Products or services toward which the customer shows a strong preference and for which he or she will expend considerable effort to search for the best suppliers.

Sustainable Packaging

Product packaging that has less of a negative impact on the environment.

unsought products/services

products or service consumer doesn’t consider purchasing

Innovation

Process where ideas transform into new offerings

Market Saturation

Market saturation happens when a product or service reaches its maximum possible demand in a given market, meaning almost everyone who wants or needs it already owns or uses it.

Diffusion of Innovation

The process by which the use of an innovation spreads

throughout a market group over time and across categories of

adopters.

Pioneers

New product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market. Also called breakthroughs.

First Movers

First, to create a product or category

What is the product development process?

1.) Idea generation

2.) Concept testing

3.) Product Development

4.) Market testing

5.) Product launch

6.) Evaluation of results

Internal R&D

Internal scientists and engineers work to solve complex

problems and develop new ideas.

R&D Constortia

A group of firms and institutions, possibly including government and educational institutions, that explore new ideas or obtain solutions for developing new products.

Licensing

A method used in developing new products in which a firm buys the rights to use a technology or idea from another firm

Brainstorming

A group activity used to generate ideas.

Outsourcing

Hiring an outside firm to help generate ideas and develop new

products and services.

Reverse Engineering

Taking apart a competitor’s product, analyzing it, and creating an improved product that does not infringe on the competitor’s patents, if any exists

Lead Users

Innovative product users who modify existing products according to their own ideas to suit their specific needs.

Product Development

Balancing various engineering, manufacturing, marketing, and

economic considerations to develop a product’s form and

features.

Prototype

The first physical form or service description of a new product, still in rough or tentative form, that has the same properties as a new product but is produced through different manufacturing processes, sometimes even the crafted individually.

Alpha Testing

Testing a product within the company to make sure it works as designed and meets its intended purpose.

Beta Testing

Having potential consumers examine a product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use.

What are the different stages of a product life cycle?

-Introduction

-Growth

-Maturity

-Decline

Introduction stage

Innovators start buying the product: Low sales, ± profits, innovators, and few competitors

Growth stage

Gaining acceptance: Rising sales, rapidly rising profits, early adopters, and few but increasing competitors

Maturity stage

Rejuvenating products: Peak Sales, Peak → Declining Profits, Late Majority consumers, and Many Competitors

Declining Stage

Exiting the market: Sales decline, Profits decline, Laggards, and few competitors

Laggards

Consumers who make up about 16% of the population resist change, and use traditional products for as long as possible.

Communication Gap

difference between the actual service provided to customers and the service that the firm’s promotion program promises

delivery gap

the difference between the firm’s service standards and the actual service it provides to customers

distributive fairness

Pertains to a customer’s perception of the benefits he or she received compared with the costs (inconvenience or loss) that resulted from a service failure.

instrumental support

Providing the equipment or systems needed to perform a task in a job setting.

Perishable

A characterisitc of service: it cannot be stored in the future

knowledge gap

reflects the difference between customers’ expectations and the firm’s perception of those expectations

Service gap

Results when a service fails to meet the expectations that customers have about how it should be delivered.

zone of tolerance

The area between customers’ expectations regarding their desired service and the minimum level of acceptable service—that is, the difference between what the customer really wants and what he or she will accept before going elsewhere.

Vertical Channel Conflict

A type of channel conflict in which members of the same marketing channel, for example, manufacturers, wholesalers, and retailers, are in disagreement or discord.

Retailers

make the final decision about which products to sell or carry in their stores

Horizontal Channel Conflict

A type of channel conflict in which members at the same level of a marketing channel, for example, two competing retailers or two competing manufacturers, are in disagreement or discord, such as when they are in a price war.

Indirect Supply Chain

When one or more intermediaries work with manufacturers to provide goods and services to customers.

Direct Supply Chain

A supply chain in which there are no intermediaries; the manufacturer sells directly to the buyer.

Franchising

A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor.

Supply chain management

Coordinating suppliers, manufacturers, warehouses, stores, and transportation so products reach the right place, quantity, and time at the lowest possible cost.

Marketing channel management

Developing and maintaining relationships among businesses involved in moving products to customers.