Exam 3: Marketing Principles (Chapters 9,10,11,14)

What step of the marketing plan is STP?

Step 3: Identify Opportunities via STP analysis

Step 1 of STP

Strategy or Objectives (s)

Articulate the vision or objectives of the company's marketing strategy clearly

Consistent with & derived from mission and objectives and current situation (SWOT)

Step 2 of STP

Segmentation Methods (s)

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

Descriptions of different segments are developed in this step, which gives firms a better understanding of customer profiles

Example: Soft-drink marketers, caffeine, sugar, calories, etc. (benefits)

Step 3 of STP

Evaluate Segment Attractiveness (t)

-Substantial, Reachable, Identifiable, Profitable, Responsive

Step 4 of STP

Select Target Market (t)

Where do the firm's competencies meet the attractiveness of a target market (SWOT & Profitability)

Conde Nast has more than 20 niche magazines focused on different aspects of life.

Step 5 of STP

Identify and Develop Positioning Strategy (p)

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 to the competition

Types of Segmentation Methods

1. Geographic 2. Demographic 3. Psychographic 4. Benefits 5. Behavioral

Geographic Segmentation

organizes customers into groups on the basis of where they live. Country, region, areas of a state using city, zip codes, etc.

Demographic Segmentation

groups consumers according to easily measured, objective characteristics such as age, gender, income, and education.

-Easy to identify -Easy to reach -Not always best because they can be poor predictors

Psychographic Segmentation

allows people to describe themselves using characteristics that help them choose how they occupy their time (behavior) and what underlying psychological reasons determine these choices.

Self-values Self-concept Lifestyles

Self-values

Goals for life

The overriding desires that drive how a person lives his or her life

Examples: Need for self-respect, self-fulfillment, or belonging

**The underlying, fundamental personal needs that pushes a person to seek out certain products or brands stems from the desire to fulfill self-value

Self-concept

Aka self-image

The image people ideally have of themselves

Ex: I have a goal to belong so I see myself as a fun-loving gregarious person that people want to be around Marketers use ads that convey the feeling of "I am like them (or want to be) so I should buy this product."

Lifestyles

The way we live

How we live our lives to achieve our goals Use of VALS (Value & Lifestyle Survey) http:// www.strategicbusinessinsights.com/vals/presurvey.s html

The Value and Lifestyle Survey (VALS) is a psychographic tool that classifies consumers into eight categories based on their answers to a questionnaire.

Benefit Segmentation

groups consumers on the basis of the benefits they derive from products or services

Example: Snack Food Market Nutritional snackers, weight watchers, guilty snackers, party snackers, economical snackers

Behavioral Segmentation

groups consumers on the basis of how they use the product or service Occasion: based on when a product or service is purchased or consumed

Loyalty: investing in retention and loyalty initiatives to retain most profitable customers~different levels of loyalty

Geodemographic Segmentation

Combines geographic, demographic, and lifestyle characteristics to classify consumers

-Helps to tailor product offerings to specific local communities

Tools:PRIZM (Potential Rating Index by Zip Market)

Identifiable

Who is in their market?

Are the segments unique?

Does each segment require a unique marketing mix?

Substantial

Too small and it is insignificant

Won't generate sufficient profits or support mktg mix activities

Not ONLY size though

Ex: https://youtu.be/5XA3-8qtrWM

Reachable

Is the target market accessible through persuasive communications and product distribution?

Know the product exists. Understand what it can do. Recognize how to buy

Responsive

Customers must: React similarly & positively to the firm's offering, Move toward the firm's products/services, Accept the firm's value proposition

Targeting Strategies

undifferentiated, differentiated, concentrated, micromarketing (one-to-one marketing)

Undifferentiated/Mass Marketing

similar benefits to most consumers

Becoming obsolete (salt, sugar, gas)?

Differentiated

target several markets with a different offering for reach Coca Cola

Concentrated

concentrate on a single, primary target market with all energies/resources

Micromarketing/one-to-one marketing

tailoring a product/service to suit an individual customer's wants or needs. my m&ms

Positioning Methods

value, salient attributes, symbol, competition

Positioning Steps

1. Determine consumers' perceptions and evaluations 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.

Marketing Research

Formal Definition: "A set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers involved in marketing goods, services, or ideas."

• AKA: Managing Marketing Information to Gain Consumer Insights

Marketing Research: When?

• Prerequisite for decision-making regarding marketing services, goods, and ideas

• Making the following types of decisions:

• Segmentation • Targeting • Positioning • 4 P's (Product, Place, Price, Promotion)

Marketing Research: Where?

• In person• Both known and unknown to consumer• Online• On the phone• Through email• Via social media• Sometimes in research "labs"

Marketing Research: Why?

Marketing Research helps with:

• Product Development and Value Creation

• What do consumers need?

• What do consumers want?

• What conveys value in our product category?

• Where does available "real estate" exist?

• Target Marketing

• Who needs this product? •

What does our customer look like?

• Actual demographics vs. consumer make-up • Where does our customer live?

• Physical location vs. Advertising reach

• Helps with "Chicken vs. Egg" Dilemma

1st Step of Marketing Research

Define the objectives and research needs

2nd Step of Marketing Research

Design the research

3rd Step of Marketing Research

Collect the Data

4th Step of Marketing Research

Analyze Data and Develop Insights (Interpret Findings)

5th Step of Marketing Research

Action Plan & Implementation Based on Findings

Define Problem

MUST know exactly what problem needs to be solved • Define objectives of the research • Assess value: Benefit of Answer vs. Cost of Research Question

• Question(s) should be: • Relevant • Able to be answered through research • Currently unknown

Primary Data

data collected to address the specific needs of your research•

Exploratory Research/Qualitative: • Social Media • Focus Groups • In-Depth Interviews • Observation (Ethnography) Conclusive Research/Quantitative: • Surveys • Panel (Survey responses designed for this research) • Scanner • Experiments

Secondary Data

pieces of information that have already been collected from other sources and are usually readily available

• Includes both internal and external sources

• Ex: Census data, syndicated data,

Internal data

(from day-to-day operations)

• Customer info & purchase history

External Data

Census Bureau, Census of Retail Trade

Qualitative Research

observation, in-depth interviews, focus groups, social media

Quantitative Research

experiments, survey, scanner, panel

Interpret Findings

Data: raw numbers or other factual information that, on their own, have limited value to marketers •

HOWEVER, when data is interpreted, it becomes information • Information results from organizing, analyzing, and interpreting data and putting data into a form that is useful to marketing decision makers • Interpreting data is what gives it meaning

Co-creation (AKA crowd-sourcing or open innovation)

An exploratory research technique that uses social media to obtain ideas and content from a large group of people

• Saves on internal R&D costs

• Large pool of ideas from a diverse group of people

• Helps with BOTH product development and target marketing

Focus Groups

• Small group (6-10 or 8-12 people) • Intensive discussion on a particular topic • Trained moderator guides conversation based on predetermined outline of topics of interest • Typically recorded (video or audio) • Use of a two-way mirror

syndicated data

Data available for a fee from commercial research firms such as Information Resources Inc. (IRI), NDP Group, and Nielsen.

unstructured questions

Open-ended questions that allow respondents to answer in their own words.

structured questions

Closed-ended questions for which a discrete set of response alternatives, or specific answers, is provided for respondents to evaluate.

big data

Data sets that are too large and complex to analyze with conventional data management and data mining software.

data warehouse

A large computer file containing data including sales transactions, customer relationship management (CRM) systems, websites, social media, blogs, locational devices, wearables, and so forth.

data mining

Statistical tools used to uncover previously unknown patterns or relationships among variables stored in the big data databases.

marketing analytics

Techniques that use advanced technologies and models to gather data so that marketers can improve their decision making, optimize their returns, and make appropriate customer-related decisions.

observation

An exploratory research method that entails examining purchase and consumption behaviors through personal or video camera scrutiny.

Products

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

Products can be more than goods (shoes) and services (flight on airplane)

Products also include:

Places (Disney World)

Ideas (Don't Text & Drive)

Organizations People (Kardashians) Communities (Facebook) *All create value for consumers in their respective competitive marketing space

Core Customer Value

defines the basic problemsolving benefits that consumers are seeking

Actual Product

Marketers convert the corecustomer value into the actual product

Attributes (such as brand name, features/design, quality level,packaging) are important but the level of importance variesdepending on the product

Associated Services (Augmented Product)

include the non-physical aspects of the product

Ex: product warranties, financing, product support, after-sale service

Types of Products

specialty, shopping, convenience, unsought

Specialty Products/Services

Consumers have such a strong preference that they will expend considerable effort to search for the best suppliers

Examples include: Luxury cars Medical professionals Legal services Designer apparel

Shopping Products/Services

Consumers will spend a fair amount of time comparing alternatives (going store to store shopping and discussing with salespeople)

Examples include: Furniture Apparel Fragrances Appliances Travel

Convenience Products/Services

Consumers are not willing to spend any effort to evaluate prior to purchasing—purchases with little thought

Frequently purchased commodity items

Examples include: Common drinks Bread Soap Gum

Unsought Products/Services

Consumers do not think of buying these products or do not even know about them at all.

Require lots of marketing and promotion

Include new-to-the-world products Pre-paid funeral services GPS What others?

Product Mix

The complete set of all products and services offered by a firm.

Product mix typically consists of various product lines.

The product mix reflects the breadth and depth of the company's product lines.

Product Lines

groups of associated items that consumers tend to use together or think of as part of a group of similar products or services

Breadth

represents a count of the number of product lines offered by the firm

Depth

the number of product offerings within a product line

SKU's

cannibalize

From a marketing perspective, it is the negative impact on a firm's sales, profits, or market share when one product competes closely with a similar product offered by the same company.

Branding

Branding can make or break a company

Provides a way for a company to differentiate its product offerings from competitors

What are the most powerful brands?

https://www.forbes.com/the-worlds-most-valuable-brands/#18d5e76b119c

What do you use to blow your nose?

What do you use when you get a cut and you are bleeding?

What do you call the automated moving steps that get you from one floor to another (in malls, airports, etc.)?

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 awareness

Measures how many consumers in a market are familiar with the brand and what it stands for; created through repeated exposures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm's communications to consumers.

brand association

The mental links that consumers make between a brand and its key product attributes; can involve a logo, slogan, or famous personality.

family brand

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

Manufacturer brands (AKA National Brands)

Brands owned and managed by the manufacturer.

Retailer/Store brands (AKA Private-label brands)

Brand developed and marketed by a retailer and available only from the retailer.

brand extension

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

Line extension

The use of the same brand name within the same product line; represents an increase in a product line's depth.

Brand Dilution

Occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.

co-branding

The practice of marketing two or more brands together, on the same package or promotion.

brand licensing

A contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, or characters in exchange for a negotiated fee.

Brand repositioning or rebranding

A strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences.

Price

is the overall sacrifice a consumer is willing to make to acquire a specific product or service.

Price is where we ___ the value

capture

The 5 C's of Pricing

Competition, Costs, Company Objectives, Customers, Channel Members

Profit Orientation

Specific strategy that focuses on target profit pricing, maximizing profits, or target return pricing

Sales Orientation

A company objective based on the belief that increasing sales will help the firm more than will increasing profits.

Premium pricing

deliberately pricing a product ABOVE the prices set for competing products in order to capturecustomers shopping for "the best" or for customers that arenot concerned with price

target profit pricing

A pricing strategy implemented by firms when they have a particular profit goal as their overriding concern; uses price to stimulate a certain level of sales at a certain profit per unit.

maximizing profits

A profit strategy that relies primarily on economic theory. If a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits, it should be able to identify the price at which its profits are maximized.

target return pricing

A pricing strategy implemented by firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments; designed to produce a specific return on investment, usually expressed as a percentage of sales.

competitor orientation

A company objective based on the premise that the firm should measure itself primarily against its competition.

competitive parity

A firm's strategy of setting prices that are similar to those of major competitors.

customer orientation

A company objective based on the premise that the firm should measure itself primarily according to whether it meets its customers' needs.

Status quo pricing

change price only to meet those changes made by competition

Customers

want value and price is half of the value equation

demand curve

Shows how many units of a product or service consumers will demand during a specific period at different prices.

price elasticity of demand

Measures how changes in a price affect the quantity of the product demanded; specifically, the ratio of the percentage change in quantity demanded to the percentage change in price.

Consumers are typically more sensitive to price increases than to price decreases

elastic

Refers to a market for a product or service that is price sensitive; that is, relatively small changes in price will generate fairly large changes in the quantity demanded.

Inelastic

Refers to a market for a product or service that is price insensitive; that is, relatively small changes in price will not generate large changes in the quantity demanded.

dynamic pricing/ individualized pricing

Refers to the process of charging different prices for goods or services based on the type of customer; time of the day, week, or even season; and level of demand.