MARK 3000 Exam 2 Loomer UGA

Based off the Exam 2 Study Guide Slides University of Georgia

5 Methods of Market Segmentation

1. Demographic

2. Geographic

3. Psychographic

4. Benefit

5. Behavioral

How do marketers evaluate segment attractiveness? 5 way

1. Identifiable

2. Substantial

3. Reachable

4. Responsive

5. Profitable

Demographic Segmentation

grouping consumers according to easily measured, objective characteristics

Ex. Age, gender, income, education

Demographic Segmentation

Most common segmentation strategy because of easiness to identify

Geographic Segmentation

organizes customers into groups based on where they live

Geographic Segmentation

This segmentation is most useful for companies whose products satisfy needs that may vary by region, or when different benefits may be of increased importance to a specific region

Psychographic Segmentation

how consumers describe themselves, how they choose to spend their time, and what motivates them

Self-values and Self-concept

Two important dimensions of psychographic segmentation:

Self Values

broad, long-term life goals

overriding desire driving a person's choices

Self Values

part of psychographic segmentation

ex. independence, need for achievement, need for belonging

Self Concept

image people have of themselves

Self Concept

part of psychographic segmentation

ex. fun loving, someone friends can count on, a "good host"

Benefit Segmentation

groups consumers based on the benefits they derive from products or services

True

T or F: different motives lead different consumers to purchase the same product, meaning products (jut as consumers) can exist in multiple segments

Behavioral Segmentation

divides customers based on their previous purchases of goods or services

Occasion Segmentation and Loyalty Segmentation

The two types of behavioral segmentation:

Occasion Segmentation

Part of behavioral segmentation

based on when a product or service is purchased or consumed

Occasion Segmentation

Part of behavioral segmentation

Ex. Frito-Lay makes individual servings for lunch boxes, and makes party size bags for large gatherings

Loyalty Segmentation

Part of behavioral segmentation

grouping based on repeat customers

Firms know that repeat customers are more profitable than the average customer in the long-term

Loyalty Segmentation

Part of behavioral segmentation

Ex. firms encouraging by airline mileage, or hotel point reward programs

Identifiable

Used to identify segment attractiveness

firms need to be able to tell who is in their market and thus design products that meet their needs

Identifiable

Used to identify segment attractiveness

Key questions?

• Who’s in their market?

• Are the segments distinct from one another?

• Does each segment require a unique marketing mix?

Substantial

Used to identify segment attractiveness

How large is the market segment in terms of size and buying power?

Substantial

Used to identify segment attractiveness

If market segment is too small or has limited buying power, it won’t generate sufficient profits

Substantial

Used to identify segment attractiveness

Key question?

• How large is the market segment in terms of size and buying power?

Reachable

Used to identify segment attractiveness

Must be able to communicate and distribute with the market, otherwise service cannot perform

Reachable

Used to identify segment attractiveness

Key Questions?

• Does the consumer know the product or service exists?

• Do they understand what it can do for him or her?

• Do they recognize how to buy it?

Responsive

Used to identify segment attractiveness

customers must respond positively to the firms offering

If firm cannot provide products to the segment, it shouldn’t target it

Responsive

Used to identify segment attractiveness

Key Question?

• Will our offering uniquely meet this consumer need?

Responsiveness

Used to identify segment attractiveness

Ex. don’t target vegetarians who don’t like the taste of beef

Profitable

Used to identify segment attractiveness

firms need to asses the potential profitability of each segment, both current and future

Profitable

Used to identify segment attractiveness

Key Questions?

• What’s the current or future market growth rate?

• How competitive is the market?

• Are there significant costs to access the market?

Profitable

Used to identify segment attractiveness

Is the segment capable of growing and making money?

1. Define the research objectives

2. Design the research

3. Collect the data

4. Analyze data and develop insights

5. Develop and implement action plan

Is not linear, researchers can go back and forth between steps as needed

What are the steps of the marketing research process?

Secondary Data

Type of data collection

Part of the third step (collect the data) in the marketing research process

• data that’s collected prior to the start of the research project

• sourced both internally and externally

  • gaps identified can be addressed with primary data

Secondary Data

Pro of this type of data:

Readily accessible

Secondary Data

Con of this type of data:

May not be specific or timely enough to meet the firm’s research objectives

Primary Data

Type of data collection

Part of the third step (collect the data) in the marketing research process

• collected to address specific research needs through methods such as focus groups, in-depth interviews, surveys, etc

  • sample chosen to represent target customers

Primary Data

Pro of this type of data:

Designed to specifically address research questions

Primary Data

Con of this type of data:

Expensive and time consuming

Secondary Data

Research projects begin with a review of this type of relevant data

Secondary Data

This type of data may come from free or low-cost external sources such as the census, trade associations, and published reports

Secondary Data

Reports generated by the firm or data accessed internally sources, such as sales reports, user data, customer complaint logs, are considered this type of data:

Syndicated Data

This type of data is purchased from specialized research firms

Considered Secondary Data

Syndicated Data

This type of data is considered secondary data:

Primary Data

Qualitative and Quantitative data are parts of which type of data:

Surveys and Experiments

Two types of quantitative data research methods:

Quantitative Data/Research

This type of primary data involves structured responses that can be statistically tested to confirm insights and hypotheses

Unstructured Questions

Type of primary data

These types of questions in a survey are open ended and allow respondents to answer in their own words:

Structured Questions

Type of primary data

These types of questions offer easy statistical analysis and usually consist of questions like multiple-choice, yes/no, or rating scales:

Qualitative Data/Research

This type of data/research uses broad, open-ended questions to understand the phenomenon of interest

1. Observation

2. Interviews

3. Focus Groups

3 types of qualitative research methods:

Observation

Research method that involves examining purchase and consumption behaviors in a way that is as unobtrusive as possible

Ex. personal or video camera recordings

Ex. tracking customers’ movements as they move through a store

Interviews

Type of research method where trained researchers ask and record the answers to pre-planned questions

These are expensive and time-consuming

Focus Groups

This type of research method consists of a small group of 8-12 people who come together for a moderated, in-depth discussion about a particular topic:

Gather data about:

• initial reactions to products

• opinions about different competitive offerings

Product Complexity

Concept that products consist of more than their physical properties or basic functions:

Core Value

This is the problem being solved by a product when referring to product complexity:

Actual Product and Associated Services

What 2 things make up the core value of a product:

Associated Services

These are the nonphysical aspects that make up the core value of a product:

Actual Product

These are the physical aspects/attributes that make up the core value of a product:

Core Value

Answer to why the consumer would purchase this product instead of another:

Actual Product

Parts of product complexity that are often more literal and tangible:

Associated Services

Parts of product complexity that are often intangible and supportive of the actual product:

1. Specialty

2. Shopping

3. Convenience

4. Unsought

What are the 4 types of consumer products:

The Product Mix

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

Product Lines

Groups of associated items within the product mix:

The Product Mix

Also referred to as the portfolio of products:

Breadth

Number of different product lines within a product mix

Ex. Haagen Dazs has sorbet, ice cream, popsicles, ice cream bars

Depth

Number of different offerings within a product line

Ex. flavors of the ice creams that Haagen Dazs has

Breadth

A con of this is that it may be costly or inefficient to maintain multiple product lines:

Depth

A con of this is that if offerings are addressing similar needs, cannibalization may occurs

Cannibalization

Occurs when a firm’s new product ends up reducing the sales of another product, rather than attracting new customers:

Line Extension

refers to a new product under the same brand name within the same product line in the same category (depth)

Ex. Crest toothpastes: Crest 3D White, Crest Pro-Health, Crest Complete Protection

Brand Extensions

Refers to a new product under the brand name but in different product line in a different category (breadth)

Ex. Crest Mouthwash, Crest Whitening Strips, Crest Toothpastes

Brand Equity

Value derived from the brand itself:

1. Facilitate purchases through awareness and associations

2. Establish loyalty from consumers

3. Protect from price competition through perceived value

4. Serve as assets to the firm

5. Impact the market value of the firm

What are 5 reasons why brands are valuable to firms?

Brand Loyalty

Occurs when a consumer buys the same brand’s product or service repeatedly:

• Loyal consumers are less sensitive to price

• Marketing costs to loyal consumers are much lower

• A base of loyal consumers can help insulate firms from competitive pressure

Why are brand-loyal customers an important source of value?

1. Private Labels

2. Brand Families

3. Line Extensions

4. Co-Branding and Licensing

5. Repositioning

What are 5 branding strategies firms use?

National Brands

These brands are owned and managed by manufacturers:

Private Label

These brands are retail or store brands and are developed by and sold by retailers:

Brand Family

When firms choose to use their corporate name across all product lines its marketed as a:

Brand Family

When corporate brand recognition is strong, the individual products can benefit from awareness and quality perceptions when marketed like this:

Individual Brands

When firms opt to give each product line their own names in order to establish unique identities:

Ex. P&G has Tide, Gain, Downy, Bounce

Primary Package

This is the packaging that consumers use:

Ex. toothpaste tube, can of soda

Secondary Package

The exterior that contains the primary package and provides the UPC label used by retailers:

• Changing consumer needs

• Market saturation

• Diversification of risk

• Trend cycles

What challenges does innovation address?

Innovation

Process by which firms transform ideas into new product and service offerings:

1. Idea generation

2. Concept testing

3. Product development

4. Market testing

5. Product launch

6. Evaluation of results

What are the 6 steps. of the product development process?

Alpha Testing

When a firm determines whether the product will perform according to its design and whether it satisfies the need for which it was intended:

Beta Testing

When potential customers examine the product prototype in a real-use setting to determine its functionality and performance, and to identify potential issues specific to its use:

Beta Testing

This type of testing is usually limited to a few weeks:

Beta Testing

This testing is done by the end users:

Beta Testing

This testing is completely unstructured:

Beta Testing

This is a test of how the product performs in a real-world application:

Alpha Testing

This is a test of each user journey or expected functionality:

Alpha Testing

This type of testing takes months, but firms can also leverage technology to increase the speed of testing:

Alpha Testing

This type of testing is rigorously structured:

Alpha Testing

This type of testing is done by the internal team:

Premarket Test

In this type of test consumers are exposed to the product and survey on its various attributes: