Final Exam Summary Notes

Targeting Steps

The process involves Segmentation, then Targeting, followed by Positioning.

The Segmentation-Targeting-Positioning Process is illustrated in Figure 5.1.

Targeting Strategies

Companies may use Differentiation Strategies to position themselves.

Positioning is accomplished by plotting customer survey data on a perceptual map.

Segment Characteristics

Marketers use segmentation bases (criteria) to describe customers within a market segment.

Common Ways of Identifying Segment Buyers fall into categories: Behavioural, Demographic, Geographic, or Psychographic.

Positioning

Positioning focuses on creating a distinctive image of a product relative to your competitors in the minds of consumers.

A Perceptual Map is a two-dimensional graph that visually shows where a product stands relative to competitors, based on criteria important to buyers.

Consumer Product Offerings

Offerings are categorized by how consumers want to purchase them.

Convenience offerings (e.g., Life Savers candy, placed near cash registers to prompt impulse buying) are purchased with minimal effort. Shopping offeringsrequire consumers to compare brands.

Product Line Depth and Breadth

An offering’s structure is analyzed by its complexity.

Product Line is a group of closely related products (e.g., Nike’s footwear). Product Breadth (Width) is the number of different product lines a company has. Product Depth is the number of categories within a product line.

Product Adoption Curve

Illustrates the diffusion of innovation.

Innovators are the first to buy, characterized as risk takers and are highly knowledgeable; they influence the next group of adopters. Laggard Adopterslike to avoid change and rely on previous technologies often until they are no longer available.

Product Life Cycle (PLC)

Products move through four stages: Introduction, Growth, Maturity, Decline.

Products in the introductory stages typically need a lot more promotional dollars to create awareness. Marketers must communicate with customers throughout the cycle to maintain loyalty.

Service Market Differences

Services are essentially intangible. The purest services are high in credence quality(difficult to evaluate even after purchase).

Marketers must tangibilize the intangible aspects. This involves considering the place, the people (e.g., professionalism), the equipment, the quality of communications materials, and the price point.

Service Gap Model

This model identifies potential disconnects (failures) or gapsduring service delivery.

The Expectation Gap is the difference between what the customer expects (prior to consumption) and what they perceives after the service is provided.

Pricing Elasticity

Price Elasticity refers to the change in demand as a result of a change in price.

Elastic Demand occurs when demand changes significantly due to a price change; Inelastic Demand occurs when demand changes little despite a price change. Elasticity is affected by the number of competing products/substitutes.

Pricing Objectives

Companies must determine their pricing objectives and think about what they want to accomplish with pricing.

Objectives drive the choice of pricing strategies, such as market-skimmingor market-penetration pricing.

Pricing Strategies

Strategies vary based on PLC stage and objectives.

Market-skimming pricing sets high initial prices to "skim" revenue; Market-penetration pricing sets a low price to attract large volume/market share. A Free Offering (monetary price is zero) is used by tech companies to encourage trial, but the non-monetary price may be user data (e.g., Facebook).

Distribution Intensity

Refers to the number of outlets used.

Intensive distribution offers products in as many outlets as possible (used for products with weak brand loyalty). Exclusive distribution limits sales to one or very few outlets; this can help prevent products from being sold cheaply in gray markets.

Channel Functions

Activities performed by channel partners to add value.

Channel partners Assume Ownership Risk based on contracts. They Share Marketing and Other Information about demand, trends, and competitors, requiring Nondisclosure Agreements due to confidentiality issues. Tracking merchandise is extremely important.

Channel Selection Factors

Factors that influence a company’s decision on how to distribute.

Factors include: Type of Customer (B2C vs. B2B), Type of Product (e.g., fragile products need shorter channels), Channel Partner Capabilities, Technologychanges, and Competing Products’ Marketing Channels.

Communication Process

Describes how a person selects and interprets information.

The Sender encodes (converts the idea to words/pictures), and the Receiver decodes (interprets) the message, passing through a Message Channel. Interference (Noise) (e.g., other ads) disrupts the flow. To increase retention, advertisers repeat the same message multiple times.

Promotion Mix

The specific promotion vehicles used to inform, remind, and motivate a purchase.

Components include Advertising, Professional Selling, Sales and Trade Promotions, Public Relations and Publicity, and Direct Promotion (which incorporates Digital/Online Marketing, Mobile Marketing, Postal Mail, Flyers, and Catalogs, as well as Sponsorships).

Sponsorship

Paying a fee to associate the company’s name with events, causes, or places.

Goals are to increase brand awareness and improve corporate image. Companies must ensure the values of the cause/place/event align with the company’s brand values. Product Placement involves placing products in videos (movies, games) to generate exposure.

Ad-Based Social Media

A form of Direct Promotion that uses social platforms.

Best used for existing customers. It allows micro-targeting using specific information provided by the platforms (location, interests, contact lists).

Types of Sales Relationships

Relationships exist on a continuum from transactional to strategic partnership.

Transactional: One-time purchases; little interest in ongoing relationship; value is calculated after every transaction. Functional: Limited, ongoing relationship based on habit. Affiliative: Buyer needs significant expertise and trust is an issue. Strategic Partnership: Both parties commit time and money to jointly expand the market.

Selling Strategies

Strategies differ based on the desired relationship.

Script-based selling (canned selling): Salespeople memorize and deliver pitches verbatim; works well when customer needs don't vary much. Needs-satisfaction sellinginvolves asking questions to identify needs and tailoring the pitch. The SPIN selling approach uses Situation, Problem, Implication, and Needs-Payoff questions. Strategic-partner selling involves investing resources to grow the business for both parties.