MARKETING LECTURE NOTES MOD 02

SEGMENTATION AND TARGET MARKETS

KEY CONCEPT: STP

segmentation → makes sense of the market by identifying distinct groups of customers

targeting → determines which segments are the best to serve marketing communication to

positioning → how to stand out from competitors with a marketing mix that will appeal to the selected target audience

SEGMENTATION

in many markets, large groups of consumers have very similar traits. this creates the ability for marketers to segment their markets based on demographic characteristics.

segmentation is done alongside market research.

• big data is making this process easier

four criteria of good segmentation…

1. sustainability

   ● is the segment large enough to drive profit?

   ● should be the starting point

2. measurability

   ● KPIs

   ● calculates number of potential customers, budget, etc..

3. accessibility

   ● will the desired product and communication be able to reach the audience?

4. responsiveness

   ● meaningful marketing is needed for each segment

   ● can help identify if a market segment should be split in two or just one

SEGMENTATION: DEMOGRAPHIC

variables such as age, gender, income, and ethnicity

SEGMENTATION PSYCHOGRAPHIC

the influence of personalities, attitudes, values, and motives for purchase

• difficult to measure

SEGMENTATION: GEOGRAPHIC

based on location of consumer segment.

SEGMENTATION: BENEFITS

segmented based on groups of what consumer are looking for in a product. identifies the different reasons why customers would choose a product such as quality, convenience, price or features.

different marketing messages are created for the different benefits for each segment.

SEGMENTATION: USAGE RATE

how frequently a product is used.

heavy user — purchase or use a few times a week

medium user — purchase once or twice a month. has some brand loyalty.

light user — might purchase for a special occasion, like a holiday, or specific need

STP: TARGET MARKETS

target markets → a specific group of people that have been identified through segmentation as likely potential customers.

primary audience — main users, majority of business. where marketers share core communications.

secondary audience — different needs, less business, may influence decisions.

tertiary audience — indirectly engage with brand, less likely to buy.

target audience (specific) vs target market (broad)

TARGET MARKET SELECTION

undifferentiated targeting = choosing to focus on an entire market, rather than looking at the segments to differentiate.

• rarely does this strategy succeed.

concentrated targeting = choosing to focus on one single-segment, focusing all marketing efforts to that area.

— niche targeting = a company may focus on a very small segment not catered to by other companies.

multi-segment targeting = choosing to focus on different segments by varying brand offerings.

• covers most of the market with a variety of offerings.

STP: POSITIONING

one of the 4 p’s of marketing = product, positioning, price, promotion.

positioning → establishing a brand, product, or service in the minds of customers and how it differentiates from competitors.

• how customers perceive the brand

PRODUCT DIFFERENTIATION

way to distinguish a product from their competitors, as a part of product positioning.

• highlights unique features and functionalities

most companies create a unique value proposition to help their business stand out from a crowded market

UNIQUE VALUE PROPOSITION

a clear statement that explains…

• what a company / product / service offers

• how it solves a problem or meets a need

• what makes it different from competitors

generally, 1-2 sentences long, avoids jargon or detail, explaining the benefit a company / product / service offers

why have a UVP?

this statement clearly communicates how a brand is perceived in the market and demonstrates the competitive advantage, creating an aligned positioning strategy.

COMPONENTS OF A UVP

clarity — should be easy to understand

relevance — address specific needs of target audience

differentiation — highlights what makes product or service unique

benefits — shares specifically how the customer gains value

EX] reese’s peanut butter cups are a balance of smooth chocolate and creamy peanut butter in every bite, to satisfy any craving.

POSITIONING AND PERCEPTUAL MAPPING

perceptual map → a visual representation used in marketing to display how consumers perceive different brands or products within a market, typically plotted on a two-dimensional graph based on key attributes, to illustrate their positioning relative to competitors.

MARKET RESEARCH

WHAT IS MARKET RESEARCH?

market research → the gathering of consumer data and insights, such as their preferences or needs.

why?

• specific customer’s preferences

• helps marketers understand buyer behavior

• allows marketers to make data-driven decisions

• gives insights into new product opportunities

QUALITATIVE VS QUANTITATIVE RESEARCH

qualitative research → collecting and analyzing non-numerical data to understand an experience or perspective.

EX] questions that start with “why” or “how,” interviews and long answer questions, open-ended questions

quantitative research → collecting and analyzing numerical data

EX] questions that start with “what” or “when” or “how many,” short answer questions, often closed questions

CONDUCTING QUALITATIVE RESEARCH

develop a research guide with open-ended questions.

• avoid yes/no — “do you like marketing 294?”

• do not “lead” the respondent — “what about marketing 295 do you like?”

survey screener

• make sure you're conducting research with those that fit your desired target. create questions that would disqualify those that don't fit.

PRIMARY RESEARCH VS SECONDARY RESEARCH

primary research → collecting original data directly from your target market or potential customers.

EX] customer survey responses, focus groups, qualitative interviews, ethnographic research → studying people in their natural environment, a company’s internal data

secondary research → the process of finding, observing, and analyzing existing data from a third-party source or database

EX] academic journals, news articles, databases, government statistics, syndicated data → collected by outside companies and sold

FOUR TYPES OF PRIMARY MARKET RESEARCH

1. exploratory

2. descriptive

3. performance monitoring

4. casual

exploratory research surveys

• always state who the survey is from, clearly and define the goals

• be clear and concise

• mix question types: multiple choice, likert scale, open ended

• follow an inverted pyramid style, leading the user through a flow

• always edit your survey

• a type of exploratory research: findings are not conclusive but characterized by small samples and non-probability sampling

exploratory research: focus group

• generally, 8-12 people

• moderated discussion, lasting 1-2 hours

• open ended questions only, no right or wrong answer

• usually, respondents are paid for their time

• a focus group has a trained moderator, rarely is the marketing team in charge of moderating the group…

• a type of exploratory research: findings are not conclusive but characterized by small samples and non-probability sampling

primary research: descriptive research

• close ended questions and probability sampling

• allows researchers to discover trends or patterns in behavior within a given population

• can be done with qualitative or quantitative research

  — surveys

  — interview

primary research: performance monitoring

• research that tracks a brands or products performance over time, with continuous data collection

• involves tracking KPIs for quantitative research or repeat studies over time for qualitative research

• sentiment analysis, word clouds, and social media listening are performance monitoring techniques

primary research: casual research

aims to determine what variables impact customer decision making.

• a/b testing and experimentation → comparing two or more versions of a product to determine which performs the best

• ethnographic research → studies people in their natural environment to understand how they live, interact and see the world

MARKET RESEARCH PROCESS

1. identify, hypothesize, and formulate the research problem

2. collect secondary data

3. plan primary data (using what you’ve found from secondary data)

4. sampling procedures

5. collect primary data

6. analyze the data

7. present the data

PRODUCT CONCEPTS & DEVELOPING / MANAGING PRODUCTS

product → anything that satisfies a need or want

TYPES OF CONSUMER GOODS

CONVENIENCE

items purchased frequently, inexpensive, easily available

goal for convenience goods = remain top of mind

SHOPPING

items that are infrequently purchased and expensive. requires the consumer to research, shop around and compare.

goal of shopping goods = provide all information to customer

SPECIALTY

items that are also infrequently purchased and expensive, but consumers have a brand preference in mind.

goal of specialty goods = maintain market exclusivity

UNSOUGHT

products that are not top-of-mind, or avoided, until a specific situation arises.

goal of unsought goods = sales and selling to catch attention

PRODUCT LINES

a company can have various product lines under one umbrella company.

— width = different types of products within a company

— depth = variations of the product

PRODUCT EXPANSION AND MODIFICATION

product expansion creates more opportunities to fulfill consumer needs and wants.

• often done with data analysis from market research

product modification → changing certain features, formulations or packaging for an existing product.

• product obsolescence — when a company makes a change with the understanding that it could replace current versions

AUGMENTED PRODUCTS

products that create an additional benefit for the consumer through special features or add-on benefits

• warranties

• repairs

• add-on tech

• upgrades

PRODUCT BRANDING

brand identity has three components…

1. brand names

2. logo or brand mark

3. tagline or slogan

manufacturers brands = owned, created and marketed by the manufacturer of a product

brand extension = uses an existing brand name to launch a new product category

co-branding = when two or more brands come together to leverage strength of all products involved

genericization = brand names that have become products

TYPES OF NEW PRODUCTS

NEW-TO-THE-WORLD

completely new innovations that introduce a product category that did not previously

• disruptive innovation / disruptor → any innovations that change a product or an industry

NEW PRODUCT LINES

products that a company introduces to enter a market they were not previously in.

ADDITIONS TO EXISTING PRODUCT LINES

new variations of an existing product that increases product depth and design

IMPROVEMENTS OF EXISTING PRODUCTS

enhancements or modifications to existing products to maintain competitiveness

REPOSITIONED PRODUCTS

products that are marketed differently to appeal to new audiences or adapt to market changes

LOWER PRICED PRODUCTS

existing products made more affordable to attract a broader customer base

NEW PRODUCT DEVELOPMENT PROCESS

1. new product development strategy

   — aligning with company goals and resources

2. idea generation

   — collecting potential product ideas from various resources

3. idea screening

   — filtering out the ideas that are not feasible or aligned with company objectives

4. business analysis

   — assessing financial viability, including costs and revenue projections

5. development

   — creating prototypes and refining the product through collaboration between departments

6. test marketing

   — introducing the product in a controlled setting to gauge market response before a full-scale launch

INNOVATION THEORY (DIFFUSION OF INNOVATIONS)

innovators — first to try new products but represent a small portion of the market

early adopters — influential customers who help spread product awareness

early majority — thoughtful customers who adopt products after careful evaluation

late majority — skeptical consumers who help spread product awareness

laggards — resistant to change and adopt only when necessary

PRODUCT LIFE CYCLE

introduction — sales are low, awareness-building is critical, and profitability is often negative

growth — sales rise quickly, competition increases, and companies may reinvest heavily to secure market dominance

maturity — sales stabilize, price competition intensifies, and companies focus on maximizing efficiency

decline — sales drop and companies must decide whether to maintain, harvest, or divest the product.

PRODUCT MARKETING

product marketing is a newer career path in the industry.

combines various aspects of business, with a heavy focus on marketing activities.

in charge of…

• positioning and messaging both internally and externally

• go-to-market strategy

CAREERS IN PRODUCT: PRODUCT MANAGERS

product managers are (PM) are responsible for defining a product vision and roadmap, aligning with customer needs and business objectives.

skills needed…

• project management

• cross functional communication

• data analysis and market research

SERVICES MARKETING AND NON-PROFITS

#FFF563, #FFA67A

WHAT IS A SERVICE?

a service is an intangible product.

FOUR CHARACTERISTICS OF SERVICES

intangibility — not a physical object

• challenges = demonstrating service quality and service expectations

inseparability — the service provider can’t be separated from the service

• challenges = the perception and service quality is dependent on provider

heterogeneity — service experiences can vary depending on provider

• challenges = standardization of services and cohesiveness

perishability — services do not need be stored, but they must be used

• challenges = low demand will equal wasted services

WHAT IS SERVICE QUALITY?

service quality → the primary way that consumers determine the value of a service and decide to purchase or repurchase.

search quality — attributes of a product that can be evaluated before purchase, usually based on tangible factors like location and pricing.

EX] doctor’s qualifications before an appointment

experience quality — attributes that can only be evaluated after the service is provided, experiencing the service to determine quality.

EX] evaluating a new haircut and salon experience

credence quality — difficult to evaluate before or after service, due to lack of customer expertise, must rely and trust service providers knowledge.

EX] long-term benefits of a surgery or medical procedure

EVALUATING SERVICE QUALITY

consumers evaluate the following when it comes to services…

1. reliability = does the service deliver consistent quality?

2. responsiveness = how quickly does the service deliver?

3. assurance = does the service have the appropriate skill level and credibility?

4. empathy = does the service provider care?

5. tangibles = what tangibles are a part of the service that can be evaluated?

GAP ANALYSIS

gap analysis → compares the current state to the desired future state to identify areas for improvement.

marketers use it to find areas of improvement within services marketing, to see where unfulfilled needs are being met by the service or competitors and improve consistency of the service being provided.

not one specific style, many templates available

FIVE TYPES OF GAPS

gap 1 — difference between what customers want and what management thinks they want

gap 2 — difference between management’s understanding and the service design

gap 3 — difference between service design and actual service delivery

gap 4 — differences between service provided and how it is marketed

gap 5 — difference between customer expectations and perceptions

HOW ARE SERVICES MARKETED?

trust-building = how can you communicate to your target audience that you are trustworthy?

value-driving = how can you prove value for something intangible?

personalization = how can you show the customer their problem is unique for you to solve?

long-term engagement = how can your marketing focus on relationship building vs one-time purchase

education = how foes your target audience know they need your service?

NONPROFIT MARKETING

most of the time, a nonprofit is a service oriented instead of product oriented, so similar techniques will be used to market a non-profit

marketers must be aware of rules, laws, and regulations when it comes to nonprofit marketing

STORYTELLING IN NONPROFIT AND SERVICES MARKETING

storytelling → the use of narratives to engage audiences and created emotional connections with customers, building long-term relationships.

— instead of focused on product features, it highlights a brand’s values and relates to customer experiences, making the brand more relatable, and trusted.

• testimonies are a great way to tell a brands story and it results in conversions