Chap 9 Framework for Marketing Management

What is STP?
Segmentation, targeting, and positioning. All marketing strategy is based on STP.
What is positioning?
The act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market. The goal of positioning is to locate the brand in the minds of consumers to maximize the potential benefit to the firm.
What is a customer focused value proposition?
A cogent reason why the target market should buy a product. Successfully creating customer focused value proposition is the result of positioning.
What is category membership?
The products of sets of products with which a brand competes and which function as close substitutes. Category membership is a starting point in defining a competitive frame of reference for brand positioning.
What are points of difference (PODs)?
Attributes or benefits that consumers strongly associate with a brand, positively evaluate, and believe they couldn’t find to the same extent with a competitive brand.
What are points of parity (POPs)?
Associations that aren’t necessarily unique to the brand but may in fact be shared with other brands. Two basic forms are category points of parity and competitive points of parity. To achieve POPs on an attribute or benefit a sufficient number of consumers must believe that the brand is “good enough” on that dimension.
What are category POPs?
Associations consumers view as necessary to a legitimate and credible offering within a certain category, although perhaps not sufficient for brand choice.
What are competitive POPs?
Associations designed to negate competitors points of difference.
Name 3 ways to convey a brand’s category membership
1. Announcing category benefits
2. Comparing to exemplars
3. Relying on the product descriptor
Name key criteria for choosing points of difference
Considerations – consumer must find POD desirable and firm must have capability to deliver on POD
Desirability criteria
* Believably
Deliver-ability criteria
* Communicability
Name the 3 differentiation strategies
1. Product differentiation
2. Service differentiation
3. Other Dimensions
List 10 way products can be differentiated
1. Form – size, shape, structure
2. Features – characteristics that supplement the product’s basic function
3. Customization
4. Performance quality – level at which product’s primary characteristics operate
5. Conformance quality – the degree to which all the produced units are identical and meet promised specifications
6. Durability
7. Reliability
8. Repair-ability
9. Style – describes product’s look and feel to consumer
10. Design – totality of features that affect how product looks, feels, functions
List 7 ways to differentiate on service
1. Ease of ordering
2. Delivery
3. Installation
4. Customer training
5. Customer consulting
6. Maintenance and repair
7. Returns
List 3 other dimensions of differentiation?
1. Personnel – better trained, performing employees
2. Channel – distribution channels coverage, expertise, performance
3. Image – of the company
Name Michael Porters 5 forces that determine profit attractiveness of a segment
1. Threat of intense segment rivalry
2. Threat of new entrants
3. Threat of substitute products
4. Threat of buyers growing bargaining power
5. Threat of suppliers growing bargaining power
Threat of intense segment rivalry notes
Unattractive segment if it already contains numerous, strong, or aggressive competitors. More unattractive if stable or declining, if capacity must be added, fixed costs or exit barriers high, = frequent prices wars , advertising battles , new products making competition more expensive
Threat of new entrants notes
Most attractive segments have high entry barriers and low exit barriers = new firms can enter and poor performing firms can exit. Profit potential high = entry and exit are high, more risk poor firms stay and fight. Returns stable and low = entry and exit are low. Worst case = entry low, exit high results in overcapacity and depressed earnings for all.
Threat of substitute products notes
Unattractive when there are actual or potential substitutes for the product. Limits prices and profits.
Threat of buying power notes
Unattractive if buyers possess strong or growing bargaining power. Grows when buyers more concentrated and more organized, when product significant % of buyers cost, when product is undifferentiated, when buyers switching cost is low, when buyers price sensitive or integrate upstream. Select buyers with least power or provide superior offer that buyer cannot refuse
Threat of supplier power notes
Unattractive if suppliers can raise prices or reduce quantity. Suppliers are strong when concentrated and organized, few substitutes, supplied is important input, cost of switching is high, suppliers can integrate downstream . Build win-win relationships with suppliers or use multiple sources
What is an industry?
Group of firms that offers a product or class of products that are close substitutes for each other.
What is a strategic group?
A group of firms following the same strategy in a given target market.
Name 3 variables a firm should monitor when analyzing competitor strengths and weaknesses
1. Share of the market
2. Share of mind – percentage of customers who state “name this company when you think of industry”
3. Share of heart – percentage of customers state “company you would prefer to buy the product”
Name 3 classes of competitors
1. Strong versus weak
2. Close versus distant – recognize distant competitors
3. Good versus bad –
What is a market leader?
Firm that has largest share in the relevant product market and usually leads the others in price changes, new product, distribution coverage, promotional intensity
Name 3 market leader strategies
1. Expanding total market – look for new customers or usage
2. Defending market – aim to reduce the probability of attack, divert attacks to less threatening areas, lessen their intensity
3. Expanding market share
What is a market penetration strategy? (expand total market)
Searching for new users among buyers who might use the product but don’t
What is a new market segment strategy? (expand total market)
Searching for new users among buyers who have never used the product
What is geographical expansion strategy? (expand total market)
Search for new users who live elsewhere.
How do you stimulate more product usage? (expand total market)
Try to increase amount, level or frequency of consumption through package or product design, or increase frequency of usage through finding more uses of brand
Name 6 defense strategies (market leader)
1. Position defense – occupy most desirable spot in market, brand almost impregnable
2. Flank defense – erect outposts to protect weak front or serve as invasion base
3. Preemptive defense – attack rival before they start offense
4. Counteroffensive – force rival to defend itself
5. Mobile defense – domain in new territories through market broadening, market diversification
6. Contraction – strategic withdrawal, unable to defend all
Name 4 factors to consider before pursuing increase market share (market leader strategies)
1. Provoking antitrust action
2. Economic cost – profitability of gaining more share
3. Pursuing the wrong marketing activities
4. Effect of share increase on actual and perceived quality
What is a market challenger?
Firms that are not market leaders that attack the leader and other competitors for more market shar
What is a market follower?
Firms that are not market leaders that don’t “rock the boat”. Followers can achieve high profit because they did not bear the innovation cost. Followers can be counterfeiters, cloners, imitators, adapter.
Name 5 Market challenger attack strategies
1. Frontal attack – match product, advertising, price, distribution
2. Flank attack – challenge rival in underperforming spot
3. Encirclement – capture wide slice of rival territory through a blitz
4. Bypass attack – attack easier markets to broaden resource base
5. Guerilla warfare – small attacks to harass and demoralize
What is a market nicher?
Being a leader in a small market, specialization. – end user, vertical level, customer size, specific customer, geographic specialist, product feature/line, job shop, quality – price, service, channel specialist.

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