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market

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a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods or services--that is, ways of satisfying those needs. ch4

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marketing-oriented vs. production-oriented

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develop marketing mixes for specific target markets vs. describe their markets in terms of products they sell -"personal-expression" market vs. "greeting card" market

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generic market

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a market with broadly similar needs--and sellers offering various, often diverse, ways of satisfying those needs. ch4

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product-market

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a market with very similar needs and sellers offering various close substitute ways of satisfying those needs. - in contrast to generic market ch4

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So the relevant market for finding opportunities should be bigger than the firm's present product-market...

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but not so big that the firm couldn't expand and be an important competitor.

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A basic difference between a "generic market" and a "product-market" is:

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how similar the competing sellers' products are.

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Which of the following is the BEST example of a "generic market?"

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The senior citizen recreation market

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Which of the following is NOT part of a product-market definition?

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information about which specific retailers will sell the product

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A complete product-market definition includes a four-part description:

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Product type - the goods and/or services that customers want Customer needs - the needs the product type satisfies for the customer. Customer types - the final consumer or user of a product type (avoid treating intermediaries as a customer type) Geographic area - where a firm competes, or plans to compete, for customers.

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Generic markets do not include which element of the product-market definition?

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Product type -any product type that satisfies the customer's needs can compete in a generic market.

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Market segmentation is a two-step process...

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of naming broad product-markets *and* segmenting these broad product-markets in order to select target markets and develop suitable marketing mixes.

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The first step in market segmentation should be:

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defining some broad product-markets where you may be able to operate profitably.

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Marketers must break apart—disaggregate—...

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all possible needs into some generic markets and broad product-markets in which the firm may be able to operate profitably.

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segmenting

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an aggregating process--clustering people with similar needs into a "market segment."

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market segment

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a homogenous group of customers who will respond to a marketing mix in a similar way.

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Ideally, "good" market segments meet the following criteria:

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Homogeneous(similar): customers in a market segment should be as similar as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions. Heterogeneous(different): customers in different segments should be as different as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions. Substantial: the segment should be big enough to be profitable. Operational: the segmenting dimensions should be useful for identifying customers and deciding on marketing mix variables.

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Saying that a "good" product-market segment should be substantial means:

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it should be large enough to be profitable.

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It is especially important that segments be...

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operational - avoid segmenting dimensions that have no practical operational use. ex. Moodiness

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Electro Technologies, Inc. (ETI) has limited capital and wants to reduce the risk of competitors taking customers if it invests in a new product-market. Its broad product-market consists of three reasonably distinct submarkets. To identify a target market, ETI should probably focus on using the __________ approach.

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single target market

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Single target market approach

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segmenting the market and picking one of the homogeneous segments as the firms target market. (3 basic ways to develop market-oriented strategies in a broad product-market)

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Multiple target market approach

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segmenting the market and choosing two or more segments, and then treating each as a separate target market needing a different marketing mix. (3 basic ways to develop market-oriented strategies in a broad product-market)

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Combined target market approach

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combining two or more submarkets into one larger target market as a basis for one strategy. (3 basic ways to develop market-oriented strategies in a broad product-market)

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Quality Ceramic, Inc. (QCI) defined five submarkets within its broad product-market. To obtain some economies of scale, QCI decided NOT to offer each of the submarkets a different marketing mix. Instead, it selected two submarkets whose needs are fairly similar, and is counting on promotion and minor product differences to make its one basic marketing mix appeal to both submarkets. QCI is using the:

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combined target market approach.

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Combiners

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third approach user try to increase the size of their target markets by combining two or more segments. - look at various submarkets for similarities -one marketing mix -doesn't try to fine-tune, marketing mix is selected to work "fairly-well" -especially attractive for firms with limited resources

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Segmenters

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first two approaches users aim at one or more homogeneous segments and try to develop a different marketing mix for each segment. -usually fine-tune -aiming at one provides greater profit potential for the firm -note, not settling for a smaller sales potential or lower profits. -hope for a larger share

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When segmenting broad product-markets, cost considerations tend:

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to lead to more aggregating.

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cost considerations

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usually encourage more aggregating and favor combining as costs often drop due to economies of scale.

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qualifying dimensions

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those relevant to including a customer type in a product-market.

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determining dimensions

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those that actually affect the customer's purchase of a specific product.

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When major airlines target business travelers because they travel often and typically pay at least three times the price for a ticket as leisure travelers, these airlines are segmenting the market primarily on:

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rate of use.

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clustering techniques

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try to find similar patterns within sets of data.

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customer relationship management, CRM

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the seller fine-tunes the marketing effort with information from a detailed customer database.

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Which of the following statements about positioning is NOT true? Positioning techniques:

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position products on a graph based on price level and quantity demanded.

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positioning

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refers to how customers think about proposed or present brands in a market.

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combining versus segmenting

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positioning may lead a firm to combining--rather than segmenting--if managers think they can make several general appeals to different parts of a "combined" market.

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Differentiation

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is to design a set of meaningful differences to distinguish the company's offering from competitors' offering. can happen in - Physical product - Services - Personnel - Distribution channel - Image

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Major Product Differentiators

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• Horizontal Differentiation - Features The characteristics that supplement the product's basic function - Style and design • Vertical Differentiation - Performance quality - Conformance quality The degree to which all the produced units are identical and meet the promised target specification - Durability - Reliability - Reparability

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Major Service Differentiators

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• Ordering ease • Delivery • Installation • Customer training • Customer consulting • Maintenance and repair Image Differentiation • Company image and brand image • Building image - Symbols: logo, person, color, sound/music ... - Atmosphere - Events and sponsorship - Use written and audiovisual media to convey a consistent image

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A product position

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is the way a product is defined by consumers on important attributes relative to competing brands.

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Positioning

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is the act of designing a firm's offering and image so that they occupy a meaningful and distinct competitive position in the target customers' minds.

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Multi-Dimensional Scaling (MDS)

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A class of methods for constructing perceptual maps for a set of objects by estimating the coordinates of these objects in a space of some specified number of dimensions. • Input - Data measuring the "similarities" or "distances" between pairs of objects; - Number of dimensions specified by researchers. •Output: positions of all the objects in a perceptual map. •Choose the best number of dimensions: statistical "fit."

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Repositioning

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• Identify competitors • Determine how the competitors are perceived and evaluated, and their positions • Analyze potential customers (probably already done in the market segmentation analysis) - "Ideal points" • Select a position

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Consumer Behavior

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consists of the activities of consumers in obtaining, using, and disposing of goods and services, including the decision processes that precede and follow these actions. - Ultimate consumer - Purchasers of products for business use

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Psychological Influences

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• Motivation • Perception • Learning • Attitude • Personality/lifestyle

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Motivation

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is a need pressing enough to cause a person to seek satisfaction.

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Motivation: Freud's Theory

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- Motivations are subconscious; - They drive everything we do.

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Motivation: Maslow's Theory

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- Needs are hierarchical from very basic to higher levels; - Reasonable attainment of each level is necessary before moving to a higher level.

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Perception

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is the meaning that a person attributes to incoming stimuli received in the formats of taste, touch, smell, vision, and sound. • Selective processes - Selective exposure "There is too much noise!" - Selective perception (comprehension) Half empty versus half full cup; - Selective retention "That's what I remembered"

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Learning

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is the behavioral changes due to - Direct experience: behavioral learning - Thinking: cognitive learning • The learning process

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Attitude

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is a favorable or unfavorable predisposition towards an object - Has action implications - Shaped by beliefs and values

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Belief

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is our opinion about an object - Based on personal experience, advertising, and discussion with other people - Do not necessarily involve liking or disliking

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Values

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are deeply held attitude and belief - Resistant to external influence - May change over time

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Personality

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affects how people see things

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Social Influences

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• The Family • Social Class • Reference groups • Personal effects

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Family life cycle

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Describes the distinctive stages that a typical family goes through, each stage bringing with it identifiable purchase behaviors. - Stages determined by the age, marital and employment status of the household head, and information about children; - Works better as a descriptive device, not as a predictive tool.

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Reference group

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is the people to whom an individual looks when forming attitudes about an object.

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Personal Effects

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Two personal effects are particularly important for marketing - Opinion leader (or trendsetter) • Features - More likely to purchase new products early; - More likely to serve as information sources. • Particularly useful in launching new products. - Word-of-mouth

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Cognitive dissonance

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is the postpurchase anxiety caused by uncertainty about the rightness of the decision. • Resolving dissonance - Seek information supporting the decision; - Avoid information supporting alternatives; - If no enough support is found, then change his/her opinion and buy something else next time. • What do you, as a Marketing person, need to do to address this? • Warranties, Return Policies, Customer Feedback Some Interesting Behavioral Research • Mental Accounting

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