Marketing Midterm: 3 – Intro to STDP

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Segmentation
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– dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes
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Targeting
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– the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter
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Differentiation
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– differentiating the market offering to create superior customer value – don’t have to physically alter product to differentiate – easiest/most common: lower price
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Positioning
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– arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers – perceptual understanding about brand – positioning maps help visually understand consumer preferences
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Market Segment
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– consists of consumers who respond in a similar way to a given set of marketing inputs
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Major Segmentation Variables
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1. Geographic: nations, region, states, climate, population density 2. Demographic: age, life-cycle stage, gender, income, education, religion, generation 3. Psychographic: social class, lifestyle, personality 4. Behavioral: occasions, benefits, user status, usage rate, loyalty status
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Benefit Segmentation
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– dividing the market into segments based upon the different benefits that consumers seek from the product – requires finding the major benefits people look for in a product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit
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Requirements for Effective Segmentation
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1. Measurable 2. Accessible 3. Substantial 4. Differentiable 5. Actionable
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Tools to Segment Markets
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1. Segmentation Trees 2. Semantic Differential Scale: Ask people to rate aspects of a product; trade-off analysis
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Target Market
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– a set of buyers sharing common needs or characteristics that the company decides to serve
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Undifferentiated Marketing
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– mass marketing – marketing strategy when a firm decides to ignore market segment differences and go after the whole market with one offer – difficult to develop a product/marketing campaign to satisfy all, and difficult to compete
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Differentiated Marketing
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– segmented marketing – marketing strategy in which a firm decides to target several market segments and designs specific offers for each – Toyota offering different kinds of cars – increased costs compared to undifferentiated
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Concentrated Marketing
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– niche marketing – marketing strategy in which a firm goes after a large share of one or a few segments or niches – Whole Foods – stronger market positioning, more effective and efficient marketing
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Micromarketing
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– tailoring products and marketing programs to the needs of specific individuals and local customer segments – includes local marketing (cities/neighborhoods/stores) and individual marketing (Nike personalization)
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Product Positioning
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– the way a product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products – use perceptual positioning maps
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Competitive Advantage
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– an advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices
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Unique Selling Proposition (USP)
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– focus on the most salient benefit of the offering to the target consumer – simmers the Value Proposition down to a actionable message – Walmart –> low prices – Burger King –> personal choice
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Value Proposition
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– the full positioning of a brand – the full mix of benefits on which it is positioned – answers “why should I buy your brand?” – the relationship of benefits from product relative to price – “more for more/same/less” etc.
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Positioning Statement
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– describes what you have to do to stay relevant with customers – compares the positioning/benefit to the price – a statement that summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference) – “To busy, mobile professionals who need to always be in the loop, the BlackBerry is a wireless business connectivity solution that gives you an easier, more reliable way to stay connected to data, people, and resources while on the go”
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Tools to pick segments to target
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1. Competitor Capability Matrix – Assessment of my capabilities relative to competitors on factors that are important to market success within the segment 1. Product development capability 2. Channels 3. Supply chain 2. Profitability Analysis – Risk adjusted (Based on CCM) assessment of profitability potential in the market 1. Growth rate and size 2. Risk of failure 3. Longevity of cash flow 4. Margin available
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Target Selection Process
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1. Identify segments 2. Competitive assessment for each segment 3. Evaluate segment profitability 4. Adjust for risk 5. Choose segments to target

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