Flashcards on Marketing review
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What is the 1st step in determining whom to approach about buying a product?
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Market Segmentation
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A Market Is...
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1. people or organizations with 2. needs or wants, and with 3. the ability and 4. the willingness to buy
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Market Segment
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a subgroup of people or orgs sharing one or more characteristics that cause them to have similar product needs (should respond similarly to marketing mix)
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Market Segmentation
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the process of dividing a market into meaningful, relatively similar groups (wasn't used very much until the 1960s)
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The Importance of Market Segmentation (3)
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1. markets have a variety of product needs and preferences 2. marketers can better define customer needs 3. decision makers can define objectives and allocate resources more accurately
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Criteria for Segmentation:
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1. substantiality 2. identifiability and measurability 3. accessibility (reachable with marketing mix) 4. responsiveness
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Substantiality
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segment must be large enough to warrant a special marketing mix
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Responsiveness
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unless segment responds to a marketing mix differently, no separate treatment is needed
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Bases for Segmentation
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geography, demographics, psychographics, benefits sought, usage rates
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Geographic Market Segmentation
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1. region of the country or world 2. market size 3. market density (# people per unit of land) 4. climate
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Benefits of Regional Segmentation
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1. new ways to generate sales in sluggish and competitive markets 2. regional brands appeal to local preferences 3. quicker reaction to competition
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Demographic Segmentation
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age, gender, income, ethnic background, family life cycle
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Family Life Cycle
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1. age 2. marital status 3. children
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Psychographic Segmentation
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market segmentation on the basis of personality, motives, lifestyles, and geodemographics (hyvee sells black & gold shirts)
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Lifestyle Segmentation
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how time is spent, beliefs, socioeconomic (income and education)
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Geodemographic Segmentation
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segmenting potential customers into neighborhood lifestyle categories (ex. wouldn't put Saks 5th ave in broadway st.)
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Benefit Segmentation
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the process of grouping customers into market segments according to the benefits they seek from the product 1. usage-rate segmentation 2. 80/20 principle
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Usage-Rate Segmentation
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dividing a market by the amount of product bought or consumed
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80/20 Principle
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pareto's principle that 80% of goods are purchased by 20% of your customers
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Bases for Segmenting Business Products
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producers, resellers, government, institutions ==> company characteristics and buying processes
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Company Characteristics
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geographic location, type of company, company size, volume of purchase, product use
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Buyer Characteristics
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1. satisficers 2. optimizers
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Satisficers
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business customers who place an order with the first familiar supplier to satisfy product and delivery requirements
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Optimizers
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business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids and study all proposals carefully before selecting one
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Buyer Characteristics
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demographic, decision style, tolerance for risk, confidence level, job responsibilities
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Steps in Segmenting Markets
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1. select a market for study 2. choose bases for segmentation 3. select descriptors 4. profile and analyze segments 5. select target markets 6. design, implement, maintain marketing mix
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Undifferentiated Strategy for Selecting Target Markets
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go after everyone with one marketing mix and one product (mass-marketing philosophy), likely used by marketers of commodity products. Advantage: potential savings on production and marketing costs
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Concentrated Strategy for Selecting Target Markets (definition and advantages and disadvantages)
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a niche strategy used to select one segment of a market for targeting marketing efforts. advantages: concentration of resources. meets narrowly defined segment disadvantages: segments too small, large competitors may market to niche segment
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Multisegment Targeting Strategy
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chooses two or more well-defined market segments and develops a distinct marketing mix for each advantages: greater financial success disadvantages: higher costs, cannibalization
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Costs of Multisegment Targeting Strategy
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product design, production, promotion, inventory, marketing research and management costs. cannibalization!
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One-to-One Marketing is:
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1. individualized 2. information-intense 3. long-term 4. personalized
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Mass Marketing is in ___.
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decline
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Positioning
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the place a product brand or group of products occupies in consumers minds relative to competing offerings. "what the product does & who is it for?"
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Positioning
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developing a specific marketing mix to influence potential customers' overall perception of a brand, product line, or org in general
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Positioning of Proctor & Gamble Detergents
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they own tide cheer bold gain era etc, nearly all of the market -cannibalization occurs
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Effective Positioning
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1. assess the positions occupied by competing products 2. determine dimensions underlying these positions 3. choose a market position where marketing efforts will have the greatest impact
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Product Differentiation
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a positioning strategy that some firms use to distinguish their products from those competitors
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Perceptual Mapping
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a means of displaying the location of products, brands or groups of products in customers' minds
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Positioning Bases
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attribute (association of a product w/ a product attribute), price and quality, use or application, product user, product class, competitor, emotion
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Repositioning
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changing consumers' perceptions of a brand in relation to competing brands -used to sustain growth in slow markets or to correct positioning mistakes
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Examples of repositioning
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1. national pork brand's campaign of "the other white meat" 2. wal-mart's expansion into a super-market industry 3. cadillac repositioning itself as a car for younger drivers
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Malcolm Gladwell video:
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-howard moskawich reinvented spaghetti sauce - developed diet pepsi formula -1/3 of americans want chunky spaghetti sauce, got campbells to create it -people don't know what they want (can't explain it) -horizontal segmentation (different types of mustard) -no perfect way to make a dish *embracing the diversity of humans allows us to find true happiness
