Chapter 11: Unique Marketing Issues Flashcards
(47 cards)
CH11 What is a target market?
Why is it important for a firm to choose its target market early in the process of launching its revenue?
Target market is the limited group of individuals or businesses that a firm tries to APPEAL TO
It’s important that a new venture choose its target market because VIRTUALLY all of its marketing choices HINGE ON these initial choices.
CH11 Explain the importance of market segmentation.
What are several ways markets can be segmented?
- First step in selecting a target market
- Market segmentation is important because a new firm typically has only enough resources to target one market segment, at least initially.
- GEOGRAPHY (city, state, country), DEMOGRAPHIC VARIABLES (age, gender, family size, income), PSYCHOGRAPHIC VARIABLES (personality, lifestyle, values), BEHAVIORAL VARIABLES (benefits sought, product usage rates, brand loyalty), and PRODUCT TYPE (varies by product)
Firms sometimes segment its market on more than one dimention to drill down to a specific market segment that the firm thinks it is uniquely capable of serving.
CH11 How should a firm go about constructing a product attribute map?
Once a firm’s identified its position in target market and positioning differentiation from its competitors -> develope a product attribute map, which illustrates a firm’s positioning strategy relative to its major rivals.
To conduct a product attribute map, a firm need to look at primary attributes that its target customers look for in an product/service -> to assess the firms, as well as its major rivals strength/weakness -> stress/focus on strength to offer values to customers.
CH11 What is a niche market?
- A niche market is a place within a market segment that represents a narrow group of customers with SIMILAR INTERESTS.
- Most firms target a niche market within the segment to ensure high value offering to customers.
- Its help the firms become an expert in that market by focusing on what to do.
CH11 What are three steps entreprenuerial firms use to identify their customer?
- SEGEMENTING THE MARKET: study the industry in which the firm intend to compete and determine different potential target markets in that industry
- SELECTING A TARGET MARKET: must be sufficiently attractive and the firm must be able to serve it well
- CRAFTING A UNIQUE MARKET POSITION: establish a positions that differentiates a firm from its competitors. Position is concerned with how the firm is situated relative to competitors.
CH11 What is a tagline in a firm’s positioning strategy?
A CATCHY PHRASE that used consistently in a company’s literature, advertisements, stationery, even invoices, and thus becomes associated with that company -> to reinforce the position it has staked out in the market.
Eg. Nike: Just Do It
A company has created a successful tagline if the message makes you think of its products/services and the position it has established in its market
CH11 What are requirements for successful market segmentation?
- HOMOGENEITY of needs and wants appears within the segment
- HETEROGENEITY of needs and wants exists btw the segmentS
- Differences within the segment should be SMALL compared to differences across segments
- The segment should be DISTINCT ENOUGH so that its members can be easily identified.
- It should be possible to determine the SIZE of the segment
- The segment should be LARGE ENOUGH for the firm to earn profits
CH11 What are some online database that provide segment suggestions?
IBIS World, Mintel, and BizMiner (available through large university libraries.
CH11 What is the consequence of overlooking market segmentation?
Overlooking this step can result in a FAULTY ASSESSMENT of the SIZE of the potential market for a new product/service. Entrepreneurs should enter the business with a REALISTIC ASSESSMENT of the size of its market
CH11 Why is niche market important?
Because by focusing on a clearly defined market, a firm can become an expert in that market and then be able to provide its customers with high level of value and service. Focusing on a clearly defined market requires a firm to know what NOT TO DO along with what to do
CH11 What are requirements of target market?
A firm’s choice of target market must also be in sync with its business model and the background and the skills of its founders and other employees.
A firm must also continually MONITOR THE ATTRACTIVENESS of its target market since SOCIETAL CHANGES could cause a target market to loose its attractiveness for a firm and the product or service it has to offer customers.
CH11 What is a brand?
- A brand is the SET OF ATTRIBUTES - positive or negative- that people ASSOCIATE with a company.
- It could be negative, such as cheap, difficult to deal with; or positive, such as trustworthy, easy to deal with
- The customer loyalty a company creates through its brand is one of its most valuable assets.
CH11 What is the purpose of brand management?
- Some companies monitor the integrity of their brands through brand management
- A program used to PROTECT THE IMAGE AND VALUE of an organization’s brand in consumers’ minds.
E.g: If a company discovered that some of its products/services didnt as good as it has promised to customers, it would take immediate steps to correct the problem.
CH11 How does a new firm develop a brand?
- On a philosophical level, a firm must have MEANING in customers’ lives
E.g: If a young couple invites neighbors to play Cranium, a group board game, and playing the game results in lasting relationships, Cranium will have a special place in their hearts - On a more practical level, brands are build through a numbers of techniques, including advertising, public relations, sponsorships, support or social causes, social media and good performance.
CH11 What are mistakes in brand building?
- Placing an overreliance on advertising.
Instead the company should create buzz or try to receive a favorable review of its product/service in magazines, trade journals, newspapers, or highly respected blog (to lend a sense of legitimacy to a firm that would be hard to duplicate through advertisements. - Focusing to much on the features and benefits of their products.
Journalists are typically skeptical when entrepreneurs start talking about how great their products are. Instead the company should focus on a HUMAN INTEREST STORY about why a firm was started or a story focused on s.th that ‘s distinctly unique about the start-up
CH11 What is meant by creating a “buzz” for a company?
- Creating buzz means creating AWARENESS and a SENSE OF ANTICIPATION about a company and its offerings.
- This process can start during feasibility analysis, when a company shows its concept statement or product prototype to prospective buyers or industry experts.
- It hopes that people start talking about it and its exciting new product/service.
CH11 What is meant by the term “brand equity”?
“Brand equity” is the term that denotes/represents the SET OF ASSETS AND LIABILITIES that are LINKED to a brand and enable it to raise a firm’s valuation.
5 categories of the assets and liabilities making up a brand equity:
- Brand loyalty
- Name recognition
- Perceived quality ( of a firm’s products/services)
- Brand association in addition to quality (e.g., good service)
- Other proprietary assets, such as patents, trademarks, and high-quality partnerships
CH11 Why is building brand important?
- A strong brand can be a very powerful asset of a firm. Over 50% of customers would buy a product because of its brand -> allow a company to charge a price for its products that is consistent with its image.
- A successful brand can also INCREASE THE MARKET VALUE of a company by 50 to 75% -> increased valuation can be very important for a firm if it is aquired, merges with another firm, or launch an initial public offering (IPO).
CH11 What is a aspect of branding that start-up should be alert to?
It is the possibility of forming CO-BRANDING RELATIONSHIPS, which is when 2 companies form a partnership to combine their brands (to combine the strengths of the brands). It could be SHORT-TERM, to promote specific event or product launch, or can be LONG-TERM, such as opening co-branded stores.
CH11 What is a firm’s marketing mix?
A firm’s marketing mix is the set of controlable, tactical MARKETING TOOLS that it uses to PRODUCE THE RESPONSE it wants in the target market.
4Ps: PRODUCT, PRICE, PROMOTION, PLACE license its products to other firms.
-> A firm’s marketing program should be consistent with its business model and its overall business plan
CH11 What kind of product investors prefer to fund?
Investors prefer to fund firms that protentially have breakthrough products, such as a software firm that is working on a product to eliminate e-mail spam or a biotech firm that is working on a cure for a disease -> these products are PAIN KILLERS because their benefits would be felt intensely and quickly. In contrast, a new restaurant start-up or a new retail store are more akin to VITAMINS than pain pills.
CH11 What is the difference btw a core product and a actual product?
While a core product maybe a Iphone, the actual product, which is what the customers buy, may have as many as five characteristics: a quality level, features, design, a brand name, and packaging.
When first introducing a product to the market, a firm needs to make sure that more than the core product is right. Attention also needs to be paid to the actual product- the features, design, packaging, and so on that constitude the collection of benefits that customers ultimately buy.
CH11 What do a “reference account” help a new firm?
A “reference account” is an EARLY USER of a firm’s product who is willing to give a TESTIMONIAL regarding his/her experience with the product.
A testomonial would pave the way for the sales force of the new firm, and the new firm could use it to REDUCE FEARS that it was selling an untested and perhaps ineffective product.
CH11 How to obtain “reference account”?
New firms must often offer their product to an initial group of customers for free or at a reduced price in exchange for their willingness to try the product and for their feedback.
Several advantages to getting a strong set of endorsements: credibility with peers, non-company advocates who are willing to talk to the press, and quotes or examples to use in company brochures and advertisements.