Class 3 - The Consumer I

Question 1

What is a marketing strategy

Answer 1

Segmentation, targeting, positioning and differentiation

Question 2

Segmentation :

Answer 2

Segmentation is the process of grouping them into categories that are meaningful to consumption
For example, even though our population differs in shape and color, it’s possible that only color affects consumption

Question 3

Targeting :

Answer 3

Once a population is segmented… You choose which groups you want to target (based on how profitable they will be for you)

Question 4

Positioning :

Answer 4

Once you know who you’re targeting… You figure out what appeals to them, and position your brand that way

Question 5

Differenciation :

Answer 5

Once you have your brand positioned… You have to differentiate from other brands with similar offerings

Question 6

Marketers can segment consumers based on :

Answer 6

ocio-demographics: Grouping based on demographic, economic & social characteristics.
E.g. Income, age, education, gender, race, religion, marital status.

Geographic : Grouping based on region of the world, neighborhood, climate type, and physical environment
When you think about geographic segmentation, don’t just think about where your product can be sold.
For example, anyone in North America could purchase a Smart Car (they are accessible everywhere). But, North America is not a geographic segment.
Instead, they choose to target people who live in cities, because Smart Car provides the most value to them.

Psychographic : Grouping based on consumer mindsets, values, opinions, and attitudes.
People’s motivation behind making a purchase
They want to affirm a particular identity (e.g., I am masculine, I am important)
The brand fits with their values (e.g., buying local, buying green)
The brand aligns with their interests (e.g., Lululemon customers like yoga

Behavioral : Grouping based on consumer needs, expectations, and behaviors related to the product

Volume & profitability : Grouping (potential and actual) customers based on their purchase volume and profitability

Question 7

It is best to choose targets based on their profitability, which is affected by

Answer 7

Competition
How much competition is there for this segment?

Growth
Will there be more customers in this segment?

Accessibility
Can you reach this segment in terms of place or promotion?

Segment Size
How many customers are in this segment?

Question 8

positioning

Answer 8

A marketing strategy that consists of defining the position that the brand occupies (or wishes to occupy):
Both cognitively and emotionally (i.e., in hearts and minds of consumers)
In relation to competing brands or businesses

It pertains to the identity, personality, and image that marketing managers want their brand to have

All brands have a desired positioning
(i.e., how they want to be seen)

Question 9

Desired positioning

Answer 9

Consumers aren’t aware of the brand : The brand has no actual positioning

Consumers think of the brand differently than the brand would prefer : The brand has an actual positioning that is different from their desired positioning

Consumers think of the brand in the way the brand prefers : The brand’s actual and desired positioning are the same

Question 10

How do brands decide their desired positioning ?

Answer 10

If you’re a new brand in that market…

• Do a market study of target customers
• See what they value (e.g., low prices, variety, customer service) and which of those options is do-able for your brand.
• Use variables in your marketing mix (e.g., your ads, your packaging, your price) to position yourself in a way that appeals to your customers

If you’re an existing brand in that market…

• Do a market study of target customers
• Determine your actual positioning and the positioning of your competitors
• If you have your desired position, just reinforce it. If you do not hold your desired position, make changes in your marketing mix.

Question 11

Ensuring Successful Positioning

Answer 11

Positioning must be consistent with targeting

Consistent with Spotify’s Target Market of:
- Young people (Millennial and Gen Z)
- People who largely enjoy the personalized listening provided by playlists
- People looking to move away from the music on the pop charts

Positioning must represent tangible or symbolic value to the customer

Tangible Value: Being clear about the real-world benefits of the brand (e.g., being dairy-free, being affordable, being convenient)

Symbolic Value: Making the brand seem like it fits with your identity (e.g., awkward, quirky) or who you want to be (e.g., cool, sophisticated)

It is important to maintain a consistent positioning over time.

You can change your slogans and ads over time, but make sure you’re getting at the same underlying ways that you bring value to customers.

Question 12

Differentiate your product based on one or more of the marketing mix variables:

Answer 12

Price

Actual price
Billing & payment terms
Packages offered
volume discounts

Product

The product/service offered
The variety in products
Product quality
Customer service
Guarantees & Warranties
Installation & After-sale service

Place

Geographical coverage
Business hours
Intermediaries

Promotion

Brand image transmitted by advertisements
Loyalty program
Sales team

Question 13

Remember that your differentiation can be symbolic or tangible.

Answer 13

Keurig and Nespresso both make a cup of coffee, but they are differentiated
Keurig: Positioned as an everyday, utilitarian, and more American coffee experience.
Nespresso:

Question 14

What is the difference between point of parity and point of differentiation

Answer 14

Points of Parity:

Features of the product that are similar across competitors
Allow consumers to categorize the product (e.g., this is an automated coffee maker)
Important to have some points of parity so consumers understand what your brand or product does.

Points of Differentiation:

The distinctive elements of what make your brand/product special
You should have between 1-3 points of difference. Any more will confuse consumers.

Question 15

Positioning statement

Answer 15

For target segment brand is a concept that distinguishing characteristic because justification (what sets you apart from competition)

Exemple :
For heavy social media users BeReal is a photo-sharing app that helps you discover who your friends really are because the filters and posed photos from other apps aren’t real.

Question 16

Positioning statement should :

Answer 16

1. Provide value for the target customer
2. Be relevant to the target customer
3. Be clear
4. Be communicated without confusion
5. Be consistent over time

Question 17

Consumer cognition

Answer 17

ATTENTION - MEMORY - HEURISTIC

Question 18

Attention

Answer 18

Attention is the means of directing mental resources towards the information that is most salient at any given moment.

Attentional processes differ based on how consciously aware we are that they are occurring:

Question 19

Preconscious Processing:

Answer 19

The processing of information that is currently outside of conscious awareness (also called “subconscious” processing)
Example: How do your clothes feel against your skin right now?

Question 20

Conscious Processing:

Answer 20

You are consciously directing your attention towards a specific stimuli.

Question 21

There are 4 types of conscious processing.

Answer 21

Vigilance
A person attends to a field of stimuli over a prolonged period attempting to detect a specific stimulus.

Selective Attention
Concentrating only on those stimuli which are important to our goals.

Divided Attention
Engaging in more than one task at a time, and shifting our attentional resources as needed.

Search
Engaging in active search for a particular stimuli

Question 22

What are the takeaways about attention

Answer 22

Consumers can react to stimuli that never enter their conscious awareness. This is called pre-conscious processing.
To take advantage of automatic attention, brands can create experiences that “grab” attention
Understand consumer’s attentional constraints in the shopping environment, and change your packaging and advertising accordingly.
Just because someone is exposed to your message, doesn’t mean they attended to it!

Question 23

Memory

Answer 23

Memory is the process used to retain and draw on our past experiences to use that information in the present.

Question 24

What is working memory ?

Answer 24

Working memory holds only the most recently activated and conscious parts of our memory.
- This could be things we are currently being exposed to, or information we are recalling from long-term memory.

It includes multiple parts including:
- The phonological loop: Your “inner voice” for verbal comprehension and recall. What you would use if I asked you to remember a string of numbers
- The central executive: The “boss” of the memory. It decides what stimuli are attended to and whether they make it into long-term memory

Question 25

Encoding & Retrieval in LTM

Answer 25

The more you rehearse a piece of information (by bringing it into working memory), the easier it is to remember it (bring it into working memory again)
The more mental connections you make between a new piece of information and knowledge you already have, the easier it will be to recall that information

Question 26

Why should you care ?

Answer 26

As a Marketer
Consumers need repeated exposure to your advertisements in order to remember them
The more ads you create with the same message (e.g., “Walmart has low prices”) the more likely people will be to remember it
Connect to scenarios people are likely to experience, so they remember you when it happens.

As a Student
You need repeated exposure to material in order to learn it
It’s better to study over time than cram
The more links you create between the material, the more likely you are to remember it
Creating mind-maps can be very helpful
Creating mnemonics is also helpful

Question 27

Heuristics and biases

Answer 27

Pros
We make so many decisions in a day that we likely could not lead our lives without using some heuristics
Heuristics developed because they often lead to the correct answer

Cons
In certain situations, the use of heuristics can lead us to the incorrect decision or valuation

Question 28

The Anchoring Bias

Answer 28

What is it? A bias wherein we rely heavily on the first piece of information we are given.
Why does it occur? Because we compare all information to the first piece of information we are given, even if it’s not relevant.
How can knowing about it make me a better person/marketer? Providing non-sale prices anchors people on a high price and makes the sale price look good

Question 29

Types of Heuristics and Biases

Answer 29

What you value :
Loss aversion
Sunk Cost Fallacy
Hyperbolic discounting
What you choose :
Choice Overload
Decision Fatigue
The Decoy Effect

Evaluating yourself and others :

Fundamental Attribution Error
Dunning-Kruger Effect
Spotlight Effect
Barnum Effect

Question 30

Why do I care about consumer cognition?

Answer 30

Attention tells us that just because a consumer is exposed to information doesn’t mean she will consciously process it.
Consumers are busy and distracted. Pick the most important pieces of information and make them noticeable.

Memory tell us that just because we attend to information doesn’t mean we will remember it literally two seconds later
Use principles of memory (chunking, repeated exposure, mental connections) to improve consumers memory of your ads (and your memory of study materials!)

Heuristics and biases teach us that humans are rarely rational
Don’t try to fight cognitive biases. Rather, use them to your advantage in marketing (and life)