Class 3 - The Consumer I Flashcards
What is a marketing strategy
Segmentation, targeting, positioning and differentiation
Segmentation :
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
Targeting :
Once a population is segmented… You choose which groups you want to target (based on how profitable they will be for you)
Positioning :
Once you know who you’re targeting… You figure out what appeals to them, and position your brand that way
Differenciation :
Once you have your brand positioned… You have to differentiate from other brands with similar offerings
Marketers can segment consumers based on :
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
It is best to choose targets based on their profitability, which is affected by
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?
positioning
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)
Desired positioning
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
How do brands decide their desired positioning ?
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.
Ensuring Successful Positioning
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.
Differentiate your product based on one or more of the marketing mix variables:
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
Remember that your differentiation can be symbolic or tangible.
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:
What is the difference between point of parity and point of differentiation
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.
Positioning statement
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.
Positioning statement should :
- Provide value for the target customer
- Be relevant to the target customer
- Be clear
- Be communicated without confusion
- Be consistent over time
Consumer cognition
ATTENTION - MEMORY - HEURISTIC
Attention
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:
Preconscious Processing:
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?
Conscious Processing:
You are consciously directing your attention towards a specific stimuli.
There are 4 types of conscious processing.
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
What are the takeaways about attention
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!
Memory
Memory is the process used to retain and draw on our past experiences to use that information in the present.
What is working memory ?
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
Encoding & Retrieval in LTM
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
Why should you care ?
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
Heuristics and biases
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
The Anchoring Bias
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
Types of Heuristics and Biases
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
Why do I care about consumer cognition?
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)
