Exam #2 Flashcards
Segmentation
Divide total market into smaller, similar segments with distinct needs, characteristics or behaviors
Targeting
Evaluate segments and select the segments to serve
Differentiation
differentiate offering to create superior value
Postitioning
position offering in the minds of the target consumers v. competition
Geographic segmentation
divides groups based on physical location
Demographic segmentation
divides the market into segments based on variable such as age, generation, life-cycle stage, gender, income, occupation, education, religion, and ethnicity
Geo Demographic
Hybrid form of segmentation that considers geographic and demographic factors
Family Life Cycle
Process of age-related family formation and dissolution
The Cohort Effect
tendency of members of a generation to be influenced and bound together by significant events in their formative years (17 - 22)
Psychographic segmentation
divides a market into different segments based on social class, lifestyle, or personality characteristics
Behavioral segmentation
divides a market into segments based on consumer knowledge, attitudes, uses of product, or responses to a product
Requirements for effective segmentation
Measurable, accessible, substantial, differentiable, actionable
Target selection process:
Growth potential, level of competition, strategic fit
Growth potential
the higher the future growth rate, the more attractive the segment
Level of competition
the more intense the competition within a segment, the less attractive the segment is to marketers
Strategic fit
marketers should work to ensure that the selected target markets fit with what the organization is and wants to be
Undifferentiated (Mass Marketing)
ignore segments and sell one offer to entire market
Differentiated
target several market segments and design separate offers (marketing mix) for different segment
Concentrated (niche)
Focus effort on a large share of one/few segments
Micro-Marketing
Tailors offers to needs of individuals and local customer segments
Differentiation
how offerings are differentiated based on the value proposition (benefits/values it promises to a target market compared to its competitors)
Positioning
How the product is defined by consumers on important attributes - the place it occupies in the consumer’s mind relative to competitors
Perceptual Maps
tool used to show the customer’s perception of a brand relative to competing brands on important attributes
Choosing a differentiation/positioning strategy:
- identify competitive advantages and select the ones consistent with consumer beliefs
- develop marketing strategies consistent with offering’s competitive advantages
- communicate important attributes and deliver promise
Value proposition
how company will create differential value for targeted segments, and the position it will occupy based on the full mix of benefits upon which a brand is positioned
Possible value propositions
more for more, more for the same, more for less, the same for less, less for much less
Positioning strategies
a firm may focus its positioning strategy on certain product attributes, features, or value perceptions
Positioning your brand
- analyze competitors positions
- highlight competitive advantage
- evaluate consumer feedback
Competitive analysis
firms must understand the position other competitors have taken in the marketplace
Product (offering)
this includes a specific combination of goods, services, or ideas that a firm offers to its target market
Product components
core product, actual product, augmented product
Core product
purchase benefits
Actual product
benefits translated into product form
Augmented product
additional features that exceed expectations
Consumer products
products and services bought by final consumers for personal consumption; classified according to how a consumer shops, pays for, or uses the products
Types of consumer products:
convenience, shopping, specialty, unsought
Product quality
the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs (positioning attribute)
Total quality management
approach that involves constantly improving the quality of products/services
Return on equity
quality is and investment, holding quality efforts accountable for bottom line results
Quality levels
level of quality that will support positioning (high price/high value)
Performance levels
ability to perform its function (mercedes v. chevy)
Conformance quality
freedom from defects and consistency in delivering a targeted level of performance
Product features
characteristics that describe the product
Style and design
style: describes appearance of product; does not necessarily make the product better
design: broader measure, contributes to the products usefulness and looks
Product attributes (actual product)
product quality, feature, style and design, packaging
Labelling and Logos
identifies the product or brand, describes attributes, and provides promotional value
Width
total number of product lines a firm offers
Length
number of different product lines a firm sells
Depth
variation in each product the firm offers
Branding
the name, term, sign, design, or a combination of these that identifies the maker or seller of a product or service
Brand equity
the differential effect that knowing the brand name has on customer responses, ability to capture consumer preferences and loyalty, high brand equity provides competitive advantage
Components of brand equity
brand recognition, brand association, perceived quality, brand loyalty
Three levels of positioning
product attributes, benefits, beliefs and values (pamper’s example)
Four brand sponsorship options
manufacturer, private (store) brand, licensed brand, co-branded
Private (store) brand
brand created/owned by reseller
Licensed brand
companies extend their brand by licensing
Five drivers of innovation
customer expectations, competition, globalization, technology, changing society
Innovation
creation of a new or significantly improved product offering
New product
new to the company
New-to-market
never been seen before
New category
new to the company, not market
Product line extension
extend product line or related products
Revamped products
packaging, features, design, etc.
Diffusion
the process through which a product is adopted and spreads across various types of adopters
Innovators
influencers, first to try new products
Product diffusion and types of adopters
Competitive advantage (better than competitors), compatibility (fits potential customer’s needs), observability (see others using), complexity (product is easier to understand), trialability (consumers can try without significant expense)
7 stages of new product development
new product development strategy, idea generation, idea screening, business analysis, product development, test marketing, product launch
Business analysis
a review of the sales, costs, and profit projections for a new product
Concept development
product idea, product concept (detailed version of the idea stated in meaningful consumer terms), product image (the way consumers perceive an actual potential product)
Standard test market
tested through representative cities using normal distribution channels (test group gets new product, control gets original product)
Electronic test market
panel of consumers carry ID card that track purchases
Simulated market
lower cost, digital ways to test products (chat room, panels)
Launch activities
purchasing the materials to make and package the good, hiring employees, manufacturing enough of a good, preparing internal systems for taking service orders
Product life cycle stages
introduction, growth, maturity, decline
Considerations in setting price
product cost, competition and other external factors, consumer perception of value
Price elasticity
one of the most important concepts in setting price that refers to a measure of sensitivity of demand to changes in price
Value based pricing
customer driven and priced to match perceived value
Good value pricing
offering just the right combination of quality and good service at a fair price
Every day low pricing
involved charging a constant everyday low price with few or no temporary price discounts
High low pricing
pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
Cost-based
based on product costs with a fair rate of return
Cost-plus pricing
adds a standard mark-up to the cost of a product
Target costing
starts with an ideal selling price based on consumer value considerations and then targets costs that will ensure that the price is met
Break-even analysis
a cost based technique used to examine the relationship between cost and price and to determine best sales volume
Market offering
comparison of value offered by competitor; consumer perception drive higher/lower prices
New product pricing strategies
market-price skimming, penetration pricing, product mix pricing (firms seek a set of prices that will maximize profits for the total mix)
Product line pricing
price lining; sets points between various products in a product line (higher price, higher perceived value)
Captive product pricing
pricing components required to support a product already purchased
Allowances
promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturers product in some way
Segmentation pricing
selling a product or service at two or more prices, where the differences in prices is not based on differences in costs
Reference pricing
prices that buyers carry in their minds and refer to when they look at a given product
Dynamic pricing
adjusting prices continually to meet the characteristics and needs of individual customers and situations
Price adjustments
pricing to account for differences in consumer segment and situation
Price fixing
companies that collude to set prices at a mutually beneficial high level
Price discrimination
occurs when a seller offers different prices to different customers without substantive basis
Predatory pricing
strategy to intentionally sell below cost and push competitor out of the market
Psychological pricing
considers the psychology of prices and not simply the economics; price is used to say something about the product
Discount pricing
straight reduction in price on purchase during a stated period of time or of larger quantities
Optional-product pricing
pricing of option or accessory products along with main product
Price sensitivity
degree to which the price of a product affects consumers’ purchasing behavior
