Exam Revision Flashcards
What is marketing?
Marketing is engaging customers and
managing profitable customer relationships.
The twofold goal of marketing is to:
- attract new customers by promising superior value; and
2. keep and grow current customers by delivering satisfaction.
Steps 1-4 broad
Create value for customers and build customer relationships
Step 5 broad
Capture value from customers in return
Step 1
Understand the marketplace and customer needs, wants and demands
Step 2
Design a customer-driven marketing strategy
Step 3
Construct an integrated marketing program that delivers superior value
Step 4
Build profitable relationships and create customer delight.
Step 5
Capture value from customers to create profits and customer equity.
Marketing information and customer insights
When creating value for
customers, marketers must
obtain fresh and deep insights
into their needs and wants.
Marketing research
Systematic design, collection, analysis and reporting of data
relevant to a specific marketing situation facing an
organisation.
• Market research gives marketers insight in customer motivations,
purchase behaviours and satisfaction.
Market research can help assess
– Market potential
– Market share
– Effectiveness of marketing mix activities (pricing, product,
distribution and promotion activities).
Marketing research
Two approaches of market research
Qualitative research
Quantitative research
Qualitative research
Involving a small number of individuals used to get qualitative data on a topic. • Focus groups (traditional and online) • In-depth one to one interviews (traditional and online)
Quantitative research
Involving a large number of individuals* and is used to get quantitative data on a topic. • Use of statistical application
- above 100 people
Consumer Buying Behaviour
The buying behaviour of final consumers (individuals and households) that buy goods and services for personal consumption.
Consumer Markets
Combining all individuals
and households that buy or
acquire goods and services
for personal consumption
Model of consumer behaviour
Companies research consumer buying decisions in great detail in order to answer questions about – what consumers buy – where they buy – how and how much they buy – when they buy and – why they buy.
Characteristics affecting consumer behaviour
Cultural
Social
Personal
Psychological
Cultural
Culture
Cultural group
Social class
Social
Reference groups
Family
Roles and status
Personal
Age and life cycle stage Occupation Economic situation Lifestyle Personality and self-concept
Psychological
Motivation
Perception
Learning
Beliefs and attitudes
The buyer decision process:
Decision stages
Need recognition
Information search
Evaluation of alternatives
Purchase decision
Post-purchase behaviour
Need recognition
The buyer recognises a need, triggered by internal or external
stimuli.
Information search
The buyer seeks out information about products or services
with potential to satisfy the need.
Evaluation of
alternatives
The consumer processes information in order to arrive at
brand choices
Purchase decision
The consumer forms a purchase intention and ultimately
makes the actual purchase.
Post-purchase
behaviour
Following purchase, the consumer will engage in a variety of post-purchase behaviours – including satisfaction, formation
of future purchase intentions and loyalty intentions.
The buyer decision process for new products
Stages in the adoption process
Awareness Interest Evaluation Trial Adoption
Awareness
Consumer becomes aware
but lacks information
Interest
They seek information
about the product
Evaluation
Considers whether trying the new product makes sense
Trial
Tries the new product on a
small scale to improve their
estimate of its value
Adoption
Decides to make full and regular use of the product
Individual differences in innovativeness
9/10
New product adoption process:
Factors influencing the rate of adoption
Relative advantage Compatibility Complexity Divisibility Communicability Other factors
Relative advantage
superiority over existing products
Compatibility
with consumer’s lifestyle, beliefs and attitudes
Complexity
ease of understanding
Divisibility
the ability to undertake trial on a limited basis
Communicability
: the ability to observe and understand the innovation’s benefits or results
Other factors
uncertainty, social approval, risks and costs
Customer-driven marketing strategy
A company must design customer-driven marketing
strategies that build the right relationships with the
right customers
Market segmentation
Buyers in any market differ in their wants, resources,
locations, buying attitudes and buying practices.
• Companies divide large, heterogeneous markets into
smaller segments:
- Segmenting consumer markets
- Requirements for effective segmentation
Segmenting consumer markets
Dividing the market into segments based on various variables • Bases for identifying and analysing consumer market segments are: • Geographical • Demographic • Psychographic • Behavioural
Geographic segmentation
Dividing a market into different segments based on: region, city size, density and climate
Demographic segmentation
Dividing a market into different segments based on: age, sex, family size, family life cycle, income (annual), occupation, education, religion and nationality
Psychographic segmentation
Dividing a market into different segments based on socioeconomic, status, values, attitudes, lifestyle groupings and personality. Marketers often segment using these variables
Behavioural segmentation
Dividing a market into segments based on consumer knowledge, attitudes, uses or responses to a product. Includes
Purchase occasion (regular or special)
Benefits sought (quality or economy)
User status (ex-user, regular user)
Usage rate (light user, heavy user)
Loyalty status (medium, strong)
Readiness stage (unaware to intending to buy)
Attitude towards product (enthusiastic to hostile)
Requirements for effective segmentation
To be useful, market segments must be:
Measurable Accessible Substantial Differentiable Actionable
Creating Segments
Combine variables to create specialised and differentiated segments
9/10
Market targeting
Evaluating market segments
A company must look at three factors:
- Segment size and growth
- Segment structural attractiveness
- Company objectives and resources
After evaluating different segments, the company must decide which
and how many segments it will target.
- Segment size and growth
Sales, growth rates, expected profitability
- Segment structural attractiveness
Number of strong competitors, substitute product, power of buyers,
power of suppliers
- Company objectives and resources
Company objectives and resources.
Target Market
A set of buyers sharing common needs or characteristics that the
company decides to serve.
It can be carried out at several different levels:
The continuum of market targeting from targeting broadly to targeting narrowly
Undifferentiated (mass marketing)
Differentiated (segmented marketing)
Concentrated (niche marketing)
Micromarketing (local or individual marketing)
Undifferentiated marketing
A market-coverage strategy where the company decides to ignore market segment differences and go after the whole market with one offer.
This mass-marketing strategy focuses on the common needs of consumers, rather than on what is different.
Differentiated marketing
A market-coverage strategy in which a firm decides to target several segments and designs separate offers for each segment. The company must weight up the increased costs against the
potential revenues
Concentrated marketing
A market-coverage strategy where a company targets a large share of one or a few segments or niches.
• The company achieves a stronger market position due to its understanding of the customer needs. Niches tend to attract fewer competitors
Micromarketing
The practice of tailoring products and marketing programs to
the needs and wants of specific individuals and local customer
segments – includes local marketing and individual marketing.
Local marketing:
Tailoring brands and promotions to the needs and wants of local
customer segments – cities, neighbourhoods and even specific
stores.
Individual marketing:
Tailoring products and marketing programs to the needs and
preferences of individual customers – also labelled ‘one-to-one
marketing’, ‘customised marketing’ and ‘markets- of-one
marketing’.
Differentiation and positioning
• Consumers are overloaded with information about
products and services
• To simplify the buying process, they organise products,
services, and companies into categories and ‘position’
them in their minds.
Choosing a differentiation and positioning strategy
Positioning is essential
• Each company must differentiate its offer by building a
unique bundle of benefits to appeals to a substantial
group within a segment
• Differentiation and positioning involves three tasks:
- Identify a set of differentiating competitive advantages
- Choose the right competitive advantages
- Select an overall positioning strategy
Differentiation and positioning
Competitive advantage
To build profitable relationships with target customer, marketers
must understand customer needs better than competitors and
deliver more customer value.
• A company can differentiate and position itself by providing superior
customer value and gains competitive advantage.
competitive advantage
An advantage over competitors gained by offering greater customer value, either through lower prices or by providing more benefits that justify higher
prices.
Competitive advantages
A company can differentiate itself or its market offer on
five dimensions of differentiation:
Product Services Channel (coverage/expertise) People Image
Differentiation and positioning
Choosing the right competitive advantages
How many differences to promote?
• Many marketers think that companies should aggressively promote only one benefit to the target market – using a Unique Selling Proposition (USP)
Others think companies should position on more than one differentiator. – Particularly where two or more companies are claiming to be the best on the same attribute
Differentiation and positioning
Choosing the right competitive advantages
Mass marketing today is fragmenting into many small segments.
• Companies are attempting to broaden their positioning strategies to
appeal to more segments.
• Companies must be careful not to have too many claims, or they risk
disbelief and loss of a clear positioning.
• Which differences to promote?
Which differences to promote?
Not all brand differences are meaningful or worthwhile
– Not every difference makes a good differentiator.
– Each difference has the potential to create company costs as
well as customer benefits.
Choosing the right competitive advantages
Differences must satisfy the following criteria:
Important Distinctive Superior Communicable Pre-emptive Affordable Profitable
Product position
A product position is the complex set of perceptions,
impressions and feelings that consumers have for the product
compared with competing products.
perceptual positioning maps,
In planning their differentiation and
positioning strategies, marketers often prepare perceptual positioning maps, which show consumer
perceptions of their brands versus competing products
on important buying dimensions.
9/10
Positioning maps
Positioning maps can be visually represented in two ways -
they both represent the same positioning
9/10
Differentiation and positioning
Selecting an overall positioning strategy
More for more More for the same The same for less Less for much less More for less
More for more
positioning involves providing the most prestigious product or service and charging a higher price to cover the higher
costs.
More for the same
Companies can attack a competitor’s more-formore
position by introducing a brand offering comparable quality but
at a lower price.
