Lectures 4-6 Flashcards
what is a market
a group of customers with heterogeneous needs and wants.
Target market
a particular group of consumers at which a product or service is aimed.
Target marketing is based on three premises
- Individual buyers can be identified
- Sellers understand the needs of buyers
- Sellers meet the needs of target buyers
Market segments
Subgroups within the total market that are relatively similar in regard to certain characteristics
Mass marketing
A mass marketer sees buyers as having common wants, needs and demands.
A single product offering is created, communicated and delivered to meet the needs of most people in the market
One-to-one marketing
seeks to appeal to each customer by providing aunique, customised offering that will meet their individual needs
When choosing target markets, the organisation will generally consider three factors
- Its own resources
- Market demand
- competition
Small organisations with limited financial resources frequently adopt one of the following specialised approaches to target marketing
- Product specialisation
- Market specialisation
- Product-market specialisation
The target marketing process 3 stages
- Segmentation
- Targeting
- positioning
Market segmentation 2 steps
- define market segments
- Profiling the market segments
Identify segmentation variables (4)
geographic
demographic
psychographic
behavioural
Effective segmentation criteria (5)
Measurability
Accessibility
Substantiality
Practicability
Stability
Market targeting involves…
a systematic examination of the range of possible market segments, their potential sales volume and revenues
Evaluate potential segments through analysis of…
Sales potential
Competitive situation
Cost structure
Positioning
how the customers distinguish the organisation, its products and its brands from competitors when they are selecting from among the available alternatives
Market positioning
the way in which target segments perceive an organisations offering in relation to competing offerings
Company positioning
a positioning strategy designed to create a single market perception of the organisation in relation to competitors
e.g Apple vs Microsoft
Brand positioning
a positioning strategy designed to create a market perception of a particular brand, usually based on product attributes
e.g.Lexus vs Toyota
Some commonly used positioning variables include:
Attributes
use/application
Product user
Price and quality
Product class
The marketing mix for each segment should:
Be consistent with the desired positioning
Be internally consistent
Be sustainable in the long term
Product
a good, service or idea offered to the market for exchange
Total product concept
Describes the core product, expected product, augmented product and potential product in order to analyse how the product creates value for the customer
Core product
the fundamental benefits of product
Expected product
attributes that actually deliver benefits
Augmented product
benefits buyer may not require as part of basic fulfilmentof needs
Potential product
all possibilities that could become part of the expected or augmented product
Shopping products
moderate to high engagement decision making, with the purchases decision based on features, quality and price
Convenience products
inexpensive, frequently purchased, products bought with low engagement decision making
Specialty products
highly desired products with unique characteristics that consumers will make considerable effort to obtain
Unsought products
purchased to meet a sudden, unexpected need
The typical stages a product progresses through during its life cycle
○ New Product Development:
○ Introduction
○ Maturity
○ Decline
Product line extensions
new products that are closely related to existing products ina the product line
Brand
A collection of symbols intended to create an image in the customers mind that differentiates a product from competitors’ products
○ Brand image
■ The set of beliefs that a customer has regarding a particular brand
○ Brand equity
■ Added value that a brand gives a product
○ Brand loyalty:
Customers highly favourable attitudes and purchasing behaviourtowards a brand
Brand metrics
Value of brand in terms of brand assets, stock price analysis, replacement cost, brand attributes, and brand loyalty
○ Compulsory label information can include:
Brand name and logo
Product name
Ingredients list
Use by date or date of packaging
Bar code
Igor Ansoff9s product-market growth strategy:
Market Penetration
Product Development
Market Development:
Diversification
○ Price is directly related to profitability (equation)
Profit = (price x sales volume) - total costs
○ Determining pricing objectives
should be
specific,
measurable,
actionable,
reasonable
timetabled
○ Return on investment (ROI)
The profit required to justify investment in a particular product orproject
Pricing objectives tend to focus on various combinations of the following issues:
profitability
long‐term prosperity
market share
positioning
what the customer is prepared to pay
○ Pricing can be based upon
Costs
Demand
Competition
➢Cost-based pricing
a percentage or dollar amount is added to thecost of a product in order to determine its selling price
Fixed costs
Costs that are constant regardless of the amount of products being sold
e.g. cost of factories
Variable costs
Costs a company incurs to sell additional products e.g.delivery costs
○ Break-even analysis
An analysis designed to estimate the volume of unit sales required tocover total costs
○ Break-even point
■ The quantity at which total revenue = total costs
Margins
The effect on costs and revenue when an organisation produces and sells one more unit of product
○ Demand curve
A plot of how much people will buy things based on a products price
Economies of scale
As the amount of units produced increases, thecost to produce each unit decreases
Low‐cost production
Often based on country of origin
○ Penetration pricing
setting a low price in order to gain rapid market share and turnover for a new product
○ Price skimming
Charging the highest price that customers who most desire the product are willing to pay, and then lowering the price to bring in larger numbers of buyers
○ Pricing includes areas subject to legal restrictions:
essential services
misleading and deceptive conduct
price collusion
price discrimination
comparability and clarity of pricing
