marketing lecture 5 (stp process)

Question 1

market segmentation

Answer 1

people have different wants and needs. through market segmentation, companies can divide the huge, heterogenous markets into smaller segments to reach customers more efficiently and effectively with products and services that match their unique needs

Question 2

criteria to use in forming segments

Answer 2

• simplicity and cost-effectiveness
• potential for increased profit
• the similarity of needs of buyers in a segment
• the difference of needs of buyers among segments
• potential of a marketing action to reach a segment

Question 3

ways to segment consumers’ market

Answer 3

1. geographic segmentation (location)
2. demographic segmentation (age, life stage)
3. psychographic segmentation (lifestyle, personality)
4. behavioral segmentation (usage rate)

Question 4

role of the basis of segmentation

Answer 4

1. focus on the results (behavioral)
2. simplest way to segment a market (geographic)
3. most powerful in explaining the ultimate reasons to buy (psychographic)
4. an important base to understand the market size (demographic)

Question 5

marketing targeting

Answer 5

reveals the firm’s market segment opportunities. now the firm must evaluate the market segment and determine how many and which segments it can serve best

Question 6

criteria in choosing the target market segments

Answer 6

• market size
• expected growth
• competitive position
• cost of reaching the segment
• compatibility with the company’s objectives and resources

Question 7

market product grid

Answer 7

use to relate market segments of potential buyers to products offered or potential marketing actions

Question 8

3 market segmentation strategies

Answer 8

1. one product and multiple market segments : an organization creates a single product or service to more market segments
2. multiple products and multiple market segments : has multiple target market segments and separate marketing offers for each
3. the segment of one (mass customization) : tailoring a product or service up to the taste of individual customers on a high level scale due to flexible manufacturing, marketing process, and internet orders
   build-to-order –> only produces when there is customer order

Question 9

any possible problems if companies start making new products/chains in order to increase consumer value?

Answer 9

• the new products/chains steals customers/sales from the old one
• stores increasingly emphasize the “tifanny/target” strategy –> they offer different variations of the same offering to high-end and low-end segments

Question 10

3 process on 5 key steps on segmenting and targeting the market

Answer 10

1. identify market needs : would benefit from :
   a. product features
   b. quality
   c. expense
   d. savings of time and convenience
2. link needs to actions –> steps to segment and target market
3. execute marketing program actions
   the marketing mix of :
   - product
   - price
   - place (distribution)
   - promotion

Question 11

link needs to actions steps

Answer 11

1. group potential buyers into segments
2. group products to be sold into categories
3. develop a market-product grid and estimate the size of markets
4. select target markets
5. execute marketing actions to reach target market

Question 12

product positioning

Answer 12

refers to a place a product occupies in a consumer’s mind based on important attributes relative to competitive products

Question 13

product differentiation

Answer 13

a marketing strategy that uses different marketing mix actions to help a consumer from a target segment perceives a product as different or better than competing products

Question 14

perceptual map

Answer 14

marketers usually prepares a perceptual map that shows the perceptions of a customer towards their product/brand vs competing products/brands on important product attributes of a product/brand class

Question 15

positioning using perceptual map

Answer 15

1. identify important attributes for the products/brand class
2. customer ratings of competing product/brand class on these attributes
3. customer ratings of the company’s product/brand class on these attributes
4. position the product or brand class on the mind of a consumer

Question 16

2 approaches to product positioning

Answer 16

1. head-to-head positioning
   - involves competing directly with a competitor on similar product attributes in the same target market
2. differentiation positioning
   - involves a less-competitive, smaller market niche in which to locate a brand

Question 17

points of differentiation

Answer 17

1. product differentiation –> products can be differentiated by their perfomance, features, and style
2. services differentiation –> through speedy and convenient services
3. channels differentiation –> gain competitive advantage through the way they design their channels expertise, perfomance
4. image differentiation –> a company or brand image can convey a product’s distinctive benefit or position
5. people differentiation –> by hiring or training better people than their competitor