Session 3 Developing a viable marketing strategy

Question 1

What is Targeting?

Answer 1

Targeting is the process of identifying customers for whom the company will optimize its offering. Targeting can be strategic or tactical. The ultimate level of targeting is the one-to-one approach, in which each market segment comprises a single customer.

Question 2

What is mass marketing?

Answer 2

In mass marketing, the firm ignores segment differences and goes after the whole market with one offer.

The argument for mass marketing is that it creates the largest potential market, which leads to the lowest cost, which in turn can lead to lower prices or higher margins.

Question 3

What is targeted marketing?

Answer 3

In targeted marketing, the firm sells different products to all the different segments of the market. The ultimate level of targeting is the one-to-one approach in which the market segment comprises a single customer.

Question 4

What is mass customization?

Answer 4

Mass customization is the ability of a company to meet each others´ requirements - to prepare on a mass basis individually designed products, services, programs, and communications.

Question 5

What is strategic targeting?

Answer 5

Strategic targeting is based on the choice to ignore some customers to better serve other customers with an offering that matches their specific needs.

Question 6

What is tactical targeting?

Answer 6

Rather than excluding any potential customers, tactical targeting strives to reach all strategically important customers in an effective and cost- efficient manner.

Question 7

What is target compatibility?

Answer 7

Target compatibility reflects the company´s ability to outdo the competition in fulfilling the needs of target customers – in other words, to create superior customer value.

Question 8

What is a core competency?

Answer 8

An important aspect of assessing a company´s resources is identifying its core competence. A core competence has three characteristics:
1) It is a source of competitive advantage and makes a significant contribution to perceived customer beliefs.
2) It has applications in a wide variety of markets, and
3) It is difficult for competitors to imitate.

Question 9

What is target attractiveness?

Answer 9

Target attractiveness reflects the ability of a market segment to create superior value for the company. Thus, the company must carefully select customers for whom to tailor its offering (based on the degree to which they can contribute value to the company and assist the company in reaching its goal.)

Question 10

What is monetary value?

Answer 10

Target customers can create two kinds of value for a company: monetary and strategic.

Monetary value consists of the capability of customers to bring profits for the company. Monetary value includes both the revenues a particular customer segment generates and the costs of serving these customers.

Question 11

What is strategic value?

Answer 11

Target customers can create two kinds of value for a company: monetary and strategic.
Strategic value refers to non-monetary benefits that customers bring to the company. The three main types of strategic value are

• social value (=the influence of target customers on other potential buyers),
• scale value (=symbolizes the benefits derived from the
• scale of the company´s operations), and
• information value.

Question 12

What is Segmenting?

Answer 12

Segmenting is part of Tactical Targeting and comprises:
- Defining the customer profile,
- aligning customer value and customer profile, and
- bringing segments to life.

Question 13

Which factors define the customer profile?

Answer 13

• Demographic factors (age, gender, income, occupation, level of education, religion, etc)
• Geographic factors (physical location of target customers)
• Behavioral factors (describe customers´ actions)
• Psychographic factors (involves aspects of the individual´s personality like atittudes, interests etc)

Question 14

What are the two main principles of tactical targeting?

Answer 14

To achieve optimal outcomes when evaluating the company´s targeting options, marketing managers should follow the two main principles of tactical targeting: Effectiveness and cost efficiency.

Question 15

What is the effectiveness principle?

Answer 15

The effectiveness principle reflects the degree to which the company is able to reach all strategically viable customers whose needs can be fulfilled in a way that benefits the company and its collaborators, make them aware of the company´s offering, and give them access to the offering.

Question 16

What is the cost efficiency principle?

Answer 16

The cost efficiency principle mandates that the company´s communication and distribution reach only the customers it has targeted. The goal of the cost efficiency principle is to shorten the waste of resources on customers whose needs the company´s offering cannot effectively address and who are unable to create value for the company.

Question 17

What are Personas?

Answer 17

To bring all their acquired information and insights to life, some researchers develop personas. Personas are detailed profiles of one, or perhaps a few, hypothetical target consumers, imagined in terms of demographic, psychographic, geographic, or behavioral information.

Question 18

What is Niche Marketing?

Answer 18

Niche Marketing focuses on smaller, well-defined groups of customers that seek a distinctive mix of benefits.

Question 19

What does it mean to target multiple segments?

Answer 19

Targeting a greater number of smaller customer segments by product or market specialization.

Question 20

What is Market Segmentation?

Answer 20

Market Segmentation divides a market into well-defined slices. A market segment consists of a group of consumers who share a similar set of needs and profile characteristics.

Common types of segmentation are:
- Demographic (age, family size, gender, income, occupation)
- Geographic (divides into geographic units such as nations, states, regions, cities, neighborhoods)
- Behavioral (divide buyers into groups on the basis of their actions)
- Psychographic (divide buyers into groups on the basis of psychological traits, lifestyle or values)

Question 21

How do customers ultimately make choices?

Answer 21

Customers choose the offer they believe will deliver the highest value and act on it.

Question 22

Across which domains can an offering create value?

Answer 22

• Functional value (reflects the benefits and costs that are directly related to an offering´s performance)
• Psychological value (encompasses the psychological benefits and costs of the offering and creates emotional benefits for target customers)
• Monetary value (includes the financial benefits and costs associated with the offering.

Across all three dimensions, customer value is the difference between the prospective customer´s evaluation of all the benefits and costs of an offering and her or his evaluation of the costs and benefits of the perceived alternatives.

Question 23

What is the total customer benefit?

Answer 23

The perceived value of the bundle of functional, psychological, and monetary benefits customers expect from a given market offering because of the product, service, and image.

Question 24

What is customer cost?

Answer 24

The perceived bundle of functional, psychological, and monetary costs customers will incur in evaluating, obtaining using, and disposing of the given market offering.

Question 25

What is a CVA?

Answer 25

CVA = Customer Value Analysis. It reveals the company´s strengths and weaknesses relative to those of various competitors. The steps in this analysis are:

1) Identify the relevant attributes and benefits that customers value. Customers are asked what attributes, benefits, and performance levels they look for in choosing a product and vendors.

2) Assess the relative importance of these attributes and benefits. Customers are asked to rate the importance of different attributes and benefits.

3) Assess the company´s and competitors´ performance on the key attributes/benefits. If the company´s offer exceeds the competitor´s offer on all important attributes and benefits, the company can charge a higher price and thereby earning higher profits, or it can charge the same price and thereby gain more market share.

4) Monitor customer value over time. The company must periodically redo its studies of customer values and competitors´ standings as the economy, technology, and product features change.

Question 26

What is the goal of developing a positioning strategy?

Answer 26

The goal is to instill the brand in the minds of consumers to maximize the potential benefit to the firm.

Question 27

What needs to be considered when developing a positioning strategy?

Answer 27

• The Positioning
• The Frame of Reference
• The Points of Difference (PODs)
• The Points of Parity (POPs)

Question 28

What is Positioning?

Answer 28

The act of designing a company´s offering and image to occupy a distinctive place in the minds of the target market.

Question 29

What is the Frame of Reference?

Answer 29

It serves as a benchmark against which customers can evaluate the benefits of a company´s offering.

Question 30

What are PODs / Points of Difference?

Answer 30

Attributes/ Benefits that customers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand. POD Criteria are: Desirable, Deliverable, Differentiating.

Question 31

What are POPs / Points of Parity?

Answer 31

Attributes/Benefit associations that are not necessarily unique to the brand but may in fact be shared with other brands. POP forms are: Category, Correlational, Competitive.

Question 32

What are Perceptual Maps?

Answer 32

Perceptual Maps, also called positioning maps, may be useful for choosing specific benefits such as POPs and PODSs to position a brand. Perceptual Maps are visual representations of consumer perceptions and preferences. They provide quantitative pictures of market situations, and the way consumers view different products, services, and brands along various dimensions.

By overlaying consumer preferences on brand perceptions, marketers can reveal “holes” or “openings” that suggest unmet consumer needs and marketing opportunities.

Question 33

What is a leverageable advantage?

Answer 33

A leverageable advantage is one that a company can use as a springboard to new advantages; much as Microsoft has leveraged its operating system with Microsoft Office and networking applications.

In general, a company that hopes to endure must be in the business of continuously inventing new advantages that can serve as the basis of points of difference.

Question 34

Which strategies help create a sustainable competitive advantage?

Answer 34

• Differentiate on an existing attribute.
• Introduce a new attribute.
• Build a strong brand.

Question 35

How is a start up positioned?

Answer 35

1) Find a compelling product or service performance.

2) Focus on building one or two strong brands based on one or two key associations.

3) Encourage product or service trial in any way possible.

4) Develop a cohesive digital strategy to make the brand bigger and better.

5) Create a loyal brand community.

6) Employ a well-integrated set of brand elements.

7) Leverage as many secondary associations as possible.