Chapter 6 Marketing
What must the marketing mix efforts do with the positioning strategy
all the company's marketing mix efforts must support the positioning strategy.
Income segmentation
dividing a market into different income segments, e.g., dollar tree vs. target.
Gender segmentation
dividing a market into different segments based on gender, e.g., cosmetics, clothing, toys
Demographic segmentation
dividing a market into segments based on variables such as age, life-cycle stage, gender, income
Example of positioning statement
evernote positioning statement, "To busy multitaskers who need help remembering things, Evernote is a digital content management application that makes it easy to capture and remember moments and ideas from your everyday life using your computer, phone, tablet, and the Web."
Channel differentiation
firms that practice channel differentiation gain competitive advantage through the way they design their channel's coverage, expertise, and performance.
(segmenting international markets) variables include ( a combination of these may be used)
geographic location, economic factors, political and legal factors, cultural factors
Value proposition (the same for less)
gives a good deal
Segmentation bases help companies to
identify smaller, better-defined target groups. Identify and understand key customer segments. Reach customers more efficiently by tailoring market offerings and messages to customers' specific needs.
Value proposition (less for much less)
meeting consumers' lower performance or quality requirements at a lower price
Undifferentiated (or mass marketing)
refers to a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.
Differentiated (or segmented marketing)
refers to a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.
Concentrated (or niche marketing)
refers to a market-coverage strategy in which a firm goes after a large share of one or a few smaller segments or niches.
How do segmentation systems help marketers
segmentation systems help marketers segment people and locations into marketable groups of like-minded consumers and tailor market offerings and msg to their specific needs.
Creating value for targeted customers involves
segmentation, targeting, differentiation, positioning
Occasion segmentation
segments divide according to occasions, when the buyers, get the idea to buy, make their purchases, use the purchased item (e.g. orange juice in the morning plus as a cool, healthful refresher at other times of the day).
Benefit segmentation
segments divided according to the different benefits that consumers seek from the product. (e.g., diff users of Fitbit (there's a Fitbit for everyone!) or Apple Watch see the product's use differently)
Superior
the difference is superior to other ways that customers might obtain the same benefit
How can firms do efficient market targeting
the firm must evaluate the various segments and decide how many and which segments it can service best.
Accessible
the market segments must be accessible - effectively reached and served.
The differentiation and positioning task consists of three steps
(1) identifying a set of differentiating competitive advantages (2) choosing the right competitive advantages (3) selecting an overall positioning strategy. (The company must then effectively communicate and deliver the chosen position to the market)
Number of differences to promote
(1) many marketers think that companies should aggressively promote only one benefit to the target market. (2) other marketers think that companies should position themselves on more than one differentiator.
Example of product position
Sonos does more than just sell speakers; it unleashes "All the music on earth, in every room of your house, wirelessly."
Requirements for effective segmentation
measurable, accessible, substantial, differentiable, actionable
Consumer and business markets use many of the ____ variables for segmentation
same
Profitable
the company can introduce the difference profitably
Why marketing position must be monitored
the product's position should be monitored and adapted over time, i.e., the concept is dynamic
Competitors' marketing strategies
what are they doing?
Competitive advantage
An advantage over competitors gained by offering greater customer value either by (1) having low prices, (2) providing more benefits that justify higher prices.
Unique selling proposition (USP)
Developing a unique selling proposition (USP) for each brand and sticking to it, i.e., pick an attribute and tout itself as "number one" on that attribute
Which differences to promote
Each brand difference has the potential to create company costs as well as customer benefits.
Example of multiple segmentation
Experian's Mosaic USA system classifies U.S. households into one of 71 lifestyle segments and 19 levels of affluence, based on specific consumer demographics, interests, behaviors, and passions.
Usage rate
Markets can be segmented into light, medium, and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of total consumption.
Example of target market
P&G markets multiple laundry detergent brands and then further segments each brand to service even narrower niches.
Example of segmentation variable, demographic
age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, generation
Example of individual marketing
at mymms.com you can order a batch of M&Ms with your face and personal message printed on each little candy.
Product's life-cycle stage
beginning or mature or end of life of the product?
Many marketers believe that ________ ___________ are the best starting point for building market segments
behavior variables
Value proposition (more for less)
best winning proposition
How can business buyers be segmented
business buyers can be segmented geographically, demographically (industry, company size), or by benefits sought, user status, usage rate, and loyalty status.
Affordable
buyers can afford to pay for the difference
Image differentiation
buyers may perceive a difference based on company or brand image differentiation - offers may look same but image differs.
People differentiation
companies can also gain a strong competitive advantage through people differentiation that is, hiring and training better people than their competitors
Choosing a targeting strategy
companies need to consider many factors when choosing a market-targeting strategy. Which strategy is best depends on, i.e., factors include, company resources, product variability, product's life-cycle stage, market variability, competitors' marketing strategies
What do companies find easier when developing a positioning strategy
companies often find it easier to come up with a good positioning strategy than to implement it, mainly due to a lack of integrated marketing approach (in strategic planning).
Preemptive
competitors cannot easily copy the difference
Distinctive
competitors do not offer the difference, or the company can offer it in a more distinctive way
Targeting narrowly strategies
concentrated (niche) marketing, micromarketing (local or individual marketing)
Positioning
consists of arranging for a market offering to occupy a clear, distinctive, and desirable place, relative to competing products in the minds of target consumers.
Marketing targeting (or targeting)
consists of evaluating each market segment's attractiveness and selecting one or more market segments to enter.
Loyalty status
consumers can be loyal to brands, stores, and companies. Highly loyal customers promote the brand through personal word of mouth and social media. The opposite is true as well!
When do controversies arise with target marketing
controversies arise when marketers attempt to profit at the expense of targeted segments - when they unfairly target vulnerable segments or target them with questionable products or tactics.
Age and life-segmentation
dividing a market into different age and life-cycle groups, e.g., luncheables for teens
Geographic segmentation
dividing a market into different geographical units
Intermarket (cross-market) segmentation
grouping consumers with similar needs and buying behaviors irrespective of their location.
Value proposition (more for the same)
high quality at lower prices
A difference is worth establishing to the extent that it satisfies the criteria of being
important, distinctive, superior, communicable, preemptive, affordable, profitable
Product variability
lots of variation? Then differentiated strategy may work best
What do marketers often use multiple segmentation bases to identify
marketers often use multiple segmentation bases to identify smaller, better-defined target groups.
User status
markets can be segmented into nonusers, ex-users, potential users, first-time users, and regular users. Marketers want to reinforce and retain regular users, attract targeted nonusers, and reinvigorate relationships with ex-users. Included in the potential users' group are consumers facing life-stage changes that can be turned into heavy users.
Example of segmentation variable, behavioral
occasions, benefits, user status, usage rate, loyalty status
What must companies do after they have built their desired position
once desired position is built, it must maintain the position obtained through consistent performance and communication.
What must a company do after taking a position with their positioning statement
once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to its target consumers.
Variables used by business marketers for segmentation include
operating characteristics, purchasing approaches, situational factors, and personal characteristics.
Firms can differentiate in terms of
product, services, channels, people, or image
Value proposition (more for more)
provides the most upscale product or service
People in the same demographic group can have very different ________ characteristics
psychographic
In evaluating different market segments, a firm must look at
segment size and growth, segment structural attractiveness (i.e., competition), company objectives and resources
Select customers to serve involves
segmentation and targeting
Target market
set of buyers sharing common needs or characteristics that the company decides to serve. This is how a market selects target market segments.
Example of segmentation variable, psychographic
social class, lifestyle, personality
Marketers segment their markets using variables such as
social class, lifestyle, personality characteristics
What does socially responsible target marketing accomplish
socially responsible target marketing should be done to serge both the interests of the company and the interests of those targeted.
Services differentiation
some companies gain services differentiation through speedy convenient service
Positioning statement
summarizes company or brand positioning. E.g. in case of Evernote, the brand's superiority is made on its points of difference to competitors in the same product category
Important
the difference delivers a highly valued benefit to target buyers
Communicable
the difference is communicable and visible to buyers
Substantial
the market segments should be substantial - large or profitable enough to serve.
Actionable
the segments should be actionable, which means that effective programs can be designed for attracting and serving the segments.
Differentiable
the segments should be differentiable, which means they are conceptually distinguishable and respond differently to different marketing mix elements and programs.
Product differentiation
through product differentiation, brands can be differentiated on features, performance, or style and design.
Format of a positioning statement
to (target segment and need) our (brand) is (concept) that (point of difference).
Measurable
to be useful, the size, purchasing power, and profiles of market segments should be measurable.
How do marketers find points of differentiation
to find points of differentiation, marketers must think through the customer's entire experience with the company's product or service.
Why is it important for marketers to differentiate themselves
today, in a time when the mass market is fragmenting into many small segments, companies and brands are trying to broaden their positioning strategies to appeal to more segments.
Targeting broadly strategies
undifferentiated (mass) marketing, differentiated (segmented) marketing
What are the different market targeting strategies
undifferentiated (or mass marketing), differentiated (or segmented marketing), concentrated (or niche marketing), micromarketing
How is value proposition formed
value proposition is formed via differentiation and positioning.
After deciding which segments a company should target, a company must decide on a
value proposition, how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments.
What are some controversy and concerns over target marketing
vulnerable or disadvantaged consumers are targeted with controversial or potentially harmful products. (e.g., vaping attracted teens).
Differentiation
involves actually differentiating the firm's market offering to create superior customer value.
Market segmentation
involves dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes.
Micromarketing
is the practice of tailoring products and marketing programs to suit the taste of specific individuals and locations.
Product position
is the way a product is defined by consumers on important attributes - the place the product occupies in consumers' minds (mind-space) relative to competing products.
The products people buy reflect their
lifestyles
Company resources
limited? Then concentrated strategy may be best
Example of segmentation variable, geographic
nations, regions, states, counties, cities, neighborhoods, population density (urban, suburban, rural), climate
Market variability
no variation? Mass marketing may be appropriate