Strategic Management Test 2

Strategic targeting

Focuses on customers whose needs the company can fulfill by ensuring that its offerings are customized to their needs

Market positioning

For each target segment, establish, communicate, and deliver the right benefit(s) for the company's market offering

What does marketing planning begin with?

Formulating an offering to meet target customers' needs or wants -Value is added on each level

Tactical marketing

Gather information to establish a customer profile including demographic, geographic, behavioral, and psychographic factors observable in this segment of customers

Demographic segmentation: race and culture examples

Hispanic, Asian, black American

Behavioral segmentation

How and when customers use the product could be a good way to segment

Tactical targeting

Identifies the ways in which the company can reach these strategically important customers

Market segmentation

Identify distinct groups of buyers who differ in their needs and wants

Demographic segmentation: stage in life cycle

Including their critical life events which is a persona's major concern at a point in time (wedding, baby, divorce, death) Life cycle stages: cycles we go through on our way to death, generally forward through the stages

The ultimate level of segmentation is -individuals as segments -single-segment concentration -differentiated coverage

Individuals as segments

Product line length: line modernization

Product lines regularly need to be modernized Ex: MS Office 2021 -to remain a leader, forms must practice continuous innovation

Product line length

Product lines tend to lengthen over time

Product differentiation: core functionality

Products have to deliver on their core benefit or they will ultimately fail in the market -BUT to successfully compete in the market, products must be differentiated

Total customer benefit

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

Product differentiation: reliability

The probability that a product will not malfunction or fail within a specified time period Ex: Maytag has built their business on this

Targeting

The process of identifying customers for whom the company will optimize its offering

Product differentiation: durability

The product's expected operating life when it is actually used Ex: Energizer batteries bunny focused on durability - Honda and Toyota are building brands on this

Product design

The totality of features that affect the way a product looks, feels, and functions to a consumer -Design addresses the look or style and also the way the customer can access/open, install, use, repair, and dispose of a product -it is the total experience

Core competency

Those "things" that make the firm uniquely them

Competitive advantage: the key

To endure, firms must continually invent new advantages that can serve as the basis of points of difference (PODs)

Key aspect of marketing strategy

Value proposition

___________is a set of benefits that satisfy the customers' needs while creating a convincing reason they should buy. -offering -value proposition -value positioning

Value proposition

Market segmentation 5 Cs

What does the Customer need? What Collaborators are present? What can the Company do? How much Competition is present? What is the Context? (microenvironment)?

Competitive advantage: 3 core strategies

- Differentiate on an existing attribute -Introduce a new attribute -Build a strong brand

Positioning statement execution

- Tell the customers what category the brand is a member in -Within that competitive space, establish and communicate the PODs and POPs for your brand Negatively correlated attributes or benefits can be challenging. Convince consumers that the negative is actually a positive: *Low price vs. high quality *taste vs. calories *powerful vs. safe -Once these are established, tell the story to build the brand associations

Segmentation tools: demographic

-Age and generation -stage in the life cycle -gender -income -race and culture

Product differentiation categories

-Features -performance quality -conformance quality -durability -reliability -form -style -customization

What does a company need to create superior value for target customers?

-business infrastructure -access to scarce resources -skilled employees -technological expertise -strong brands -collaborator networks

Behavioral segmentation: loyalty status

-hard-core loyals -split loyals -shifting loyals -switchers

Behavioral segmentation: usage rate

-light product users -medium product users -heavy product users

On what will target customers judge an offering?

-product -service -brand

Behavioral segmentation: buyer-readiness stages

-unaware -aware -informed -interested -desire -intend to buy

Points of parity (POP) association forms

1. Category POP attributes or benefits that a brand has to provide to exist in a certain category - the brad has to have it, but it doesn't have to be unique 2. Correlational POP negative associations that arise from the existence of positive associations 3. Competitive POP associations a brand designs to overcome perceived weaknesses of the brand in light of competitors' POD

3 criteria to determine if a brand association can truly function as a point of difference (POD)

1. Desirable the brand association is personally relevant and important to the customer (prove your claim) 2. Deliverable the company has the resources and is committed to creating and maintaining the brand association -What do you have to do? -Does the physical product or marketing require adaption? 3. Differentiating consumers see the brand association as distinctive and superior to relevant competitors

Two ways that product lines lengthen

1. Line-stretching -down-market stretch: introduce a lower-priced line -up-market stretch: develop for the higher-end market -two-way stretch: develop both for low and high-end 2. Line filling: lengthen product line by adding more items with the present range

3 Characteristics of core competency

1. a source of competitive advantage and significant contribution to perceived customer benefits 2. applications in a wide variety of markets 3. is difficult for competitors to imitate

Geographic segmentation: Claritas PRIZM

A geo-clustering tool that focuses on zip code and combines demographic and lifestyle to build a profile -People living in a zip code tend to lead similar lives, drive similar cars, have similar jobs, and read similar magazines

Market segment

A group of customers/buyers who share a similar set of needs and wants

Product line

A group of related products sold by the same company

Product differentiation: style

A product's look and feel to the buyer. Many times, equated with fashion, cars, and other product categories

Target compatibility

A reflection of the company's ability to outdo the competition in fulfilling the needs of target customers. Can the company create superior value for target customers?

Competitive frame of reference

Actual and potential competitors may not be obvious and broadly framing can show opportunities. Competitors are companies that satisfy the same customer need

Single segments

Aim at one group and serve them very well

Product portfolio design: product mix/assortment

All of the products the firm sells and is sorted into lines

Product portfolio design: product portfolio

All products offered by a company, including various product categories and product lines

Managing packaging

All the activities of designing and producing the container for a product -good packaging attracts attention -can act as a "five-second commercial" -packages affect the user experience Distinctive packaging can be a competitive advantage Color carries different meanings in different cultures and market segments, it can define a brand

Product map

Allows a company to see its main competitors at a glance -helps planners to identify market segments and spot market opportunities

Points of parity (POP)

Attribute or benefit associations that are not necessarily unique to the brand, but may in fact be shared with other brands

Points of difference (POD)

Attributes or benefits that consumers strongly associate with a brand -The customers positively evaluate and they believe they could not find to the same extent with a competitive brand

Which offering level do we get competitive?

Augmented -if the customer doesn't add value to the added attribute you threw money away

Customer value proposition

Based on the difference between the cluster of benefits the customer gets and the costs he or she assumes for different choices Ex: Volvo promises "safety" but they also deliver on good performance, design, and concern for the environment

Geographic segmentation: customer cloning

Best perspective customers are where existing customers are

Multiple frames of reference

Brands can have more than one competitive frame of reference

Segmentation tool: psychographic

Buyers are divided into groups on the basis of psychological traits, lifestyle, and values

Consumers might not consider a hand sanitizer truly a hand sanitizer unless they are gels designed to apply topically and contain alcohol that kills the germs present on the skin. This is an example of which POP? -Category -Competitive -Correlational

Category

Product differentiation: features

Characteristics that supplements the product's basic function Ex: automobile backup camera and airbags

Positioning statement

Communicates on offerings category membership along with POP and POD, and develops a narrative to convey the offering's positioning

Creating a sustainable advantage

Competitors are always trying to take away the competitive advantage, but the nature of that competition can force us to innovate

Levels of offering value

Core benefit: the most basic level Ex: transportation Basic product: take the core benefit and create a basic product to satisfy that need Ex: car or bike Expected: the set of attributes that the customer expects to get when they purchase the product Ex: the car is safe and comfortable Augmented: add attributes so the product exceeds the expectations Ex: warranties and accessories Potential: the future product. All the possible augmentations and transformations the product or offering might undergo

Value proposition

Customers maximize on their value: -functional value -psychological value -monetary value

In the business market, the most important segmenting vehicle is -personal characteristics -demographic -operating variables

Demographic

How should business markets be segmented? (In order from most important to least)

Demographic 1. industry 2. company size 3. location Operating variables 4. technology 5. user or nonuser status 6. customers capabilities Purchasing approaches 7. purchasing-function organization 8. power structure 9. nature of the existing relationship 10. general purchasing policies 11. purchasing criteria Situational factors 12. urgency 13. specific application 14. size of order Personal characteristics 15. buyer-seller similarity 16. attitude toward risk 17. loyalty

Approaches to product design

Design thinking -observation -ideation -implementation

Tactical marketing: personas

Detailed profiles of one, or perhaps a few, hypothetical; target consumers, imagined in terms of demographic, psychographic, geographic, or other descriptive attitudinal, or behavioral information

How to build a strong brand?

Differentiate points of difference (PODs)

Product differentiation: customization

Differentiating by finding out exactly what a person wants and doesn't want and delivering on that

Segmentation tools: geographic

Divides the market into geographic units such as nations, states, regions, countries, cities, or neighborhoods

For a brand association to truly function as a POD, it must meet all of the following criteria EXCEPT which? -Desirable -Deliverable -Documented -Differentiating

Documented

Demographic segmentation: generation and how to market to them

Each generation will share behaviors and traits that are influenced by the times in which they grow up (music, movies, politics, defining events of that period). -Market to them using icons and images of the times or their generational needs

When P&G puts their products in "Newlywed Kits" they are targeting customers based on -age -income -life stage

Life stage

A group of customers/buyers who share a similar set of needs and wants is a -marketing program -market segment -customer bullseye

Market segment

Segmentation tools: behavioral

Marketers divide buyers into groups on the basis of their actions

Levels of segmentation

Mass market, full market coverage, multiple segments, single segments, individuals as segments, mass customization

Marketing myopia

Near-sightedness, or a narrow focus, where you miss substitutes (in competitive frame of reference) Ex: Kodak

Mass customization

Now firms have the ability to meet each customer's requirements, to prepare on a mass basis individually designed products, services, programs, and communications -largely due to technology -services have done this for a long time

Theresa's best friend is getting married and she's noticing advertisements for showing brides receiving Instant Pots at their bridal showers. She has been targeted based on -culture -occasion -personality

Occasion

Straddle positioning

POD for one category becomes POP for another

The _________ communicates an offering's category membership along with POPs and PODs, and develops a narrative to convey the offering's positioning -mission statement -marketing mix -positioning statement

Positioning statement

Category membership

Products which a brand competes with, and that target customers use as close substitutes. Is there an alternative market that is more attractive? Ex: DiGiorno in the delivered pizza market instead of the frozen pizza market

Product line length: line pruning

Remove deadwood that depresses profits

Customer value analysis

Reveals the company's strengths and weaknesses relative to those of various competitors -Identify the relevant attributes and benefits that customers value -Asses the relative importance of these attributes and benefits -Assess the company's and competitors' performance on the key attributes and benefits -Monitor Customer value over time

What does effective market marketing require?

STP (Segmentation, targeting, positioning)

Multiple segments

Select multiple segments and develop strategies that appeal to each segment (commonly the norm over time)

Market targeting

Select one or more market segments to enter

Targeted marketing

Sell different products to all the different segments of the market

Full market coverage

Serve all customer groups with all the products they might need

Frame of reference

Serves as a benchmark against which customers can evaluate the benefits of a company's offering. The brands a brand competes with -Focus on these brands in competitive analysis -From the target market's perspective - what brands do they see as substitutes to yours...this reveals all actual and potential competitors

When BMW first made its appearance in the U.S. market, it positioned the brand as the only car that offered both luxury and performance, which is known as ____________ because it uses both PODs and POPs across categories? -Double positions -straddle positioning -reference positioning

Straddle positioning

Brand substitution test

Substitute your competitor's name into your marketing activity - if it works, then it isn't a good position A well-positioned brand is distinctive in its meaning and execution

Elements of strategic targeting

Target compatibility, core competency, and target attractiveness

Target attractiveness

The ability of a market segment to create superior value for the company. -Monetary value: customer revenues and the costs of serving customers -Strategic value: social, scale, and information value

Positioning

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

Product differentiation: form

The actual shape, size, or makeup of the physical product Ex: Aspirin used to only a chalky white pill

Product differentiation: conformance quality

The degree to which all of the produced units are identical and meet the promised target specifications Ex: Pepsi has to taste the all the time

Mass marketing

The firm ignores segment differences and goes after the whole market with one offer -undifferentiated product and communicated to all -the largest potential market with the least cost, but hard to do

Product differentiation: performance quality

The level at which the product's primary characteristics operate. -Adding more quality features costs money -Firms have to decide how much quality to build in

Total customer cost

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

Individuals as segments

Ultimate level of segmentation is "segment of one"

Product portfolio design: product lines characteristics

Width: number of different product lines the company carries Length: total number of items in the mix (length if line = number in the line) Depth: number of variants offered for each product in the line Consistency: how closely related the various product lines are in end-use, product requirements, distribution, channels, or some other way

Behavioral segmentation: occasions

specific occasion or time in life