Chapter 6 - UGBA 106

almost every company services at least some business markets many companies establish sperate systems for dealing with larger or multiple location customers

american express three segments in business merchants, corporations, small businesses

people differnetiations

hirign and training better people than coeditors do requires a company self its customer contact people carefully and truing them well

most companies have moved away from mass marketing and torward TARGET MARKETING

identifying market segments, selecting one or more of them and developing products and marketing progmras tailored to each forms are focusing on the buyers who have greater inters in the values they create best

more for more wild raw one target market, less for much less will draw another

in amny market usually room for many differnt companies each successful occupying different positions each company must delveop its own wining postionig staregy one that ameks the company special to its target consumers

Previewing the Concepts

looking further into key customer driven marketing strategy decisions dividing up markets in meaningful customer groups - segmentation choosing which customer groups to service - targeting creating market offering that the best serve targeted customers ( differnetnaition positioning the offering sin the minds of consumers - positioning 4Ps

more for more

positing that invoeld providing the most upscale product or sercie and charging a higher price to cover the higher costs offers not only high quality also gives prestige to buyers symbolizes status and lifter lifestyle can be profitable this strategy can also be vulnerable often invites imitators who claim the same quality but for a lower price luxury goods that sell well during good times maybe at risk during eocnomcid downturns when buyers become more careful about their spending

Benefits sought

powerful form of segmantion that groups buyers according to the different benefits they seek from a product requires finding the major benefits people look for in a product class, the kinds of people who look for each benefit and the other major brands that deliver each benefits gelleite - types of shavers

Micromarketing

practice of tailoring products and amrkeign programs to suit the tastes of specific individuals and locations. rather than seeing a customer in every individual, micro markets see the individual in ere customer 1) local marketing 2) indvidual amreking

Zip car

zeros in on narrwly defined lifestyle segments people who live or work in dneslley populated neighborhoods in big cities and colleges enviornmetnal covenient

cosnumers position products with or without help of markets but marketers do not want to leave their produce positions to chance msut PLAn positions that will give their products greets advatanges in selected target markets must design marking mixes to create these planned positions

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in target marking the issue is not really WHO is target but rather HOW and for WHAT controversies areise when marektesr attempt to profit at the expense of target segments need to serve the interest of those targeted

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marketers also use peraonlsity variables to segment markets [ ex diffent soft drinks target diffent personalities

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marketers must be careful to guard against stereotypes when using age and life cycle segmentation age is often a poor predictor of a person;s life cycle. health, work or family stuatus , needs and buying power comapnie markting to maure consumer usually emopliy positive mages and appeals

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companies can segment intnertiaonl markets using one or a combo of several variables

1) geogprahic location - ex. western europe, pacific rim, middle east or agrica. assumes that nations close to one another will have common common traits. although this isftenthe case there are many exceptions 2) economic factors - countries might be grouped by population income elves or by their overall level of economic development . a country's economic structure shapes its population product and services needs and therefore the marketing opportunities it offers . ex BRIC - brazil, russia, idnia china 3) politicla and elgal factors - such as the type ad stability of government , receptivity to foreign firms, monetary reguatlions, and amount of bureaucracy 4) cultural factors - can be used grouping markets according to common languages, religions, values and attitudes, customs, and behavioral patterns

above all, a brand;s positioning must served the needs and preferences of wells defined target markets

3 steps 1) identifing a set of diferentaign competitive advantages on which to build a piston 2) choosing the right comeptive advantages 3) selecting an overall positioning strategy. comapnymust then effecrilvey communicate and deliver the chose piston to the markt

4 Stpes in DESIGNING A CUSTOMER DRIVN MARKETING STRATEGY

Company selects the customer that it will serve 1) segmentation - dividng a market into smaller segments of buyers with distinct needs, chacterisitcs, or behaviors might need separate marketing strategies or mix. the company identifies different ways to segments the market and develops profiles of the reulsting market segments 2) targeting- evaluating each of the segmetns's attractiveness and selecting one ore more market segments to enter company decides on value propositioning- how it will create value for target customers 3) Differnetiaton - differnetitg the market offering to create superior customer value 4) Positioning - arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers

less for much less

a mkt almost always exits for products that offer less and therefore cost les few people need, want or can affor the very set in everything they buy in many cases consumers will baldy settle for less than optimal performance or give up some of the bells and whistles in exchange for a lower price invoveld meeting cosmuersm lower perfoemcne or quality requirements at a much lowe price

consumers are overloaded with information about products and servces- the cannot reavlate products every time they make a buying decision to simplify the buying process costumer organize products, services, and companies into catregores and position them in their minds

a prodcuts position is the complex set of perceptions impressions and feelings that consumers have for the rpdouct compared with competing products

Selectign Target Market Segmetns

after evaluating different segments, the company must decid which and how many segmetsn it will target target market - consists of set of buyers who share common needs or charactersits that the company decides to serve market target can be carried otua t several different levels 1) broad - undifferentiated marketing 2) narrow - micro marketing 3) somewhere in btw - differentiated or concentrated marketing

Differentating and Positioning

beyond decide which segments of mkt it will target --> decided on VALUE PROPOSITION - how it will create differentiated vale for target segments and what position it wants to occupy in those segments PRODUCT POSITION - the way a rpdouct is defined by consumers on important attributes - the place the product occupies in consumers minds relive to competing products . brands happened int he minds of consumers

product differentiation

brands can be diffenton features, performance or style and design

Market Segmentation

buyers in any market differ in their wants, resources, locations, buying attitudes, and buying practices through market segmentation companies divi large heterogenous market into smaller segment that can be reached more efficiently and effecilty with products and services that match their unique needs 1) segmetning consumer markets 2) segmenting business markets 3) segmetning international markets, 4) requriements for effective segmentation

same for less

can bey powerful value proposition because everyone like sa good deal they dent claim to offer diffenrt or better products. they offer many of the same bradsn as department stores and specialty stores but a deep discounts on superior purchasing power and lower cost operations other cmapnies develop imitative lower priced brands in an effort to lure custom away from market leader

to encourage responsible advertising the CHILDREN ADVERTISGN REVIEW UNIt adverign indsutry sefl regualtory agenecy has published extensrive chidlrens advertising guidlens to recognize the spcial needs of child audiences

cigarette, bear, and fast good armekts have also generated controversy in recent years growth of the internet has other carefully target direct media has reaised fresh concenrcns about the potential targeting abuses unscruplous marketers can now send tailor made deceptive messages by email directly to millions of usnsupsetign consumers

more for same

companies can attack a comeptors more for more position by inrdocuing a brand offering comparable quality at a lower price

Choosing a Targeting strategy

companies need to consider many factors when choosing a market targeting staregy which strategy best depends not eh company;s RESOURCES limited - concentrated marking best stately also depdns on the DEGREE OF PRODUCT VARIABLITY undifferneate mareking -uniform prodcuts products that can vary in design - differentiation or concentration PRODUCT LIFE CYCLE STAGE when a firm introduces a new product it may be practical to launch one version only as undifernated marketing or conectreated amercing may make the most snes e. int eh amure stage of PLC differnated marking often makes more sense MARKET VARAIBLITy undiffernetaed for simialr custoemrs COMPETIROS MARKEIGN STRATEGIES

Developing a Positoning Statement

company and brand psitiong should be summed up in a POSITONG STATMENTt - to (target segment dn need ) our (brand) is (concept) that ) point of difference prodcut emmershup category, point of diffenrece , placing a brand in a specific category suggest simialites that it might share with other products int eh category base fot eh brands superiority is mad on its pouts of iddference s

Age and life Cycle Stage

consumer needs and wants change with age defintiion: pffing different products or suing diffenret marketing approaches for different age and life cycle groups

Segmetning Business Markets

coustomer and busienss marketers use many of the same variable to segment their markets business buyers ca be segmented 1) geogrpahically 2) demographically ( industry, company size) or by benefits sought, user status, usage rate, and loyalty status business marketers also use some additional variables such as 1) customer operating charatersitics 2) purchaisng approahces 3) situatioanl facgors 4) persoanl characteristics

ChOosing the right competitive advantages

decide how many diffenreces to promote and which ones

companies today recognize that they cannot appeal to all buyers in the marketplace - or at least not all buyers in the same buyers are too numerous widely scattered and have varying needs and in their buying practice companies themsley vary widely i their abilities to serve different market segments must identify the parts of the market that they can best serve most profitably

design customer driven marketing strategies that build the right relationship with right customers

Services Differnetiatios

diffenriate the searches that accompany product speedy, convenient or careful delivery high quality customer care

Demographic segementation

divide the market into segments based on variables such as 1) age 2) life cycle stage 3) gender 4) income 5) occupation 6) education 7) religion 8) ethnicity 9) generation demogarphic factors are the most popular bases for segmenting customer groups because consumer needs wants and us usage rates often ary closely with demographic variables demogrpahic variables are also easier to measure than most other ypes of variables even when marketers first define segments using other bases such as benefits sought or behavior they mud know a segment's demographic characteristics to assess the size of the target market and reach it efficinelty

Geographic Segmentation

dividing the market into diffenrt geographic units, such as nation, regions, states, countries, cities, or even neighborhoods a company may decide to operate in one or few geogaprhical areas or operate in all areas buy pay attention to geogprahic dffernecces in needs and wants many companies today are localizing their produts, advertising, promotion and sales efforts to fit the needs of individual regions, cities and neighborhoods

Behavior Segmeentation

dividn a market ing segments based on consumer knowledge, attitudes, users, or responses to a product occasion segmenetaiton - dividing the market into segments based on occasion when buyers get the idea to by, actually make this purchases or use the purchased items can help firms to build up product usage

gender segmentation

dividng a market into different segments based on gender long been used in clothing, cosmetics, toiletries, and amgzinds an underdeveloped gender segment can offer new opportunites in markets raining from consumer electronics to motorcycles men skincare/makeup harley davidson - more owmen

Physogarphic segmentation

dividng a marketing into different segments based on social class, lifestyle , or personality characteritiscs people in the same demographic grip can have very different pysocgraphic chaaracteritiscs the products people buy reflect their lifestyles markets often segment their markets by consumer lifestyles and base their marketing strategies on lifestyle appeals

Dunkin Donughts

dunkin donuts is no starbucks but it also does not want to be To succeed,it has to have its own clear vision of just which customers it wants to serve - the segments and targeting strategy - and how - positioning and value proposion dunlin and starbuck target very different customer who want very different things from their favorite coffee shops dunkin doughnuts more better positioned in the recession time

image differnetiations

even when competing offers look the same buyers may perceive a difference based on a campy or brand image diffenrations a coampny or rand image should convey a products distinctive bents nd positioning need creativity and hard work image must be supported by everything the company says and does chosen symbols, endorsements, characters and other image elements must be communicated through advertising that conveys the company's or brands peranlsty

segmenting Internatiaonl Markets

few companies have either the resources or the will to operate in all, or event most of the coutnires that dot the globe most internatioanl form focus on a smaller set operating in many countries presents new challenges they can vary greatlin in their economic, cultural, political makeup just as they do within their domestic markets, international firms need to group their world markets into segments with distinct buying needs and behaviors

differentiated marking aka segemneted marekting strategy

firm decdes to target several market segmetsn and designs separate offers for each by offering product and marketing variations to segments, companies hope for higher sales and a strong position within each market segment , companies hope for higher sales and a strong position with each market segment devleopong a storng position within several segments creates more total sales tha undiffernetaied marketing across all segments also increase the costs of doing businesses. a firm usual finds it more expensive to develop and roducrt devloepling separate market segments with different advertising campaigns increases promotion costs thus the company must weight increased sales against increased costs when deicing on a differentiated marketing strategy

Undifferentiated marketing aka Mass Marketing strategy

firm might decide to ignore market segment differences and target the whole market with one offer this strategy focuses on what is COMMON in the needs of consumers coampny desigs a rpdocut an marketing program that will appeal to the largest number of buyers most modern marketer have strong doubts about this strategic . difficulties arises in developing a product or bran that will satisfy all consumers mass markets often have trouble competing with more focused firms that do a better job of aatstifing the needs orf specific segments and niches

Seelcting and Overall Positiong Strategy

full positing of a brand is called the brand's VALUE PROPOSITION - the full mix of benefits on which a brand is differentiated and postioniend why should i buy your brand more for more more fot eh same more for less same for less less for much less benefits, price

channel diffenretation

gain comeptive adage through the way they design their canals courage, expertise, and performance

Evaluating Market segements

in evnalatuing differnet marekt segments- a firm must look at three factors 1) segment size and growth - company wants to selecting segments that have the right size and growth characteristics. but right size an growth is relative matter 2) segment structural attractiveness - need to examine major structural factors that affect long run segment attractiveness .a segment is less attractive if it already contains many strong and aggressive competitors or if it easy for new entrants ro com in into segment. existence of many actual or potential substite product may limit prices and profits earned in segments. relative power of buyers also affects segment attractives ness. buyers with strong bargaining power relative to slleres will have try to force prices down, demand more prices, and set comeptirs against each other all at the expense of slleter pfortiability segment may be less attractive if it contains powerful suppliers whoc an control prices or reduce the quality of qt of ordered g+s 3) company objectives and resources - some attractive segments can be dismissed quickly because they do not mesh with the company's long run objectives. or the company may lack the skills and resources needed to succeed in an attractive segment . a company should only enter segments in which it can great superior customer value and gain advantages over its copetitors

concetnrated amrekting aka niche marketing strategy

instead of going after a small share of a large market, a firm goes after large share of one or a few smaller segments or niches through concentrated marketing the firm achieves a strong market position because of its greater knowledge of consumer needs in the niches it serves and the special reputation it acquires can market more effectively by fine tuning tis products, prices, and programs to the needs of carefully defined segments can also market more efficiently to targets its produces or services, channels and communications programs toward only consumer that I can vest serve adnb set most profitable

B2B marektesr are also finding new ways to customer their offerings . mass customization provides a way to stand outagianst competitors unlike mass production which eliminates the need for human interaction - individual marketing has made realtiosnhup with cutoerm more important then ever

interact markeign is vecoming a marketing pricniple for the 21 century world appears to be coming full circle

local marketing

invovles tailoring brands and prmotions to the needs and wants of local customer hours - cities, neighbor hoods, or even specific store advances in commincatiosn technology have given rise to new high tech versions of location based marketing drawbacks: can drive up manufacutign and marking boats by redoing the economics of scales create logistics problems as companies try to meed the varied requirements of different regional and logical markets still as companies face in increasingly gragemtned markets and a new supporting tehcnoglies develop the advatanges of local marketing often outweigh the drawbacks local amrekign helps a company more effecitbley in the face of pronounced regional and local differences in demographic and lifestyles

niching lets smaller companies focus their limited resources on serving niches that may be unimportant to or overlooked by larger comeptors

many companies start as niters to get a foothold agisnt larger, more resrouceful comeptors, and then grow into broader competoros conetnrated amrekign can by highly profitable it involves higher than normal risks companies rely on one or a few segments for all their business will sugger greatly if the segment turns source or larger comeptors may dwcied to enter with grater resources for these reason many companies prefer to diversify in several market segments

How many differences to promote

many markets think that ocapnies should aggresibly promote only one benefit to the target markets USP - unique selling proposition - each brand and stick to it . each brand should pink an attiruvte and tout itself as number one on that attirubbe buyers tend to remember number one better spec in this vercommunciatd marketing others marketers think that coapnie should position themselves on more than on diffenretiatr this may be necessary if two or more firms are claiming to be best on the same attributes today in a time when mass amrekt is fragmenting into many small segments companies and brands are trying to broaden their posting strategies to appeal to more segments

loyalty status

market can be segmented by consumer loyalty buyers can be divided into groups according to their degree of loyalty some consumers are completely loyal they buy one brand all the time and can't wait to tell others about it some what loyal - they are loyal to two or three brands of a given product or favor one brand when sometimes buying the others no loyalty they wither want something different each time they buy or they buy whateber's on sale can learn a lot by analyzing loyalty pattesr in the market start by studying its own loyal cutovers - their passion is contagious many companies target diehard fans with special products, appeals, and events by studying less loua buyers can detect which brands are most competitive with its own . by looking at customers who are shifting away from its brand coapny can learn about its meriting weaknesses and take actions to correct them

Market Targeting

market segmentation reveals the firm's market segment opprotutnies. the firm now has to evaluate the various segments and decide how many and which segments can it serve best.

Income

marketers of produts and services such as automobiles, clothing, cosmetics financial services, and travel ave long used income segmentation many coammnies target affluent consume with lozuriy goods and convenience services other market use hight rough marketing to courtt the well to do now all companies that u se income segmentation target the affluent when family dollar del estate experts scout location for new stores they look for lower middle class neighborhoods where people wear less expensive shoes and they look for older cats that dry a lot with their low income strategies, dollar stores, are now the fastest growing relatielrs in the nation

POSITIONING MAPS pg 183

marketers oftne prepare pereceptiual positioning maps that show consumer perceptions of their brands versus competing products on important buying dimensions position of each circle not eh map indicates the brand's perceived psition on two dimensions: price and orientation . size of sac circle indicates the brands relative market share

usage rate

markets can also be segmented into light, meduym and heave product users heavy users are often a small percentage of the market bt account for a high percentage of goal consumption

user status

markets can be segmented into non uses, ex users, potential users, first time users, and regular users of a product markets wat to reinforce and retain regular users, attract tar geed nonusers, and reinvorage relationsup with ex usesr included the potential user group are consumers facing life stage changes who can be turn dingo heavy users

Using Multiple Segmentation Bases

markets really limit their segmation anaylsi to nay one or a few variables they often use multiple segmentation bases in a effort to identify smaller, better defined target groups business information services - provide multivariable segmentation system that merge geographic, demographic, lifestyle, and behavioral data to help companies segment their markets down to zip codes, neighborhoods, and even households

Segmenting Consumer Markets

no single way to segment a market market has to try different segmentation variables alone dn in combination to find best way to view market structure 1) geographic 2)demogarphic 3)psychographic 4) variables

Which Differences to promote

not all brand differences are meanifnul or worthily each difference has the potential to create company costs as well as customer benefits 1) importnat 2) Dinsticitive 3) Superior 4) Communcialbe 5) Preemtpive 6) Affordabe 7) Proftiable

more for less

offer more for less many companies lain to do this in the short run some companies can actually achieve such lofty positions in the Long run companies will find it very difficult to sustain such best of both positioning offering more suavely costs more making it difficult to deliver not eh for less prmose companies that try to delver both may lose out to more focused competitors each brand must adopt a positioning staregey designed to serve the needs and wants of tis target markets

companies often find it easier to come up with a good posting staregy than to implement it establsihing a psotiong or aching one sully takes a long time but can be quickly lost

onc a coampny ans built the desired posting ,ust take care to maintain the positing through consistent performance and comuncaition must closely monitory and adapt the positing over time to match hagnes in consumer needs and comeptors stagesy should devleop gradually as it adpas toeveyr chang mkt but not to abrupt to not confuse consumers

COMMUNCATING AND DELIVERY THE CHOSEN POSITION

once it has chosen a posting the company must take strong steps to delivery and communicate the desired positing to tis target ocnsuerms all the company's marketing mix efforts must support the postinign strategy

SOCIALLY RESPOSNBILE TARGET MARKETING

smart targeting helps companies become more efficient and effecby bey focusing on the segments that they can satisfy best and most profitable targeting also benefits cosnuerms - companies serve specific groups of consumers with offers carefully tailored to their needs target amrekign can sometimes generate controversy and concern biggest isuess usually invoeld the target of vulnerable or disadvantaged consumers with controversial or potentially harmful products

Choosing a Differentiation and Position Strategy

some firms find it easy easy to choose a diffenrtiaion and position strategy if a firm well know for quality in certain segments will go after this poison in a new segment if there are enough burrs seeking quality in many cases two or more firms will go after the same position. then each will have to din other ways to itself apart . each firm must differentiates its offer by buidlign a unique bundle of benefits that appeals to a substantial group within he segments

Indivdiual markeign

tailors products and meriting programs to the needs and preferences of idnvidaul customers one to one marketing mass customization markets of one marketing widespread use of mass arming has obsueced the facts for centuries conservers were served as individuals new tech are premittign many companies o return to customized marketing. more detailed databases, robotic production and flexible manfucating and interactive communication mass customizationn - the process by which firms interact one to one with masses of customers to design products and services tailor made to idnvidaul needs

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

there are many ways to segment a amrekt but not all segementations are effective 1) measurable - size, purchasing power, and profiles of the segments can be measured 2) accessible - market segments can be effectiely reached and served 3) substantial - market segments are large or profitable enough to serve . segment should be the largest possible homogenous group worth pursuing with a tailored marketing program 4) Differentiable - segments are conceptually disintguishalbe and respond diffenretly to different marketing mix elements and programs 5) Actionable - effective programs can be designed for attracting and serving the segments

Identifying Possible slue Differneces and Comptitive Advantages

to build profitable relationships with target customs , marketers must understands customer needs better than competirirso do and deliver more customer value the extent that a company can difernate and position itself as providing superior custom slue --> gains COMEPTIVE ADVTG

solid position cannot be build on empty promises - must actually delivery value companies must do much more than simply shout their psitions with slogans and tag lines live the slogn

to find points of diffenrtiaion markets must think through the customers entire experience with the coampy's product or service in what sepcif ways can a company differitnaties itself for its market offer differentitalte align the lines of 1) product 2) services 3) channels, 4) people 5) image

Location based micro marketing equals macro opportunities

today;s amrekts are increasingly adding an important new targeting variable - locaiont where you are right now smartphones with GPS capbibliies and gear offer accordingly check in services full fledged lcaotion location ased lifestyle networks

segmenting intenratioknl markets based on geographic, economic, political, cultural, and other factors repsuresm that segments should consists of clusters of coutnires. However as new communications technologies such as satellite TV and the Internent, connecnt consumers around the world markets can define and reach segments of like minded consumers no matter where they are in they world

using INTERMARJET SEGEMENTATION aka CROSS MARKET SEGEmentATIon - form segments of consumers who have similar needs and buying behaviors even though they are located in different countries