MKTG CH 8

The three characteristics of a good Unique Selling Proposition (USP):

1. Each advertisement must make a proposition to the customer. Each advertisement must say to the reader, "Buy this product, and you will get this specific benefit." 2. The proposition must be one that the competition either cannot, or does not, offer. It must be unique -- either a uniqueness of the brand or claim not otherwise made in that field of advertising. 3. The proposition must be so strong that it can move the masses, that is, pull new customers over to the product.

"Choosing a Value Positioning Strategy Matrix" The Four Viable Options:

1. Higher Price for More Benefits 2. The Same Price for More Benefits 3. Lower Price for The Same Benefits 4. Much Lower Price for Fewer Benefits

The three analytical tools aiding positioning decisions:

1. Perceptual mapping 2. Gap analysis 3. Hierarchical values analysis

In order to identify new opportunities and strengthen competitive advantage, marketing managers use:

1. Segmentation 2. Targeting 3. Positioning

Three ways that market segmentation benefits companies

1. provides an effective means for reaching customer groups 2.helps in allocating marketing resources 3.indentifies market opportunities for the company

The marketing manager can identify value-positioning alternatives for customers using:

1.Customer benefits 2.Product Price

Good segmentation plans are measurable and identify unique needs. Two ways to Quantify Segments:

1.Divide potential customers into different groups based on age and gender (demographic segmentation). Or divided up into different segments based on where they live (geographic segmentation), their activities and interests (psychographic segmentation), and the benefits they are seeking (behavioral segmentation). 2. Cluster Analysis. Potential customers who are representative of the target market answer survey questions regarding the importance of product prices, benefits, personal values, etc. Marketers then look at the survey responses and use cluster analysis to divide respondents into homogeneous groups. The analysis also allows marketing managers to identify which segment each respondent belongs to. If we assume the sample appropriately represents the market, the proportional size of the segment identified through the cluster analysis can be projected to the market as a whole.

Marketers categorize the bases for segmentation into the following groups:

1.Geographic Segmentation 2.Demographic Segmentation 3.Psychographic Segmentation 4.Behavioral Segmentation

The three groups:

1.Hate 2.Swing 3.Love

Guidance criteria in selecting segments:

1.Market Size Is the market large enough to deliver expected profits for the company? 2.Expected Growth Is the market growing? 3.Competitive Position What is the level of competitive rivalry/intensity in the segment? Is your company's differentiated product valued by the segment? 4.Cost to reach Is the market economically accessible? 5.Maximize Company Profit Is profit being maximized for the company as a whole and for the long term?

The Five Main Characteristics of a Good Segmentation Plan:

1.Measurable 2.Accessible 3.Durable 4.Substantial 5.Meet Unique Needs

A good segmentation plan is...

1.Simple 2.Actionable 3.Can be reached through the company's promotion and distribution channels 4.Can be understood and embraced by everyone

"Choosing a Value Positioning Strategy Matrix" Which three alternatives can be rejected without question?

1.The Same benefits & Higher price 2.Fewer benefits & Higher price 3.Fewer benefits & The Same price

A USP brings a brand's positioning into focus by forcing marketing managers to answer pointed questions.... such as:

1.Who is the customer in terms of their identity and buying situation? 2.How does the product's biggest benefit solve a compelling pain-point that a customer has and/or magnify the enjoyment a customer is getting out of life? 3.Who is the main competitor and what differentiates this product making it unique?

two things that can stimulate interest and growth

1.launching multiple brands into a single premium segment 2.External economic pressures can stimulate interest and growth in a price-sensitive segment

When positioning products, marketing managers make decisions about:

1.product 2.place 3.price 4.promotion, and 5.packaging that establish points of parity with competitive alternatives as well as points of difference.

Segment Profiling

A segment profile may describe the 1.demographic characteristics 2.geographic factors 3.attitudinal scores, and 4.behavioral tendencies of the segment members. The profile delineates the similarities among potential customers within the segment and explains the differences in potential customers between segments.

Segmentation Basis

A segmentation basis, such as importance of specific product benefits, is used to assign potential customers to different segments.

Much Lower Price for Fewer Benefits

Consumers attracted to this value positioning strategy are willing to give up some quality for much lower prices. Ex: Aldi, a discount supermarket, specializes in staple products such as food, beverages, paper products, and inexpensive household products. Customers willingly accept small product assortment and limited service for lower prices. Capsule hotels in Japan offers extremely small rooms, actual capsules (7 feet by 4 feet by 4 feet), stacked side by side and two units high, with communal washrooms at 25% of the cost of a traditional hotel room. Consumers are willing to pay much less for fewer benefits.

Segmentation

Dividing a market into separate groups, so that customers within a group are similar in the way they respond to the marketing effort directed toward them

Deal Shoppers

High brand sensitivity & high price sensitivity (They tend to purchase leading brands at a discount. They will purchase their favorite brand only when it id on promotion) Ex: diapers, hand and body soap, and pet food.

Brand-loyal shoppers

High brand sensitivity & low price sensitivity (They will pay as much as they need to in order to purchase their favorite brands) Ex: toothpaste, cigarettes, coffee, and soda.

What do you do with the "Hate" group?

Ignore

"Measurable"

Individuals can be assigned to a specific segment, and the number of individuals in the segment can be counted.

"Accessible"

Individuals in the segment can be reached through the company's promotion and distribution channels

The Same Price for More Benefits

Japanese auto manufacturers used this value positioning strategy when entering the high-end car market with Accura (Honda), Infiniti (Nissan), and Lexus (Toyota). The vehicles were offered at similar prices as those of US manufacturers, yet claim more benefits.

Price shoppers

Low brand sensitivity & high price sensitivity (They purchase lowest-price products regardless of brand) Ex. plastic food bags, frozen pizza, and detergents.

Convenience Shoppers

Low brand sensitivity & low price sensitivity (They maximize their velocity through shopping environments, buying products without regard to brand or price) Ex. energy drinks, junk food, eggs, dairy products, and over-the-counter medications.

High Price for More Benefits:

Luxury brands focus on this value positioning strategy by offering consumers more benefits than competitors, but also charging higher prices. Often, the price exceeds the incremental product quality, but consumers of these products are buying much more than quality products. They are buying prestige. Ex: Rolls Royce, Rolex, Mont Blanc, and Bottega Veneta

Companies always assume that core customers will stay loyal. Is this always the case?

No! Examples: New Coke, Cadillac

How many segments do great marketing companies often seek to dominate?

Only a few!

"Durable"

Segment membership and size are relatively constant over time

Targeting

Selecting one or more of those groups to sell to

Marketing managers may also target multiple segments in order to cobble together enough sales to make a product profitable. How can they get away with this?

Sometimes, multiple segments share enough characteristics for a single company to have the distinctive competencies, experience, and resources needed to cover them with the same marketing umbrella. In the energy drink market, for example, 5-hour Energy targets busy college students, drowsy office workers, low-energy seniors, and looking-for-an-edge gym rats.

Lower Price for The Same Benefits

Store brands (or private label brands) like Costco's Kirkland brand, Walmart's Great Value brand, and Kroger's Big K brand offer products with national brand quality at store brand prices. Hyundai uses this same value positioning in an attempt to steal market share away from Honda and Toyota. The company promotes Hyundai cars with Honda quality at lower prices.

Positioning

The act of designing the company's product offering so that it occupies a distinct and valued place in the target customers' minds.

Demographic Segmentation

The market is divided based in differences in... 1.Age 2.Gender 3.Income 4.Level of Education 5.Social Class 6.Family Composition 7.Religion, or 8.Ethnicity

Geographic Segmentation

The market is divided based on differences in 1.Geographic regions 2.Population density 3.Population size, or 4.Climate

Psychographic Segmentation

The market is divided based on differences in... 1.Personality 2.Motives, or 3.Lifestyle

Behavioral Segmentation

The market is divided based on differences in... 1.The core benefits customers seek 2.Usage Situations 3.Brand loyalty 4.Usage rates, or 5.Price Sensitivity

"Meet Unique Needs"

The needs of or benefits sought by the segment membership are homogeneous within each segment and heterogeneous across the segments.

Market Segmentation

The process of grouping customers into relatively homogenous sets or groups such that customers within a segment are similar to one another in the way they respond to the marketing efforts directed toward them.

"Substantial"

The segment is large enough to make products profitable.

Brand Loyalty

The situation in which a consumer generally buys the same brand's product repeatedly over time rather than buying from multiple suppliers within the category.

What do you do with the "Love" Group?

These are your "Brand Champions". Don't turn your back on the love group! Understand the benefits to your Love Group and sell to the swing group through the eyes of the love group.

What do you do with the "Swing" Group?

They are your biggest opportunity... Sell to the Swing Group through the eyes of the Love Group.

Customers think in terms of value, aka...

benefits vs. costs. "What are the benefits I receive for the price I pay?"

Digging into the buying situation helps marketing managers understand...

consumer needs, wants, and how to deliver superior value. It helps marketers master the consumption experience.

Each basis for segmentation builds on the phenomenon that...

customers have different levels of senesitivity to changes in the marketing mix (ex: Ford-Price, Miller Lite-calories, Gillette-Gender)

"Choosing a Value Positioning Strategy Matrix" Lower price for more benefits

difficult for companies to sustain in the long-run. offering more benefits costs more profit margins are squeezed or eliminated. Marketers exclude this alternative unless a disruptive technology comes along.

People buy products and pay prices that...

fit the usage situation

Marketing managers seek to select segments that...

maximize overall profits for the company.

"Me too" marketing

paying the same price for the same benefits. does not give consumers a reason to change. should be eliminated.

Good marketing does not aim to change people but

seeks to add value by responding to authentic wants and needs.

Three steps for market segmentation

segment, target, position

Companies building on the same core competencies can...

serve very different segments by introducing new brands with separate personalities and physical locations. Ex: Toyota targets--reliability-minded, cost-conscious customers with the Toyota line of cars and dealerships. Toyota targets, luxury-minded, image-conscious customers with the Lexus line of cars and dealerships. The Marriott Corporation follows a similar approach. Marriott Hotels, Marriott Suites, Courtyard by Marriott, Renaissance Hotels, Fairfield Inn, Residence Inn, SpringHill Suites, Bulgari Hotels & Resorts, and Ritz-Carlton each appeal to different segments of travelers with different brand personalities, price points, and physical locations.

Marketing managers prefer segments showing sign of...

showing signs of growth.

A word of caution: Do not target segments that...

stray from the company's core competencies or confuse core customers. Ex: Pizza Hut should pass on economy Little Caesar-style pizza. McDonald's should pass on adult-oriented In-and-Out Burger-type burgers.

Product Positioning

the act of designing the company's product offering so that it occupies a distinct and valued place in the target customers' minds. It is the heart of marketing strategy.