Marketing Exam 2

Importance of Market Segmentation: companies

- allows companies to allocate resources more efficiently - helps companies find their niche" and avoid head-on competition

Blue Ocean Strategy

- find a market space where there are no competitors yet - risk may be high (initial investment on product/market development) - return may also be high

Collaborators

- suppliers - marketing intermediaries - final consumer

Brand Positioning

1. Attributes of the product - equality, features, style, design 2. Benefits to the customer - comfort and convenience related to the consumer's needs/wants 3. Beliefs & Values (deeper and more enduring emotional commitments of the brand) - freedom, adventure, and sheer pleasure related to the customer

Modern Marketing System: 5c's

1. Company 2. Consumers 3. Competitors 4. Collaborators 5. Climate

Market Leader Competitive Strategies

1. Expand the total market size 2. Keep existing customers 3. Attract New customers

Maket Nichers Competitive Strategies

1. Focus on a geographic niche 2. Focus on a price niche 3. Focus on a service niche

Market Followers Competitive Strategies

1. Follow the market leader/market challenger at an optimal distance 2. Bring distinctive value to the target customer ** ultimate purpose is to avoid counter-attacks from the market leader/challenger

Market Challengers Competitive Strategies

1. Full frontal attack on competitors strengths 2. Indirect attack on competitors weaknesses

Characteristics of a good USP

1. Important: Consumers in the target segment care about it. 2. Distinctive: It is different from the competitors' selling points. 3. Communicable: It can be easily communicated to consumers in the target segment. 4. Preemptive: Competitors cannot easily copy it. 5. Affordable: Consumers in the target segment can afford it. 6. Profitable: Company can profit from building this USP.

Brand Development

1. Line Extension: develop products of new styles, ingredients, or flavors within the existing product category using the existing brand name 2. Brand Extension: develop products of a new category using the existing brand name 3. Multibrands: develop products of new styles, ingredients, or flavors within the existing product category using a new brand name 4. New Brands: develop products of a new category using a new brand name

Brand Sponsorship

1. Manufacturer-sponsored brand: the manufacturer puts their own brand name on its product - most common 2. Reseller sponsored brand (store brand): the manufacturer lets the resellers put their brand names on its products - more common than before 3. Licensed Brand: The manufacturer pays another brand to put that brand's name/logo on its manufacturer product 4. Co-sponsored Brand: the manufacturer puts its brand name and someone else's brand on its product - most risky

Develop Competitive Strategies depending on the company's competative positions

1. Market leader (with the largest market share) 2. Market challenger (with the 2nd largest market share) 3. Market follower (with the 3rd largest market share) 4. Market nichers (with smaller market shares)

Three methods to collect date

1. Observation: often used for exploratory research objectives 2. Survey: often used for descriptive research objectives 3. Experiment: used for casual research objectives

Decisions for individual products: Step 1 - Product Attributes

1. Product Quality performance: ability to perform the expected functions conformance: the ability to consistently deliver the expected performance 2. Product Features Profitability: namely, the cost for the company to offer a feature - the price customers are willing to pay for this feature feature fatigue 3. Product Style and Design Style: the appearance of a product Design: the heart of a product

How a company chooses a target strategy:

1. Product variability: can the market offer be easily varied for different consumers 2. Market Variability: do different consumers want different versions of the market offering? 2. Social Responsibility: are there underserved consumers?

Two Forms of Data

1. Qualitative: non-numerical (gender, ethnicity, product description, photo, video) 2. Quantitative: numeric data (age, income, product rating, household size)

How to do market Segmentation:

1. Start with one variable for market segmentation - geographic - demographic - behavioral - psychographic 2. Outline all possible values of this variable - Lego use "Age group" as a demographic variable to divide the global market into 6 segments 3. Use a segmentation table to show how this variable divides the large market into multiple smaller and distinct segments 4. Check whether the first variable gives and effective segmentation - measurability: the size and purchasing power - accessibility: at least one segment can be easily reached by the company - substantial: at least on segment is large/profitable enough enough to be worth serving - differentiable; each segment needs/wants a different marketing mix - actionable; the company has the resources and ability to develop a desired marketing mix for at least one segment 5. If the first variable does NOT five an effective segmentation, pick a different variable and repeat steps 1-4 6. If a single variable can NOT give an effective segmentation, pick two variables and repeat steps 2-4

Three levels of product decisions

1. individual product decisions 2. product line decisions 3. product mix decisions

Concentrated (niche ) Marketing

A company focuses on serving one or a few very small segments. Advantages: generally less competition and higher profitability Disadvantages: smaller pie, higher risk, less resistant to a threat ** very common for companies to start with niche marketing and later switch to differentiated or mass marketing**

Undifferentiated (mass) Marketing

A company ignores individual differences and goes after the whole market with the same market offering. Disadvantage: it is difficult to satisfy everyone's needs/wants with the same marketing offer - trying to be good enough for everyone is the best for no one ** not common in modern marketing**

Target Segment Example:

A company may have more than one target segment

Differentiated (segmented) Marketing

A company serves different segments with different market offerings Advantages: it allows a company to capture various types of customers and sometimes even charge a higher price for a differentiated product/service Disadvantages: cost extra money to develop additional products and to promote them - there could be can (one product taking sales from other products)

Direct Marketing Channel

A distribution channel that has NO intermediaries 1. the producer has more control over the marketing and distribution processes 2. the producer has closer contact with final customers (easier to understand needs/wants) 3. the producer can eliminate double margins (no need to give away part of the profits to intermediaries)

Indirect Marketing Channel

A distribution channel that has one or more intermediaries 1. intermediaries help[ the producer reach a broader demographic 2. intermediaries allow the producer to focus on specialization 3. Intermediaries share the distribution cost with the producers

Multi-channel distribution system

A distribution system that consist of two or more distribution channels to reach broader consumers

Market Segmentation: Variable

A feature or factor that has more than on possible value - gender - age

Ethn

A specific form of observational research that involved sending trained observers to watch and interact with consumers in their "natural environments."

Market Segmentation: Distinct

A variable used for market segmentation that has more than one possible value and the values DO NOT overlap

Quota Sampling

After making subgroups, select a prescribed and identical number of people from each group

How to assess which competitors to attack/avoid: Customer Value Analysis

Analysis conducted by a company that determines what attributes customers value and finds a place in the market where the company satisfies their needs/wants in a way that competitors can't 1. Identify major attributes that customers value and the importance customers place on each attribute 2. Compare the company's performance with the competitor's performance on the important attributes

Analyze Competitors: Step 2

Asses the following of each competitor: - objectives - strategies -strengths -weaknesses -reaction patterns

Decisions for individual products: Step 2 - Branding

Benefits of branding for consumers: - brand simplifies buyers decision process (surrogate for quality information) - brand can satisfy the need for status Benefits of branding for manufactures/sellers: - brand serves as a basis of differentiation from the competitors - brand helps foster customer loyalty - brand can reduce the amount of promotion required - each brand name represents a valuable asset (brand equity)

Intermediaries: agent/broker

Both bring the buyer/seller together and assist in the negotiation

Differentiation

Building a unique positioning for the company by making the company's market offerings unique to consumers in the target segment, on one more multiple aspects UNIQUE SELLING POINT (USP): something that helps you stand out - your competative advantage

Demographic force in a climate

Characteristics of a human population in terms of age, family structure, gender ratio, ethnicity distribution, income, population size/education, location, occupation, etc

How to Identify the competitors: MARKET PONT OF VIEW

Competitors are companies that are trying to build relatioonships with the same customer group

How to Identify the competitors: INDUSTRY POINT OF VIEW

Competitors are companies that are trying to sell the same product or class of products

Market POV

Competitors to Halal Shake are other restaurants in the LBC

Industry POV

Competitors to Halal Shake are other restaurants trying to sell bowl Mediterranean food

Competitor Mytopiia

Consider competition from both points oof view and identify direct and less direct competitors

Building a USP

Construct an interpreted marketing plan (4Ps) 1. Product 2. Price 3. Promotion 4. Placement

Cluster Sampling

Divide the total population into smaller groups and then use simple random sampling of a select number of groups

Stratified Sampling

Divide the total population into smaller groups and then use simple random sampling to select a number of members from each group

Economic Force in a climate

Economic situation that affect consumers purchasing power and their spending patterns when the economy is bad, companies may find it easier to sell inexpensive products and difficult yo sell durable products: 1. use careful calculation and logical thinking 2. buying on impulse 3. relying on intuition

Positioning

Efforts made by the company to shape and alter how consumers in this target segment think about the company's market offering concerning attributes that consumers care about

Experimental Research

Gathering primary data by selecting and assigning subjects into multiple groups, giving each group a different treatment, controlling related factors, and checking for differences in group responses 'how does the form of class participation impact class performance" ADVANTAGES: can clearly show whether a certain action X will lead to a certain outcome Y DISADVANTAGES: Experiment must be well designed otherwise it may be hard to tell what actions lead to outcome Y

Analyze Competitors: Step 1

Identify the competitors

Intermediaries

Individuals or businesses that assist in the flow of goods/services from the company to the final consumers

Suppliers

Individuals or businesses that provide goods or services to the company - drive innovation - create healthy competition - opens up more supply channels - empower minority business ownersI

Importance of Market Segmentation: consumers

It helps different consumers get what they need/want - allows companies to understand the different needs/wants of different consumers - allows companies to customize their market offerings to satisfy the different needs/wants of different consumers

Decisions for an individual product: product support services

Keep customers happy after the sale is critical to building long-term relationships (CRM, CLV)

Political-Social force in a climate

Law, government, agencies, or pressure groups that influence or restrict a company's behaviors

Analyzing the Data

Marketing research may convert qualitative data into quantitative data before further analysis

Mixed Methods

Pampers: 10 BILLION in revenue, 12% of P&G's sales 1. Observation: 5 Baby Labs, where they observe how diapers perform when children of different ages crawl/walk 2. Survey: 9,000 interviews with parents each year 3. Experiment: squirting water in different areas of a baby's diaper (in the lab) and seeing how long it takes before they leak

Natural Force in a climate

Physical environment and natural resources that are needed as raw materials or effective marketing strategies wildfires--> storage of lumber--> increased price of mew homes

Marketing Research Process: Step 2: Types of data to collect

Primary Data: information being collected to specifically answer the question at hand (did not exist before research) - What data should be collected, and how should it be collected? Secondary Data: information existing before starting the research that was collected for other purposes (YouTube, articles, etc) - how to analyze

Consumer Products

Products that are purchased for personal use 1. Convenience 2. Shopping 3. Specialty 4. Unsought

Industrial Products

Products that are purchased to be used for business 1. raw materials for manufacturing 2. capital items (long-lived business assets) 3. supplies and services

Marketing Research Process: Step 1: Descriptive

Research objective to describe a problem, situation, or market in an accurate and structured way - findings of descriptive research are usually CONCLUSIVE - may be followed up with casual research if the research team wants to find out the cause of the problem '"Reports indicated a 22% increase in deforestation (of the Amazon rainforest) from the previous year (2020), reaching the highest level since 2006."

Marketing Research Process: Step 1: Exploration

Research objectives and gather preliminary information that helps formulate a question/problem for a clean investigation. - results of exploratory research are usually NOT conclusive - exploratory research is often followed up with descriptive research "How is the Amazon rainforest now?' 'there might be a deforestation problem here.'

Marketing Research Process: Step 1: Casual

Research objectives and test cause-and-effect relationships - used experiments to strictly test cause-and-effect relationships - correlation relationships

Convenience Sampling

Select population members that are easy to obtain information from

Analyze Competitors: Step 3

Select which competitors go attack/avoid

Sampling

Selecting a segment of the whole population to represent the whole population - three "probability sampling" methods - three "non-probability sampling" methods

Intermediaries: Distributor

Serve as the producer's contact point or sales representative in a certain geographical area. - have a close business relationship with the producer - may have an exclusive buyer agreement with the producer ** often actively involved in promoting the product and may even customize the products for customers in a certain geographical area)

Runner-up advantage

Similar to challengers, followers can observe what has made the market leader successful and improve on it

How to asses which competitors to attack/avoid: Are all competitors bad?

Some competitors can be helpful to a company. - Share the cost of market development (triggering customer need/wants) - share the cost of product development (understanding customer needs/wants) - Servee less attractive segments

Marketing Research

Systematic design, collection, analyses, and reporting of data relevant to a specific marketing situation that the company is facing

Micromarketing (individual or local)

Tailors the market offering for each consumer or each local consumer segment 1. mass customization - higher annual margin 2. local marketing Advantages: satisfy each or local segment's needs/wants Disadvantages: - expensive and takes time - different product/price/promotion/location - difficult to maintain a clean and consistent identity

Second Mover Advantage

The challenger can observe what has made the market leader successful and improve on it.

Value Delivery Network

The company, its suppliers, marketing intermediaries, and final consumers work together to deliver value to final consumers

Non-probability sampling

The selection is NOT based on the principle of randomization

How to asses each competitor (continued)

Understand how each competitor would react to our company's marketing activities - if we opened new stores in foreign country X, would each of our competitors do the same? - If we lower our product price, would each competitor do the same?

How to asses each competitor

Understand the relative weights each competitor places on different objectives - making profits - expanding market share - technological leadership - service leadership

Judgment Sampling

Use researcher's own judgment to select population members who are good prospects for accurate information

Market Segmentation

Using one or multiple "variables' to divide a large group of diverse consumers into smaller and distinct groups of consumers

Demographic force in a climate

WHY ARE THE CHARACTERISTICS OF HUMAN POPULATION FORCES ON A COMPANY'S MARKETING STRATEGIES? - Company's market offering should satisfy consumer needs/ wants/ demands and different consumers have different priorities

Positioning Map

a graphical representation of a company/competitor positioning - attributes consumers in the target segment they care about

Target Segment

a group of consumers who has the same value regarding the segmentation variable and who are/will be the most values customer

Brand Name

a word, letter, or group of words or letters that differentiates one seller's goods and services from those of competitors SELECT A UNIQUE NAME AND PROTECT IT

Product

anything that can be offered to a market for attention, acquisition, or consumption and can satisfy a need or want

Decisions for an individual product: packaging

designing and producing the container or wrapper of a products - packaging can contribute to a brands positioning in terms of its values - packaging can also highlight a product attribute - packaging can also impact the products cost and its price

Decisions for an individual product: labeling

designing and putting information on the package - can impact a products sales

Simple Random Sampling

each member of the population has an equal chance of being selected

Intermediaries: Retailer

engage in selling products to final consumers for their personal/non-business use

Intermediaries: Wholesaler

engage primarily in selling products in large quantities to retailers

Cultural force in a climate

forces that affect consumers basic values, perceptions, preferences, and behaviors - cultural shifts may generate new wants

Observational Research

gathering primary data by observing relevant people, actions, and situations - a particular type of observational research: ethnography ADVANTAGES: Can generate new and unexpected insights DISADVANTAGES: - cannot observe some things - often time-consuming, expensive, and includes a small sample of people - interpretation can be a big challenge

Survey Research

gathering primary date by asking people questions about their knowledge (questionnaires, mail, phone, online) ADVANTAGES: - cheap and easy to collect large samples (not for interviews due to price and time0 - easy to interpret the date - highly flexible DISADVANTAGES: - limit the range of answers and miss unexpected insights - participants may not have an answer to a question and rathe say what they think is "right" (not in interviews)

Technological force in a climate

new technologies that create new products or provide new market opportunities (advances camera censors, gps, AI)

Organization, person, places, and ideas

products that aren't tangible goods or services

Brand Equity

the effect of knowing the brand name of a product on a customers evaluation of the product