BA370: Chapter 9

Values and Lifestyle Survey (VALS)

-the most widely used psychographic segmentation; owned and operated by Strategic Business Insights (SBI) -Examines the intersection of psychology, demographics, & lifestyle -Places individuals into one of the eight groups: Consumers with abundant resources (psychological, emotional, and material means and capabilities) are near the top of the framework and those with minimal resources are at the bottom

lifestyle

-the third component of people's psychographic makeup are the ways we live. -If values provide an end goal, and self-concept is the way we see ourselves in the context of that goal, _________ is how we live our lives to achieve goals.

VALS

-uses an expanded definition of resources to include not just key demographics such as age and income but measures of curiosity, leadership, information seeking, and interest in experimentation -is more useful than demographics alones to predict consumer behavior, especially for not-yet-invented products and services

Identifiable

-who is in their market? -are the segments distinct from one another? -does each segment require a unique marketing mix? All fall under which component of evaluating segment attractiveness?

6 steps of Positioning Using Perceptual Mapping

1. Determine consumers' perceptions and evaluations of the product or service in relation to competitors' product or service 2. Identify the market's ideal points and sizes 3. Identify competitors' positions 4. Determine consumer preferences 5. Select the position 6. Monitor the positioning strategy

All of these are correct

A firm's value proposition communicates the benefits received from the product or service by customers. Therefore, the value proposition provides the customer with which key piece(s) of information? -the price of the good or service -where to buy the good or service -how to use the good or service -reasons to buy the good or service -all of these are correct

to help understand the profile of each segment

After establishing overall objectives, why do marketers then use a particular method or combination thereof to identify and describe market segments? -to validate preconceived notions of each market segment -to eliminate less desirable consumers from the customer base -to articulate the vision of the marketing strategy clearly -to help understand the profile of each segment

Micromarketing or one-to-one

An extreme form of segmentation that tailors a product or service to suit an individual customer's wants or needs -Ex. P&G uses big data gathered from Google searches to target expectant mothers exclusively; when women begin searching for pregnancy-related info, P&G is notified and advertises exclusively and specifically to these women, offering advice on diaper bags, etc.

loyalty segmentation (a component of behavioral segmentation)

Companies today are using _________: strategy of investing in loyalty initiatives to retain the firm's most profitable customers due to the high cost of finding new customers. Ex. buy 10 sandwiches, get the 11th free punch cards (simple); airline miles Ex. Starbucks uses its loyalty programs and mobile apps to enhance value for its customers

primary; achievement; self-expression

Consumers with a __________ ideals motivation are guided by knowledge and principles. Consumers motivated by ___________ looks for products and services that enhance their image of personal success to others. Consumers with a primary motivation of ______________ seek social or physical activity and independence

benefit segmentation

Convenience, economy, prestige, value, quality, price are all components of which segmentation strategy?

1. self-value 2. self-concept 3. lifestyle

Determining psychographics involves knowing and understanding three components:

occasion

Ellie's Deli offers good sandwiches and fast service to its lunchtime customers from a nearby university. It also delivers the same sandwiches packaged with side dishes as part of its catering services. This is an example of ______ segmentation. -demographic -reachable -occasion -loyalty

Substantial

Ex. As China's economy grew, there were not enough middle-class car buyers to push foreign automakers to design an entry-level vehicle. It was only after that number grew dramatically that it became worthwhile for them to market to these identifiable consumers This is an example of which of the 5 components of segment attractiveness?

Differentiated

Ex. Conde Nast has more than 20 niche magazines focused on different aspects of life → Vogue for fashionistas, Bon Appetit for foodies, The New Yorker for literature lovers Ex. Nike makes shoes for segments that include basketball players, football players, and skateboarders Both of these examples exemplify which targeting strategy?

benefit segmentation

Ex. Hollywood / the movie industry: constant practitioner of _____________ segmentation → movies seems to provide the same service (entertainment) but film producers know that people visit the theater or rent films to obtain a vast variety of __________ and market them accordingly → comedies, romantic films, coming of age, feel-good

Demographic segmentation (age)

Ex. Kellogg's uses age segmentation for its breakfast cereals: Lucky Charms and Corn Pops for kids; Crispix, Corn Flakes, and Fiber Plus for adults Is an example of which method of segmentation?

Concentrated

Ex. Newton Running employs a ____________ strategy by focusing on those who want to improve their running form -- not all runners. This is an example of which targeting strategy?

Reachable

Ex. if Victoria's Secret fails to tell women that it is offering some less luxurious, more affordable options, shoppers will walk right past the store and buy basic bras from Macy's. This is an example of which of the 5 components of segment attractiveness?

benefits or lifestyles

Firms often employ a combination of segmentation methods, using demographics and geography to identify and target marketing communications to their customers, then using ___________ or _________ to design the product or service and the substance of the marketing message

By identifying differences across market segments By identifying similarities within market segments

How does developing descriptions of each market segment help firms? (select all that apply) -By determining the most attractive market segments -By identifying differences across market segments -By identifying similarities within market segments -By revealing similarities across market segments

ongoing

In regards to positioning using perceptual mapping, firms must always view the first three steps of the positioning process as ________, with adjustments made in step four as necessary

Demographic segmentation

It May not be useful for defining the target segments for other companies → they are poor predictors of the users of activewear such as jogging suits and athletic shoes. Firms like Nike assumed that activewear would be purchased exclusively by young, active people, but the health and fitness trend has led people of all ages to buy such merchandise bc they are found to be more comfortable than traditional street clothes

profitability

It is useful to evaluate the ____________ of a segment over the lifetime of one of its typical customers. In doing so, marketers consider factors such as how long the customer will remain loyal to the firm, the defection rate (% of customers who switch on a yearly basis), the cost of replacing lost customers (advertising, promotion), etc.

Step 4: Select a Target Market

Key factor of this step of the STP process is the marketer's ability to pursue the market

Profitable

Key factors of this component of segment attractiveness includes: -current market growth rate -future growth rate -market competitveness -market access costs

Value or Value Proposition

__________ is a popular positioning method because the relationship of price to quality is among the most important considerations for consumers when they make a purchase decision. Ex. KIND and PowerBar both offer their respective target markets a good value → KIND bars are made w/ natural ingredients, thus supporting a healthy lifestyle. PowerBars are protein bars designed to improve the performance of athletes

loyal

____________ customers are those who feel so strongly that the firm can meet their relevant needs best that any competitors are virtually excluded from their considerations; these customers buy almost exclusively from the firm. -these customers are the most profitable long term

Segmentation

_____________ strategy must be consistent with and derived from the firm's mission and objectives as well as its current situation → its strengths, weaknesses, opportunities, and threats (SWOT)

Psychographic Segmentation

a method of segmenting customers based on how they spend their time and money, what activities they pursue, and their attitudes and opinions about the world in which they live.

value proposition

communicates the customer benefits to be received from a product or service

Market positioning

defining marketing mix variables so target customers have a clear, distinctive, desirable understanding of what the product does.

Step 4: Determine consumer preferences

determine the ideal product/service that appeals to each market. Ex. Gatorade recognizes a market of consumers who would prefer a less sweet, less calorie-laden drink that offers the same rejuvenating properties as Gatorade. This is which of the 6 steps of positioning using perceptual mapping?

Self-Values

goals for life, not just the goals one wants to accomplish in a day; a component of psychographics that refers to overriding desires that drive how a person lives his or her life. -Ex. the needs for self-respect, self-fulfillment, or a specific sense of belonging

Demographic segmentation

groups consumers according to easily measured, objective characteristics such as age, gender, income, and education

Geographic segmentation

organizes customers into groups on the basis of where they live markets could be grouped by country, region (northeast, southeast), or areas within a region (state, city, zip codes)

Step 1: Determine consumers' perceptions and evaluations of the product or service in relation to competitors' product or service

Marketers determine their brand's position by asking a series of questions about their firm's and competitors' products → ask: how the consumer uses the existing product/service, what items the consumer regards as alternative sources to satisfy his/her needs, what the person likes or dislikes about the brand in relation to competitors, and what might make that person choose one brand over another. This is which of the 6 steps of positioning using perceptual mapping?

self-concept

Marketers often make use of this through communications that show their product being used by groups of laughing people who are having a good time → connotes a lifestyle that many consumers seek

1. Establish strategy or objective 2. Use segmentation methods 3. Evaluate segment attractiveness 4. Select the target market 5. Identify and develop positioning strategy

Name the 5 steps in the segmentation, targeting, and positioning process

1. Establish strategy or objective 2. Use segmentation methods - *Segmentation* - 3. Evaluate segment attractiveness 4. Select the target market - *Targeting* - 5. Identify and develop positioning strategy - *Positioning* -

Of the 5 steps in the segmentation, targeting, and positioning process, which steps identify to segmentation, which to targeting, and which to positioning?

Substantial

Once the firm had identified its potential target markets, it needs to measure their sizes → if a market is too small or its buying power insignificant, it won't generate sufficient profits or be able to support the marketing mix. This is which of the 5 components of segment attractiveness?

demographics and geography

segmenting by ___________ and __________ is easy because information about who the customers are and where they are located is readily available; however, these characteristics don't help marketers determine their customers' needs

psychographics

studies how people self-select; used in segmentation; allows people to describe themselves using those characteristics that help them choose how they occupy their time (behavior) and what underlying psychological reasons determine those choices. Ex. a person might have a strong need for inclusions or belonging which motivates him or her to seek out activities that involve others, which in turn influences the products he or she buys to fit in with the group

third

STP analysis occurs during which step of the marketing planning process? 1. fourth 2. third 3. second 4. first

Symbols

Strong and well-known __________ create a position for the brand that distinguishes it from its competition Ex. Colonel Sanders, Gerber Baby, Tony the Tiger, Nike swoosh, Ralph Lauren Polo player

Value Proposition

Target market, offering name or brand, product/service category or concept, unique point of differences/benefits are all key elements of what?

ideal points

the position at which a particular market segment's ideal product would lie on a perceptual map

Reachable

The consumer must: -know the product exists -understand what it can do -recognize how to buy This exemplifies which component of evaluating segment attractiveness?

Step 4: Select Target Market

The key factor that affects this decision is the marketer's ability to pursue such an opportunity or target segment → assessing both the attractiveness (opportunities and threats based on SWOT and the profitability of the segment) and its own competencies (strengths and weaknesses based on the SWOT). This is what step of the STP process?

Psychographic segmentation

The one method of segmentation that delves into how the consumer actually describes themselves

self-value

The underlying, fundamental, personal need that pushes a person to seek out certain products or brands stems from his or her desire to fulfill a ____________.

demographically

These variables represent the most common means to define segments because they are easy to identify, and ______________ segmented markets are easy to reach.

True

True/False: Depending on the marketing objective, psychographics are not always the most appropriate, nor the most cost-effective method by which to segment consumers.

1. value proposition 2. salient attributes 3. symbols 4. competition

What are the 4 positioning methods that firms use to position products/services?

1. identifiable 2. substantial 3. reachable 4. responsive 5. profitable

What are the 5 components of segment attractiveness? (Step 3: Evaluate Segment Attractiveness)

1. Geographic 2. demographic 3. psychographic 4. benefit 5. behavioral

What are the 5 segmentation methods?

Step 5: Select the position

to appeal to the "less sweet sports drink" target market Gatorade could develop a new product to meet the needs of this market, or could adjust/ reposition its product and promotion, or even ignore what target market 4 really wants and hope that consumer will be attracted to the original Gatorade b/c it is closer to their ideal product than anything else on the market. This exemplifies which of the 6 steps of positioning using perceptual mapping?

Step 3: Identify competitors' position

when the firm understands how its customers view its brand relative to competitors', it must study how those same competitors position themselves. Ex. Powerade positions itself closely to Gatorade → they are often found next to each other on store shelves, are similarly priced, and are viewed as sports drinks. Gatorade also knows that its sports drink is perceived to be more like Powerade than Propel Fitness Water or Coke. This is which of the 6 steps of positioning using perceptual mapping?

1. Undifferentiated or Mass marketing 2. Differentiated 3. Concentrated 4. Micromarketing or one-to-one

Within step 4 (Select a Target Market) of the STP process, what are the 4 main targeting strategies?

self-concept

(aka self-image) is the image people ideally have of themselves; a component of psychographics

Behavioral Segmentation

-A segmentation method that divides customers into groups on the basis of how they use the product or service -occasion and loyalty

Step 1

-Articulate the vision or objectives of the company's marketing strategy clearly is which step of the STP process?

geodemographic segmentation

-Can be particularly useful for retailers because customers typically patronize stores close to their neighborhoods -This type of segmentation is also useful for finding new locations; retailers identify their best locations and determine what types of people live in the area surrounding those stores -Consumers in the same neighborhood tend to buy the same types of cars, appliances, and apparel and shop at the same types of retailers

Competition

-Firms can choose to position their products/services against a specific competitor -Marketers must be careful not to position their product too closely to their competition → McDonald's sues anyone who uses the Mc prefix

Identifiable

-Firms must be able to identify who is within their market to be able to design products or services to meet their needs -It is important that the segments are distinct from one another because too much overlap between segments means that distinct marketing strategies aren't necessary to meet segment member's needs Is which of the 5 components of segment attractiveness?

Salient Attributes

-Focuses on the product attributes that are most important to the target market -Ex. With its all-wheel-drive Quattro, Audi has positioned itself on performance and handling. Subaru positions its all-wheel-drive differently, instead focusing on safety and handling

Responsive

-For a segmentation strategy to be successful, the customers in the segment must react similarly and positively to the firm's offering -If the firm cannot provide products or services to that segment, it should not target it This is which of the 5 components of segment attractiveness?

Profitable

-Marketers must focus their assessments on the _________ of each segment both current and future -Key factors in this analysis includes: market growth (current size and expected growth rate), market competitiveness (number of competitors, entry barriers, product substitutes), and market access (ease of developing or accessing distribution channels and brand familiarity) This is which of the 5 components of segment attractiveness?

Geographic sementation

-Most useful for companies whose products satisfy needs that vary by region. Ex. Safeway and Kroger run similar stores with similar assortments in various locations across the U.S. but within those similar stores, a significant percentage of the assortment of goods will vary by region, city, or even neighborhood, depending on the different needs of the customers who surround each location.

Reachable

-The consumer must know that the product or service exists, understand what it can do for him or her, and recognize how to buy it -The best product or service cannot have any impact, no matter how identifiable or substantial the target market is if that market cannot be _________ (or accessed) through persuasive communications and product distribution This is which of the 5 components of segment attractiveness?

Step 5: Identify and Develop Positioning Strategy

-The positioning strategy can help communicate the firm's or the product's value proposition, which communicates the customers' benefits to be received from a product or service and thereby provides reasons for wanting to purchase it -The 4 main value propositions are (1) Target market, (2) Offering name or brand, (3) Product/service category or concept, and (4) Unique point of difference/benefits Which step of the STP process is this?

self-values

-This motivation causes people to develop self-images of how they want to be and then images of a way of life that will help them arrive at these ultimate goals -help determine the benefits the target market may be looking for from a product → Ex. Sanderson Farms targets consumers whose ____________ prioritize saving money rather than worrying about antibiotic use

Step 2: Use Segmentation Methods

-Use a particular method or combination of methods to segment the market -This step also develops descriptions of the different segments, which helps firms better understand the customer profiles in each segment → this info allows firms to distinguish customer similarities within a segment and dissimilarities across segments

Undifferentiated or Mass marketing

-a marketing strategy a firm can use if the product/service is perceived to provide the same benefits to everyone, with no need to develop separate strategies for different groups -Focuses on similarities in needs of the customers as opposed to differences -Not a common strategy today bc the marketplace is complex, but is used for some basic commodities like sugar or salt

Concentrated (targeting strategy)

-a marketing strategy of selecting a single, primary target market and focusing all energies on providing a product to fit that market's needs -Entrepreneurial start-up ventures often benefit from using this strategy bc it allows them to employ their limited resources more efficiently

Differentiated marketing

-a strategy through which a firm targets several market segments with a different offering for each -Helps diversify the business and therefore lowers the company's overall risk; likely to be more costly for the firm -Firms embrace this strategy bc it helps them obtain a bigger share of the market and increase the market for their product overall

Tapestry Segmentation system

-a widely used tool for geodemographic market segmentation -classifies all U.S residential neighborhoods into 65 distinctive segments based on detailed demographic data and lifestyles of people who live in each U.S. block tract → each block group can then be analyzed and sorted by many characteristics including income, home value, occupation, education, household type, age, etc

Occasion

-behavioral segmentation based on when a product or service is purchased or consumed -Ex. Men's Wearhouse uses this type of segmentation to develop its merchandise selection and its promotions → sometimes men need a suit for their everyday work, but other suits are expressly for special ___________ such as a prom or a wedding -Ex. Snack food companies: make & promote snacks sizes - individual servings of potato chips for a snack on the run but 16-ounce bags for parties

Perceptual map

-displays, in two or more dimensions, the position of products or brands in the consumer's mind

Benefit Segmentation

-groups consumers on the basis of the benefits they derive from products or services. -It is effective and relatively easy to portray a product's or service's benefits in the firm's communication strategies

demographic segmentation

-most common segmentation strategy -easy to identify and easily measured

geodemographic segmentation

-the grouping of consumers on the basis of a combination of geographic, demographic, and lifestyle characteristics. -One very popular mixture of segmentation