Chapter 6 Marketing

What must the marketing mix efforts do with the positioning strategy

all the company's marketing mix efforts must support the positioning strategy.

Income segmentation

dividing a market into different income segments, e.g., dollar tree vs. target.

Gender segmentation

dividing a market into different segments based on gender, e.g., cosmetics, clothing, toys

Demographic segmentation

dividing a market into segments based on variables such as age, life-cycle stage, gender, income

Example of positioning statement

evernote positioning statement, "To busy multitaskers who need help remembering things, Evernote is a digital content management application that makes it easy to capture and remember moments and ideas from your everyday life using your computer, phone, tablet, and the Web."

Channel differentiation

firms that practice channel differentiation gain competitive advantage through the way they design their channel's coverage, expertise, and performance.

(segmenting international markets) variables include ( a combination of these may be used)

geographic location, economic factors, political and legal factors, cultural factors

Value proposition (the same for less)

gives a good deal

Segmentation bases help companies to

identify smaller, better-defined target groups. Identify and understand key customer segments. Reach customers more efficiently by tailoring market offerings and messages to customers' specific needs.

Value proposition (less for much less)

meeting consumers' lower performance or quality requirements at a lower price

Undifferentiated (or mass marketing)

refers to a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.

Differentiated (or segmented marketing)

refers to a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.

Concentrated (or niche marketing)

refers to a market-coverage strategy in which a firm goes after a large share of one or a few smaller segments or niches.

How do segmentation systems help marketers

segmentation systems help marketers segment people and locations into marketable groups of like-minded consumers and tailor market offerings and msg to their specific needs.

Creating value for targeted customers involves

segmentation, targeting, differentiation, positioning

Occasion segmentation

segments divide according to occasions, when the buyers, get the idea to buy, make their purchases, use the purchased item (e.g. orange juice in the morning plus as a cool, healthful refresher at other times of the day).

Benefit segmentation

segments divided according to the different benefits that consumers seek from the product. (e.g., diff users of Fitbit (there's a Fitbit for everyone!) or Apple Watch see the product's use differently)

Superior

the difference is superior to other ways that customers might obtain the same benefit

How can firms do efficient market targeting

the firm must evaluate the various segments and decide how many and which segments it can service best.

Accessible

the market segments must be accessible - effectively reached and served.

The differentiation and positioning task consists of three steps

(1) identifying a set of differentiating competitive advantages (2) choosing the right competitive advantages (3) selecting an overall positioning strategy. (The company must then effectively communicate and deliver the chosen position to the market)

Number of differences to promote

(1) many marketers think that companies should aggressively promote only one benefit to the target market. (2) other marketers think that companies should position themselves on more than one differentiator.

Example of product position

Sonos does more than just sell speakers; it unleashes "All the music on earth, in every room of your house, wirelessly."

Requirements for effective segmentation

measurable, accessible, substantial, differentiable, actionable

Consumer and business markets use many of the ____ variables for segmentation

same

Profitable

the company can introduce the difference profitably

Why marketing position must be monitored

the product's position should be monitored and adapted over time, i.e., the concept is dynamic

Competitors' marketing strategies

what are they doing?

Competitive advantage

An advantage over competitors gained by offering greater customer value either by (1) having low prices, (2) providing more benefits that justify higher prices.

Unique selling proposition (USP)

Developing a unique selling proposition (USP) for each brand and sticking to it, i.e., pick an attribute and tout itself as "number one" on that attribute

Which differences to promote

Each brand difference has the potential to create company costs as well as customer benefits.

Example of multiple segmentation

Experian's Mosaic USA system classifies U.S. households into one of 71 lifestyle segments and 19 levels of affluence, based on specific consumer demographics, interests, behaviors, and passions.

Usage rate

Markets can be segmented into light, medium, and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of total consumption.

Example of target market

P&G markets multiple laundry detergent brands and then further segments each brand to service even narrower niches.

Example of segmentation variable, demographic

age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, generation

Example of individual marketing

at mymms.com you can order a batch of M&Ms with your face and personal message printed on each little candy.

Product's life-cycle stage

beginning or mature or end of life of the product?

Many marketers believe that ________ ___________ are the best starting point for building market segments

behavior variables

Value proposition (more for less)

best winning proposition

How can business buyers be segmented

business buyers can be segmented geographically, demographically (industry, company size), or by benefits sought, user status, usage rate, and loyalty status.

Affordable

buyers can afford to pay for the difference

Image differentiation

buyers may perceive a difference based on company or brand image differentiation - offers may look same but image differs.

People differentiation

companies can also gain a strong competitive advantage through people differentiation that is, hiring and training better people than their competitors

Choosing a targeting strategy

companies need to consider many factors when choosing a market-targeting strategy. Which strategy is best depends on, i.e., factors include, company resources, product variability, product's life-cycle stage, market variability, competitors' marketing strategies

What do companies find easier when developing a positioning strategy

companies often find it easier to come up with a good positioning strategy than to implement it, mainly due to a lack of integrated marketing approach (in strategic planning).

Preemptive

competitors cannot easily copy the difference

Distinctive

competitors do not offer the difference, or the company can offer it in a more distinctive way

Targeting narrowly strategies

concentrated (niche) marketing, micromarketing (local or individual marketing)

Positioning

consists of arranging for a market offering to occupy a clear, distinctive, and desirable place, relative to competing products in the minds of target consumers.

Marketing targeting (or targeting)

consists of evaluating each market segment's attractiveness and selecting one or more market segments to enter.

Loyalty status

consumers can be loyal to brands, stores, and companies. Highly loyal customers promote the brand through personal word of mouth and social media. The opposite is true as well!

When do controversies arise with target marketing

controversies arise when marketers attempt to profit at the expense of targeted segments - when they unfairly target vulnerable segments or target them with questionable products or tactics.

Age and life-segmentation

dividing a market into different age and life-cycle groups, e.g., luncheables for teens

Geographic segmentation

dividing a market into different geographical units

Intermarket (cross-market) segmentation

grouping consumers with similar needs and buying behaviors irrespective of their location.

Value proposition (more for the same)

high quality at lower prices

A difference is worth establishing to the extent that it satisfies the criteria of being

important, distinctive, superior, communicable, preemptive, affordable, profitable

Product variability

lots of variation? Then differentiated strategy may work best

What do marketers often use multiple segmentation bases to identify

marketers often use multiple segmentation bases to identify smaller, better-defined target groups.

User status

markets can be segmented into nonusers, ex-users, potential users, first-time users, and regular users. Marketers want to reinforce and retain regular users, attract targeted nonusers, and reinvigorate relationships with ex-users. Included in the potential users' group are consumers facing life-stage changes that can be turned into heavy users.

Example of segmentation variable, behavioral

occasions, benefits, user status, usage rate, loyalty status

What must companies do after they have built their desired position

once desired position is built, it must maintain the position obtained through consistent performance and communication.

What must a company do after taking a position with their positioning statement

once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to its target consumers.

Variables used by business marketers for segmentation include

operating characteristics, purchasing approaches, situational factors, and personal characteristics.

Firms can differentiate in terms of

product, services, channels, people, or image

Value proposition (more for more)

provides the most upscale product or service

People in the same demographic group can have very different ________ characteristics

psychographic

In evaluating different market segments, a firm must look at

segment size and growth, segment structural attractiveness (i.e., competition), company objectives and resources

Select customers to serve involves

segmentation and targeting

Target market

set of buyers sharing common needs or characteristics that the company decides to serve. This is how a market selects target market segments.

Example of segmentation variable, psychographic

social class, lifestyle, personality

Marketers segment their markets using variables such as

social class, lifestyle, personality characteristics

What does socially responsible target marketing accomplish

socially responsible target marketing should be done to serge both the interests of the company and the interests of those targeted.

Services differentiation

some companies gain services differentiation through speedy convenient service

Positioning statement

summarizes company or brand positioning. E.g. in case of Evernote, the brand's superiority is made on its points of difference to competitors in the same product category

Important

the difference delivers a highly valued benefit to target buyers

Communicable

the difference is communicable and visible to buyers

Substantial

the market segments should be substantial - large or profitable enough to serve.

Actionable

the segments should be actionable, which means that effective programs can be designed for attracting and serving the segments.

Differentiable

the segments should be differentiable, which means they are conceptually distinguishable and respond differently to different marketing mix elements and programs.

Product differentiation

through product differentiation, brands can be differentiated on features, performance, or style and design.

Format of a positioning statement

to (target segment and need) our (brand) is (concept) that (point of difference).

Measurable

to be useful, the size, purchasing power, and profiles of market segments should be measurable.

How do marketers find points of differentiation

to find points of differentiation, marketers must think through the customer's entire experience with the company's product or service.

Why is it important for marketers to differentiate themselves

today, in a time when the mass market is fragmenting into many small segments, companies and brands are trying to broaden their positioning strategies to appeal to more segments.

Targeting broadly strategies

undifferentiated (mass) marketing, differentiated (segmented) marketing

What are the different market targeting strategies

undifferentiated (or mass marketing), differentiated (or segmented marketing), concentrated (or niche marketing), micromarketing

How is value proposition formed

value proposition is formed via differentiation and positioning.

After deciding which segments a company should target, a company must decide on a

value proposition, how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments.

What are some controversy and concerns over target marketing

vulnerable or disadvantaged consumers are targeted with controversial or potentially harmful products. (e.g., vaping attracted teens).

Differentiation

involves actually differentiating the firm's market offering to create superior customer value.

Market segmentation

involves dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes.

Micromarketing

is the practice of tailoring products and marketing programs to suit the taste of specific individuals and locations.

Product position

is the way a product is defined by consumers on important attributes - the place the product occupies in consumers' minds (mind-space) relative to competing products.

The products people buy reflect their

lifestyles

Company resources

limited? Then concentrated strategy may be best

Example of segmentation variable, geographic

nations, regions, states, counties, cities, neighborhoods, population density (urban, suburban, rural), climate

Market variability

no variation? Mass marketing may be appropriate