Flashcards in 3. Understanding Markets & Customers Deck (58):
What is mass marketing and what does it entail?
What is it also known as?
When a company seeks to appeal to the entire market through mass distribution and media
Aka undifferentiated marketing
What is segment marketing?
Where a company targets different subsections and uses different market strategies for different segments depending on their characteristics
What are the two approaches to marketing a product?
What is "targeted communication"?
This is where companies use different advertising styles depending on the target audience
What is "mass communication"?
Where companies use mass media to relay information to large segments of the market at the same time
Give 3 benefits of market segmentation?
Closer matching of customer needs generates more revenue
Customers often stick to familiar brands so are likely to work their way through a product line (depends on income)
It can be profitable to segment even if it is not essential
Give 3 concerns about segmentation?
It is expensive to make different product versions / very specific products
The target audience becomes small relative to that reached by mass marketing
Different versions of a product may eat into sales of the original design - returns to scale lost
Give an example of a segmented market?
The car industry. Cheap, basic cars aimed at low-income HHs, sophisticated expesive car aimed at high income HHs
What are the 3 methods of segmentation?
Explain "geographic segmentation"?
(Give one problem)
Most common method of segmentation
Different locations will have different dominant features
(Problem: there will still be a huge range of human characteristics in any given area)
Explain "demographic segmentation"?
(Give one problem)
Uses demographics such as income, gender and age
Easy to define and measure
(Problem: demographics are descriptive - don't identify individual preferences)
Explain "psychographic segmentation"?
(Give one problem)
Based on activities, interests, opinions and demographics
Uses more detail about customer preferences
(Problem: Expensive / difficult to collect)
What are the 2 stages of segmenting organisational markets?
Macro-segmentation: Identify subgroups within whole market that share common characteristics
Micro-segmentation: Refinement stage where consumers individual characteristics/preferences are determined (more expensive stage)
What are the 4 criteria for successful segmentation?
Distinctiveness - boundaries between segments should not be blurred
Tangibility - The segment must be big enough to make it worthwhile
Accessibility - Distribution/communications must be relatively easy
Defendability - Company/product must be different to gain competitor advantage
What is "targeting"?
The selection of groups that will provide the company with the most profit after segmentation
What are the 3 types of targeting?
Describe "undifferentiated targeting"?
There is one price and one product
The same promotional techniques are applied to the entire market
There is no segmentation - the market is viewed as one homogeneous unit
Describe "differentiated targeting"?
There is a specific mix of products and prices to focus on a few different segments of the market
E.g. Nike sports shoes - football boots, trainings, casual sneakers
Describe "concentrated marketing"?
There is focus on a single segment of the market
Can be very successful but can attract competitors as a result
E.g gluten-free products
What is "positioning"?
When is it decided upon?
How the company chooses a distinctive place in the market for itself and its products
Reflected in the brand image, packaging, quality and communications
Allows the organisation to establish its competitive advantage
Decided upon in the product development stages
What is a perceptual map?
A graphical representation of the products environment. It gives a complete picture of the position of a company and its competitors
What is STP?
Segmentation: Defining different sections of the market
Targeting: Selecting segments
Positioning: Formulation of all marketing mix elements to project the desired message to customers
What is the "Marketing Mix"?
A tactical detail of positioning strategy.
Set of tactics that the company uses to promote the product in the chosen market
What are the 5 major consumer theory disciplines?
Name the three buying situations
Routine problem solving
Limited problem solving
Extended problem solving
Describe "routine problem solving" (the 3 buying situations)?
Decisions are made automatically
Consumer opts for a shop/brand without further consideration
e.g. newspapers, coffee
Describe "limited problem solving" (the 3 buying situations)"?
Occurs when the consumer is less familiar with the product => takes more time to research/decide which product to buy and where
e.g. mobile phones, paint
Describe "extended problem solving" (the 3 buying situations)?
Occurs when the consumer is very unfamiliar with the product
Or the product is an expensive, one-off buy
A lot of time dedicated to research / decision
E.g. house, car, holidays
How to the 3 buying situations differ?
They differ in the involvement (time and intensity) with which they are researched
What is "high involvement"?
Occurs when the product can deeply affect the consumers' welfare.
Product cannot be ignored once bought - mistake would be recognised on a day-to-day basis
What is "low involvement"?
When the product decision is less important
Occurs when the consequences of making a mistake will not have any significant impact of the consumers happines
Outline the 5 stage decision-making process?
1. Need recognition
2. Information search
3. Information evaluation
4. Purchase decision
5. Post-purchase evaluation
Explain the "Need recognition" stage of the D-M process?
Derived from 2 stimuli:
i) Internal (instinctual e.g. hunger)
ii) External (reaction to external environment that triggers the feeling of need e.g. smell)
What are the 3 types of need in the context of the D-M process?
Functional need - product is the answer to a problem
Social need - desire for social recognition / belonging
Need for change - product is bought out of the consumers desire to change
Describe the "Information search" stage of the D-M process?
How is it carried out?
Consumer seeks info about possibilities for fulfilling the need
Carried out in 4 sources:
i) Personal (family/friends)
ii) Commercial (sales people/experts)
iii) Public (advertising/internet)
iv) Experimental (touch, smell etc.)
Describe the "Purchase decision" stage of the D-M process?
Split into 2 sub-stages:
i) Purchase intention (product selected but external factors may cause the consumer to change their mind)
ii) Purchase decision (consumer commits to purchase)
Describe the "post-purchase evaluation" stage of the D-M process?
Occurs after purchase
Consumer compares product performance with their prior expectations of its perceived performance
Cognitive dissonance occurs if the product doesn't match with expectations
Define "cognitive dissonance"?
Mental discomfort caused by holding two or more conflicting beliefs
What are the two important sources of socio-cultural influences on the consumer? What is a third influence?
What is a "reference group" (socio-cultural influences)?
A group that the consumer interacts with in order to form values/attitudes
What are the 3 types of reference group (socio-cultural influences)?
Normative (aids in initial development of behaviour, family)
Comparative (People that the consumer wants to imitate)
Indirect (consumer does not know them personally but knows about them e.g. celebrities)
Explain the concept of "conformity"?
Individuals often alter their behaviour in order to conform to a part of society that appeals to them
Discuss "household influences" (socio-cultural influences)?
HH influence diminishes / changes with age
Changes due to events such as retirement, moving, co-habiting etc.
Define and discuss "culture"?
Sum total of learned beliefs/values/customs that serve to direct consumer behaviour of members of a particular society
Difficult to change
Acts as a major barrier to growing market share
Give 3 ways in which culture is learned?
Formal learning - taught by peers/family
Informal learning - picked up through cultural norms
Technical learning - Instruction by teachers
What are the 5 primary psychological influences on the consumer ?
Describe "innate" and "acquired" needs?
Innate - needed to survive
Acquired - what society has taught us to need
What is "Maslows Hierarchy of Needs" (3 points)?
A comprehensive framework for marketers in developing appropriate advertising. Key to unlocking human motivation.
Facilitates product positioning
Marketers often focus on one need level
Outline the 5 levels of "Maslows hierarchy of needs" (top to bottom)
Self-Actualisation (feeling of fulfilling potential)
Esteem (Status/success e.g. good job)
Social (membership, affection)
Physiological (e.g. hunger)
Describe "Motivation" as a psychological influence?
Motivation compels us to satisfy a need (refer to Maslows Hierarchy of Needs)
Describe "Personality" as a psychological influence?
Reflects individual preferences
Personality is persistent and enduring but can change due to life events
What are the two inputs that form "Perception"?
Physical stimuli - outside environment
Internal stimuli - expectations/motives based on previous experiences
What is "Perceptual Selection"?
How we subconsciously select which stimuli we percieve
What is "Selective Perception"?
How we block out things that we don't need in order to concentrate on things that are relevant
How can "Expectations" affect consumer behaviour?
Consumers will pay attention more if they see something that they don't expect, however marketers should be careful not to distract them from the product
What are the two types of "learning"?
Incidental - consumer comes across information
Intentional - consumer seeks to find it
Explain the 4 elements of "learning"?
Motivation (depends on relevance of info)
Cues (stimuli supporting motives)
Response (reaction to cue)
Reinforcement (increases likelihood that response will happen again)