chapter 6 Flashcards
(23 cards)
market
market is often identified by type of customers- groups of people or organisations with needs and wants that companies can satisfy by providing products and services
Companies after introducing fast moving consumer goods- soft drinks, candies always keep track of repeat purchases
Durable consumers goods- market analysis is complicated- these are the products that people buy for several years
types of demand
Initial demand- who do not own the product and buy it for the first time Repeat demand- demand for a product by a consumer who has bought that product before
Replacement demand- own the product but buy a new one to replace it
Additional demand- keep the product and purchase another one
Extended demand- the sum of the initial demand plus the additional demand
Total demand- extended demand plus the replacement demand
As long as the initial demand continues to rise, there are plenty of growth opportunities
When the initial demands starts to fall, growth stagnates and the market becomes saturated. At this point we should stimulate both additional demand and replacement demand with a product differentiation or product innovation strategy, in order to increase market share
PEER TO PEER- A platform that enables visitors to link supply and demand. Consumers can buy or borrow products from others through a website or app- example is Vinted
PEER-TO-BUSINESS-TO-PEER- A marketplace where a company acts as an intermediary between two people
BUSINESS TO PEER- A platform for a growing group of companies in the B2C sector that provide consumers access to their products or services- in the same way as the sharing economy
Market segmentation-
involves choosing target groups- teenagers for example and developing marketing programs tailored to their needs and interests
Why is it important?
Markets are heterogeneous in makeup- one consumer reacts differently to advertising campaigns than another
There is competition in the market (important to retain customers)
Segmentation is consistent with the marketing concept (it recognizes the existence of distinct market groups, each with its own set of need and wants)
If a firm did adopt a more market-oriented approach, it was usually through a strategy of product differentiation
To boost sales, it introduced various products that differed in terms of style, quality, price or other attributes. It did not differentiate its products in order to systematically target distinct groups of buyers, but merely reacted to buyers whose tastes were changing or who were, for whatever reasons, seeking some variety in their product use
In deciding whether to adopt a segmentation strategy, most companies examine four criteria:
- The measurability (the firms ability to identity and measure the buyer characteristics that will serve as the basis for segmenting the market (if the company is able to identity different people characteristics such as 0 income, social class, profession)
-The size- a segment must be large enough and have sufficient purchasing power to be potentially profitable and interesting as a target market. Sometimes market segment decrease over the years- counter segmentation the merging of the segments could be a solution
-The accessibility (reaching with focused promotion campaign and through the available distribution channels)
-Feasibility of the segmentation strategy (segment has to be workable- a company must have the necessary resources to tackle the segment it has identified as differentiated markets)
Cannibalism-
occurs when a company loses sales in its established products after introducing a new product, that is seen as a substitute by buyers- this risk may be diminished with a well- planned marketing policy
Different segmentation criterias:
- Demographic
-Geographic
-Psychographic
-Behavioural
- Demographic
(income (it influences buyers wants and his behaviour), social class (for example insecure working class people tend to buy a used car straight from the original owner) age (for example teenagers are heavy users for soft drinks and mobile phones), family life cycle (family situation), race (ethnic patterns))
-Geographic
(climate, culture, degree of urbanisation, city size, population density)- different countries, regions or cities buy different types of products to fulfil the same basic needs
-Psychographic
(personality (all physical, mental and emotional characteristics), lifestyle, benefits (benefits that people seek from the product))
-Behavioural
(usage rate (light, medium, heavy, non-users), brand loyalty, user status (ex-user, potential user, first-time user, regular user), brand loyalty)
Geodemographic segmentation-
based on the principle that people with similar economic and cultural backgrounds and perspectives tend to cluster together
TARGETING-
Assessing the attractiveness of each of the identified segments that meet certain criteria, and selecting one or more of these market segments on which to concentrate when entering the market
Do buyers consider the products or brands on the market as identical (homogenous products) or as being different from one another (heterogeneous products)?
If the products are regarded as heterogeneous and it is possible to identify different market segments on this basis, should we target these segments with just one marketing mix or- in the context of a differentiated strategy- with different marketing propositions?
How many market segments should we focus on and if we have to choose which of the identified segments would be suitable target markets?
POSITIONING-
Finding ways to make the company (or its products) stand out- in the customer’s perception- from competitors
This involves crating a clear, powerful and consistent image for our products- relative to those of competitors- that will occupy a prominent position in the customer’s mind
The battle for the mind:
1) where are we now (SWOT)
2)How do we want to go?
3)how can we get there?
Best way to select a positioning strategy= research and visualization
Perceptual map (product positioning map)= is graph indicating how consumers perceive competing brands in a product category along two or more important dimensions, usually product attributes
A positioning map might for instance present two characteristics:
Price and perceived quality
TARGETING STRATEGIES:
UNDIFFERENTIATED:
CONCENTRATED AND DIFFERENTIATED STRATEGY
TARGET MARKET SELECTION
UNDIFFERENTIATED:
- Mass marketing
-Means you develop a single marketing strategy to reach the entire market
-Appropriate strategy for homogeneous products where buyers are identical
-The most important thing- not the products themselves but how customers perceive them
CONCENTRATED AND DIFFERENTIATED STRATEGY
-Heterogeneous products
-Customers are different from each other, so different market segments
-Concentrated strategy- we confine ourselves to a single marketing mix and use it to target one or just a few segments
- Niche strategy- concentrating on just one market segment
-Differentiated marketing strategy=we try to reach the entire market (or a very large part of it) by developing a unique marketing mix for each segment of the larger population (the products themselves do not necessarily have to be completely different. Often a unique brand personality or positioning strategy will be enough to get customers to perceive them as different
Result= higher sales
TARGET MARKET SELECTION
The segment of buyers that the company selects as its market= target market
In this target market selection process the so-called market grid approach can be useful analytical tool
REPOSITIONING-
changing the position it holds in the mind of prospective buyers in the target market relative to the positions of competing products
Also if the company decides to change its market approach strategy or its choice of target market
It is more difficult and more costly
