Chapter 6 Flashcards
(16 cards)
Give and define the 2 activities involved in selecting customers to serve
” creating a value proposition
- Segmentation - Dividing the market into smaller groups of buyers with distinct needs, characteristics or behaviors that might require separate marketing strategies
- Targeting - Evaluating each market segment’s attractiveness and selecting one or more segments to enter
- Differentiation - Differentiating the firm’s market offering to create superior customer value
- Positioning - Arranging for a market offering to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers
Give a larger description of segmentation
Give and define the 4 segmentation methods
Companies divide large, heterogenous markets into smaller segments that can be reached more efficiently and effectively with products/services that match unique needs
- Geographic - Dividing the market into different geographical units such as nations, regions and cities
- Demographic - Divides the market into groups based on age, gender, income, occupation, generation etc
- Psychographic - Divides buyers into different groups based on social class, lifestyle or personality (personality most used by marketers)
- Behavioral - Divides buyers into groups based on their knowledge, attitudes, uses or responses about a product
Which is the most popular segmentation method?
Describe how marketers segment the market by age and life-cycle
” gender (4)
” income (5)
Demographic
By offering different products/use different marketing approaches for different age and life-cycle groups
Used in clothing, cosmetics, toiletries and magazines
Used in automobiles, clothing, cosmetics, financial services and travel
Give and describe the 5 types of behavioral segmentation
- Occasion - Group buyers according to occasions when they get the idea to buy, actually buy or use the product
- Benefit - Group buyers according to the different benefits they seek from the product (attributes vs benefits)
- User Status - Segmenting markets into nonusers, ex-users, potential users, first-time and regular users
- Usage Rate - Group markets into light, medium and heavy product users
- Loyalty Status - Divide buyers into groups according to their degree of loyalty (own, other, switchers)
How else can marketers segment?
Give and define the 5 requirements for effective segmentation
Use multiple segmentation bases (e.g. geodemographic)
- Measurable - The size, purchasing power and profiles of the segments can be measured
- Accessible - The segments can be effectively reached and served
- Substantial - The segments are large or profitable enough to serve
- Differentiable - Segments are conceptually distinguishable and respond differently to different marketing mix elements and programs
- Actionable - Effective programs can be designed for attracting and serving the segments
Which 3 factors should a firm look at when evaluating market segments?
Give 4 points about segment attractiveness
- Segment size and growth
- Segment structural attractiveness
- Company objectives and resources
- A segment is less attractive if it already contains strong and aggressive competitors
- Many actual or potential substitute products may limit prices and profits
- Relative power of buyers also affects segment attractiveness (less buyer power best)
- A segment is less attractive if it contains powerful suppliers who can control prices
Define target market
Give and describe the 4 targeting approaches
Consists of a set of buyers who share common needs or characteristics that the company decides to serve
- Undifferentiated (Mass) - Firms ignore segment differences and target the whole market with one offer - focuses on what is common among consumers
- Differentiated (Segmented) - A firm targets several market segments and designs separate offers for each
- Concentrated (Niche) - Instead of going after a small share of a large market, goes after a large share of one or few smaller segments/niches with specialized needs
- Micromarketing - Tailoring products/programs to suit specific individuals and locations
Give and define the two types of micromarketing
Give 3 drawbacks of local marketing
- Local Marketing - Tailoring brands/promotions to the needs and wants of local customer groups, in cities, neighborhoods and stores
- Individual Marketing - Tailoring products/programs to the needs and preferences of individual customers (e.g. eHarmony)
- Can drive up manufacturing/marketing costs by reducing economies of scale
- Can create logistics problems
- Brand’s overall image might be diluted if product/message vary too much in different localities
Give 5 things choosing a targeting strategy depends on
- Company resources
- Product variability
- Product’s life-cycle stage
- Market variability
- Competitors’ marketing strategies
What is socially responsible marketing?
Give 3 reasons marketing can gain controversy
Socially responsible marketing calls for segmentation and targeting that serve not just the interests of the company, but also the interests of those targeted
- Targeting vulnerable/disadvantaged consumers with controversial or potentially harmful products (e.g. marketing adult products to kids or beer companies targeting Hispanic youth)
- Growth of Internet raised concerns about targeting abuses
- Issue not who is targeted, but how and for what - marketers attempt to profit by unfairly targeting vulnerable segments with questionable products/tactics
Define value proposition
Define positioning
What do perceptual positioning maps show?
How companies create differentiated value for target segs and what position it wants to occupy in segments
The way a product is defined by consumers on important attributes (brand image/perception)
Consumer perceptions of brands vs competing products on important buying dimensions (e.g. price, taste)
Give the 3 steps in differentiation/positioning
What decides whether a company gains competitive advantage?
Which 5 things can a company differentiate?
- Identify a set of differentiating competitive advantages upon which to build a position
- Choosing the right competitive advantages
- Selecting an overall positioning strategy
The extent that a company can differentiate and position itself as providing superior customer value
- Product
- Services
- Channels
- People
- Image
What does USP stand for?
What does Rosser Reeves believe?
What do other marketers believe?
Unique selling proposition
That every company should develop a USP for each brand and stick to it
That companies should position themselves on more than one differentiator
What criteria needs to be established to determine whether a difference/USP is worth establishing? (7)
- Important - Delivers highly valued benefit to target buyers
- Distinctive - Competitors don’t offer the difference or the company can offer it in a more distinctive way
- Superior - Difference is superior to other ways customers might obtain the same benefit
- Communicable - Communicable and visible to buyers
- Preemptive - Competitors can’t easily copy the USP
- Affordable - Buyers can afford to pay for the difference
- Profitable - The company can introduce the difference profitably
What is the full positioning of a brand called?
Give the 4 types of value propositions
What is the ideal value proposition?
Value proposition
- More For More - More benefits for a higher price (Mercedes)
- More For The Same - More benefits for the same price (Target)
- The Same For Less - The same benefits, lower price (Walmart)
- Less For Much Less - Lower benefits/quality, lower price (Spirit Airlines)
More for less
What form should a positioning statement take? (4)
Once a company has chosen a position, what happens next?
Which tool should be used for this?
- To (target segment/need)
- Our (brand)
- Is (concept)
- That (USP/point of difference)
The company takes strong steps to deliver and communicate the desired position to target customers
Marketing mix - support positioning strategy
