Chp 6: STP Flashcards
1
Q
what is segmentation key to and example
A
1) Segmentation is key to identifying the right target markets.
2) Example: if you divide market by geographical region but your product targets health and wellness concerns you’ve segmented the market wrong and will likely miss out on sales from customers in geographical areas segmented that you didn’t target.`
2
Q
what happens if you identify wrong target market and example
A
if you identify wrong target market, that will cause issues. Can’t sell health product to those who shop at the dessert aisle.
3
Q
2 steps in segmentation
A
1) establish strategy or objectives
2) segmentation bases (LO1)
4
Q
2 steps in targeting
A
3) evaluate attractiveness of segment (LO2)
4) select target market based on step 3 (LO3)
5
Q
1 step in positioning
A
5) identify and develop positioning strategy (LO4)
6
Q
explain step 1) establish strategy or objectives in segmentation
A
Segmentation strategy must be consistent with and derived from firm’s mission and objectives as well as its current situation (SWOT)
7
Q
LO1: segmentation bases: what does this step involve
A
involves developing descriptions of the different target market segments and their needs, wants, characteristics using variety of segmentation bases
8
Q
LO1: segmentation bases: how does this help firms
A
Helps firms better understand profile of customers in each segment and can distinguish customer similarities and dissimilarities across segments.
9
Q
LO1: segmentation bases: 5 bases for segmenting markets
A
geographic, demographic, psychographic, behavioural or combination
10
Q
LO1: segmentation bases: define geographic segmentation
A
grouping of consumers on the basis of where they live
11
Q
LO1: segmentation bases: geographic segmentation: what does it include
A
Includes grouping by country, region (like western canada), province, city, neighborhood, climate, topography (warm, cold)
12
Q
LO1: segmentation bases: geographic segmentation: when is this most useful
A
Most useful for companies whose products satisfy needs that vary by region
13
Q
LO1: segmentation bases: geographic segmentation:example
A
increase in ethnic foods in loblaws depends on what area the loblaws store is in. For instance, if it is in ethnic portion of toronto like the greek area, there will be more greek food
14
Q
LO1: segmentation bases: define demographic segmentation
A
grouping of consumers according to easily measured, objective characteristics such as age, gender, income and education
15
Q
LO1: segmentation bases: demographic segmentation example
A
froot loops are targeting to children
16
Q
LO1: segmentation bases: demographic segmentation: when is this helpful and example
A
Demographics play important role in how firms market products. Example: tv viewing habits vary for genders, men channel surf and watch prime time shows that action oriented, women view shows they can personally relate to so product targeted to women should be shown in ads between tv shows that cater to women
17
Q
LO1: segmentation bases: demographic segmentation: when is this not helpful
A
Can be poor predictors of users of a product. Firm may assume young people purchase their active wear when it is really purchased by older people.
18
Q
LO1: segmentation bases: define psychographic segmentation
A
segmentation base delves into how consumers describe themselves; allows people to describe themselves by using those characteristics that help them choose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices
19
Q
LO1: segmentation bases: psychographic segmentation: 2 examples
A
health conscious, if consumers are attached to groups that enjoys literary discussions, will seek out products on books
20
Q
LO1: segmentation bases: psychographic segmentation: determining psychographics involves what?
A
involves knowing and understanding 3 components: self-values, self-concept/image, lifestyles
21
Q
LO1: segmentation bases: psychographic segmentation: define self-values
A
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/her life
22
Q
LO1: segmentation bases: psychographic segmentation: 3 examples of self-values
A
self-respect, self-fulfillment, sense of belonging
23
Q
LO1: segmentation bases: psychographic segmentation: how does self-values help marketers
A
For marketing, self-values help determine the benefits the target market may be looking for from a product
24
Q
LO1: segmentation bases: psychographic segmentation: actual example of self-values
A
BMW uses tagline designed for driving pleasure to target these values
25
LO1: segmentation bases: psychographic segmentation: define self-concept/self-image
the image a person has of himself or herself, a component of psychographics
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LO1: segmentation bases: psychographic segmentation: example of self-concept/self-image
person who has goal to belong may see themselves as fun loving people
27
LO1: segmentation bases: psychographic segmentation: 2 points on what marketers should do for self-concept/self-image
1) Marketers can use this to show advertisements of products that connotes a certain lifestyle consumers seek. Example: for fun people, an ad with people laughing and having good time with product
2) These tactics need to balance ideal with realistic. Underwear models need to be realistic otherwise buyers may feel uncomfortable buying product
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LO1: segmentation bases: psychographic segmentation: define lifestyle
how we live our lives to achieve goals
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LO1: segmentation bases: psychographic segmentation: example of lifestyles
Lululemon markets people with balanced, healthy lifestyles
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LO1: segmentation bases: psychographic segmentation: what is a well used tool to support psychographic segmentation
VALS - values and lifestyle survey
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LO1: segmentation bases: psychographic segmentation: define VALS
a psychological tool that classifies consumers into 8 segments: innovators, thinkers, believers, achievers, strivers, experiencers, makers, survivors
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LO1: segmentation bases: psychographic segmentation: explain the 4 upper segments of VALS
have more resources and are more innovative than bottom
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LO1: segmentation bases: psychographic segmentation: 4 upper segments of VALS
innovators, thinkers, achievers, experiencers
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LO1: segmentation bases: psychographic segmentation: 4 lower segments of VALS
believers, makers, strivers, survivors
35
LO1: segmentation bases: psychographic segmentation: vertical dimension of vals and 5 examples
indicates level of resources, including income, education, curiosity, energy level and degree of innovativeness
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LO1: segmentation bases: psychographic segmentation: horizontal dimension of vals
shows segment’s primary psychological motivation
37
LO1: segmentation bases: psychographic segmentation: horizontal segment of vals: 3 motivations
ideals, achievement, self-expression
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LO1: segmentation bases: psychographic segmentation: vals: explain motivated by ideals
thinkers, believers (guided by knowledge and principles)
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LO1: segmentation bases: psychographic segmentation: vals: explain motivated by achievement
achievers, strivers (look for products that demonstrate success to peers)
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LO1: segmentation bases: psychographic segmentation: what does vals enable firms to do
VALS enables firms to identify target segments on the basis of underlying motivations
41
LO1: segmentation bases: psychographic segmentation: explain how psychographic segmentation is often used and why
Psychographics are a more expensive way to identify potential customers so is often used in conjunction with other segmentation methods
42
LO1: segmentation bases: psychographic segmentation: vals: 3 traits of innovators
1) open to new ideas and tech
2) actively seek new info
3) problem-solvers
43
LO1: segmentation bases: psychographic segmentation: vals: 3 traits of thinkers
1) well-educated
2) carefully research and plan before taking action
3) not influenced by latest trends
44
LO1: segmentation bases: psychographic segmentation: vals: 3 traits of believers
1) choose familiar products, established brands
2) predictable, loyal customers
3) value family, religion and community
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LO1: segmentation bases: psychographic segmentation: vals: 3 traits of achievers
1) favour prestige products and conscious of peers
2) embrace tech with productivity benefits
3) deep commitment to career and family
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LO1: segmentation bases: psychographic segmentation: vals: 3 traits of strivers
1) active yet impulsive consumers
2) looking for a better life
3) favour stylish products
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LO1: segmentation bases: psychographic segmentation: vals: 3 traits of experiencers
1) active in sports and social activities
2) keep up with latest fashions
3) seek variety and excitement
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LO1: segmentation bases: psychographic segmentation: vals: 3 traits of makers
1) unimpressed with material possessions
2) suspicious of new ideas
3) protect what they see as theirs
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LO1: segmentation bases: psychographic segmentation: vals: 3 traits of survivors
1) concern for safety and security
2) comfortable with routine and the familiar
3) loyal to favorite brands
50
LO1: segmentation bases: define behavioural segmentation
groups consumers based on benefits they derive from products/services, their usage rate, their loyalty and the occasion
51
LO1: segmentation bases: behavioural segmentation: define occasion segmentation
group consumers based on when they purchase or consume a product/service.
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LO1: segmentation bases: behavioural segmentation: example of occasion segmentation
wedding dresses
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LO1: segmentation bases: behavioural segmentation: define benefit segmentation
groups consumers based on the benefits they derive from products or services
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LO1: segmentation bases: behavioural segmentation: why does benefit segmentation make sense
Since marketing is all about satisfying needs and wants
55
LO1: segmentation bases: behavioural segmentation: example of benefit segmentation
RBC divides consumers into benefits they get from banking with them like wealth preservers and wealth accumulators
56
LO1: segmentation bases: behavioural segmentation: define loyal segmentation
strategy of investing in retention and loyalty initiatives to retain the firm’s most profitable customers
57
LO1: segmentation bases: behavioural segmentation: example of loyal segmentation
digital loyalty programs that targets and rewards customers with offers tied to specific needs
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LO1: segmentation bases: behavioural segmentation: define usage rate
how often a person uses the product or service
59
LO1: segmentation bases: behavioural segmentation:4 categories of usage rate
occasional, light, regular, heavy users
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LO1: segmentation bases: behavioural segmentation: 2 examples of usage rates
1) Example; fast food restaurants use coupons to entice customers who have never visited before
2) Example: airlines pamper frequent fliers by giving them things like priority seating, boarding etc
61
LO1: segmentation bases: pros and cons of segmenting by demographics and geography
Segmenting by demographics and geography is easy because info about who customers are and where they are located is readily available but these characteristics don’t help marketers determine customer needs
62
LO1: segmentation bases: define geodemographic segmentation
the grouping of consumers on the basis of a combination of geographic, demographic and lifestyle characteristics
63
LO1: segmentation bases: define PSYTE clusters
grouping of all neighborhoods in canada into 60 different lifestyle clusters
64
LO1: segmentation bases:2 ways to use multiple segmentation methods
1) geodemographic segmentation
| 2) PSYTE clusters
65
LO1: segmentation bases: 2 ways PSYTE helps firms
1) Consumers in same neighborhood tend to buy same type of goods and respond similarly to promotions and tend to visit stores close to their neighborhood
2) For a less affluent neighborhood, marketers may want to adjust products to cheaper products
66
LO2: evaluate attractiveness of segment: 4 things marketers must determine
To evaluate segment attractiveness, marketers must determine if segment is identifiable, reachable, responsive, substantial and profitable
67
LO2: evaluate attractiveness of segment: 2 things firms must ensure with identifiable
1) Firms must determine who is within their market to be able to design products to meet their needs
2) Need to ensure segments are distinct from one another because too much overlap means that distinct marketing strategies aren’t necessary to meet segment member’s needs
68
LO2: evaluate attractiveness of segment: example of identifiable
the gap identified that that one of its core segments is children so it developed gapkids
69
LO2: evaluate attractiveness of segment: 2 points to reachable
1) Products do not have impact if that market cannot be reached through persuasive communications and product distribution
2) Consumers must know product exists, understand what it can do for them and recognize how to buy it
70
LO2: evaluate attractiveness of segment: 1 point to responsive
For segmentation strategy to be successful, customers in segment must react similarly and positively to firm’s offerings. If market will not be responsive to product, firm should drop product.
71
LO2: evaluate attractiveness of segment: example of responsive
lasenza shouldn’t offer formal dresses because that’s not their reputation in eyes of consumers
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LO2: evaluate attractiveness of segment: 2 points to substantial and profitable
1) Firm needs to measure target market’s size and growth potential
2) If market is too small or buying power is insignificant, it won’t generate sufficient profits or be able to support marketing mix activities
73
LO2: evaluate attractiveness of segment: substantial and profitable: 3 things firms need to pay attention to when analyzing potential profitability
1) market growth
2) market competitiveness(# of competitors, entry barriers, product substitutes)
3) market access (ease of accessing distribution channels, brand familiarity)
74
LO2: evaluate attractiveness of segment: substantial and profitable: formula for segment profitability
(segment size * segment adoption % * purchase behaviour * profit margin %) - fixed costs
75
LO2: evaluate attractiveness of segment: substantial and profitable: formula for segment size
of people in segment
76
LO2: evaluate attractiveness of segment: substantial and profitable: formula for segment adoption %
% of customers in segment who are likely to adopt product
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LO2: evaluate attractiveness of segment: substantial and profitable: formula for purchase behaviour
purchase price * # of times customer would buy product during given time period
78
LO2: evaluate attractiveness of segment: substantial and profitable: formula for profit margin %
(selling price - variable costs) / selling price
79
LO2: evaluate attractiveness of segment: substantial and profitable: 4 things firms must pay attention to in determining CLV
1) how long customer will remain loyal to firm
2) defection rate (% of customer who switch on yearly basis)
3) costs of replacing lost customers (ads, promotion)
4) whether customers will buy more or more expensive gods in future
80
LO3: select target market: what is firm likely to assess when selecting target marketing (3 things)
1) attractiveness of opportunity (including O, T in SWOT)
2) its own competencies (S, W in SWOT)
3) its ability to pursue such opportunity or target segment
81
LO3: select target market: 4 targeting strategies
1) mass or undifferentiated
2) differentiated
3) concentrated/niche
4) micromarketing (one to one)
82
LO3: select target market: define undifferentiated targeting strategy (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
83
LO3: select target market: undifferentiated targeting strategy (mass marketing): when is this strategy helpful
When everyone is considered a potential user of its product, often effective for basic items like salt, sugar and for small firms that offer products consumers perceive to be indistinguishable like neighborhood bakery
84
LO3: select target market: undifferentiated targeting strategy (mass marketing): why and how are firms moving away from this strategy
by distinguishing themselves and making commodity like products appear special, they add value for the customer and differentiate themselves from competition
85
LO3: select target market: define differentiated targeting strategy
a strategy through which firm targets several market segments with a different offering for each
86
LO3: select target market:differentiated targeting strategy: example
Ex. Gap targets kids with Gapkids, and babies with Gapbabies
87
LO3: select target market:differentiated targeting strategy: 2 pros of this strategy
1) Firms use this strategy because it helps them obtain a bigger share of the market and increase the market for their products overall.
2) Providing products that appeal to multiple segments helps diversify the business, thereby lowering the company’s overall risk (if a line directed towards one segment is doing poorly, the impact on profits can be offset by revenue from another line to another segment that is doing well)
88
LO3: select target market:differentiated targeting strategy: con of this strategy
can be expensive as firm must develop and promote products separately for each store concept
89
LO3: select target market: define concentrated/niche 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
90
LO3: select target market: concentrated/niche strategy: who benefits from this strategy
Entrepreneurial start up ventures often benefit from this strategy as it allows them to employ their limited resources more efficiently
91
LO3: select target market: concentrated/niche strategy: example
newton running concentrated targeting strategy on runners who prefer to land on forefeet while running
92
LO3: select target market: define micromarketing (one to one)
an extreme form of segmentation that tailors a product/service to suit an individual customer’s needs or wants
93
LO3: select target market: micromarketing (one to one): example
build a bear workshop or suit makers
94
LO3: select target market: micromarketing (one to one): define mass customization
practice of interacting on a one-to one basis with many people to create custom made product/services; providing one to one marketing to the masses
95
LO3: select target market: micromarketing (one to one): what facilitates this strategy and how
Internet facilitates this strategy - companies can cater to very small segments efficiently and inexpensively. The internet also simplifies customer identification, cookies provide unique identification of each potential customer who visits site and details how customer searched site. Marketers can use this to make recommendations to customers
96
LO3: select target market: what does targeting strategy depend on
depends on balance the firm wants to achieve between added perceived customer value that segmentation can offer and its cost
97
LO4: identify & developing positioning strategy: define positioning
the mental picture that people have about a company and its products relative to competitors
98
LO4: identify & developing positioning strategy: what can positioning strategy help with
Positioning strategy can help communicate firm’s or product’s value proposition
99
LO4: identify & developing positioning strategy: define value proposition
communicates the customer benefits to be received from product or service and the reason for wanting to buy it
100
LO4: identify & developing positioning strategy:what does effective positioning require
requires that marketers shape customers thinking and feelings but also evolve these feelings as they reposition their products and brands to keep up with dynamic marketplace
101
LO4: identify & developing positioning strategy: define positioning statement
expresses how a company wants to be perceived by consumers
102
LO4: identify & developing positioning strategy: how are positioning strategies realized
realized by communicating position statement and particular messages in persuasive communication through different media
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LO4: identify & developing positioning strategy: 4 elements of positioning statement
1) target market
2) offering name or brand
3) product/service category or concept
4) unique point of difference/benefits
104
LO4: identify & developing positioning strategy: example of positioning statement
for [target market], [brand] is the [product category] that represents [x] and unlike [x]..
105
LO4: identify & developing positioning strategy: 5 positioning methods
1) value
2) product attributes
3) benefits & symbolism
4) competition
5) market leadership
106
LO4: identify & developing positioning strategy: points to value
Popular because relationship of price to quality is among the most important considerations for consumers when they make a purchase decision
107
LO4: identify & developing positioning strategy: example of value method
department stores like target claim they are offering the same value for much less money
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LO4: identify & developing positioning strategy: 2 points to product attributes method
1) Focus on attributes that are important to target market
2) Positioning strategies focused on product attributes tend to focus on product leadership, emphasizing dimensions like innovation, quality, performance, design, reliability
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LO4: identify & developing positioning strategy: example of product attributes method
volvo positioned for safety conscious driver
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LO4: identify & developing positioning strategy: 2 points to benefits and symbolism method
1) Emphasizes benefits of brand and the psychological meaning of brand to consumers
2) Symbols are so strong and well known so it creates a position for the brand that distinguishes it from competition
111
LO4: identify & developing positioning strategy: example of benefits and symbolism method
lululemon is the ultimate destination for energy, healthy, fun lifestyle apple symbol
112
LO4: identify & developing positioning strategy: 2 points on competition method
1) Position products head to head against specific competitor or entire product classification on similar attributes within target market
2) Must be careful marketers don’t position products too closely to their competition because they risk confusing customers or facing legal challenges
113
LO4: identify & developing positioning strategy: example of competition method
avis positioned itself as “we try harder”
114
LO4: identify & developing positioning strategy: point to market leadership method
Companies, especially market leaders, may emphasize their leadership position within their industry
115
LO4: identify & developing positioning strategy: example of market leadership method
amazon is leader and so consumers perceive them as setting the standards of their industry
116
LO4: define perceptual map
displays, in 2+ dimensions the positions of products or brands in consumers mind
117
LO4:example of axes on perceptual map
on vertical axes we may have sweet vs light taste, on horizontal we may have less natural vs healthy
118
LO4: perceptual map: explain the layout
Position of each brand denoted by circle and numbered circles denote the consumer's ideal point, the larger the numbered circle, the larger the market size.
119
LO4: define ideal point
the position at which a particular market segment’s ideal product would lie on a perceptual map
120
LO4: 6 steps to create perceptual map
1) determine consumers perceptions and evaluation of firm’s product/service in relation to competitors
2) identify market’s ideal points and size
3) identify competitors position
4) determine consumer preferences
5) select the position
6) monitor positioning strategy
121
LO4: explain step 1 of perceptual map:determine consumers perceptions and evaluation of firm’s product/service in relation to competitors
Can ask consumers questions about their and competition products, like what they like/dislike, why they would choose one brand over another
122
LO4: 2 points to step 2 of perceptual map: identify market’s ideal points and size
1) Ideal circle 1 would represent the largest circle and it is the largest market so if firm does not have product positioned close to this point, it should consider it
2) For smallest markets, with relatively small customers, firms might want to consider a niche rather than a mass market strategy for this group
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LO4: point to step 3 of perceptual map: identify competitors position
Firm can identify which competitor’s products are likely to be perceived, similarly priced, and found next to each other on store shelves as their own
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LO4: 2 points to step 4 of perceptual map: determine consumer preferences
1) Determine ideal product or service that appeals to each market
2) If there is no ideal product currently on market for that target market, consider selling it
125
LO4: 1 point to step 5 of perceptual map: select the position
To appeal to another market, firm could develop new product, adjust or reposition its marketing approach to sell product to that market, or ignore that that market really wants and hope consumers will be attracted to original product because it is closer to ideal product than anything else on market
126
LO4: 1 point to step 6 of perceptual map: monitor positioning strategy
Consumers taste shifts and competitors react to those shifts so adjustments to positioning strategy may be necessary
127
LO4: repositioning: example of repositioning
Early on tiffany was known for luxury jewelry, but then it repositioned itself to more affordable jewelry to appeal to middle class
128
LO4: repositioning: why should firms reposition
Companies should reposition brands to keep up with changes in marketplace or to put fresh spin on stale brand
129
LO4: repositioning: define brand repositioning (rebranding)
strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences
130
LO4: repositioning: cons of repositioning
Firms often need to spend lots of money to make changes to product and brand image through promotion. These costs may not be recovered if repositioned brand and messages are not credible to the consumer or if firm has mistaken a fad for long term market trend
