What is Market Segmentation?
Involves aggregating prospective buyers into groups or segments that have a common need and will respond to marketing actions similarly
What is Product Differentiation?
A marketing strategy that involves a firm using different marketing mix actions to help consumers perceive the product as being different and better than comptetitors
What is a Market-Product Grid?
A framework to relate the market segments of potential buyers to products offered or potential marketing actions
What is Organizational Synergy?
The "increased customer value" achieved through performing org. functions such as marketing or manufacturing more efficiently
What is Cannibalization?
When an org. adds a new product or new chain of stores, the market segment trade off steals customers from its older ones
What are the 5 key steps in segmenting and targeting a market?
1) Group potential buyers in segments
2) Group products to be sold into categories
3) Develop a market-product grid and estimate the size of the market
4) Select the target markets
5) Take marketing actions to reach the target market
What are criteria in forming segments?
1) Simplicity and cost effectiveness of assigning potential buyers to segments
2) Potential for increased profits
3) Similarity of needs and potential buyers within a segment
4) Different needs of buyers among segments
5) Potential of marketing action to
What are ways to segment to consumer markets?
1) Geographic (region, city size, density, etc)
2) Demographic (age, gender, race, etc)
3) Psychographic (personality, values, needs, etc)
4) Behavioral (user status, usage rate, etc)
What is Usage Rate?
The quantity used or patronage during a specific period of time
What is the 80/20 rule?
80% of a firms sales come from 20% of the firms customers
What are ways to segment to business markets?
1) Geographic (region, country, etc)
2) Demographic (NAICS code, # of employees, etc)
3) Behavioral (# of locations, kind, application, etc)
What are the two ways to group products?
1) By individual products- Specific groups target specific market segments
2) By groups of products- Grouping like products together for a specific market segment
What are criteria used in selecting target segments?
1) Market size
2) Expected growth
3) Competitive position
4) Cost of reaching the target
5) Compatibility with the orgs. objectives and resources
What is Product Positioning?
The place that a product occupies in the consumers mind based on important attributes compared to a competitive product
What is Product Repositioning?
Changing the place a product occupies in a consumers mind compared to competitive products
What are two approaches to Product Positioning?
1) Head to Head Positioning
2) Differentiation Positioning
What is Head to Head Positioning?
Competing directly with competitors on similar product attributes in the same target market
What is Differentiation Positioning?
Seeking a less competitive, smaller niche market to locate a brand
What are the 4 steps for Product Positioning using Perceptual Maps?
1) Identify the important attributes for a product or brand class
2) Discover how the target customers rate competing products or brands with respect to these attributes
3) Discover where the competitors product or brand is on these attributes in the mind
What is a Perceptual Map?
A means of displaying in 2 dimensions the location of products or brands in the minds of consumers to enable a manager to see how they perceive competing productes or brands, as well as the firms own product or brand
What are the axes on a Perceptual Map?
Key attributes or buying criteria of a product
What is a Market?
A group of people with a need or desire for a product in a specific product category, the ability to buy the product, and the willingness to buy the product
What are the two types of Markets?
1) Consumer Markets
- Individuals/household members
- Buy for personal consumption
2) Business Markets
- Individuals/organizations that buy products for resale, direct use to produce other products, or use in daily business operations
- Categorized as pro
What are typical Targeting Strategies?
1) One product to one market (uncommon today)
2) One product to multiple markets (Harry Potter books)
3) Multiple products to multiple markets (Ford)
4) "Segments of one" (Mass-customization)
What are Market Segment Profiles?
They describe the similarities among potential customers within a segement
What creates a new segment?
If ANY SINGLE element of the marketing mix changes, it creates a new segment
What is a Positioning Statement?
A succinct description of the core target audience to whom a brand is directed
What is a Target Audience?
The potential customers that you are trying to market to
What is the Frame of Reference?
The category in which a brand competes
What is the Benefit/Point of Difference?
The most compelling benefit the brand can own in the hearts and minds of the target relative to the competition
What is Product Modification?
A change in one or more characteristics of the product and the elimination of the original product from the product line
What is Continuous Innovation?
- The most common form of innovation
- Change is minimal
- Mostly in the form of line extensions, or product modifications
What is a Line Extension?
Adding a product that is closely related to existing products in the line but meets different customer needs
What is a Quality Modification?
A change related to a products dependability, durability, etc
What is a Functional Modification?
A change that affects a products function
What is an Aesthetic Modification?
A change to the sensory appeal of a product
What is a Discontinuous Innovation?
- Creates MAJOR changes in the way we live
- Consumers must engage in a great deal of new learning
- Far more difficult to market
What is Dynamically Continuous Innovation?
-Disrupts the consumers normal routine but does not require totally new learning
What are the unique characteristics of Services?
- Intangible
- Inseparable
- Inventory (Perish-ability)
- Inconsistent (Variability)
What does Inseparability mean in terms of Services?
The service is produced and consumed simultaneously
What does Inventory mean in terms of Services?
Many unused services cant be used at future times because they are "perishable
What does Idle Capacity mean?
Capacity is available because there is no demand
What does Inconsistency mean in terms of Services?
There is variation in quality from one purchase to the next because the service providers are different people and have different skill levels