Marketing Test 3

what does market segmentation mean?

aggregating buyers into groups that have common needs and will respond similarly to marketing action

what are market segments?

groups of relatively homogeneous consumers drawn from the heterogeneous marketplace.

what is product differentiation

the strategy of creating real or perceived differences between your product and the competitor’s

when do you segment markets

• when there is one product with multiple market segments (like a mini fridge that appeals to multiple types of people)

• when there is multiple products and multiple market segments (Like Honda with several different vehicles that appeal to many different consumers)

• when you have “segments of one” AKA mass customization (personalized stuff)

what are the criteria to use in forming segments

• similarity of needs of buyers in a segment

• difference of needs of buyers between segments

• the potential of a marketing action to reach a segment

• simplicity of cost of assigning buyers to segments

The segment must be identifiable and reachable!

bases for segmentation for consumer markets

• geographic

• demographic (race/ethnicity, religion, income, gender, family size, etc. NEVER USED BY ITSELF!)

• psychographic (personality)

• behavioristic/usage (based on product usage, for existing product users)

• benefit (based on benefit customers seek)

Criteria to use in picking the target segments

• relevance to the product - make it make sense

• fits with their image, objectives, and resources - don’t try to sell a rolex to a student

• competitive position - how much room is in the market?

• cost/benefit - is it worth it?

• leverage to other segments - get your foot in the door with other segments. (like giving athletes branded clothes in order to reach their audience)

what is positioning

the place an offering/brand occupies in a consumer’s minds on important attributes relative to competitors

variations of products

• consumer goods (business 2 consumer)

• business goods ( B2B)

explain the classification of consumer goods

• convenience (purchased with little effort)

• shopping (compare alternatives on important attributes)

• specialty ( shopping good, but also luxury item)

• unsought (goods you don’t think about)

explain the classification of business goods

• production goods/ components

• support goods (raw materials used in the process of doing business)

• installations (assembly line, equipment)

• accessory equipment (office equipment, computers)

• supplies ( frequently purchased items like paper)

• industrial services (B2B services like cleaning)

what are the degrees of tangibility

• nondurable

• durable

• services

why do products fail?

• insignificant point of difference (not unique enough)

• too little market attractiveness (test mkt is too small or too competitive)

• poor execution of marketing mix

• poor product quality or insensitivity to customer needs on critical factors (not what they want)

• bad timing

• no economical access to buyers (no distribution)

newness from a customer’s perspective

there must be unique benefits

the new product development process

• new product strategy development (start defining roles of the new product within an organization)

• idea generation (pool of concepts)

• screening and evaluation (filter and evaluate new ideas)

• business analysis (financial projections (demand, cost))

• development (create prototype)

• market testing (test market cities)

• commercialization (full scale product launch)

What is the product life cycle + name the steps

the lifespan of a product

• introduction stage (product introduced to market)

• growth stage (rapid increase in sales)

• maturity stage (trying to maintain share)

• decline stage (sales and profit drop)

how does the marketing mix change throughout a product’s life cycle?

introduction: goal is to gain awareness and stimulate demand

growth: goal is to differentiate your brand

maturity: the goal is to maintain your share

what are some alternative product life cycles

high learning product: long introduction stage

low learning product: short introduction stage, long growth stage

fashion product: multiple growth and decline stages

fad product: fast growth stage, short maturity stage, fast decline stage

what does diffusion of innovation mean and what are the types of people within this?

how a product spreads through a population

• innovators (risk takers, not trendy, not typical consumers)

• early adopters (more normal, opinion leaders)

• early majority (mainstream, most people)

• late majority (the “wait and see”’s)

• laggards (reluctant, conservative spenders, traditional)

what is brand personality

associating human characteristics with a brand

what is brand equity

commands higher prices and competitive advantages

value added to products beyond their functional benefits

name the different branding strategies

• multiproduct branding: one brand name for everything in a product class. (example: olay) a segment of multiproduct branding is subbranding: second brand that goes under a family brand

• multibranding: each type of product gets its own brand name (like P&G)

• private branding (resller branding/private labeling): store brand

• mixed branding: producer has name brand and supply store brand (like green giant and store brand are the same)

what are services

activities or benefits that an organization provides/offers to consumers

what are the four I’s of services

intangibility, inseparability, inconsistency, inventory

what is the price equation

final price = list price - incentives/allowances +extra fees

what is value

perceived benefits

price

what is value pricing

increase perceived benefits (numerator) or decrease price (denominator)

what is the profit equation

profit = total revenue (sales) - total costs (expenses)

what does it mean to move along the demand curve

price - quantity relationship

what is the demand curve

shows the relationship between price and quantity demanded under certain conditions

what are the factors of demand

• consumer tastes (what the marketplace wants)

• price and availability of similar products

• consumer income (things feel more/less affordable)

what is a shift in the demand curve

a move back or forward in demand

what is price-elasticity of demand and explain elastic/inelastic demand

how sensitive are consumers to change in price?

• elastic: change the price a little and see a big change in demand

• inelastic: change the price and see small change; low sensitivity

• unitary demand: theoretical where the change in price is perfectly offset by a change in demand

A large # of substitutes means more elasticity; necessities are less elastic

what are the demand oriented approaches?

• Skimming pricing (high initial price that goes down)

• penetration pricing (low price to capture market share)

• prestige pricing (high price to denote luxury)

• penetration pricing (set the price points within the product line; works well with subbranding. Example: Olay with the different types of cream)

Name and describe the different types of innovation

continuous - incremental improvements

dynamically continuous - middle of the road sort of changes

discontinuous innovation - new ideas