Marketing Chapter 6 Summary PDF

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Marketing Chapter 6 Summary...

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Dunkin Donuts vs Starbucks Both Dunkin Donuts and Starbucks paid their loyal consumers to switch coffee shops. Dunkin found them so polarized that company researchers dubbed them as "tribes" Dunkin Donuts found Starbucks to be pretentious and trendy. Meanwhile, Starbucks found Dunkin Donuts to be plain and boring. Both of these stores are completely different to one another with two completely different demographics. Dunkin aims for the traditional demographic while Starbucks aims for the higher-income demographic. Can companies appeal to all buyers No Buyers are too numerous, widely scattered, and varied in their needs/buying practices Also, companies vary widely in their abilities to serve different market segments Because of this, instead of Mass Marketing, companies are using __________ Target Marketing What does target marketing achieve? 1. it identifies market segments 2. selects one or more of them 3. developing products and marketing programs tailored to each This approach allows companies to serve their best to each customer within their target market and most profitably.

4 steps in a customer value-driven marketing strategy 1. Segmentation 2. Targeting 3. Differentiation 4. Positioning Market segmentation Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing strategies or mixes Market Targeting (Targeting) Evaluating each market segment's attractiveness and selecting one or more segments to serve. Differentiation Actually differentiating the market offering to create superior customer value Positioning Arranging for a market offering to create superior customer value. Diagram of a Customer Value-Driven Market Strategy

4 Variables in Market Segmentation 1. Geographic 2. Demographic 3. Psychographic 4. Behavioral Geographic Segmentation

Dividing a market into different geographical units, such as nations, states, regions, counties, cities, or even neighborhoods - Companies catering to a few geographical areas, but pay attention to geographical differences in needs and wants - Companies are also localizing their products, services, advertising, promotion, and sales efforts to fit the needs of individual regions, cities, and neighborhoods Example of Geographic Segmentation Target opening a smaller-format "Express-Target" in a city. These stores are designed to fit into densely packed urban neighborhoods and they cater to the needs of cities (less product). Macy's that are located near water-parks carry more swimsuits. Major Segmentation Variables for Consumer Markets (Table 6.1)

Demographic Segmentation Dividing the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. - Easiest to measure out of all the variables - Most popular bases for segmenting consumer groups Age and life-cycle segmentation Dividing a market into different age and life-cycle groups Kraft markets "Lunchables" as convenient prepackaged lunches for children.

Kraft also catered Lunchables to teenagers called "Lunchables Uploaded" Amazon example of Age and life-cycle segmentation (tablets) Pg. 172 "Amazon has spotted a tinier tablet market. Feedback from parents suggested that they were handling their entertainment-packed Kindle Fire tablet over to their younger children for entertainment, education, and babysitting purposes. Therefore, Amazon introduced FreeTime Unlimited that's bundled with a Fire Tablet and a childproof case." Gender Segmentation Dividing a market into different segments based on gender Axe shampoo/bodywash packaged/imaged for male use. Meanwhile brands like L'Oreal, and Neutrogena are specifically tailored for females Income Segmentation Dividing a market into different income segments. Louis Vitan targets high income individuals Dollar Tree targets low income individuals Psychographic Segmentation Dividing a market into different segments based on social class, lifestyle, or personality characteristics VF Corporation offers 30 premium lifestyle brand that "taps into consumer aspirations to fashion, status, and well-being" in a well defined segment.

What are personality variables in Psychographic Segmentation? When a brand caters to each type of personality. Mountain Dew = youthful, rebellious, adventurous attitudes Coca-Cola Zero - targets the more mature, practical, and cerebral (but good humored) personality types Behavioral Segmentation Dividing a market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product. Many marketers believe that behavior variables are the best starting point for building market segments (Behavioral Segmentation) Occasion Segmentation Dividing the market into segments according to the different benefits that consumers seek from the product Example of Occasion Segmentation (Bicycles) Bikes for competitive racing, touring, recreation, dirt, or just plain fun. This ranges from Schwinn's Lakeshore ($170-$220) to their Vestige bike ($1,470). Another example Xbox One for casual gamers and Xbox One X for hardcore gamers User Status in Behavioral Segmentation

Classified into three categories 1. nonusers 2. ex-users 3. potential users 4. regular users Diaper example = potential users are newly-wed couples (they'll eventually buy diapers in the future). This newly-wed couple has the potential of becoming regular users of diapers in the future. Usage rate in behavioral segmentation light, medium, and heavy users Hardees/Carls JR focuses their marketing on "young, hungry men" (their heavy users). Because of this, they use attractive bikini models in their commercials to attract that particular segment. Loyalty status in behavioral segmentation 1. Completely loyal (buy every Iphone as soon as it comes out) 2. Somewhat loyal (loyal to 2-3 products within the same category. Maybe toilet paper) Segmenting Business Markets Starbucks distinct program for the Office Coffee Segment and the Food Service Segment. IBM and Microsoft also caters to large businesses as well. With their special server programs. How can a company segment international markets?

1. segment by geographic location (grouping countries by regions like Western Europe, the Pacific Rim, South Asia, or Africa.) 2. economic factors (grouped by income levels) 3. political and legal factors (stability of the government, monetary regulations, etc.) Intermarket Segmentation Forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries. (H&M targets fashion-conscious [but frugal] shoppers in 43 countries) 5 requirements for effective market segmentation Measurable - The size, purchasing power, and profiles of the segments can be measured Accessible - The market segments can be effectively reached and served Substantial - The market segments are large or profitable enough to serve. (should be tailored to the largest possible homogeneous group worth pursuing) Differentiable - The 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. (An airline identified seven market segments, but their staff was too small to develop each marketing segment) Three important factors for evaluating market segments

1. Segment Size and Growth (it's a relative matter) 2. Segment structural attractiveness (less attractive if it has a lot of competition, powerful buyers, powerful sellers) 3. The company objectives and resources (does it mesh with the company's long-run objectives?) A company should only enter segments in which it can create superior customer value and gain advantages over its competitors. Target Market A set of buyers sharing common needs or characteristics that the company decides to serve Different levels of target marketing Undifferentiated Marketing A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. Focuses on what is common in the needs of consumers rather than on what is different. (modern marketers have strong doubts with this) Differentiated Marketing A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. (Tide Original, Tide Coldwater, Tide Pods, Tide Vivid White, Tide Colorguard, Tide with downy) Wide range of products to differentiate themselves within the market segment.

Concentrated Marketing A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches Whole Foods offers "organic, natural and gourmet food". Therefore, since Whole Foods is a much smaller supermarket, the typical consumer of Whole Foods will be more likely to boycott Walmart (since Walmart can't serve their "niche") It can be highly profitable and highly risky at the same time Micromarketing Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments; it includes local marketing and individual marketing. (local marketing [home-grown food] and individual marketing) Local Marketing Tailoring brands and marketing to the needs and wants of local customer segments-cities, neighborhoods, and specific stores. Marriott Hotels' Navigator program. It puts a local and personal face on each location by "micro-localizing" recommendations for guests' food, shopping, entertainment, and cultural experiences. This can drive up manufacturing and marketing costs by reducing the economies of scale. Individual Marketing Tailoring products and marketing programs to the needs and preferences of individual customers.

PUMA sneaker customization Xbox design lab Socially Responsible Marketing Avoiding target marketing vulnerable or disadvantaged consumers with controversial or potentially harmful products. Example - "McDonalds targeting children with toys into consuming extremely unhealthy food. Therefore, McDonalds trimmed 20% of their calories from their happy meals and added fruit slices to each meal" Children Advertising Review Unit Pg. 186 (Hypertargeting) Smartphone tracking is borderline privacy invasion Product Position How a product is defined by consumers on important attributes- the place a product occupies in consumers' minds relative to competing products. IHOP = "come hungry, leave happy" How do consumers manage information about products and services (without getting overloaded) They organize products, services, and companies into categories and position them in their minds. A product's position is the complex set of perceptions, impressions, and feelings that consumers have for the product compared with competing products. Positioning Maps

Maps that show consumer perceptions of their brands versus those of competing products on important buying dimensions. (central positioning maps)

Competitive Advantage An advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices If a company positions its product as offering the best quality and service, it must actually differentiate the product so that it ______ the promised quality and service delivers Thing to differentiate in a market for a company. 1. product 2. services 3. channels 4. people 5. image Product differentiation examples 1. features 2. performance 3. style Bose audio (high quality, stylish headphones that have a lot of features built in) Channel differentiation Advantage when it comes to coverage, expertise, and performance (smooth channels that make it easy for the customer) people differentiation

hiring and training better than their competitors do Wegman's "Everyday You Get Our Best" Image Differentiation A company or brand image that conveys a product's distinctive benefits and positioning. (Nike "Just Do It") Rosser Reeves Every company should create a USP (unique selling proposition) for each brand and stick to it. Target - "Touch of class at low prices" Microsoft Surface - "Powerful as a laptop, lighter than Air" Which differences to promote Important - The difference delivers a highly valued benefit to target buyers. Distinctive - Competitors do not offer the difference, or the company can offer it in a more distinctive way. Superior - The difference is superior to other ways that customers might obtain the same benefit. Communicable - The difference is communicable and visible to buyers. Preemptive - Competitors cannot easily copy the difference. Affordable - Buyers can afford to pay for the difference.

Profitable - The company can introduce the difference profitably. Value Proposition The full positioning of a brand - the full mix of benefits on which it is differentiated and positioned.

More-for-More positioning providing the most upscale product or service and charging a higher price to cover the higher costs Hearts On Fire Diamonds - "The World's Most Perfectly Cut Diamond" More for the Same A company that attacks a competitor's value proposition for offering more at the same price. Walmart, Kohl's The Same for Less Discount Stores Best Buy, PetSmart, Amazon Less for much less Going at a lower-grade hotel for less money Holiday Inn, Motel 6, Costco Spirit Airlines, (ultra low cost airlines that may get unfavorable reviews) [spirit charges money for wifi, pillows, and entertainment] bare-bones experience. Positioning Statement

A statement that summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference). Evernote - "To busy multitaskers who need help remembering things" (193)...