Unit 2 Notes
Unit 2 Notes MARK 300 001
Popular in Marketing/Supply Chain Mgt
MARK 300 001
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Popular in Marketing
ANSC 221: Animal health and Nutrition
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This 34 page Class Notes was uploaded by Bree Reed on Sunday October 11, 2015. The Class Notes belongs to MARK 300 001 at University of Tennessee - Knoxville taught by Adam Mark Hepworth (P) in Summer 2015. Since its upload, it has received 185 views. For similar materials see Marketing/Supply Chain Mgt in Marketing at University of Tennessee - Knoxville.
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Date Created: 10/11/15
UnitZ Thursday September 17 2015 1109 AM Chapter 6 Customer Driven Marketing Strategy Creating Value for Target Customers What is Market Segmentation involves dividing a market into smaller segments of buyers with distinct needs characteristics or behaviors that might require MajorSegmentation Types 1 divides market into different geographical segments a ie countries metros statesprovinces 2 age income gender religion occupation education ethnicity etc 3 divides buyers into segments based on social class lifestyle or personality characteristics divides buyers into segments based on knowledge occasions attitudes uses or responses Ex Old Spice CocaCola a User status i Nonusers ex users potential users firsttime users regular users b Usage Rate i Light medium heavy c Loyalty status i Brands stores companies Ex The new frontier ofonline dating Sizzl app online dating app that allows you to find someonethat loves bacon just as much as you do REI lifestyle receive coupons with membership Pepsi Cola taste challenge Coke fires back and changes coke but it doesn39t work Marketers will frequently use more than one segmentation variable Use multiple segmentation bases in order to identify smaller betterdefined target groups 0 Culture gt subculture gt subculture ofArizona Ex PayPerClick advertising Segmenting Business Markets Consumer and business markets use many of the same variables for segmentation Business marketers can also use 0 Operating characteristics 0 Purchasing approaches 0 Situational factors 0 Personal characteristics Step 2 Targeting Selecting the market segments that will become the chosen targets of opportunity You have to decide which segments are most attractive o This is done by evaluating market segments on the criteria of 39 Segment size and growth 39 Segment structural attractiveness 39 Company objectives and resources Evaluating Market Segments 0 Segment Size and Growth 39 Analyze current segment sales growth rates and expected profitability 0 Segment Structural Attractiveness 39 Consider competition existence of substitute products and the power of buyers and suppliers 0 Company Objectives and Resources 39 Examine company skills and resources needed to succeed in that segment 39 Offer superior value and gain advantages over competitors Targeting Strategies Undifferentiated mass marketing 0 Ignores segmentation opportunities 39 Such products rarely succeed for long in the American marketplace Differentiated segmented marketing 39 Targets several segments and designs separate offers for each III Cocacola Procter amp Gamble and Toyota III Ex Difference between un differentiated and segmented marketing Ford and General Motors has Chevrolet Buick and Cadillac Different products appeal to different market segments Concentrated niche marketing TDY39GD39I39C nna nr 2 Pnllhl n39F CMD COGMDH39I39C v mgus we u a wupe u sa segments 0 Niches 0 Le Whole Foods compared to Kroger Tailoring products and marketing programs to suit the tastes of specific individuals and locations 0 Local Marketing Tailoring brands and promotions to the needs and wants of local customer groups cities neighborhoods specific stores gt local car dealerships 0 Individual Marketinngailoring products and marketing programs to the needs and preferences of individual customers Step 3 Positioning A product39s position is the way a product is defined by consumers on important attributes The place the product occupies in consumers39 minds relative to competing products 39 What does a customer think about when heshe thinks about us Differentiation and Position Differentiation involves identifying a set of possible value differences and competitive advantages on which to build a position 5 ways to differentiate the brand 39 Productdifferentiation 39 Services differentiation 39 Channels differentiation 39 People differentiation 39 Image differentiation Example quotTough book storiesquot British Airways tries to differentiate itself from competitors by touting its superior service Louis Vuitton Bottom Line Here s Why All Of This Is 80 Important Woo 395 Our Customer l and Positionquot and Ta rg a Y What do we want our customers to think about when they think about us Integrated Product Distribution Pricing Strategy gt Communi39 A a Strategy amp amp Tactics Jactics r l i Chapter 7 Products Services and Brands Building CustomerValue Learning objectives 1 Differentiate between a product and service and understand their similarities 2 How do services differ from goods 3 What types of consumer goods exist in a marketplace 4 How do marketers influence consumption through manipulating products Anything that can be offered to a market for attention acquisition use or consumption and that might satisfy a want or need What is a product 39 Products include physical objects services events persons places organizations ideas or some combination thereof III Crest brush your teeth and buy Crest 39 It39s important to NOT limit yourthinking about products to be only physical objects Any activity or benefit that one party can offer to anotherthat is essentially intangible and does not result in the ownership of anything The Product Service Continuum Pure tangible good lt gt Pure Service Il CalI nnnrlo vnrI l ranI nrl nnvn nn EA JCIIL LCIIIEIIJIC EUUUI ICDLCIUICIIIL EUUU CIIIU DCI VILC 3 Levels of Product for an iPad Core What is the customer really buying Entertainment connectivity Actual Apple brand sleek packaging Augmented warranty tech support Product and Service Classification Industrial Products Those purchased for further processing or for use in conducting business Distinction between consumer and industrial products is based on the purpose for which an item is bought 39 Can a product be both an industrial product and a consumer good 1 Materials and parts III Raw materials manufactured materials and parts III ie wheat cotton livestock 2 Capital items III Products that aid in buyer39s production or operations III Large computer systems fax machines desks 3 Suppliesand services III Operating supplies maintenance and repair items III Paper pencils nails Consumer Products Products and services bought by final consumers for personal consumption 4 types 1 Convenience goods III Purchased frequently and immediately with little comparison shopping effort Low customer involvement Low priced Mass advertising and promotion Widespread distribution with many convenient locations III ie candy soda newspapers 2 Shopping products III Bought less frequently more planning and effort brand comparisons on basis of price quality and style El Higher price Selective distribution in fewer purchase locations Advertising and personal selling is undertaken by both producer and reseller ie furniture cars appliances 3 Specialty products El El El El Strong brand preference and loyalty special purchasing effort little comparison shopping High price and exclusive distribution in only one or a few outlets per market area Carefully targeted promotion by both the producer and reseller Carefully targeted promotion by both producer and reseller ie Lamborghini Rolex watches 4 Unsought products III Little product awareness or knowledge of the brand sometimes negative interest III Pricing strategies vary III Distribution strategies vary III Require aggressive advertising and personal selling by both producer and resellers III ie life insurance cemetery plots blood donation We watched a Nationwide commercial about accidents Other Market Offerings Organization I Profitbusinesses and nonprofitschools and churches III Person GE commercial 39 Politician entertainers sports figures real estate agents doctors and lawyers III SenatorJoni Ernst commercial about castrating pigs and living Place within yourmeans 39 Create maintain or change attitudes or behavior toward particular places III Visit Ireland commercial Ideas social marketing 39 Public health campaigns environmental campaigns family planning or human rights III Global warmingcommercials Types of Product and Service Attributes Product quality dimensions freedom from defects 39 Performance quality Bentley compared to Kia 39 Conformance quality consistency Productsfeature considerations 39 Sellers ask Is the value greater than the cost Product style and design I How will it influence the user experience 39 ie Cadillac interior design Good product design begins with an understanding of consumer needs 39 OX0 successfully redesigns common kitchen tools by focusing on the end user experience desired by buyers 2 Ideally good packages should 1 Help to market the brand Protect the contents Provide convenience and ease of use Ensure products and userchild safety Address environmental concerns thinkgreen packing ie Mellow Mushroom 3 a name term sign symbol or design or a combination ofthese that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors Branding involves building and managing brands 0 Advantages to buyers 39 Helps identify products 39 Cue to product quality and consistency 0 Advantages to sellers 39 Basis for product39s quality story 39 Provides legal protection 39 Helps to segment markets U39lbUUN 39 Measures the brand39s ability to capture consumer preference and loyalty 39 Is a valuable asset that offers many competitive advantages 39 Builds strong and profitable customer relationships that result in loyal PI IC39lnmorc III Ex MostValuable Global BrandsToyota Intel Samsung McDonalds GE Microsoft IBM CocaCola Apple Major brand strategies involve these challenging decisions 1 Brand Positioning Brand name selection 3 Brand Sponsorship 0 Manufacturer39s brands III Also called nationabrands III Levi39s Jeans 0 Store brands III Also called private brands III Massive increase of private brands in retail stores ie Arizona Jeans Co forJCP or Merona for Target 0 gt Nike and Tennessee 0 gt Doritos and Taco Bell Tide and Febreze merchandise for presidential candidates Marco Polo Ted Cruzies Grillery Clinton 4 Brand Development N Brand Development Decisions Product category Existing New Existing Brand name New III Introduction ofadditional items in a given product category under the same brand name ie flavors forms colors ingredients or package sizes III Usinga successful brand name to launch a new or modified product in a already developed market 9 Ex V8 soup Guinness barbequesauce III Offers a way to establish different features and appeal III Existing product category new brand name 0 Ex Saturn Oldsmobile Pontiac 0 the riskiest III Developed based on belief that the power of its existing brand is waning and a new brand name is needed III Also used for products in new product categories forwhich none of the firm39s existing brands are appropriate 9 Ex VW Porsche Bentley Audi Services 0 Any activity or benefit that one party can offerto another that is essentially intangible and does not result in the ownership of anything Four Service Characteristics lnseperabllity Services cannot be separated from their providers Variability Quality ol services depends on who provides them and when where and how 39 Collectively these four measures distinguish services from physical products Service Industries 0 Government Services III Court systems hospitals fire departments DMV Privatenotforprofitorganizations III Churches colleges not all charities Business organizations D Banks investment firms restaurants concert venues Major Service Marketing Tasks Managing service quality III Set high service quality standards have good service recovery empower frontline employees 0 Managing service productivity III Train current employees or hire new ones harness technology self service technology Chapter 8 New Product Development and Product Life Cycle Strategies New Product Development The development oforiginal products product improvements product modifications and new brands through the firm39s own product development efforts 0 New Product Failures Overestimations of market size 0 Design problems Incorrectly positioned priced or advertised Pushed despite poor marketing research findings 0 Excessive Development Cost 0 Competitive reaction Figure 81 Major Stages in NewProduct Development Process Idea generatom Major Stages in New Product Development Process 1 Idea Generation Internal sources III Company employees at all levels External sources III Customers Lay39s allowing customers to submitflavor ideas El 0 Crowdsourcing Inviting broad communities of people customers scientists researches and the general public into the new product innovation process Competitors Distributors Suppliers Outsourcing 2 Idea Screening Process used to spot good ideas and drop poor ones Executives provide a description of the product along with estimates of market size product price development time and costs manufacturing costs and rate of return Tradeoff evaluation matching with company objectives forecasting 3 Product concept detailed version of the new product idea stated in meaningful consumerterms El Darn Tough Socks 0 Affo rdably priced 0 Durability 0 Styles colors 4 Concept testing III Testing new product concepts with groups of target consumers to find nut if the rnnrpnfc have cfrnno rnncllmprnnnpal Ilvl vvlbll nll v VVIIVVPBUIIMVVUBIVIID VVIIUVIIIIVI PIPIqu e Usingfocus groups to test alternate movie endings surveying consumers about mockups or possible prototypes 5 Business Analysis quotDo the projectionsfor sales costs and profits align with our company objectivesquot 6 Product Development transforming the product concept into a physical product Sizeable increase in investment Prototypes must have correct physical features convey psychological characteristics and are subjected to physical tests Research and Development ltgt Marketing Ex III Product Testing at Gillette they use employee volunteers to test new shaving products 7 Test Marketing Product and program are introduced in a more realistic market settingoutside of the company Can be expensive and time consuming but better than making a major mistake Beta phase 323 testing Ex Virtual MarketTesting Frito Lay worked with Decision Insight to create an online virtual convenience store to test new products and marketing ideas III Google Glass 8 Commercialization Must decide on timing ie when to introduce the product Must decide on where to introduce the product eg single location state region nationally internationally Must develop a market rollout plan Product Life Cycle PLC Strategies Sales and Profits Over the Product s Life from Inception to Decline Sales and pro t S MWM Losses investment S Time Introduction Growth Maturity Decline Figure 83 Styles Fashions and Fads Style Sales Tm Practical Problems of PLC Fashion Fed to on 2 9 3 3 Time Time In practice it is difficult to 0 Identify the current stage of a product39s PLC 0 Pinpoint when the product moves to the next stage o Identifv factors that affect oroduct39s movement through stages w39vvl oo 0 Forecast sales level length of each stage and shape of PLC 0 Develop marketing strategy as strategy is both a cause and result of the PLC Two strategies to increase consumption during maturity state 1 Find new users and new market segments forthe product 2 Modifyingthe product Changing characteristics such as quality features or style to attract new users and to inspire more usage How III Improve durability reliability speed taste III Improve styling and attractiveness III Add new features III Expand usefulness safety convenience Ex Crayola Deluxe Sidewalk Chalk Chapter 9 Pricing Understanding and Capturing Customer Value What is price 0 Narrowly price is the amount of money charged for a product or service 0 Broadly price is the sum of all the values that consumers exchange for the benefits of having or using the product or service Company Profile Trader Joe39s Describe the TJ39s customer experience One guy in our class left his debit card at home and they allowed for him to keep his cart in their refrigerator until he came back to make his purchase They are able to keep their prices low by selling their brand and maybe another brand on the shelves instead of 10 different options Factors Affecting Price Decisions D Marketing objectives 0 Survival Low Prices Hoping to increase demand A 39 9 Current Profit Maximization choose the price that produces the maximum current profit etc 0 Market Share Leadership Low as possible prices to become the market share leader 0 Product Quality Leadership High prices to cover higher performance quality and RampD D Marketing mix strategies D Costs D Organizationalconsiderations D Nature of the mkt and demand D Competition B Environmental factors economy govt social concerns D Costs that do not vary with sales or production leves 0 Ex Executive salaries rent D Costs that do vary directly with the level of production 0 Ex Raw materials D Sum of the Fixed and Variable costs for any given level of production Buyers and Sellers trading in a uniform commodity D ie wheat barley 0 Many Buyers and Sellers who trade over a range of prices D ie minivan market Few sellers who are sensitive to each other39s pricingmarketing strategies D ie mobile phones 0 Pure Monopoly One seller who dominates the market D ie Luxottica eyewear company 39 lquotl lLlllg LUIIDIUEI dLlUllb 39 lquotl ILE EldbLlLlLy UI UEllldllU A Inelastic Demand Demand hardly changes with a small change in price D Gasoline B Elastic Demand Demand changes greatly with a small change in price D Effected by the number of substitutes 0 Fast Food burgers if McDonald39s hamburger is less expensive than Burger King39s then more people will go to McDonald39s CostBased Versus ValueBased Pricing Cosbbased pcictng Product I Coal I o m I w Value I lutii39m Valuebased phch Value I o Paco I w Cost gtlt Proma I I D Price is based on buyers39 perceptions of value not seller39s costs D Along with promotion product and place price is considered before marketing program is set 0 Ex Goodwill vs Macy39s 3 vs 30 D Product Driven B Company considers costs associated with manufacturing the product and determines an which sets the price 9 D Setting prices based on competitor strategy Questions to ask 0 How does the company39s market offering com pa re with competitor39s offerings in terms of customer value 0 How strong are current competitors and what are their current pricing strategies Home Depot Pricing they are going to have competitive prices with Lowe39s I Involves setting price steps between various products in a product line based on D Cost differences between products D Customer evaluations of different features D Competitors39 prices Product Line Pricing Optional product pricing Captive product pricing Byproduct pricing Product bundle pricing 39 The psychology of prices is considered not the economics El P 39gtWE 0 LASIK eye surgery providers Tiffany amp Co
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