Marketing Concepts and Strategies
Marketing Concepts and Strategies MKT 5360
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This 10 page Class Notes was uploaded by Mose Murazik PhD on Thursday October 22, 2015. The Class Notes belongs to MKT 5360 at Texas Tech University taught by Roy Daniel Howell in Fall. Since its upload, it has received 61 views. For similar materials see /class/226369/mkt-5360-texas-tech-university in Marketing at Texas Tech University.
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Date Created: 10/22/15
Chapter 7 Mass marketing engage in the mass production distribution and promotion of one product for all buyers The argument for mass marketing is that it creates the largest potential market Most companies are turning to microm arketing at one of four levels niches local areas and individuals Segment Marketing A segment market consists of a group of customers who share a similar set of needs or wants Flexible market offering consists of a naked solution containing the product and service elements that all segment members value Homogenous preferences exists when all consumers have roughly the same preferences the market shows no natural segments Diffused preferences who very greatly in their preferences Clustered preferences natural market segments emerge from groups of consumers with shared preferences Niche Marketing A niche is more narrowly defined customer group seeking a distinctive mix of benefits Niche is attractive when its customers have a distinct set of needs Local Marketing Local marketing reflects a growing trend toward grassroots marketing concentrating on getting as close and personally relevant to individual customers as possi l A brand s overall image might be diluted if the product and message vary in different localities Individual Marketing The ultimate level of segmentation leads to segments of one customized marketing or onetoone marketing Customerization combines operationally driven mass communication with customized marketing in a way that empowers consumers to design the product and service offering of their choice Bases for Segm enting Consumer Markets n 1 1 1 J A an r p 39 first Then they examine whether these customer segments exhibit different needs or product responses Next the researcher sees whether different characteristics are associated with each consum erresponse segment Geographic segm entation dividing the market into different geographical units such as nations states countries cities or neighborhoods Demographic segmentationdivide the market into groups on the basis of age and the other variables One reason demographic variables are so popular is that consumer wants preferences and usage rates are often associated with demographic variables Age and life cycle state consumers wants and abilities change with age Life stage People in the same part of life cycle may differ in their life stage Gender Income Generation Social class 1quot p 39 39 i A 39 is the science of using psychology and demographics to better understand consumers Buyers are divided into different groups on the basis 0 psychologicalpersonality traits lifestyle or values system classifies US adults into 8 primary groups based on demographics and attitudes Behavioral segmentation marketers divided into groups on the basis of their knowledge of attitude toward use of or response to a product Initiator Influencer Decider Buyer User Behavioral variables Occas1ons Benefits not everyone who buys a products wants the same benefits from it User status markets can be segmented into nonusers exusers potential users first time users and regular users of a product Usage rate markets can be segmented into light medium and heavy product users Buyer readiness state some are unaware of the product some are aware some are informed some interested some desire of the product and some intended to bu Loyalty status hardcore loyals always buy one brand spilt loyals loyal to two or three brands shifting loyals shift from one brand to another Caution What appears to be brand loyalty may actually reflect habit indifference a low price a high switching cost or the unavailability of other brands Attitude Five attitudes about products enthusiastic positive indifferent negative and hostile The Conversion Model measures the strength of the consumers psychological commitment to brands and their openness to cha The model assesses commitment based on factors such as consumer attitudes toward and satisfaction with current brand choices in a category and the importance of the brandselection decision in the category Business marketers indentify segments through a sequential process Market targeting To be useful market segments rate favorably on five key criteria Measurable 7 size purchasing power and characteristics can be measured of segment Substantial segments are large and profitable to serve Accessibleeffectively reached and served Differentiate conceptually distinguishable Actionable formulated for attracting and serving the segments V eP Nf Evaluating and Selecting Market Segments I1 1 1 must look at two factors the segment s overall attractiveness and the company s objectives and resources Supersegment set of segments sharing some exploitable similarity Selective specialization firm selects a number of segments each objectively attractive and appropriate Product specialization specialize in making a certain product for several segments downside is the product may be supplanted by an entirely new technology Market specialization the firm concentrates on serving many needs of a particular customer group downside risk is that the custom er group may suffer budget cuts or shrink in size Full market coverage the firm attempts to serve all customers groups with all the products they might need Undifferentiated marketing the firm ignores segment differences and goes after the whole market with one market offer Differentiated marketing firm operates in several market segments and designs different programs for each segment Because differentiated marketing leads to both higher sales and higher operating costs we can t generalize about this strategy s profitability Company s should be cautious about over segmenting their markets Megamarketing the strategic coordination of economic psychological political and public relations skills to gain the cooperation of a number of parties in order to enter or operate in a given market Chapter 8 Brand name term sign symbol or design or a combination of them intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors Brand signal a certain level of quality so that satisfied buyers can easily choose the product again Branding endowing products and services with the power of a bran Branding creates mental structures that help consumers organize their knowledge about products and services in a way that clarifies their decision making and in the process provides value to the irm Customerbased brand equitydifferential effect that brand knowledge has on customer response to that brand s marketing First brand equity arises from differences in consumer response Second differences in response are a result of consumer s brand knowledge all the thoughts feelings images experiences beliefs and so on that become associated with the brand Third the differential response by consumers that makes up brand equity is re ected in perceptions preferences and behavior related to all aspects of the brand s marketing Brand promise is the marketer s vision of what the brand must be and do for consumers Brand elem ents tradem arkable devices that serve to identify and differentiate the brand Brand building memorable meaningful and likeable Defensive transferable adaptable protectable Brand contact any inform ation bearing experience a customer or prospect has with the brand product category or market that relates to the firm s product or service Personalizable ensuring that the brand and its marketing are as relevant as possible to as many customers as possible lntegration mixing and matching marketing activities to maximize their individual and collective effects Brand identity the way a firm aims to identify or position itself or its product Brand image the way the public actually perceives the firm or its product Internal marketing activities and processes that inform and inspire employees Brand promise will not be delivered unless everyone in the company lives the brand Brand audit a consumer focused exercise that involves a series of procedures to assess the health of the brand uncover its sources of brand equity and suggest ways to improve and leverage the bran Brand valuation job of estimating the total financial value of the brand Branding strategy re ects all the number and nature of both common distinctive brand elements its applies to the products it sells 1 Develop new brand elements for the new product 2 Apply some of its existing brand elements Branding Decisions Individual names 2 Blanket family names 3 Separate family names for all products Sears 4 Corporate name combined with individual product names Brand extensions many firms have decided to leverage their most valuable asset by introducing new products under their strongest name brands Brand dilutionconsum ers no longer associate a brand with a specific product or highly similar products and start thinking less of the brand The revenue coming from consumers switching the extension from existing parentbrand offerings cannibalizing the parent brand One final disadvantage of brand extensions is that the firm forgoes the chance to create a new brand with its own unique image and equity The most important consideration with brand extensions is fit in the mind of the consumer based on common physical attributes usage situations or user types One major mistake in evaluating extension opportunities is focusing on one or few brand associations as a potential basis of fit rather than considering all of the consumer s brand knowledge structures Brand portfolio the set of all brands and brand lines a particular firm offers for sale to buyers in a particular category or market segment Brands in a brand portfolio F ankers fighter brands positioned with respect to competitors brands so that more important agship brands retain their desired positioning Cash cows Lowlevel entry Highend prestige Customer equity using custom er relationship management to product consumer equit Brand equity on the other hand emphasizes strategic issues in managing brands and in creating and leveraging brand awareness and image providing much practical guidance for specific marketing activities Chapter 9 All marketing strategy is based on STP segmentation targeting and positioning Positioning is the act of designing the company s offering and image to occupy a distinctive place in the minds of the target market Category membership the products or sets of products with which a brand competes and which functions as close substitutes Points of difference are attributes or benefits that consumers strongly associate with a brand positively evaluate and believe they couldn t find to the same extent with a competitive brand Points of parity are associations that aren t necessarily unique to the brand but may in fact be shared with other brands Ways to convey a brand s category membershi Announcing category benefits reassure consumers that a brand will deliver on the fundamental reason for using a category Comparing to exemplars well known noteworthy brands can also be used to specify category membership Relying on the product descriptor the product descriptor that follows the brand name is often a concise means of conveying category origin N V L V Research has shown that brands can sometimes be successfully differentiated on seemingly irrelevant attributes if consumers infer the proper benefit Product differentiation Form features mass customization performance quality conformance quality durability reliability reparability style design Services differentiation Ordering case delivery installation customer training customer consulting maintenancerepair retuIns Other dimensions for differentiation Personnel differentiation Channel differentiation lm age differentiation A company is more likely to be hurt by emerging competitors or new technologies than by current competitors Strategic group a group of firms following the same strategy in a given target market Strengths and Weaknesses 1 Share of market 2 Share of mind Name the first company that comes to mind in this industry 3 Share of heart Name the company from which you would prefer to buy the product In general the market leader should look for new customers or more usage from existing customers It can try to attract buyers who are unaware of the product or resist it because of price or lack of certain features Defending Market Share 1 osition Defense this means occupying the most desirable market space in the consumer s minds making the brand almost impregnable 2 Flank defense the market leader should also erect outposts to protect a weak front or possibly serve as an invasion base for counterattack 3 Preemptive defense a more aggressive maneuver is to attack before a rival starts its offense 4 Counterattack defense when attacked most leaders will counterattack 5 Mobile defense here the leader stretches its domain over new territories that can serve as future centers for dense and offense 6 Contraction defense large companies sometimes must recognize that they can no longer defend all their territory Other competitive strategies ese firms can either attack the leader and other competitors in an aggressive bid for further market share market challengers or they can choose not to rock the boat market followers Five strategies for attack 1 2 3 Mb VV Frontal attack match the opponent s product advertising price and distribution Flank attack geographical attack the challenger spots areas Where a rival is underperforming identifies shifts in market segments that cause gaps to develop then filling the gaps and developing them into strong segments Encirclement attack used to capture a Wide slice of enemy s territory through a blitz grand offensive on several fronts Bypass attack bypass the enemy and attack easier markets to broaden the firm s resource base Guerilla warfare consists of small intermittent attacks to harass and demoralize the opponent and eventually secure permanent footholds Chapter 10 Product anything that can be offered to a market to satisfy a want or need including physical goods services experiences events places properties organizations information or ideas 1 Core benefit the fundamental service or benefit that the customer is really buying 2 Basic product actual product 3 Expected product set of attributes and conditions that buyers normally expect when they buy this product 4 Augmented product exceeds customers expectations 5 Potential product all possible augmentations and transformations the product might undergo in the future Consumption system the way the user performs the tasks of getting and using products and related services Product classifications Durability and tangibility nondurable goods Consumergoods classification Convenience goods Shopping goods Specialty goods Unsought goods Industrial goods Product system is a group of diverse but related items that function in a compatible manner Product mix is the set of all products and items a particular marketer offers for sale Product type is a group of items within a line that share one of several possible forms of the product while an item is distinctive unit within a line A useful tool is a product map showing which competitive products compete against the company s products Companies seeking high market share and market growth will carry longer lines companies emphasizing high profitability will carry shorter lines of carefully chosen items Line stretching occurs when a firm lengthens its product line beyond the current range The relative position of a brand and its competitor context will affect consumer acceptance Cobranding also called dual branding or brand bundling two or more well known brands combined into a joint product Cobranding main advantage is that a product may be convincingly positioned by virtue of the multiple brands generating greater sales from the existing target market and opening more opportunities for new consumers and channe s Ingredient branding is a special case of cobranding that involves creating brand equity for materials components or parts that are necessarily contained within other branded products Packaging refers to all the activities of designing and producing a product s container Packaging must identify the brand convey descriptive and persuasive information facilitate product transportation and protection assist athome storage and aid product consumption Labeling identifies the product grade the product describe the product promote the product A company can add new products in two ways through acquisition or organically through development New Product Decision Process 1 Idea Generation 2 Idea Screenin 3 Concept and development testing presenting the product concept to appropriate target customers 4 Marketing strategy development 5 Business analysisevaluates the proposed new product business attractiveness 6 Product developm ent determine whether the product can be translated technically and commercially feasible 7 Market testinggauge the size of the market and see how customers and dealers react to handling 8 Commercialization first entry parallel entry late entry Conjoint analysis method for deriving the utility values that consumers attach to varying levels of a product s attri u s Adoption is an individual s decision to become a regular user of a product Innovation refers to any good service or idea that is perceived by someone as new Innovation diffusion process the spread of a new idea from its source of invention or creation to its ultimate users or adopters New product stages Awareness 2 Interest 3 Trial 4 Adoption Personal influence is the effect one person has on another s attitude or purchase probability Five characteristics of adoption rate 1 Relative Advantage 2 Compatibility 3 Complexity 4 Divisibility 5 Communicability A company s positioning and differentiation strategy must change as the product market and competitors change over the product life cycle lntroduction rowth Maturity Decline Chapter 11 Service any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership or anything Categories of Service Mix 1 Pure tangible good 2 Tangible good with accompanying services 3 Hybrid 4 Major service with accompanying minor goods and services 5 Pure service Search qualities characteristics the buyer can evaluate before purchase Experience qualities characteristics the buyer can evaluate after purchase Credence qualities characteristics the buyer finds hard to evaluate after consumption Distinctive characteristics of services lntangibility inseparability variability and perishability lntangibility buyers look for signs or evidence of service quality service firms can try to demonstrate their service quality through physical evidence lnseparability services are typically produced and consumer simultaneously unlike physical goods which are manufactured and not store Variability recruiting the right employees and provide with proper training standardize the service performance throughout organization and monitor customer satisfaction through suggestion and complaint systems Perishability services can t be stored perish ability is a problem when demand uctuates Charles Schwab s best customers get calls answered in 15 seconds other customers wait 10 minutes or more One study estimated that 13 of all service problems are caused by the customer External marketing is the normal work of preparing pricing distributing and promoting the service to customer Internal marketing training and motivating employees to serve customers as we Interactive marketing employees skill in serving clients Technical quality technical quality was the surgery successful Functional quality Did the surgeon show concern and inspire confidence Customer expectations 1 Gap between consumer expectation and management perception 2 Gap between management perception and servicequality specification 3 Gap between service quality specifications and service delivery 4 Gap between service delivery and external communications 5 Gap between perceived service and expected service Practice s of service quality management Customer obsessed Top management commitment High standards Self service technologies Monitoring systems Satisfying custom er complaints Satisfying employees as well as customers Differentiating services Primary service package Secondary service features Lifecycle cost the product s purchase cost plus the discounted cost of maintenance and repair less the discounted salvage value
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