Marketing Fundamentals and Segmentation
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Questions and Answers

What are the 5 C's in marketing?

  • company (correct)
  • competitors (correct)
  • context (correct)
  • collaborators (correct)
  • customer (correct)

What does the 4 P's/Marketing Mix stand for?

Product, Price, Place, Promotion

What are the two types of segmentation?

Strategic and Tactical

What is Strategic Segmentation?

<p>Grouping customers based on the value that the company can create and capture from customers; unobservable needs.</p> Signup and view all the answers

What is Tactical Segmentation?

<p>Grouping customers based on characteristics: profile-based and value-based.</p> Signup and view all the answers

Define segmentation.

<p>Process of dividing a target market into groups based on common characteristics.</p> Signup and view all the answers

What are potential reasons for failure if you ONLY use profile-based segmentation?

<p>Misidentification of competition (A), Heterogeneity within segments (B), Homogeneity between segments (C)</p> Signup and view all the answers

What are the biases for segmentation?

<p>In v.outgroup bias (A), Confirmation bias (B), Outgroup homogeneity bias (C)</p> Signup and view all the answers

What is Factor Analysis?

<p>It tells you which items correlate.</p> Signup and view all the answers

What are features of a good segment?

<p>Unique match to your resources (A), MECE: Mutually Exclusive, Collectively Exhaustive (B), Homogeneous within segments, different across segments (C), Segment is reachable and reasonably durable (D), Responses are measurable (E)</p> Signup and view all the answers

Define Targeting.

<p>Evaluating potential segments to decide which to serve and which to ignore.</p> Signup and view all the answers

What is Strategic Targeting?

<p>Determining which segment(s) can establish a mutually beneficial relationship with the company.</p> Signup and view all the answers

What are the criteria for Strategic Targeting?

<p>Attractiveness (size, growth, need) (A), Compatibility (B)</p> Signup and view all the answers

Define Tactical Targeting.

<p>How can your target segment be reached in a cost-effective way?</p> Signup and view all the answers

What are the consequences of targeting multiple segments?

<p>Change product to appeal to new segment (A), Create multiple positions (B), Introduction of new promotions (C)</p> Signup and view all the answers

What is Blue Ocean Strategy?

<p>Finding unsatisfied demand and creating a new segment.</p> Signup and view all the answers

What are the features of a Positioning Statement?

<p>Point of difference (A), Reasons to believe (B), Target segment (C), Reference frame (D)</p> Signup and view all the answers

Define Customer Lifetime Value.

<p>Measure of predicted economic value of the customer to the firm.</p> Signup and view all the answers

What are the ways to increase CLV?

<p>Increase margin (A), Increase retention (B), Decrease customer acquisition costs (C)</p> Signup and view all the answers

What are the takeaways from Fader's lecture?

<p>Customer-based corporate valuation and focus on high loyalty customers.</p> Signup and view all the answers

What are the limitations of the sales funnel?

<p>No feedback loops (A), Fails to capture all touch points (B), Assumes economically rational consumers (C), No post-purchase phase (D), No accounting for satisfaction or repeat purchase (E)</p> Signup and view all the answers

What are the stages of McKinsey Consumer Decision Model?

<p>Post-Purchase (A), Moment of Purchase (B), Consideration (C), Evaluation (D), Trigger (E)</p> Signup and view all the answers

What is System 1 processing?

<p>Fast (A), Frequent (B), Emotional (C), Unconscious (D), Automatic (E)</p> Signup and view all the answers

What is System 2 processing?

<p>Slow (A), Rational (B), Effortful (C), Conscious (D), Logical (E)</p> Signup and view all the answers

What are the criteria for shifting to System 2?

<p>Motivation (A), Opportunity (B), Ability (C)</p> Signup and view all the answers

When do you want people in System 1?

<p>Dominant brand/market leader.</p> Signup and view all the answers

When do you want people in System 2?

<p>Not the market leader; if you want to build true loyalty; if you have subtle differentiators.</p> Signup and view all the answers

What is Expectation Disconfirmation?

<p>Positive disconfirmation: delivered more &gt; satisfied customers (A), Negative disconfirmation: underperformed &gt; unsatisfied customers (B)</p> Signup and view all the answers

What is Prospect Theory?

<p>Feel losses more than gains.</p> Signup and view all the answers

Define Reference Point.

<p>Expectation.</p> Signup and view all the answers

What is Satiation?

<p>Consumers become habituated to a product; not as excited as the first time they tried it.</p> Signup and view all the answers

What are ways to reduce satiation?

<p>Slow down consumption (A), Create subcategories (B), Enlarge the sense of time since last consumption (C), Highlight variety (D), Recall variety of past consumption (E)</p> Signup and view all the answers

What are the different types of loyalty?

<p>None (A), True (B), Latent (C), Spurious (D)</p> Signup and view all the answers

Define Brand.

<p>All the combined impressions and experiences associated with a particular company, good, or service.</p> Signup and view all the answers

What are the sources of brand value for consumers?

<p>Functional (A), Psychological (B), Monetary (C)</p> Signup and view all the answers

What are the sources of brand value for companies?

<p>Monetary (A), Strategic (B)</p> Signup and view all the answers

How do brands change?

<p>Extension and repositioning.</p> Signup and view all the answers

Define Brand Extension.

<p>Extending an existing brand name to new product categories.</p> Signup and view all the answers

What is Brand Repositioning?

<p>A strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences.</p> Signup and view all the answers

What are the steps of a perceptual map?

<p>Identify competitors (A), Identify key attributes that matter to your target segment (axes) (B), Collect consumer data about brand perception (C), Plot to see clusters and holes (D)</p> Signup and view all the answers

What is Horizontal Brand Extension?

<p>Brand is well-positioned but you want to reach a larger or different segment.</p> Signup and view all the answers

What is Vertical Brand Extension?

<p>Change in price/quality.</p> Signup and view all the answers

What are the goals of Brand Architecture?

<p>Simplicity (A), Clarity (B), Synergy (C), Leverage (D), Commonality (E)</p> Signup and view all the answers

What is a House of Brands strategy?

<p>A firm employs a collection of individual brands all with different names.</p> Signup and view all the answers

What is a Branded House strategy?

<p>A single brand with lots of variations.</p> Signup and view all the answers

What are the pros and cons of House of Brands?

<p>Corporate name is protected (Pros) (A), More positioning opportunities (Pros) (B), More expensive and complicated to manage (Cons) (C), Lose benefit of big brand (Cons) (D)</p> Signup and view all the answers

What are the pros and cons of Branded House?

<p>Risk of dilution or ambiguity (Cons) (A), Bad news affects all products (Cons) (B), New products have instant credibility (Pros) (C), Efficiency of communications (Pros) (D)</p> Signup and view all the answers

When should brands collaborate?

<p>Efficiency (A), Complementary (B), Brand fit (C), Asymmetries (D), Unique assets (E)</p> Signup and view all the answers

What are examples of Value Design Collaboration?

<p>BMW x Louis Vuitton (A), Uber x Spotify (B)</p> Signup and view all the answers

What is Value Delivery Collaboration?

<p>MasterCard x ApplePay (A)</p> Signup and view all the answers

What is Value Communication Collaboration?

<p>Buzzfeed interviews x kittens from shelter (A)</p> Signup and view all the answers

Define Horizontal Integration.

<p>Acquire a business entity at the same level of value-delivery chain.</p> Signup and view all the answers

What is Vertical Integration?

<p>Buy upstream or downstream companies instead of just collaborating.</p> Signup and view all the answers

When to horizontally integrate?

<p>Want access to new markets or technology (A), Consolidation (B), Similar core competencies (C), Diversification (D), Want to reduce competition (E)</p> Signup and view all the answers

When to vertically integrate?

<p>When collaboration will create lock-in (A), Market is young or declining (B), Asymmetry is too large to be sustainable (C), To raise barriers for competitors (D)</p> Signup and view all the answers

Define Cannibalization.

<p>The loss of sales of an existing brand when a new item in a product line is introduced.</p> Signup and view all the answers

What is Brand Dilution?

<p>Occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.</p> Signup and view all the answers

Define Brand Equity.

<p>Awareness, position, and image of brand.</p> Signup and view all the answers

Define Brand Value.

<p>Dollar value of the brand to the owner.</p> Signup and view all the answers

What are the four methodologies of measuring brand value?

<p>Brand Asset Valuator (BAV) (A), Consumer-Based Brand Equity (CBBE) (B), BERA (C), Interbrand (D)</p> Signup and view all the answers

What is CBBE?

<p>Ask customers about awareness, associations, attitude, and attachment.</p> Signup and view all the answers

Define Brand Asset Valuator.

<p>Measures brand health through differentiation, relevance, esteem, and knowledge.</p> Signup and view all the answers

What is Interbrand?

<p>A valuation method that considers financial forecasting, role of branding, and brand strength.</p> Signup and view all the answers

What is BERA?

<p>Predictive brand analytics that track a large sample constantly.</p> Signup and view all the answers

What is the takeaway from the Starbucks Case?

<p>$40 million investment in improving customer satisfaction/speed of service (success!) (A), Used breakeven formula (B), Customer base had evolved; needed to satisfy new and existing customers (C)</p> Signup and view all the answers

What is the takeaway from the Unilever Case?

<p>Chose to introduce new product (A), Expanded into low income Northeast segment (B), Considerations included potential cannibalization (C)</p> Signup and view all the answers

What is the takeaway from the Blue Apron case?

<p>Used CLV calculations to strategize (A), Had high churn rates due to dependence on short-term promos (B), Wanted to improve customer lifetime values (C)</p> Signup and view all the answers

What is the takeaway from the Mountain Man case?

<p>Expanded into growing light beer market (A), Wanted to attract younger drinkers without diluting brand (B), Differentiated by presenting as the darkest light beer (C)</p> Signup and view all the answers

How to get people in System 1?

<p>Reduce perceived risk (A), Appeal to emotions (B), Raise time pressure (C), Present lots of arguments (D)</p> Signup and view all the answers

How to get people in System 2?

<p>Raise perceived risk/benefit (A), Slow them down (B), Reduce distraction (C)</p> Signup and view all the answers

What is the VALS survey?

<p>Segments adults into eight distinct types or mindsets.</p> Signup and view all the answers

What is PRIZM?

<p>A geo-demographic classification system merging Census data with consumption patterns.</p> Signup and view all the answers

Flashcards

5 C's

Essential marketing elements include customer, company, context, collaborators, and competitors.

4 P's (Marketing Mix)

Fundamental components of the marketing mix are Product, Price, Place, and Promotion.

Segmentation

Dividing target markets based on shared traits like demographics, psychographics, and behavior.

Strategic Segmentation

Focuses on customers' unobservable needs and creating value for them.

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Tactical Segmentation

Based on profile (age, gender) and value (psychographics) characteristics.

Signup and view all the flashcards

Targeting

Assessing which market segments to focus on, prioritizing the most valuable ones.

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Strategic Targeting

Identifies segments to cultivate mutually beneficial relationships.

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Blue Ocean Strategy

Creating new market segments when competition is fierce in existing ones.

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Positioning Statement Components

Includes the target segment, reference frame, point of difference, and reasons to believe.

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Customer Lifetime Value (CLV)

Represents the predicted economic value of a customer to a company.

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Sales Funnel Limitations

The stages consumers go through from awareness to purchase, but doesn't account for post-purchase phases.

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McKinsey Consumer Decision Model

Stages include Trigger, Consideration, Evaluation, Moment of Purchase, and Post-Purchase.

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System 1 Processing

Quick, automatic, emotional decisions typically guided by heuristics.

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System 2 Processing

Deliberate, rational decisions that require more mental effort.

Signup and view all the flashcards

Expectation Disconfirmation

Consumers assess satisfaction by comparing their experience with expectations.

Signup and view all the flashcards

Prospect Theory

Describes how individuals experience losses more acutely than gains.

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Brand Definition

Collective impressions and experiences associated with a company or product.

Signup and view all the flashcards

Brand Equity

Involves awareness, position, and image of a brand.

Signup and view all the flashcards

Brand Value

Represents the dollar value attributed to the brand.

Signup and view all the flashcards

Brand Architecture Goals

Clarity, simplicity, synergy, leverage, and commonality among brands.

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Brand Extension

Leveraging existing brand names for new product categories.

Signup and view all the flashcards

Brand Repositioning

Adjusting a brand's focus for new markets or changing preferences.

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Collaboration Rationale

Collaborating with other brands for mutual benefit.

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Horizontal Integration

Acquiring similar value chain entities for reduced competition or diversification

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Vertical Integration

Acquiring upstream or downstream companies for supply chain control.

Signup and view all the flashcards

CBBE Metrics

Assess awareness, associations, attitude, and attachment from a customer's perspective.

Signup and view all the flashcards

VALS Survey

Categorizes adults into eight psychological profiles influencing consumer behavior.

Signup and view all the flashcards

PRIZM

Offers geo-demographic classification using Census data and consumption patterns

Signup and view all the flashcards

Study Notes

Marketing Fundamentals

  • 5 C's: Essential marketing elements include customer, company, context, collaborators, and competitors.
  • 4 P's (Marketing Mix): Fundamental components are Product, Price, Place, and Promotion.

Segmentation

  • Types of Segmentation: There are two main types: Strategic (value-based) and Tactical (characteristics-based).
  • Strategic Segmentation: Focuses on unobservable needs and value creation from customers.
  • Tactical Segmentation: Based on profile (age, gender) and value (psychographics) characteristics.
  • Segmentation Process: Involves dividing target markets based on common characteristics.
  • Profile-based Segmentation Issues: Risks include heterogeneity within segments, homogeneity between segments, and misidentifying competition.
  • Segmentation Biases: Important biases include in-group/out-group bias, out-group homogeneity bias, and confirmation bias.
  • Good Segments Criteria: Must be MECE (mutually exclusive, collectively exhaustive), homogeneous within segments, measurable, reachable, durable, and match company resources.

Targeting

  • Targeting Definition: Evaluates which market segments to focus on, ignoring less valuable ones.
  • Strategic Targeting: Identifies segments to build mutually beneficial relationships.
  • Criteria for Strategic Targeting: Should assess attractiveness (size, growth, need) and compatibility.
  • Tactical Targeting: Focuses on cost-effective methods to engage target segments.

Positioning and Value

  • Blue Ocean Strategy: Emphasizes creating new market segments when competition is fierce in existing ones.
  • Positioning Statement Components: Includes target segment, reference frame, point of difference, and reasons to believe.

Customer Insights

  • Customer Lifetime Value (CLV): Represents the predicted economic value of a customer to a company.
  • Increasing CLV: Strategies to enhance CLV include improving retention, increasing margins, and lowering acquisition costs.

Consumer Behavior

  • Sales Funnel Limitations: Does not address post-purchase phases, satisfaction, and all consumer interactions.
  • McKinsey Consumer Decision Model: Stages consist of Trigger, Consideration, Evaluation, Moment of Purchase, and Post-Purchase.
  • System 1 Processing: Quick, automatic, emotional decisions typically guided by heuristics.
  • System 2 Processing: Deliberate, rational decisions that require more mental effort.
  • Motivating System Shifts: Transition to System 2 requires motivation, ability, and opportunity.

Expectations and Perceptions

  • Expectation Disconfirmation: Consumers assess satisfaction based on whether expectations are exceeded (positive) or unmet (negative).
  • Prospect Theory: Describes how individuals experience losses more acutely than gains.
  • Reference Point Evolution: Customer expectations shift based on previous experiences.

Brand Management

  • Brand Definition: Collective impressions and experiences associated with a company or product.
  • Types of Loyalty: Includes true loyalty, spurious loyalty, latent loyalty, and none at all.
  • Brand Equity: Involves awareness, position, and image of a brand.
  • Brand Value: Represents the dollar value attributed to the brand.
  • Brand Architecture Goals: Clarity, simplicity, synergy, leverage, and commonality among brands.

Brand Strategies

  • Brand Extension: Leveraging existing brand names for new product categories.
  • Brand Repositioning: Adjusting a brand’s focus for new markets or shifting preferences.
  • House of Brands vs. Branded House: House of Brands entails multiple independent brands; Branded House focuses on variations under a single brand umbrella.

Collaboration and Integration

  • Collaboration Rationale: Brands should collaborate when there's compatibility, efficiency, complementary strengths, and equal benefits for all parties.
  • Horizontal Integration: Involves acquiring similar value chain entities to reduce competition or diversify.
  • Vertical Integration: Means acquiring upstream or downstream companies for supply chain control.

Measurement Approaches

  • Brand Value Measurement Methods: Include Consumer-Based Brand Equity (CBBE), Brand Asset Valuator (BAV), Interbrand, and BERA.
  • CBBE Metrics: Assess awareness, associations, attitude, and attachment from customers' perspectives.

Case Studies Insights

  • Starbucks: Successfully invested in improving customer satisfaction leading to business growth.
  • Unilever: Expanded products for low-income segments while managing potential cannibalization.
  • Blue Apron: Analyzed high churn and focused on increasing customer retention strategies post-COVID.

Consumer Segmentation Tools

  • VALS Survey: Categorizes adults into eight psychological profiles influencing consumer behavior.
  • PRIZM: Offers geo-demographic classification using Census data combined with consumption and media usage patterns.

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Description

Explore the essential concepts of marketing fundamentals, including the 5 C's and the 4 P's, as well as different types of market segmentation. Understand how to strategically and tactically segment markets, along with addressing potential biases and criteria for good segments. This quiz covers key marketing principles vital for effective strategies.

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