Podcast
Questions and Answers
What characterizes the growth stage of the Product Life Cycle?
What characterizes the growth stage of the Product Life Cycle?
Which pricing strategy involves setting a low price to attract a large number of customers quickly?
Which pricing strategy involves setting a low price to attract a large number of customers quickly?
In which stage of the Product Life Cycle do profits typically not exist due to high introduction costs?
In which stage of the Product Life Cycle do profits typically not exist due to high introduction costs?
What is one reason that product life cycles tend to be getting shorter?
What is one reason that product life cycles tend to be getting shorter?
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What is a significant challenge in the product life cycle related to poor quality control?
What is a significant challenge in the product life cycle related to poor quality control?
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Which type of pricing strategy is designed to appeal to consumers' emotional responses?
Which type of pricing strategy is designed to appeal to consumers' emotional responses?
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Which decision is NOT one of the six basic PLACE decisions?
Which decision is NOT one of the six basic PLACE decisions?
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What issue can arise from using multiple intermediaries in a supply chain?
What issue can arise from using multiple intermediaries in a supply chain?
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What are the three main steps in a marketing strategy?
What are the three main steps in a marketing strategy?
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Which dimension is NOT commonly used to segment consumer markets?
Which dimension is NOT commonly used to segment consumer markets?
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What does a marketing plan outline?
What does a marketing plan outline?
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Which of the following is a criterion for evaluating market segments?
Which of the following is a criterion for evaluating market segments?
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What does the Five Forces Model help assess?
What does the Five Forces Model help assess?
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Which element is NOT part of the marketing mix?
Which element is NOT part of the marketing mix?
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What is a potential risk of targeting several market segments?
What is a potential risk of targeting several market segments?
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Which of the following statements about positioning is correct?
Which of the following statements about positioning is correct?
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What is considered a critical goal of marketing?
What is considered a critical goal of marketing?
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What are attractive segments that a company may choose to target referred to as?
What are attractive segments that a company may choose to target referred to as?
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Study Notes
Marketing Defined
- Marketing is the management of identifying, anticipating, and satisfying customer needs profitably.
- The right product, in the right place, at the right time, and at the right price.
- The purpose of a firm is to delight customers, at a profit.
Marketing Plan
- A marketing plan is a detailed outline that guides an organization’s marketing efforts.
- It's a crucial part of a company's success, and lacking one can lead to slow decline.
Steps to Marketing Strategy or Tactics
- Segment: Divide the market into groups based on shared characteristics.
- Target: Choose specific segments to focus on based on attractiveness and alignment with the company's goals.
- Position: Create a clear and distinct image of your product or brand in the minds of your target customers.
Segmenting Markets
- A market segment is a group of customers with similar characteristics.
- Mass Marketing: Targeting everyone in the market (not a good strategy).
- Customization: Tailoring products or services to individual customer needs (often not cost-effective).
Segmenting the Market
- The process involves three steps:
- Cut the market up: Divide the market into segments.
- Choose attractive segments: Select target segments based on factors like size, growth, and competition.
- Design an offering: Create a product or service that appeals to the chosen target segment, using the marketing mix (4Ps).
Possible Dimensions to Segment Consumer Markets
- Geographic: Location, region, climate.
- Demographics: Income level, age, gender, education, occupation.
- Psychological: Attitudes, beliefs, personality, lifestyle, values.
- Product Use: Hobby, on-the-job, special occasion, level of usage (e.g., heavy user).
Segmenting a Market
- Most effective segmentation strategies use multiple dimensions (e.g. age + income, location + lifestyle).
Targeting
- Focusing resources on particular target segments.
Evaluating Market Segments
- Segment size and growth: Assess the potential size and growth rate of the segment.
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Segment structural attractiveness: Evaluate the competitive landscape within the segment (Porter Five Forces):
- Level of competition: High competition can make it difficult to gain market share.
- Substitute products: Existing substitutes can erode market share.
- Power of buyers: Strong buyers can demand lower prices or better terms.
- Powerful suppliers: Suppliers with strong bargaining power can charge high prices.
- Company objectives and resources: Ensure the segment aligns with the company's strategic goals and resources.
Most firms have several “primary targets”
- Primary segments are the most attractive and aligned with the company's goals and resources.
There may be secondary targets
- These segments are also attractive but not as prioritized as primary targets.
- They may be pursued in the future, but may distract from key initiatives in the short-term.
A good strategy identifies targets to avoid
- Avoiding certain segments can help focus efforts on the most promising markets.
Segments to avoid
- Segments that are too small, not growing, or have excessive competition.
- Segments that don't align with the company's strategic goals, or are not profitable.
Positioning
- The perception of your product or brand in the mind of your target customers.
- It's created through the marketing mix (4Ps).
Positioning is tricky
- It's both a result of effective marketing strategy and a crucial element in crafting a good strategy.
- You need to understand your positioning to craft a strong marketing strategy.
The Marketing Mix
- The tools used by a business to influence the target market and achieve marketing objectives.
- 4Ps: Price, Product, Promotion, Place
- Other Ps: People, Process, Physical Environment
Product
- The core offering of your business.
- The product development process includes steps like idea generation, screening, concept testing, and commercialization.
New Product Development Process
- A structured approach to developing and launching new products.
- It involves several stages:
- Idea Generation: Explore different ideas for new products.
- Screening: Evaluate the viability and feasibility of ideas.
- Concept Testing: Test the product concept with potential customers.
- Business Analysis: Analyze the financial potential of the product.
- Product Development: Develop the product prototype.
- Test Marketing: Conduct pilot launches in selected markets.
- Commercialization: Launch the product widely into the market.
Products Life Cycle
- The stages a product goes through from introduction to decline.
- Each stage presents different challenges and opportunities.
Five stages of the PLC
- Product Development: Sales are zero, investment costs are high.
- Introduction: Profits are non-existent, high costs for product introduction.
- Growth: Rapid market acceptance, profits begin to increase.
- Maturity: Sales growth slows down; profits level off or decline.
- Decline: Sales decrease, profits decline.
Other Issues in Product Life Cycle
- Life Cycles are Getting Shorter: Products are becoming obsolete faster.
- Early Bird Usually Profits: Businesses that enter a market early often have an advantage.
- Fashions and Fads: Products that are fashionable or fads typically have short life cycles.
Poor quality control can kill a good product
- Consistent, high-quality products are essential for long-term success.
Price
- The amount customers pay for a product.
- Effective pricing strategies are key to profitability.
Pricing Strategies
- Economy: Low quality, low price.
- Penetration: Low price to gain market share rapidly.
- Skimming: High price for new or premium products.
- Premium: High price to position as a high-quality product.
Other Pricing Strategies
- Psychological Pricing: Using prices to create perceptions of value (e.g., ending prices with .99).
- Optional Product Pricing: Offering additional features or accessories at a separate cost.
- Captive Product Pricing: Pricing a complementary product low, then pricing the main product high.
- Product Bundle Pricing: Offering a package of multiple products at a discounted price.
- Promotional Pricing: Offering temporary price reductions to stimulate demand.
- Geographical Pricing: Adjusting prices based on location.
- Price Discrimination: Charging different prices to different customer segments.
Place
- The distribution channels or locations where customers can access a product.
Traditional Supply Chain
- Raw Materials > Producers > Distributors > Retailers > Consumers
- This traditional model involves multiple intermediaries.
Industrial Food Markets and Distribution Systems
- The food industry uses complex and specialized supply chains.
- Farmers > Processors > Distributors > Retailers > Consumers
- This model may involve specialized intermediaries such as wholesalers, brokers, and food service companies.
Six basic PLACE decisions
- Direct vs. Indirect Channels: Sell directly to customers or use intermediaries.
- Single vs. Multiple Channels: Use one distribution channel or multiple.
- Cumulative Length of Multiple Channels: Determine the length of a multi-step distribution chain.
- Types of Intermediary: Identify appropriate intermediaries (e.g., wholesalers, retailers).
- Number of Intermediaries: Determine the number of intermediaries needed at each level.
- Which Companies as Intermediaries: Choose specific companies to avoid conflicts within the distribution channel.
Where is your product placed?
- Consider the physical locations and online platforms where your product is available.
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