Principles Of Marketing MKT1014/MKT2224 PDF

PRINCIPLES OF MARKETING MKT1014/ MKT2224 WEEK 2 – LECTURE 2 These teaching materials are protected under the Copyright Act 1987. Duplication, in any form, including digitally, is prohibited by law and a pun...

PRINCIPLES OF MARKETING MKT1014/ MKT2224 WEEK 2 – LECTURE 2 These teaching materials are protected under the Copyright Act 1987. Duplication, in any form, including digitally, is prohibited by law and a punishable offence. ©2021 Our Vision: To be a World Class University Copyright © 2021, 2018, 2016 Pearson Education, Inc. Principles of Marketing Eighteenth Edition Chapter 7 Customer Value-Driven Marketing Strategy: Creating Value for Target Customers Copyright © 2021, 2018, 2016 Pearson Education, Inc. P&G: Competing with Itself—and Winning By offering brands and sub-brands that target specific segments of detergent preferences, here Tide Free & Gentle, Tide offers a unique value proposition to each distinct customer segment. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Learning Objectives 7.1 Define the major steps in designing a customer-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. 7.2 List and discuss the major bases for segmenting consumer and business markets. 7.3 Explain how companies identify attractive market segments and choose a market-targeting strategy. 7.4 Discuss how companies differentiate and position their products for maximum competitive advantage. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Learning Objective 1 Define the major steps in designing a customer-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.. Our Vision: To be a World Class University Copyright © 2021, 2018, 2016 Pearson Education, Inc. Customer-Driven Marketing Strategy Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Learning Objective 2 List and discuss the major bases for segmenting consumer and business markets.. Our Vision: To be a World Class University Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (1 of 14) Market segmentation requires dividing a market into smaller segments with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (2 of 14) Segmenting consumer markets Segmenting business markets Segmenting international markets Requirements for effective segmentation Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (3 of 14) Segmenting Consumer Markets Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (4 of 14) Segmenting Consumer Markets Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, cities, or even neighborhoods. Copyright © 2021, 2018, 2016 Pearson Education, Inc. McDonalds Menu Copyright © 2021, 2018, 2016 Pearson Education, Inc. KFC Menu Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (5 of 14) Segmenting Consumer Markets Demographic segmentation divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (6 of 14) Segmenting Consumer Markets Age and life-cycle stage segmentation divides a market into different age and life-cycle groups. Gender segmentation divides a market into different segments based on gender. Income segmentation divides a market into different income segments. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (7 of 14) Segmenting Consumer Markets Psychographic segmentation divides a market into different segments based on social class, lifestyle, or personality characteristics. Lifestyle segmentation: Panera caters to a healthy eating lifestyle segment of people who want more than just good-tasting food—they want food that’s good for them, too. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (8 of 14) Segmenting Consumer Markets Behavioral segmentation divides a market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (9 of 14) Segmenting Consumer Benefit segmentation: Schwinn Markets makes bikes for every benefit Behavioral Segmentation segment. For example, its e- bikes “help make the morning Occasions commute or ride around town a Benefits sought little bit easier.” User status Usage rate Loyalty status Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Behavioral Segmentation 1. Occasions refer to when consumers get the idea to buy, actually make their purchase, or use the purchased item. i. Occasion segmentation can help firms build up product usage. Campbell’s advertises its soups more heavily in the cold winter months, and Home Depot runs special springtime promotions for lawn and gardens products. Other marketers prepare special offers and ads for holiday occasions or nontraditional occasions. Copyright © 2021, 2018, 2016 Pearson Education, Inc. 2. Benefits sought refers to finding the major benefits people look for in a product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit. 3. User status: nonusers, ex-users, potential users, first-time users, and regular users of a product. Marketers want to reinforce and retain regular users, attract targeted nonusers, and reinvigorate relationships with ex-users. 4. Usage rate: light, medium, and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of total consumption. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc. 5. Loyalty. - Some consumers are completely loyal—they buy one brand all the time and can’t wait to tell others about it. - Other consumers are somewhat loyal—they are loyal to two or three brands of a given product or favor one brand while sometimes buying others. - Still other buyers show no loyalty to any brand—they either want something different each time they buy, or they buy whatever’s on sale. A company can learn a lot by analyzing loyalty patterns in its market, starting with its own loyal customers. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (10 of 14) Segmenting Consumer Markets Multiple segmentation is used to identify smaller, better-defined target groups. Experian’s Mosaic USA system classifies U.S. households into one of 71 lifestyle segments and 19 levels of affluence. Using Acxiom’s Personicx segmentation system, marketers paint a surprisingly precise picture of who you are and what you buy. Personicx clusters carry such colorful names as “Skyboxes and Suburbans,” “Shooting Stars,” “Hard Chargers,” “Soccer and SUVs,” “Raisin’ Grandkids,” “Truckin’ and Stylin’,” “Pennywise Mortgagees,” and “Cartoons and Carpools.” Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (11 of 14) Segmenting Business Markets Consumer and business marketers use many of the same variables to segment their markets. Additional variables include: Customer operating characteristics Purchasing approaches Situational factors Personal characteristics Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (12 of 14) Segmenting International Markets Geographic location Economic factors Political and legal factors Cultural factors Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (13 of 14) Segmenting International Markets Intermarket segmentation involves forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Segmentation (14 of 14) Requirements for Effective Segmentation Measurable Accessible Substantial Differentiable Actionable Copyright © 2021, 2018, 2016 Pearson Education, Inc.  *extra notes Measurable: The size, purchasing power, and profiles of the segments can be measured. Substantial: The market segments are large or profitable enough to serve. Accessible: The market segments can be effectively reached and served. 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. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 1 ________ involves dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. A) Mass customization B) Market targeting C) Market segmentation D) Differentiation E) Positioning A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 2 Many companies today are localizing their products, advertising, promotion, and sales efforts to fit the needs of individual regions, cities, and neighborhoods. This is an example of ________. A) geographic segmentation B) product diversification C) branding D) psychographic segmentation E) demographic segmentation A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 3 ________ segmentation divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. A) Geographic B) Benefit C) Occasion D) Psychographic E) Demographic A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 4 ________ segmentation divides buyers into different segments based on social class, lifestyle, or personality characteristics. A) Benefit B) Occasion C) Geographic D) Demographic E) Psychographic A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 5 ________ segmentation has long been used in clothing, cosmetics, toiletries, and magazines. A) Behavioral B) Gender C) Benefit D) Occasion E) Geographic A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 6 Tropicana promotes drinking orange juice at any time of day as a cool, refreshing drink. The market segmentation approach Tropicana is using is ________. A) occasion segmentation B) benefit segmentation C) age and life-cycle segmentation D) gender segmentation E) behavioral segmentation A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 7 Calypso Motors recently rolled out its Proteus hatchback. Proteus combines the attractiveness of a luxury car with the excellent agility of a sports car. Calypso Motors is confident that Proteus will appeal to both sports car enthusiasts as well as the luxury segment. Which of the following types of market segmentation is evident here? A) gender segmentation B) income segmentation C) benefit segmentation D) geographic segmentation E) age and life-cycle segmentation A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. End of Chapter 7 Part – 1 ✓ 7.1 Define the major steps in designing a customer-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. ✓ 7.2 List and discuss the major bases for segmenting consumer and business markets. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Learning Objective 3 Explain how companies identify attractive market segments and choose a market-targeting strategy. Our Vision: To be a World Class University Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Targeting (1 of 10) Evaluating Market Segments Segment size and growth Segment structural attractiveness Company objectives and resources Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Targeting (2 of 10) Selecting Target Market Segments A target market is a set of buyers who share common needs or characteristics that the company decides to serve. Copyright © 2021, 2018, 2016 Pearson Education, Inc. https://www.youtube.com/watch?v=FTrB7HHNbvY&list=PLN5 PMjQv7C- 6DNiIWLQlcnXotViRzIiG7&index=20&ab_channel=retrooldco mmercials https://www.youtube.com/watch?v=uaWA2GbcnJU&list=PLN5 PMjQv7C- 6DNiIWLQlcnXotViRzIiG7&index=19&ab_channel=thailifechan nel Market Targeting (3 of 10) Figure 7.2 Market-Targeting Strategies Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Targeting (4 of 10) Selecting Target Market Segments Undifferentiated marketing targets the whole market with one offer. Mass marketing Focuses on common needs rather than what’s different Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Targeting (5 of 10) Selecting Target Market Segments Differentiated marketing targets several different market segments and designs separate offers for each. Goal is to achieve higher sales and stronger position More expensive than undifferentiated marketing Differentiated marketing: With more than 30 differentiated hotel brands, Marriott International dominates the hotel industry, capturing a much larger share of the travel and hospitality market than it could with any single brand alone. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Targeting (6 of 10) Selecting Target Markets Concentrated marketing targets a large share of a smaller market. Limited company resources Knowledge of the market More effective and efficient Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Targeting (7 of 10) Selecting Target Market Segments Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Local marketing Individual marketing Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Targeting (8 of 10) Selecting Target Market Segments Local marketing involves tailoring brands and promotion to the needs and wants of local customer segments. Cities Neighborhoods Stores Copyright © 2021, 2018, 2016 Pearson Education, Inc. Local Sarawak premium grocer Market Targeting (9 of 10) Selecting Target Markets Individual marketing: The Individual marketing Rolls-Royce Bespoke design involves tailoring products team works closely with and marketing programs to individual customers to help the needs and preferences of them create their own unique individual customers. Rolls-Royces. Also known as: One-to-one marketing Mass customization Copyright © 2021, 2018, 2016 Pearson Education, Inc. Market Targeting (10 of 10) Selecting Target Market Segments Choosing a targeting strategy depends on Company resources Product variability Product life-cycle stage Market variability Competitor’s marketing strategies Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Learning Objective 4 Discuss how companies differentiate and position their products for maximum competitive advantage. Our Vision: To be a World Class University Copyright © 2021, 2018, 2016 Pearson Education, Inc. Differentiation and Positioning (1 of 9) Product position is the way the product is defined by consumers on important attributes. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Differentiation and Positioning (2 of 9) Positioning maps show consumer perceptions of marketer’s brands versus competing products on important buying dimensions. Figure 7.3 Positioning map: Large luxury SUVs Copyright © 2021, 2018, 2016 Pearson Education, Inc. Differentiation and Positioning (3 of 9) Choosing a Differentiation and Positioning Strategy Identifying a set of possible competitive advantages to build a position Choosing the right competitive advantages Selecting an overall positioning strategy Communicating and delivering the chosen position to the market Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Differentiation and Positioning (4 of 9) Choosing a Differentiation and Positioning Strategy Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Differentiation and Positioning (5 of 9) Choosing a Differentiation and Positioning Strategy Identifying a set of possible competitive advantages to differentiate along the lines of: Product Services Channels People Image Copyright © 2021, 2018, 2016 Pearson Education, Inc. Differentiation and Positioning (6 of 9) Choosing a Differentiation and Positioning Strategy A competitive advantage should be: Important Distinctive Superior Communicable Preemptive Affordable Profitable Copyright © 2021, 2018, 2016 Pearson Education, Inc.  *extra notes 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. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Differentiation and Positioning (7 of 9) Choosing a Differentiation and Positioning Strategy Value proposition is the full mix of benefits upon which a brand is positioned. Figure 7.4 Possible Value Propositions Copyright © 2021, 2018, 2016 Pearson Education, Inc.  High end product Benefit for Price More for more: This positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. Although more for more can be profitable, this strategy can also be vulnerable. It often invites imitators who claim the same quality but at a lower price. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Offering more benefit at the same price More for the same: Companies can attack a competitor’s more for more positioning by introducing a brand offering comparable quality at a lower price. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Offering same products but cheaper The same for less: Offering the same for less can be a powerful value proposition—everyone likes a good deal. VS Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Economic - cheap Less for much less: A market almost always exists for products that offer less and therefore cost less. Few people need, want, or can afford “the very best” in everything they buy. In many cases, consumers will gladly settle for less than optimal performance or give up some of the bells and whistles in exchange for a lower price. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc.  Offer more benefit for cheaper price More for less: Of course, the winning value proposition would be to offer more for less. Many companies claim to do this. And, in the short run, some companies can actually achieve such lofty positions. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Differentiation and Positioning (8 of 9) Choosing a Differentiation and Positioning Strategy Positioning statement summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference) Copyright © 2021, 2018, 2016 Pearson Education, Inc. Differentiation and Positioning (9 of 9) Communicating and Delivering the Chosen Position Choosing the positioning is often easier than implementing the position. Establishing a position or changing one usually takes a long time. Maintaining the position requires consistent performance and communication. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 1 ________ consists of evaluating each market segment's attractiveness and selecting one or more segments to enter. A) Positioning B) Mass customization C) Market targeting D) Market segmentation E) Differentiation A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 2 ________ involves actually distinguishing the firm's market offering to create superior customer value. A) Mass customization B) Differentiation C) Market segmentation D) Diversifying E) Targeting A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 3 When marketers at Fair & Leigh Inc. selected the Gen Z, a demographic group that includes many college students, as an untapped group of potential customers for their new line of products, they were engaging in ________. A) occasion segmenting B) local marketing C) market diversification D) market targeting E) product positioning A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 4 ________ refers to a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. A) Individual marketing B) Local marketing C) Niche marketing D) Undifferentiated marketing E) Segmented marketing A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. Question 5 Sanguine Services is a small company that uses a marketing strategy in which its limited resources are employed to target a large share of two small market segments. Sanguine most likely uses which of the following marketing strategies? A) individual marketing B) one-to-one marketing C) mass marketing D) concentrated marketing E) trigger-based marketing A C E B D Copyright © 2021, 2018, 2016 Pearson Education, Inc. End of Chapter 7 Part – 2 ✓ 7.3 Explain how companies identify attractive market segments and choose a market-targeting strategy. ✓ 7.4 Discuss how companies differentiate and position their products for maximum competitive advantage. Copyright © 2021, 2018, 2016 Pearson Education, Inc. Copyright This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Copyright © 2021, 2018, 2016 Pearson Education, Inc.