MKT 3010 Chapter 4 Study Guide PDF

MKT 3010 Chapter 4 Study Guide When identifying a company’s market, some managers get into trouble because they describe their markets solely in terms of products they sell. A market is a group of potential customers with similar needs who are willing to exchange something of value with sellers offe...

MKT 3010 Chapter 4 Study Guide When identifying a company’s market, some managers get into trouble because they describe their markets solely in terms of products they sell. A market is a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods or services—that is, ways of satisfying those needs. A generic market is a market with broadly similar needs—and sellers offering various, often diverse, ways of satisfying those needs. It is sometimes hard to understand and define generic markets because quite different product types may compete with each other. A product-market is a market with very similar needs and sellers offering various close substitute ways of satisfying those needs. In a product-market concerned with specific products, consumers compare them with similar products that may satisfy their needs. Customer type refers to the final consumer or user of a product type. To define customer type, marketers should identify the final consumer or user of the product type, rather than the buyer—if they are different. Marketers must break apart—disaggregate—all possible needs into some generic markets and broad product-markets in which the firm may be able to operate profitably. Marketing-oriented managers think of segmenting as an aggregating process— clustering people with similar needs into a “market segment.” The segmenter wants to aggregate individual customers into some workable number of relatively homogeneous target markets and then treat each target market differently. A “good” market segment should be operational. This leads marketers to include demographic dimensions such as age, sex, income, location (geographic region), and family size, but not personality. Gloria appears to be following the single target market approach. It means segmenting the market and picking one of the homogeneous segments as the firm’s target market. When a firm is using a single target market approach. It means segmenting the market and picking one of the homogeneous segments as the firm’s target market. Segmenting the market and choosing two or more segments, then treating each as a separate target needing a different marketing mix is the multiple target market approach. Procter & Gamble is using the multiple target market approach, as it segments the market and chooses two or more segments, and then treats each as a separate target market needing a different marketing mix. Combiners try to increase the size of their target markets by combining two or more segments. They look at various submarkets for similarities rather than differences. A combined target market approach doesn’t try to fine-tune each element of the marketing mix to appeal to each of the smaller submarkets. It may require less investment. Combiners try to increase the size of their target markets by combining two or more segments. They look at various submarkets for similarities rather than differences. Then they try to extend or modify their basic offering to appeal to these “combined” customers with just one marketing mix. A segmenter that really satisfies the target market can often build such a close relationship with customers so that it faces no real competition. However, combiners are always vulnerable to competitors. Segmenters usually fine-tune their marketing mixes for each target market—perhaps making basic changes in the product itself—because they want to satisfy each segment very well. Cost considerations usually encourage more aggregating and favor combining as costs often drop due to economies of scale. Geographic segmenting dimensions include region of world/country, region in country, and size of city. Buyer personas are fictional depictions of customers illustrative of each target segment. Buyer personas emerge from customer research and are used to help everyone across an organization (research and development, customer service, advertising, website development, etc.) to better empathized with target customers and develop a marketing orientation. Critical data is often less available—and less dependable—as firms move into international markets. This is one reason why some firms insist that local operations and decisions be handled by natives. They, at least, have a feel for their markets. Marketing use market segmentation to find target markets. A market grid is a good way to help visualize the broad product-market and its narrow product-markets. Draw the market grid as a rectangle with boxes inside representing smaller, more homogeneous segments. Think of the whole grid as representing the broad product-market and each of the boxes as a different (narrower) product-market. To estimate the size of the product-markets, the marketing manager will examine demographic data. This occurs during step 6 of the 6-step approach to market segmentation. Clustering techniques try to find similar patterns within sets of data. Clustering groups customers who are similar on their segmenting dimensions into homogeneous segments. With customer relationship management (CRM), the seller fine-tunes the marketing effort with information from a detailed customer database. The database stores information that is useful for segmentation. The CRM system at book-seller’s website recommends related books that have been purchased by other customers who bought that book. A CRM system usually includes data on a customer’s past purchases as well as other segmenting information. Positioning issues are especially important when competing products in a market appear to be very similar in the eyes of customers. Once managers know what customers think, they can choose to leave the product (and marketing mix) alone or reposition it. Repositioning a product can mean physical changes in the product or simply image changes based on promotion. Positioning refers to how customers think about proposed or present brands in a market, thereby helping strategy planners see how customers view competitors’ offerings. Positioning maps are based on customers’ perceptions—the actual characteristics of the products might be different. Positioning usually focuses on specific product features and brands that are close competitors in the product-market and that are related to two or three product features that are important to product managers. Positioning refers to how customers, not managers, view brands in a market. Perceptual mapping provides details of positioning techniques. A positioning statement about a new product to use in designing an advertising campaign includes a description of the target market, the product type, the primary benefits of using the product, and how this product is different from, and better than, competitive products.