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ISU MKT 230 - Evaluate Relevant Market Segments

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MKT 230 1st Edition Lecture 11 Outline of Last Lecture I. Target Marketsa. Market SegmentationII. Step 1: Identify Appropriate Targeting StrategiesIII. Step 2: Determining Which Segmentation and Variables to UseIV. Step 3: Develop Market Segment ProfileOutline of Current Lecture I. Step 4: Evaluate Relevant Market SegmentsII. Step 5: Select Specific Target MarketsIII. Buying Behavior and Possible InfluencesIV. Consumer Buying Decision ProcessCurrent Lecture – Monday, February 23, 2015Chapter 6 Notes ContinuedI. Step 4: Evaluate Relevant Market Segments- Sales estimates can be measured along severl dimensionsoMarket Potential – total amount of product customer will purchase in a specific period1. Realistic total amount that can be sold2. You know you wont get all of it so you look at:oCompany Sales Potential – Maximum percentage of market share that a firm can expect for a product1. If we do really good, how much will we get?oBreakdown Approach – Measuring company sales potential based on a general economic forecastoWhat will affect the market potential?These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.1. General economy2. The marketing mix3. Competitors- Competitive assessmentoFirms must assess competitors already in the segments being consideredoMarket segments that are seen as attractive based on sales estimates may be less soafter competitive assessmentoMeaning: you might not want to compete against certain companies if they already have most of the market share and are very dominant- Cost EstimatesoMaintaining the right marketing mix can be expensiveoCompanies must consider the cost of taking a potential product to marketII. Step 5: Select Specific Target Markets- Determine which approach is best- Does the company have the resources to compete?- Identifying the right target market is key to implementing a successful marketing strategyoFailure to do so can lead to low sales- Product positioning – creating and maintaining a concept of a product in a customer’s mindoMarketers seek to position a product so that it appears to have the characteristics the target market most desires1. Example: When you think of a cheap and fast place to grab lunch most people will think of McDonald’s even though that might not be the cheapest or fastest place2. Toothpaste example: all brands have a different approach and key characteristic that they want to stick out to customers- Perceptual Mapping – products position is a result of customer’s perceptions of products attributes relative to those of competitive brandsoCreated by questioning a sample of consumers about perceptions of products and brands- Bases for positionsoCompetitoroPricingoQuality leveloWhat the product doesoBenefits the product offers- Repositioning oCompanies spend a lot of time and money creating their position as a companyoSo why might they want to reposition themselves>1. Try to change how people think of them2. They want to update their image3. They want to change with the changing customer values (Value of food vs. quality of food)4. New competitorsoRepositioning can be accomplished by:1. Changing the price2. Changing the distribution3. Changing the image through promotion4. Changing packaging5. Changing benefitsoExample: Tide – sometimes packaging has been changed for various reasons like more efficient distribution, to grab customer’s attention, or changing the packaging so that you don’t have to change the price (meaning same price for less product)oLegos example: They changed their image and somewhat changing their prices, theyaren’t just for kids anymore and they can be very expensive as well- Developing a sales forecastoSales forecast – Amount of a product a company expects to sell during a specific period at a specified level of market activityoForecasting methods can be scientific or arbitrary and vary in complexity and expensesoDepends on costs, products, market characteristics, time span, purpose of forecasting, historical sales data, and many other variables- Where do we get sales forecasts?oOur past sales or competitor salesoBuy sales information from places like BloombergoLook at the economy and buying habits- Executive judgment – sales forecasting method based on intuition of one or more executivesoExample: The convertible comeback - SurveysoCustomer Forecast – Survey customers on types and quantities of products they intend to buy during specific periodsoSales Force Forecast – surveying the firms sales force regarding anticipated salesoExperts Forecast Survey – prepared outside the firm by experts outside the field (economists, etc.)- Time-Series AnalysisoUses historical data- RegressionoLooks at relationships between different variables- Market Test – making products available to buyers in one or more test areas and measuring purchases and consumer responsesoInformation based on customer’s actual versus intended purchases behavioroTime-consuming and expensiveoEffective at estimating sales of a new product- Most companies will use multiple forecasting methods because short-range and long-range forecasting both require different methods III. Buying Behavior (Chapter 7 Notes)- Steps consumers might take in buying a washer and dryer– in class exampleoIs it energy efficient?oResearching brandsoLooking at customer reviewsoWord of mouthoLook at size and other constraintsoEstablish a price rangeoPrice vs. expected lifeoConsider service warrantiesoPrice matching- Buying Behavior – decision process and actions of people involved in buying and using the product- Consumer Buying Behavior – decision process and purchasing activities of ultimate consumer, those people who purchase product for personal or household use and not for business purposes- Why is buying behavior important to know for marketing?oThe marketing mix has to answer certain concerns of the buyersoConsumption is a key elementoThis continues after the purchase has taken placeoUnderstanding buying behavior and consumers can help marketers better respond to customer needs and develop a long-term relationshipIV. Consumer Buying Process and Possible InfluencesoConsumer buying process1. Problem Recognition2. Information Search3. Evaluation of alternatives4. Purchase5. Post-Purchase Evaluation- Problem Recognition Stage – occurs when buyer becomes aware of difference between desired state and actual


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