MARK 3321 1st Edition Lecture 7 Outline of Last Lecture I. Factors Influencing Buying DecisionsII. Market segmentationIII. Bases for Segmenting Consumer MarketsOutline of Current Lecture I. Steps in Segmenting MarketsII. Types of Targeting Strategya. Undifferentiatedb. Concentratedc. Multi-segmentIII. Positioninga. BasesIV. Business MarketingV. Major Categories of Business ConsumersVI. Demand in Business MarketsVII. Types of Business ProductsCurrent LectureCH 8 – Segmenting and Targeting Markets (continued)- Steps in Segmenting Marketso 1. Select a market for studyo 2. Choose bases for segmentationo 3. Select descriptors (specific segmentation variables)o 4. Profile and analyze segmento 5. Select target markets Part of marketing strategyo 6. Design, implement, and maintain marketing mix Part of marketing strategyo Market segmentation is a natural part of the market strategyThese 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.- Undifferentiated Targeting strategyo Creating one marketing mix and apply it to all the different baseso Advantages Potential savings on production and marketing costso Disadvantages Unimaginative product offerings Company more susceptible to competition- Concentrated targeting strategyo Pick one segment to focus ono Advantages Concentration of resources Can better meet the needs of a narrowly defined segment Allows some small firms to better compete with larger ones Strong positioningo Disadvantages Segments too small, or changing Large competitions may market to niche segment- Multi-segment targeting strategyo Choose a few segments and make slightly different marketing mixeso Advantages Greater financial success Economies of scale in producing/marketingo Disadvantages High cost Cannibalization- Positioningo Positioning Developing a specific marketing mix to influence potential customers’ overall perception of a brand, product, or organization in generalo Position The place a product, brand, or group of products occupies in consumers’ mind relative to competing offerings Product differentiationo Repositioning Changing consumers’ perception of a brand in relation to competing brands Ex: new Buick commercials- Positioning baseso Attribute o Emotiono Use or applicationo Product usero Product classo Competitoro Price and qualityCH 7 – Business Marketing- Business (industrial) marketingo The marketing of goods and services to individuals and organizations for purposes other than personal consumption- Business Marketing on the interneto B2B e-commerce The use of the internet to facilitate the exchange of goods, services, and info between organizationso Many B2B marketers are experimenting with how to use social media to build successful relationships with business customers- Major Categories of Business Customerso Producers OEMs (original equipment manufacturer)o Resellers Wholesalers Retailerso Governments Federal State Localo Institutions Schools, churches, civic clubs Hospitals, unions, foundations Colleges, fraternal groups, other- Segmenting Business Markets: Company Characteristicso Important segmentation variables Geographic location Volume of purchase Company size Product use- NAICSo North American Industry Classification System A detailed numbering system developed to classify north American business establishments by their main production processes The longer the NAICS code, the smaller the industry segment- Demand in Business Marketso Derived Demand for business products results from demand for consumer productso Inelastic A change in price will not significantly affect the demand for producto Joint Multiple items are used together in final product Demand for one item affects allo Fluctuating Demand for business products is more volatile than for consumer products Multiplier effect- Phenomenon in which a small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to make the consumer product- Types of Business Productso Major equipment, Accessory equipment, Supplies Major equipment is most expensive like buildings Accessory equipment is not as long-lasting These don’t get sold to consumerso Raw materials, Component parts, Process materials Raw materials are taken directly from nature Component parts Process materials are parts from nature that aren’t in the same form consumers get them (coffee grounds to businesses that turn into coffee for consumers) Eventually get passed to the consumero Business services Consulting, accounting, market research, etc. Not a tangible product - Roles in the Buying centero Initiatoro Influencers/evaluatorso Gatekeeperso Decidero Purchasero