MKT 305 1st Edition Exam 3 Study Guide Chapters 8 10 Chapter 8 Market Segmentation Involves aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action Market Segments Relatively homogeneous groups of prospective buyers that result from the market segmentation process Ways to Segment Consumer Markets Geographic segmentation region Demographic segmentation household size Psychographic segmentation lifestyle Behavioral segmentation product features Behavioral segmentation usage rate Ways to Segment Organizational Business Markets Geographic segmentation statistical area Demographic segmentation NAICS code Demographic segmentation number of employees Behavioral segmentation usage rate Product differentiation Strategy that involves a firm using different marketing mix activities such as product features and advertising to help consumers perceive the product as being different and better than competing products Steps in Segmenting and Targeting Markets 1 Group potential buyers into segments 2 Group products to be sold into categories 3 Develop a market product grid and estimate size of markets 4 Select target markets 5 Take marketing actions to reach target markets Criteria to Use in Selecting the Target Segments Market size Expected growth Cost of reaching the segment Compatibility with the organization s objectives and resources Product Positioning A product s position is based on consumer perception of it Two types of product positioning include head to head and differentiation Product Repositioning To reposition a product in consumer s minds you must change attributes marketing or both Perceptual Map Helps producers marketers know how best to reposition their product Product Positioning Using Perceptual Maps 1 Identify the important attributes for a product or brand class 2 Discover how target customers rate competing products or brands with respect to these attributes 3 Discover where the company s product or brand is on these attributes in the minds of potential customers 4 Reposition the company s product or brand in the minds of potential customers Chapter 9 Product A good service or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers needs and is received in exchange for money or something else of value Services Intangible activities or benefits that an organization provides to satisfy consumes needs in exchange for money or something else of value Consumer Products Products purchased by the ultimate consumer Business Products Products organizations buy that assist in providing other products for resale Convenience Products Items that the consumer purchases frequently conveniently and with a minimum of shopping effort Shopping Products Items for which the consumer compares several alternatives on criteria such as price quality or style Specialty Products Items that the consumer makes a special effort to search out and buy Unsought Products Items that the consumer does not know about or knows about but does not initially want Derived Demand Sales of business products frequently result or are derived from the sale of consumer products Example Consumer demand for Ford increases the company may increase its demand for paint spraying equipment Support Products Items used to assist in producing other products and services Classifying Services Delivery by Person Business Delivery by Non profit Delivery by Government What impacts expectations 1 Frequency of use 2 Distance between input output and distance between investment return 3 Conditioning Example People trust non profits more than governmental agencies Uniqueness of Services Intangibility Services are not a physical object that can be seen Inconsistency Quality of service varies with provider Inseparability The provider and services are inseparable Inventory Pertains to whether or not service is being rendered Five Dimensions of Service Reliability Do we deliver on our promises Tangibility Do we present a professional image appearance Responsiveness Do we respond to our customers in a high quality manner Assurance Do we know and do we appear to know what we are doing Empathy Do we listen take customer needs concerns seriously and really care about each customer Product Line Group of product or service items that are closely related because they satisfy a class of needs are used together are sold to the same customer group are distributed through the same outlets or fall within a given price range Product Mix Consists of all of the product lines offered by an organization Reasons New Products Fail Insufficient product protocol Blinders caused by bias Inadequate competitive analysis Does not meet consumer needs Too small a target market Insufficient differentiation Poor product quality performance Poor positioning Inadequate budget Insufficient access to market Bad timing Poor execution of marketing Small Business Failure 1 Lack of capital 2 Insufficient customer base target market 3 Poor marketing 4 Victim of their own success Organizational problems in new product features 1 Not really listening to the voice of the consumer 2 Skipping stages in the new product process 3 Pushing a poorly conceived product into the market to generate quick revenue 4 Encountering groupthink in task force and committee meetings 5 Not learning critical takeaway lessons from past failures 6 Avoiding the NIH problem Seven stages in the new product process Stage 1 New product strategy development Stage 2 Idea generation Stage 3 Screening and evaluation Stage 4 Business analysis Stage 5 Development Stage 6 Market testing Stage 7 Commercialization Chapter 10 Product Life Cycle Introduction awareness Growth differentiation Maturity loyalty Decline deletion Decline Includes Harvest Liquidation Divestiture Selling Different Types of Product Life Cycles High learning products slow trending complexity low need perception Low learning products take off Fads repeating fads Seasonal Criteria in Picking a Good Brand Name Product benefits Memorable distinctive positive Fit company or product image No legal or regulatory restrictions Simple and emotional