Marketing Exam 2 ReviewCHAPTER 6To be useful, market segments must be:MeasurableAccessibleSubstantialDifferentiableActionableBenefit segmentation often results in the creation of multiple market offering with distinct sets of benefits.  Marriott Consider competition, existence of substitute products, and the power of buyers and suppliers.Factors to consider:Company resourcesProduct variabilityProduct’s life-cycle stageMarket variabilityCompetitors’ marketing strategiesA product’s position is the way a product is defined by consumers on important attributes —the place the product occupies in consumers’ minds relative to competing products.Differentiation and Positioning- Identifying a set of possible value differences and competitive advantages on which to build a position.Types of differentiation:Product differentiationServices differentiationChannels differentiationPeople differentiationImage differentiationMany marketers believe that only one difference should be promoted via the unique selling proposition (USP).Positioning Statement Format: To (target segment and need) our (brand) is (a concept) that (point of difference).”Competitive Positioning Example – DiGiornos pizzaCHAPTER 7Augmented product: Additional services and benefits such as delivery and credit, instructions, installation, warranty, and service. Industrial Products: Those purchased for further processing or for use in conducting business.Types of consumer goods: convenience (Coke), shopping (furniture), specialty (Rolex), unsought (funeral services)Individual Product Decisions:Product Line: A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges.Line extension: Introduction of additional items in a given product category under the same brand name (e.g., new flavors, forms, colors, ingredients, or package sizes).Brand extension: Using a successful brand name to launch a new or modified product in a new category.CHAPTER 870-90% of new consumer products fail within 12 monthswhy? – overestimation of market size, design issues, incorrectly positioned, excessive costsexternal sources of idea generation: customers, suppliers, distributers, competitionmarket analysis: find target market, define value, market analysis, budget, profit analysisbusiness analysis: review costs to make projectionsproduct dev: prototypes, large investmenttest marketing: can be expensivecommercialization: timing, location, market rollout planTeam based NPD: Some steps are performed simultaneously rather than the entire process being sequentialProduct Life Cycle Stages: 1) Introduction 2) Growth 3) Maturity 4)DeclineStrategies used to manage the PLC during maturity include:Modifying the marketModifying the productModifying the marketing mixCHAPTER 9Broadly, price is the sum of all the values that consumers exchange for the benefits of having or using the product or service.Marketing objectives: survival-low prices to increase demand (Amazon), current profit maximization, market share leadership-low as possible prices to capture the market, product quality leadership- high prices to cover higher performance quality and R&DPrice must be higher than variable costs.market & demand:pure competition- many buyers and sellers, little effect on pricemonopolistic competition – many buyers and sellers, range of prices – clothingoligopolistic – few sellers, responsive, sensitive to others – airlinesmonopoly – single seller – electricitydemand curve can be upward sloping – MBA program, demand increased when price increasedInelastic : steep demand curve, demand hardly changesElastic: demand changes greatly with priceCost-plus pricing- standard markup to the cost of the product; minimizes competition; ignores demand; simplest pricing methodValue-based pricing – start with customerCompetition- based pricing – not totally flexible; going rate: based on competitor’s prices; sealed bid: what they think competitor’s prices areMarket Skimming: Setting a High Price for a New Product to “Skim” Maximum Revenues from the Target Market.Market Penetration: Setting a Low Price for a New Product in Order to “Penetrate” the Market Quickly and Deeply; Attract a Large Number of Buyers and Win a Larger Market Share.Product-Mix Pricing: Involves setting price steps between various products in a product lineoptional product pricing: accessory products sold with main product – car companies w/ optionscaptive-product: must be used with main product – printer inkby-productproduct bundling: theater season ticketsPsychological pricing: when customers can’t judge products, use price as a quality signalprice cuts- excess capacity, falling market shareprice increase- cost inflation, over to demand (to lower demand)CHAPTER 10Distribution Channel: Set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.marketing intermediaries: gains more than it can achieve on its own; contacts, experience, specialization,scale of operationChannel Design: product availability- desired level of coverage; promotional effort-selling support, customer service, market informationA Major Trend is Toward Disintermediation Which Means that Product and Service Producers are Bypassing Intermediaries and Going Directly to Final Buyers or That New Types of Channel Intermediaries are Emerging to Displace Traditional OnesHorizontal Marketing System: Two or More Companies at One Channel Level Join Together to Follow a New Marketing Opportunity. – Subway in WalmartHybrid Marketing System: A Single Firm Sets Up Two or More Marketing Channels to Reach One or MoreCustomer Segments.Channel ManagementIncentives – to encourage promotional activities – sales person incentive fund: SPIFsHorizontal Conflict occurs among firms at the same level of the channel, i.e K-mart vs. WalmartVertical Conflict occurs between different levels of the same channel, i.e. Sony vs. Walmart –contactsCHAPTER 11Retailing includes all the activities involved in selling products or services directly to final consumers for their personal use.types of retailers: amount of service the offer, breadth/depth of service, relative prices charged, how they are organizedservice: self-service –pigglywiggly; limited service – provide some