Marketing 2101 Assurance of Learning Study Guide Spring 2013 Identifying Markets and Market Segments o A company decides which customers it will serve segmentation and targeting and how differentiation and positioning It identifies the total market and then divides it into smaller segments selects the most promising segments and focuses on serving and satisfying the customers in these segments o Market penetration Company growth by increasing sales of current products to current market segments w o changing the product o Market Development company growth by identifying and developing new market segments for current company products o Product development Company growth through starting up or acquiring businesses outside the company s current products and markets o Diversification o Market segment group of consumers who respond in similar way to a given set of marketing efforts o Product Market expansion grid Exploring Components of a marketing strategy o Customer driven marketing strategy Market segmentation dividing market into distinct groups of buyers who have different needs etc and who might require separate products or marketing programs Marketing Targeting evaluating a markets attractiveness and selecting one or more segments to enter Differentiation Actually differentiating the market offering to create superior customer value Positioning arranging for a product to occupy a clear desirable place relative to competing products in the minds of target consumers o Integrated Marketing Mix Marketing mix set of tactical marketing tools product price place and promotion that the firm blends to produce the response it wants in the target market Product Customer solution Price Customer cost Place convenience Promotion Communication Reviewing The role of marketing research o Marketing research systematic design collection analysis and reporting of data relevant to a specific marketing situation facing an organization o Companies use marketing research b c it gives marketers insights into customers motivations purchase behavior and satisfaction o Marketing research can help them to assess market potential and market share or measure the effectiveness of pricing product distribution and promotion activities Exploratory research gather preliminary info that helps define problems and suggest hypothesis Descriptive research used to better describe marketing problems situations or markets Causal research used to test hypotheses about cause and effect relationships Applying product life cycle concept to market planning o Product life cycle course of a products sales and profits over its lifetime Introduction Product development Growth Maturity Decline and tactics products and markets work its different stages o The different stages of the PLC require different marketing strategies o Marketers use the PLC as a useful framework for describing how o The PLC concept can help in developing good Marketing strategies for Examining options in setting prices A LOT OF INFORMATION NOT ALL HERE LOOK IN THE TEXT BOOK o If customers perceive that a products price is greater than its value they wont buy it If the company prices the product below its costs profits will suffer Between the 2 extremes the right pricing strategy is one that delivers both value to the customer and profits to the company Customer value based pricing Setting price based on buyers perceptions of value rather than on the sellers cost Good value pricing offering the right combo of quality and good service at a fair price Value added pricing attaching value added features and services to differentiate a company s offers while charging higher prices Cost based pricing setting prices based on the costs for producing distributing and selling the product plus a fair rate of return for effort and risk Cost plus pricing Adding a standard markup to the cost of a product Breakeven pricing setting price to break even on the costs of making and marketing a product or setting price to make a target return Competition based pricing setting prices based on competitors strategies prices costs and market offerings Target costing pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met Price elasticity a measure of the sensitivity of demand to the change in price Understanding the role of intermediaries and supply chain management o Intermediaries play important role in matching supply and demand o Producers use intermediaries because they create greater efficiency in making goods available to target markets o Through their contacts experience specialization and scale of operation intermediaries usually offer the firm more than it can achieve on its own o Supply chain management managing upstream and downstream value added flows of materials final goods and related information among suppliers the company resellers and final consumers o Managing the supply chain calls for customer centered thinking o Supply chain management software lets firms quickly and efficiently manage the flow of goods info and finances through the supply chain Examining the role of promotion advertising sales trade promotion selling DM o Sales promotion short term incentives to encourage the purchase or sales of a product or service reasons why to buy NOW o Whereas advertising offers reasons to buy a product or service o Sales promotion campaign calls for setting sales promotions objectives selecting tools and developing and implementing the sales promotion program by using consumer promotion tools trade promotion tools and business promotion tools as well as determining such things as the size of the incentive the conditions for participation how to promote and distribute the promotion package and the length of the promotion After a company completes this process it must evaluate its sales promotion results o Sales promotion plays an important role in the total promotion mix To use it well marketers must define the sale promotion objectives select the best tools design the sales promotion program implement the program and evaluate the results o Sales Promotions are usually used together with advertising personal selling direct marketing or other promotional mix tools o Sales promotion must be coordinated carefully with other promotion mix elements within the overall IMC program o Trade promotions include getting retailers to carry new items and more inventory buy ahead or promote the company s products and give them more