Marketing Test 2 Notes 1 Market 02 25 2015 A group of people individuals or organizations who have needs for products and have the ability willingness and authority to purchase products Must have the desire ability willingness and authority to buy a product Example a market o Selling alcohol to legal buyers that wants it you have created o Under aged teenagers that have the desire the money and willingness to buy alcohol do not have the authority to purchase alcohol by law 2 Two types of markets Consumer Market o Household members who benefit from the products they purchase o They do not buy products to make profits o Also referred to as business to consumer market o Individuals organizations ad groups that purchase products Business Market for Resale Direct use in producing other products General daily operations o Also referred to as business to business market o Classified into 4 categories Producer anyone who produces a product Example Companies that provide services Reseller buy products and resale it Example Retails May by from one producer and sale to another producer Government Institutional nonprofit organizations Overlap with government Example Private Schools 3 Target Market Selection Process Identify Appropriate Targeting Strategy o Target Market A group of people or organization in which a business creates and maintains a marketing mix specifically designed to satisfy the needs of a group o 3 Basic Target Strategies Undifferentiated Targeting Strategy A company designs a single marketing mix and directs it at the entire market Homogeneous markets No one customer wants anything else Everyone wants the same thing Market Segmentation Dividing a total market into groups of customers with a similar product needs and designing a marketing mix to meet those needs Heterogeneous Markets Customers with diverse needs for products in a specific product class Market Segments Customers that share one or more similar characteristics Has similar product needs Concentrated Targeting Strategy A company targets a single market segment using one marketing mix Example Mont Blanc pen and Bic pens o They are not competing for the same customers Differentiated Targeting Strategy A company directs its marketing efforts at 2 or more segments Segmentation Variables o Segmentation Variables Characteristics of individuals groups or organizations used to divide a market into segments o Types of segmentation variables Demographic Geographic Examples age gender occupation religion race income education family size family life cycle Examples region urban suburban rural city size county size state size climate terrain Market density The number of potential customers within a unit of land area Not the same as population density Geodemographic segmentation Clusters people in zip code areas and small neighborhoods based on lifestyle and demographic info Micromarketing Focuses precise marketing efforts on very small geographic markets Examples personality attributes motives Psychographic lifestyles Behavioristic Volume usage end use benefit expectations brand loyalty price sensibility Market Segment Profile o Market Segment Profile Describes similarities of potential customers within a segment Explains the differences among people and organizations in different segments Evaluate Market Segments o After analyzing the segment profiles a marketer has identified several relevant market segments which require further analysis o Factors that should be analyzed Sales estimates Measured along several dimensions including Product Level Geographic Area Time Level of Competition Market Potential The total amount of a product customers will purchase within a specified period at a specific level of industry wide marketing activity Company Sales Potential The maximum percentage of market potential a firm can expect for a specific product Breakdown Approach Measuring company sales potential based on a general economic forecast for a specific period and the market potential Buildup Approach Measuring company sales potential by estimating how much of a product a potential buyer in a specific geographic area will purchase in a given period multiplying the estimate by the number of potential buyers and adding the totals of all geographic areas considered o Competition be misleading o Estimated Costs Select Target Markets o Sales Forecast Without competitive assessment sales estimates can Developing and maintaining a marketing mix that fulfills the needs of the target segment is expensive The amount of a product a company expects to sell during a specific period at a specific level of marketing activities o Forecasting Methods Executive Judgment Sales forecasting method based on the intuition of one or more executives Time Series Analysis Forecasting method that uses historical sales data to discover patterns in the firm s sales over time and generally involves trend cycle seasonal and random factors analyses Trend Analysis o Focuses on sales date over a period of many years to determine general trends in annual sales Cycle Analysis o Analysis of sales figures for a 3 to 5 year period to ascertain whether sales fluctuate in a consistent periodic manner Seasonal Analysis o Analysis of daily weekly or monthly sales figures to evaluate the degree to which seasonal factors influence sales Random factor analysis o Analysis attempting to attribute erratic sales variations to random nonrecurring events Regression Analysis Surveys A method of predicting sales based on finding a relationship between past sales and one or more independent variables Examples Population or income Customer forecasting surveys A survey of customers regarding the types and quantities of products they intend to buy during a specific period Sales fore forecasting survey A survey of a firms sales force regarding anticipated sales in their territories for a specified period Expert forecasting survey Sales forecasts prepares by experts outside the firm advertising executives or college professors The Delphi Technique A procedure in which experts create initial forecasts and then refine the forecasts Market Tests Makes a product available to buyers in one or more areas and measures purchases and consumer responses to distribution promotion and price 4 Buying Behavior The decision processes and actions of people involved in buying and using products Consumer Buying Behavior o The decision processes and purchasing activities of people who purchase products for