MAR3023 Exam 2 Study Guide STUDY FOR EXAM TOPIC 1 Segmentation and Positioning I Market Segmentation o How is a firm supposed to make sense of a huge market o Market Segmentation is the process of dividing up a market into smaller groups called segments The groups are designed to have similar wants and needs The idea is that firms can use their marketing mix to tailor products for the different groups o Cluster Analysis Firms can plot segments against their core competencies and target the groups with the most sales potential 5 Key Segments Price Fighters Range Buyers Delivery Buyers Quality Fanatics Traditionalists II Targeting o Firms then develop new products or reposition old ones to target lucrative groups of consumers 45 of NFL fans are women Female fantasy footballers doubled in 2011 o Targeting Strategies Undifferentiated entire market is target market 1 marketing mix theoretical Homogenous market similar needs Differentiated two or more segments more than 1 marketing mix Concentrated single market segment 1 marketing mix Singles Sites II Segmentation Bases o Demographics Describe characteristics of a population Gender Age Ethnicity Education Religion o Iphones Page 1 of 9 o Geographic o Psychographics o Behavioristic Region City Size Urban Rural Region McDonald s Mc Rib in the South McBaguette in Paris Personality Motives Lifestyles Mountain Dew and their snowboarding ads Usage Volume Benefits Loyalty Price Sensitivity Customer Loyalty Cards and Points cards Use Related Segmentation o Usage Rate Heavy Users o Awareness Status Medium Users Light Users Non Users Unaware Aware Interested Enthusiastic o Brand Loyalty None Some Strong VALS Puts it All Together o The Value and Lifestyles Survey o Helps classify customers based on psychological characteristics that are Correlated with purchasing behavior Related to key demographics Firms to Know o Nielsen s Claritas Provides market research and target marketing Offers Prism a geo demographic segmentation tool Prism data can be helpful in choosing a store location purchasing targeted advertising and direct mail etc III Forecasting Forecasting Market Demand level of marketing activities o Sales Forecast The amount of a product a company expects to sell during a specific period at a specified Forecasting methods can be scientific or arbitrary and vary in complexity and expense Depends on costs product market characteristics time span purpose of forecast historical sales data and many other variables o Time Series Analysis Using historical sales data to discover patterns in the firm s sales such as Trend Analysis Using aggregate sales data from many years to determine general trends Cycle Analysis Analyzing sales for three to five years to assess consistent fluctuations Seasonal Analysis Analyzing daily weekly or monthly sales to assess seasonal influences Page 2 of 9 o Regression Analysis Predicting sales based on finding a relationship between past sales and one or more independent variables Also requires the use of historical sales data Is useful when a precise association between variables can be established and when historical data is extensive Cannot use this method for new products o Test Market consumer responses Making a product available to buyers in one or more test areas and measuring purchases and Information about customers actual rather than intended purchase behavior Effective at estimating sales of new products Time consuming and expensive o Multiple Forecasting Methods Most firms use a variety of forecasting methods and techniques to accommodate different products and or different time frames and to confirm and refine the forecasts Short range and long range forecasts will usually require different methods o The process of developing and maintaining an image in the minds of consumers For example High Low Price Quality Luxury Economy o A product s position results from customer s perceptions of a product s attributes relative to those of IV Positioning Product Positioning competing products Perceptual Mapping o Done with Multidimensional scaling MDS o Idea is to position objects in a multidimensional space according to their relative similarities or customer preferences o Products can be positioned according to ratings on both objective and perceived measures Page 3 of 9 V Repositioning o St Johns Clothing Was originally targeting older women now has repositioned for younger ones Angelina Jolie o Hyundai o Cheese Whiz o OP Repositioned itself with a luxury car Like a Lexus Originally was for moms to put on Broccoli Now for nachos Originally sold in Surf Shops Now at Wal Mart VI Review Through Segmentation the market can be divided into several groups of people with similar characteristics o Step 1 Segment o Step 2 Target o Step 3 Position o Step 4 Reposition A market segment is a homogeneous group of customers with similar needs wants values and buying behavior Target Marketing involves selecting certain segments for emphasis Positioning is creating an image reputation or perception in the minds of consumers about the organization TOPIC 2 Using Market Research to Assess Needs What is Marketing Research o Marketing Research is the process of designing gathering analyzing and reporting information that may be used to solve a marketing problem Examples Product Development Pricing Studies Customer Satisfaction Assessments Distribution Analysis Promotion Effectiveness Studies o Product Development 60 OF ALL NEW VEHICLES ARE PURCHASED BY WOMEN 53 OF ALL USED CARS ARE PURCHASED BY WOMEN 85 OF VEHICLE PURCHASES ARE INFLUENCED BY WOMEN 105 7 MILLION WOMEN HAVE DRIVER S LICENSES 1 4 MILLION MORE THAN MEN 62 OF WOMEN RANK SAFETY AS VERY SIGNIFICANT o Pricing Strategy Price says something about a product People believe that the more expensive wine is better so if the expensive wine was priced lower sales would drop because it wouldn t be viewed as better anymore o Customer Satisfaction Increased wait times can signal higher quality Unknown waits seem longer than known waits Explained waits seem shorter Page 4 of 9 Where Did it Come From o The TQM Movement Deming Juran Customer Orientation Research to find customer reaction to product Research to compare product to competitors Research to find problems with product Why Is it Important o It gives managers answers to important questions if decrease customer defection by 5 you can increase profits by 25 100 One unhappy customer tells 9 12 others more now it s five times as
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