BCOR 2400 Exam 2 Study Guide Test will also cover concepts from The Price of Everything Chapter 9 Market Segmentation splitting potential customers in a market into different groups where they share a similar level of interest in the same set of needs They respond similarly to a specific mix of the 4 P s which leads to high marketing efficiency Segmentation Strategies ex Honda targets different target markets for different types of cars One product and multiple market segments the same product with slight variation to all segments Multiple product and multiple market segments multiple products allocated to different segments Risk of cannibalization at some point reduction in sales volume revenue or market share of one product as a result of the introduction of a new product by the same producer Segments of One Mass customization offer the same thing to everyone but allow them to customize for their needs Ex iCream 256 000 varieties of ice cream in Chigaco Segmentation Process group buyers into segments target products at specific segments develop market product grid select target markets tailor 4P s to chosen segments Group buyers into segments geographic demographic psychographic behavioral Target markets into segments create a market product grid matching segments with products Ex How do you segment a market Statistical analysis that identifies clusters of consumers with HOMOGENEITY around specific attributes Ways to Segment Product Positioning Repositioning how we want the consumer to think of our brand Perceptual Maps a means of displaying how a product or brand lives in the mind of the consumer Identify important attributes for a product Customers ratings of competing products on these attributes Customer s ratings of the company s products on these attributes Reposition the company s products in the minds of consumers Value proposition distinct combo of benefits and price a biz offers to Product Positioning approaches Head to head positioning Differentiation positioning customers The Long Tail three rules Offer everything Cut the price in half now lower it Help me find it The 80 20 Rule the Pareto Principle 20 of causes generates 80 of results Illustrates the lack of symmetry between work put in and results achieved Chapter 10 New Product Development Types of Products B2C Consumer Products sold directly to consumers Convenience low involvement Shopping bit more expensive usually compare items Specialty expensive status brand is very important Unsought things you don t really want but still need such as insurance identity theft protection etc B2B Business Products sold business to business Components support products etc What is a New Product Newness in terms of the Consumer s perspective Continuous innovation always improving adapting Ex cheerios and their new types of products Low degree of new consumer learning needed Dynamically continuous innovation more of a leap Ex electric toothbrush Medium degree of new consumer learning needed Discontinuous Innovation Completely new product Ex iPod electric car High degree of new consumer learning needed Newness in terms of the organization s perspective Product line extension small change to the product Ex OJ with Jump in innovation medium change to the product Ex cell phone to Brand extension huge change to the product Ex Burton offering Calcium smart phone bikes Radical Innovation completely new product Ex the first personal computer Why Products Fail Insignificant point of difference Incomplete market and product protocol before product development starts Not satisfying customer needs on critical factors Bad timing Poor product quality No economic access to buyers Poor marketing mix execution New Product Development Process 7 Steps 1 New Product Strategy Why pursue new products Where are there opportunities Where do we have advantage Where will we aim a Innovation Protocol statement that before product development begins identifies target market customer s need description and benefit 2 Idea Generation where do ideas come from Sources customers employees partners innovation firms competitor analysis etc The number one job in developing new products is identifying unmet user needs 3 Screening and Evaluation how do we evaluate ideas a Internal Approach voting on an idea evaluative criteria b External Approach qualitative and quantitative 4 Business Analysis how do we assess financial contribution a Costs to develop produce b Sales projection c Would it cannibalize d Profitability projection 5 Development developing the product prototypes production assessment service and support requirements safety tests 6 Market testing testing the product standard test market controlled test market simulated test market 7 Commercialization launching the product full scale production positioning marketing communications campaign Go No Go Decisions 10 Types of Innovation Strategies Chapter 11 Product Life Cycle Skimming and Penetration pricing strategy Introduction gain awareness target innovators and early adaptors Growth stress differentiation expand distribution target early majority Maturity maintain brand loyalty sales growth slows more profits decline maintain brand loyalty and market share Decline harvesting deletion Diffusion of Innovation consumers adopt new products at varying rates Compatibility with existing lifestyles Relative advantage Product complexity Perceived risk Factors affecting speed of adoption Barriers to adoption Incompatibility No incentive Physical emotional barriers Cultural image barriers Product Life cycle curves Brand Management Branding a marketing decision by an organization to use a name phrase design symbols and experience to identify its products and distinguish them from those of competitors Trademarks firm legally registered its brand name so it has exclusive use preventing others from using it Brand Personality describing a brand in human traits think of eBags assignment benefits Brand Equity the added value a brand name gives beyond functional Goodwill Competitive advantage Consumers willing to pay premium Worth something when selling the company Has financial value measured and tracked by management Brand Licensing contractual agreement whereby one company allows its brand name or trademark to be used with products or services offered by another company for a royalty or fee Company seeks to create brand loyalty via functional quality consistency convenience and emotional personality humor values etc