BUAD 332 Exam #2 Chapters 6-9Chapter 6: Customer Driven Market Strategy Designing a customer-driven market strategy:- Step 1: Segmentation o The basic idea here: Take a group of customers that are inherently heterogeneous, and divide it into smaller groups that are more homogeneouso Segmented by geography, gender, demography, and behavioro Psychographic segmentation: divided by social class, lifestyle and personality characteristics. Behavioral segmentation: consumer knowledge, attitudes, uses, or responses to a product. o The Goal: Create a heterogeneous customer group that might be a good target for marketing activity - Step 2: Targetingo The basic idea here: From the segments that have been identified in Step 1, pick those segment(s) to whom you plan to market your products or services.o Segment size and growth: analyze current segment sales, growth rates, and expected profitability. o Segment structural attractiveness: consider competition, existence of substitutions, and the power of buyer and suppliers o Company objectives and resources: examine company skills and resources needed to succeed in segment. Offer superior value and gain advantages over competitors. o TARGETING STRATEGIES:Micromarketing: tailoring products and marketing programs to suit the tastes of specific individuals and locations. Local marketing: tailoring brands and promotions to the needs and wants of local customer groups – cities, neighborhoods, and Targets one or a couple small segments. Very specialized interests. Targets several segments and designs separate offers to eachIgnores segmentation opportunitiesspecific stores. Individual Marketing: tailoring products and marketing programs to the needs preferences of individual customers. - Step 3: Positioning and Step 4: Differentiationo What does the customer think about when they think about US?o Identify a set of possible value differences and competitive advantages on which to build a position. o Differentiate the marketing offering to create superior customer value Chapter 7: Products, Services, and Brands: Building Customer Value Products- Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. - It’s important to NOT limit your thinking about products to only be physical Services- Intangible, no ownership, provided to youThree Levels of Product: 1. Core Value: from owning or consuming a product 2. Actual product: tangibleness of product (brand name, features, quality, design, and packaging) 3. Augmented product: not with all products, to what extent can marketers differentiate their product (deliver and credit, product support, warranty)Industrial Products: - Those purchased for further processing or for use in conducting business - Distinction between consumer and industrial products is based on the purpose for whichan item is bought - Types of industrial goods:o Raw materialso Capital items: products that aid in buyers in production and operations o Supplies and services: operating supplies, maintenance and repairConsumer Products: - Products and services bought by final consumers for personal consumption. Classified byhow consumers buy them.- Types of consumer products: o convenience goods (these goods need to be readily available)o shopping products (bought less frequently)o speciality products (high price, don’t necessarily want to have high demand for these products)o unsought products (things no one really wants)Individual Product Decisions:- Product attributes o Marketers have to decide what is going to be included in their products  Product quality dimensions, feature considerations, style and design - Brandingo One of the most important decisions marketers worry about – brand identity o Involves building and managing brands o Helps identify products, provides legal protection, helps segment markets- Packaging o Can deliver competitive advantageo Involves designing and producing the container or wrapper for a product Product Line- A group of products that are closely related because they function in a similar manner, sold to same customer groups, are marketed through the same types of outlets, or fall within given price ranges. EX; Marriot: they offer many parts of their product and managed collectively Brand Equity- Measures the brand’s ability to capture consumer preference and loyalty - Offers competitive advantages and builds strong and profitable customer relationships Major Brand Strategy Decisions:- Brand positioning: What do customers think about when they think of us?o Three levels: product attributes, benefits, beliefs and values - Brand name selection- BRAND SPONSORSHIP: o Manufacturer’s brands (national)o Store brands (private) Retailers like private brands, they tend to be more profitable and cheaper.EX: Kenmore (owned by Sears) can’t buy Kenmore products anywhere but Searso Licensed brands: add value to products (Power T on T-shirt)o Co-branding: 2 or more brands on one product (Doritos Locos Taco at Taco bell)Brand Development Decisions: Companies like to GROW!- Line extension: really common/under same brand nameo Introduction of additional items in a given productcategory.  New colors, sizes, ingredients, flavors- Brand Extension: using successful brand name to launch a new ormodified product in a new category.o Ex: V8 always known for juice going into the soup business—very logical for V8- Multibranding: offers a way to establish different features and appeal to different buying motives o Ex: Toyota selling Lexus so they could sell more expensive cars and gain a broaderaudience - New Brands: Developed based on belief that the power of its existing brand is waning and a new brand name is needed. o Ex: Phillips coming out with Lifetouch Four Service Characteristics1. Intangibility 2. Variability 3. Perishability 4. Inseparability Must differentiate yourself from competitors other than price. Chapter 8: New product Development and Life Cycle Strategies New product development: - Development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts. - Very risky and expensive: 70-90% of new products fail within 12 months Why do new products fail?- Overestimation of market size - Design problems - Incorrectly positioned, priced, or advertised - Pushed despite poor marketing research findingsMajor Stages in New Product Development:- Idea Generation: