Marketing Chapter 6

Front 1

What are Marketers?

A market is a group of people, individuals or organizations who have needs for products in a product class and have the ability, willingness, and authority to purchase such products. A group of people that lack any of the four requirements does not constitute a market. A relationship between supply and demand.

Back 1

Consumer Market: Purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make profits.

Business Market: Individuals, organizations or groups that purchase a specific kind of product for resale, direct use in producing other products or use in general daily operations.

Front 2

Step 1 Target Market: A group of people or organizations for which a business creates and maintains a marketing mix specifically designed to satisfy the needs of group members. The strategy used to select a target market is affected by:Target market Characteristics, Product attributes, and the organization's objectives and resources

Back 2

Undifferentiated targeting strategy means a company designs a single marketing mix and directs it at the entire market. Effective for Homogeneous markets where a large proportion of people in a target market have similar needs for a product. This strategy is one type of product, one promotional program, one price, and one distribution channel.

Front 3

Market Segmentation: is a process of dividing a total market into groups of customers with similar product needs and designing a marketing mix to meet those needs. Used for heterogeneous markets made up of individuals or organizations with diverse needs for products in a specific product class.

Back 3

Market segments: consist of customers that share one or more similar characteristics causing them to have similar product needs. Smaller groups allow a tailored marketing mix.

Front 4

Market segmentation to succeed, five conditions must exist. Customer's needs must be heterogenous, segments must be identifiable and divisible, Segments must be comparable to one another with respects to estimated sales potential, costs and profits, One segment must show enough profit potential to justify developing a special marketing mix,

Back 4

and the firm must be able to reach the chosen segment with a particular marketing mix

Front 5

A Concentrated Targeting Strategy means a company targets a single market segment using one marketing mix. Doing something really well

Advantage:

Allows specialization

A Small firm can compete

Disadvantages: Profits fall with demand

Difficult to diversify

Back 5

With a Differentiated Targeting Strategy, an organization directs its marketing efforts at two or more segments, developing a marketing mix for each segment.

Advantages:

Could mean increased sales

Uses excess production capacity

Disadvantages: Production costs are higher

Front 6

Step 2: Segmentation Variables

Are the characteristics of individuals, groups or organizations used to divide a market into segments. Variables such as age, gender, income, and occupation.

Back 6

Geodemographic Segmentation: Clusters people in zip code areas and even smaller neighborhood units based on lifestyles and demographic information.

Micromarketing: Focuses precise marketing efforts on very small geographic markets. Can be as small as communities or neighborhoods. Some retailers tailor the merchandise by store

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Psychographic variables, such as personality characteristics, motives and lifestyles, are sometimes used to segment markets. Marketers choose a positive trait and assume most people either have that trait or desire to have.

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Behavioristic Variables: Markets can be divided according to some feature of consumer behavior toward a product, usually some aspect of product use. Such as heavy, moderate or light use and nonusers

Benefit Segmentation: is the division of a market according to benefits consumers want from the product.

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Step 3 Market Segment Profile: Describes the similarities or potential customers within a segment. Explains the differences among people and organization in different segments. Market Segment Profile assist marketers in determining which segment is most attractive

Back 8

Step 4 Evaluate Market Segments: After analyzing the segment profiles, a marketer has identified several relevant market segments which require further analysis. Several factors should be analyzed, including:

. Sales estimate

. Competition

. Estimated costs

Front 9

Sales Estimates: can be measured along several dimensions including

. Product Level

. Geographic area

. Time

. Level of Competition

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Market Potential: is the total amount of a product customers will purchase within a specified period at a specific level or industry wide marketing activity.

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. Affected by economic, sociocultural and other

environmental forces.

. Marketers must assume a certain level of mar

keting effort in the industry.

. Marketers must also consider whether and to

what extent industry marketing efforts will

change.

Back 10

Competitive Assessment: Following questions need answered for a competitive assessment.

. How many competitors exist?

. What are their strengths and weaknesses?

. Do several competitors have a major market

share?

. Can we create a competitive marketing mix?

. Will new competitors enter this segment?

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Step 5 Select Target Markets: In selecting target market, it must be determined if the customers' needs differ enough to warrant use of market segmentation. Segmentation analysis will show if the customers' needs are homogeneous and would benefit from an undifferentiated targeting strategy.If the customers' needs are heterogeneous, one or more target markets must be

Back 11

selected. Assuming one or more segments offer significant opportunities, marketers must decide in which segments to participate.

Front 12

Step 5 Select Target Markets: After identifying the target market, the company needs a sales forecast which differs from sales potential.

. Sales forecast is the amount of a product a company expects to sell during a specific period at a specific level of marketing activities.

There are five categories of forecasting methods

Back 12

Executive Judgement

Time Series Analysis

Regression Analysis

surveys

Market Test

Front 13

Executive Judgement: is a sales forecasting method based on the intuition of one or more executives. This approach is unscientific but fast and cheap. May work when product demand is stable and forecaster has years or market-related experience

Back 13

Customer forecasting survey: is a survey of customers regarding the types and quantities of products they intend to buy during a specific period. Useful to a business with few customers.

Sales force forecasting survey: is a survey of a firm's sales force regarding anticipated sales in their territories for a specified period. Salespeople are closer to customer and know their needs

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A Market Test: makes a product available to buyers in one or more areas and measures purchases and consumer responses to distribution, promotion, and price.

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Advantages:

. Effective for new products.

. Also effective for introducing existing products

in a new geographic area

Disadvantages:

. Time consuming and expensive.

. Not guaranteed replication from the test

market to the national market.