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44 Cards in this Set
- Front
- Back
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What is market segmentation? What are market segments?
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Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.
Market segments are the relatively homogeneous groups of prospective buyers that result from the market segmentation process. |
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Why is market segmentation important?
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Organizations go through segmenting markets when it increases, sales, profits, and ability to serve costumers better
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Explain the steps in segmenting and targeting a market (note: understand what happens in each step rather than trying to memorize them and the order in which they are)
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The five key steps in segmenting and targeting markets link market needs of customers to the organization’s marketing program:
1.Group potential buyers into segments 2. Group products to be sold into categories 3. Develop a market-product grid and estimate size of markets 4. Select target market 5. Take marketing actions to reach target markets |
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What are the criteria to use in forming segments?
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1. Potential for Increased Profits
2. Similarity of needs of potential buyers within segment 3. Difference of needs of buyers among segments 4. Potential of a marketing action to reach a segments 5. Simplicity and cost of assigning potential buyers to segments |
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What are the ways of segmenting consumer or organizational markets?
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1.customer characteristics: region, household size, lifestyle
2. buying situations: product features, usage rate |
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What is geographic segmentation?
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geographic customer characteristic: region
demographic customer characteristics: household size psychographic customer characteristics: lifestyle |
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What is demographic segmentation?
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a
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What is psychographic segmentation?
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a
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What is benefit segmentation?
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benefit sought: product features
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What is usage segmentation?
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usage/patronage: usage rate, quantity consumed or patronage
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What is the 80/20 rule?
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The 80/20 rule is a concept that suggests 80 percent of a firm’s sales are obtained from 20 percent of its customers.
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What is a market-product grid and how is it useful in segmentation and targeting?
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markets-horizontal rows
products-vertical columns size of market in each cell form of usage rate analysis |
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What are the criteria to use in picking target segments?
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market size: estimated size of market
expected growth competitive position: is there comp cost of reaching the segment compatibility with the org objectives and resources |
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What is synergy in the context of choosing segments to target? Explain marketing and product synergies.
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Synergy is the increased customer value achieved through performing organizational functions more efficiently.
Marketing Synergies…allow Market Specialization Product Synergies…allow Product Specialization |
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What is positioning? What is repositioning?
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Product positioning refers to the place an offering occupies in consumers’ minds on important attributes relative to competitive products.
Product repositioning involves changing the place an offering occupies in a consumer’s mind relative to competitive products. |
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What is perceptual mapping and why is it used? What are the elements that make-up a perceptual map?
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A perceptual map is a means of displaying or graphing the location of products or brands in the minds of consumers
1.Identification of the imp attributes for a product class 2 Judgements of existing products or brands with respect to these attributes 3. Ratings of an ideal product or brand's attributes |
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What are tangible and intangible attributes in the context of a product?
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A product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value.
Tangible attributes: speed, color, size, etc. Intangible attributes: health, efficiency, safety, happiness, etc. |
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What is a product line? Why do firms develop product lines? What is a product mix? Width of product mix? Depth of product line? Product Item?
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A product line is a group of products that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same type of outlets, or fall within a given price range.
The product mix is the number of product lines offered by a company. The product item is a specific product as noted by a unique brand, size or price (SKU or stock keeping unit) why develop a product line: So as not to limit growth potential by concentrating on a single product Certain products could offset seasonal variations in sales Desire to Grow Optimal Use of Company Resources Enhance Company's Position in the Market |
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What are durable and non-durable goods and how are they different?
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nondurable good: an item consumed in one or a few uses, fool/fuel
durable good: is on that usually lasts over an extended number of uses, appliances/auto |
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What are the 4 I’s of services? How do they make services uniquely different from products?
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Services are intangible activities or benefits that an organization provides to consumers in exchange for money or something else of value.
1. Intangiblity 2. Inconsistency of quality 3. Inseparability from deliverer 4. Inventory related to idle production cap |
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Consumer goods may be classified as convenience, shopping, specialty or unsought. What are the differences among them?
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Convenience goods are items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort.
Shopping goods are items for which the consumer compares several alternatives on criteria, such as price, quality, or style. Specialty goods are items that a consumer makes a special effort to search out and buy. Unsought goods are items that the consumer either does not know about or knows about but does not initially want. |
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Business goods may be classified as production goods or support goods. Further, support goods may be classified as installations, accessory equipment, supplies and services. What are the differences among them?
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production goods: items used in manufacturing process that become part of the final product
support goods: the second class of business goods, items used to assist in producing other goods and services installations: buildings and fixed equipment accessory: tools and office equipment supplies: purchased with little effort services: intangible activities to assist buyers |
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One way to classify services is by delivery by people or equipment – what is meant by this?
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delivery: professional services
equipment: people not involved directly in providing the service. |
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How can we think about classifying newness of products from the consumer’s point of view? How does this impact the marketing emphasis for products at different levels of newness?
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according to the degree of learning required by a consumer in order to use the product properly
1. continuous innovation: no new behaviors must be learned to use product 2. dynamically continuous innovation: only minor changes 3. discontinuous innovation: consumer learn entirely new behaviors |
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Explain the steps in the new product development process and identify key activities within each of the stages (note: understand what happens in each step rather than trying to memorize them and the order in which they are).
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New-product strategy development is the stage of the new-product process that defines the role for a new product in terms of the firm’s overall corporate objectives.
1. Idea generation is the stage of the new-product process that involves developing a pool of concepts as candidates for new products. 2.Screening and evaluation is the stage of the new-product process that involves internal and external evaluations of the new-product ideas to eliminate those that warrant no further effort. 3.Business analysis is the stage of the new-product process that involves specifying the product features and marketing strategy and making necessary financial projections needed to commercialize a product. 4.Development is the stage of the new-product process that involves turning the idea on paper into a prototype. 5.Market testing is the stage of the new-product process that involves exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy. 6.Commercialization is the stage of the new-product process that involves positioning and launching a new product in full-scale production and sales. |
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What is a protocol in the context of new product and new product development?
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A protocol is a statement that, before product development begins, identifies: (1) a well-defined target market; (2) specific customers’ needs, wants, and preferences; and (3) what the product will be and do.
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What are the various sources for ideas in the idea generation stage of new product development?
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1. customer and supplier suggestions
2. employee and co-worker suggestions 3. research and dev breakthroughs 4. competitive products |
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What is test marketing? What makes a market a likely candidate for test marketing? When does test marketing not work?
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test marketing involves offering a product for sale on a limited basis in a defined area. cities that represent the US average. services are hard to test market.
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What are the stages of the product life cycle (PLC)? What are the implications of the stages of the product life cycle for marketing management? What are some of the actions that marketers take to manage the PLC?
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The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.
Introduction Stage – when a product is first introduced to its target market Sales grow slowly Profit is minimized (b/c of development costs) Marketing Objective: create customer awareness and stimulate trial Often heavy expenditures on advertising and promotions to build awareness among consumers Growth Stage – rapid increase in sales Sales growth comes from: More people trying/using the product Repeat purchasers Advertising focus shifts to stimulating selective demand Compare products with competitors to gain mkt share Often see changes in product to differentiate from competitors “new and improved”, new features Maturity Stage – slowing of product class sales Sales increase at decreasing rate as fewer new buyers enter the market Most consumers who would buy the product are either repeat purchasers or have tried and abandoned product Marketing attention directed at holding market share through further differentiation Decline Stage – sales and profits drop Often happens b/c of environmental changes 2 strategies to handle declining product: deletion – dropping the product from the company’s product line harvesting – company retains product but reduces marketing costs Purpose of harvesting: maintain ability to meet customer requests |
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What is product deletion? What is harvesting? Which stage of the PLC are they associated with?
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Decline Stage – sales and profits drop
Often happens b/c of environmental changes 2 strategies to handle declining product: deletion – dropping the product from the company’s product line harvesting – company retains product but reduces marketing costs Purpose of harvesting: maintain ability to meet customer requests |
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How does the length and shape of the product cycle change to produce alternative PLCs?
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high-learned product: hill with peak
low-learned product: smooth hill fashion product: cyclical fad product: short steep hill |
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Consumers fall into different categories depending on the length of time it takes them to adopt a new innovation. What are the categories, and the characteristics associated with people in the various categories?
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innovators: higher education, venturesome, use multiple information sources
early adopters: leader in social setting, slightly above avg education early majority: deliberate, many informal social contacts late majority:skeptical below avg ed social status laggards: fear of debt, neighbors and friends are info sources |
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What is a brand name? What are the characteristics of a “good” brand name?
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A brand name is any word, device (design, shape, sound, or color), or combination of these used to distinguish a seller’s goods or services.
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What is brand equity? What are the characteristics of brand equity? What is brand personality?
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Branding is a basic decision in marketing products in which an organization uses a name, phrase, design, or symbols, or combination of these to identify its products and distinguish them from those of competitors.
Brand equity is the added value a given brand name gives to a product beyond the functional benefits provided. A brand personality is a set of human characteristics associated with a brand name. |
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What are the alternative branding strategies? How are they different from each other?
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multiproduct: one name for all products in a product class
multibranding: each product different name private branding: manufactures products but sells them under retailer name mixed branding: firm markets product under thier name and reseller's name |
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What are the benefits of packaging?
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communication
functional perceptual |
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Firms use demand-oriented, cost-oriented, profit-oriented and competition-oriented approaches to pricing? How are these different from each other? What are the types of pricing under each of these approaches?
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Demand oriented approach:
skimming pricing-highest price penetration-low initial price prestige-setting high price for prestige competition oriented:customary- competitive factors dictate price loss-leader-buy other products as well odd-even-few cents under even number target-adjusts comp and features of product to achieve target price bundle-two or more products in package yield management- diff prices at capacity cost-oriented: standard markup-adding fixed percentage to inputs cost-plus-adding specific amount to cost profit oriented: target profit-volume of profit target return on sales-profit at a specific percentage |
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What is the profit equation? What are the components of this equation?
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A firm’s profit equation is as follows:
Profit = Total revenue − Total cost; or Profit = (Unit price × Quantity sold) − Total cost. |
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What is demand and what is a demand curve? How does demand fit into the pricing equation?
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A demand curve is a graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price.
price lowered quantity demanded increases |
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What is price elasticity of demand? What is elastic and inelastic demand? What determines elasticity of demand?
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Price elasticity of demand is the percentage change in quantity demanded relative to a percentage change in price
Elastic Demand (price elasticity > 1) slight decrease in price large increase in demand slight increase in price large decrease in demand marketers may cut price to increase units sold Inelastic Demand (price elasticity < 1) slight increases or decreases in price will not significantly affect demand What determines price elasticity of demand? More substitutes a product has, more likely it is to be elastic New clothes have many substitutes = elastic Gasoline has few substitutes = inelastic Necessities are price inelastic (luxuries are elastic) Open-heart surgery = inelastic Cruise vacation = elastic Items that require a large cash outlay (compared to disposable income) are price elastic Cars, yachts = elastic Books = inelastic Apparent contradictions? Think in terms of product categories and brands within product categories |
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How does cost fit into the profit equation? What are the various components of total cost?
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A firm’s profit equation is as follows:
Profit = Total revenue − Total cost; or Profit = (Unit price × Quantity sold) − Total cost. Total cost (TC) is the total expense incurred by a firm in producing and marketing a product. Total cost (TC) equals the sum of fixed cost (FC) and variable cost (VC) or TC = FC + VC. Fixed cost (FC) is the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. Variable cost (VC) is the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold. Unit variable cost (UVC) is variable cost expressed on a per unit basis. |
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What is the break-even point, how is it calculated in terms of volume and price, and how is it used by marketing managers?
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Break-even analysis is a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.
Break-even point (BEP) is the quantity at which total revenue and total cost are equal or BEP = FC / (P− UVC) |
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What are the various types of discounts used by marketers?
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discounts-reductions from list price
allowances-reductions for performing activity geographical adjustments- reflect cost of trans |
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What is the difference between price skimming and penetration pricing, and when is each appropriate? Which stage of the PLC are these associated with?
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