Marketing Review Exam 2

Module #5 Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs (senior citizen market or Hispanic market) Market targeting -Undifferentiated marketing targets the whole market with one offer Market positioning - is the way the product is defined by consumers on important attributesthe place the product occupies in consumers minds relative to competing products Bases for Segmenting Consumer Markets (4) Geographic, demographic, psychological, behavioral Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits. Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product. Ex. Occasion, benefits sought, user status, usage rate, loyalty status Requirements for Effective Market Segmentation (4) It must be measurable, accessible, substational, and actionable 3 Factors for Evaluating Market Segments 1. User status divides buyers into ex-users, potential users, first time users, and regular users of a product. 2. Usage rate divides buyers into light, medium and heavy product users, (ex. Cigarette smokers) 3. Loyalty status divides buyers into groups according to their degree of loyalty 3 Options for Selecting Market

Segment 1. Undifferentiated market targets the whole market with one offer. (focuses on common needs rather than what is different, and mass market.) 2. Differentiated market targets several different market segments and designs separate offers for each (goal is to achieve higher sales and stronger position) (It is also more expansive than undifferentiated market) 3. Concentrated Market targets a small share of a large market (limited company resources, knowledge of the market, and more effective and efficient) Module 6 Product is anything that can be offered in a market for attention, acquisition, use or consumption that might satisfy a need or want (soap or toothpaste) Consumer products are products and services for personal consumption Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort (newspapers, candy and fast food) Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price and style Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort (medical services, designer clothes, High-end electronics Product Attributes are the benefits of the product or service. (ex. Quality, features, style and design) Brand is the name, term, sign, or design or a combination of these, that identifies the maker or seller of a product or service (Jet Blue, KFC) Criteria for Brand name Selection Packaging involves designing and producing the container or wrapper for the product (primary container, secondary container and shipping package) Effective Labeling identifies the product or brand, describes attributes, and provides promotions (identifies product, grade product (grade A eggs), describe product, promote product with graphics) New Product Development refers to the original products, product improvements, product modifications, and new brands developed from the firms own research and development

-Includes 8 stages 1. Idea Generation is the systematic search for new product ideas (internal sources refers to the companys own formal research and development, management and staff, and intraprenurial programs and external sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms) 2. Idea screening refers to reviewing new product ideas in order to spot good ideas and drop poor ones as soon as possible. 3. Concept development and testing Product idea is an idea for a possible product that the company can see itself offering to the market / Product concept is a detailed version of the idea stated in a meaningful consumer terms/ Concept testing refers to new product-concept with groups of target consumers 4. Market strategy development refers to the initial marketing strategy for introducing the product to the market ( Description of the target market, price distribution and budget, long-term sales, profit goals, and marketing mix strategy) 5. Business analysis - involves a review of the sales, costs and profit projections to find out whether they satisfy the companys objectives 6. Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments. (Requires an increase in investment) 7. Test market is the stage at which the product and marketing program are introduced into more realistic marketing settings. (Test marketing provides the marketer with experience in testing the product and entire marketing program before full introduction. 8. Commercialization is the introduction of the new product (When to launch, Where to launch, Planned market rollout) Product Life cycle (PLC) is the course that a products sales and profits take over its lifetime -Includes 5 stages 1. 2. Product development ^above Introduction stage is when the new product is first launched

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Growth Stage is when the new product satisfies the market

4. Maturity stage is a long-lasting stage of a product that has gained consumer acceptance 5. Decline stage is when sales decline or level off for an extended time, creating a weak product Module # 7 Price is the amount of money charged for a product or servide. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service. It is the only element in the marketing mix that produces revenue; all other elements represent costs. Cost-based pricing involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk. Value-based pricing uses the buyers perceptions of value, not the sellers cost, as the key to pricing. Price is considered before the marketing program is set. It is customer driven. Market-Skimming pricing is a strategy with high initial prices to skim revenue layers from the market. Product quality and image must support the price. Buyers must want the product at the price. Costs of producing the product in small volume should not cancel the advantage of higher prices. Market-Penetration pricing sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share. Price sensitive market. Inverse relationship of production and distribution cost to sales growth. Low prices must keep competition out of the market. Product line pricing takes into account the cost differences between products in the line, customer evaluation of their features, and competitors prices ex: GAP Inc. Optional-Product pricing takes into account optional or accessory products along with the main product ex: buying a car. Captive-Product pricing involves products that must be sued along with the main product ex: Gillette or Polaroid. Quantity discount reduces prices to buyers who buy large volumes ex: Costco. Seasonal discount reduces prices to buyers who purchases merchandise or services out of season ex: Christmas things after holidays, swimwear after summer. Timing pricing (discount) reduces prices to buyers who based on month, day, even an hour. Ex: movie theathers matinee pricing, cell phones. Promotional pricing (discount) temporarily reduces prices below list price to increase short-run sales. Ex: airline tickets.

Module # 8 Consumer Promotion Samples (consumer promotion tool) offer a trial amount of a product. Coupons (consumer promotion tool) are certificates that give buyers a saving when they purchase specified products. Cash Refund (rebates) (consumer promotion tool) are similar to coupons except that the price reduction occurs after the purchase. Contests, Sweepstakes, Games give consumers the chance to win something, such as cash, trips, or goods, by luck or through extra effort. Contests require an entry by a consumer. Sweepstakes require consumers to submit their names for a drawing. Games present consumers with something that may or may not help them win a prize. Direct-Mail marketing involves an offer, announcement, reminder, or other item to a person at a particular address. Personalized, easy-to-measure results, costs more than mass media, provides better results than mass media. Catalog marketing involves printed and web-based catalogs. Benefits: lower cost than printed catalogs, unlimited amount of merchandise, real-time merchandising, interactive content, promotional features. Challenges: require marketing, difficulties in attracting new customers. Telephone marketing involves using the telephone to sell directly to consumers and business customers. Outbound telephone marketing sells directly to consumers and businesses. Inbound telephone marketing uses tollfree numbers to receive orders from television and print ads, direct mail, and catalogs. Direct Response TV marketing (DRTV) involves 60 to 120 second advertisements that describe products or give customers a toll-free number or web site to purchase and 30-minute infomercials such as home shopping channels. Less expensive than other forms of promotion. Easier to track results. Kiosk marketing involves placing information and ordering machines in stores, airports, trade shows, and other locations. Mobile phone marketing includes: ring-tone giveaways, mobile games, adsupported content, contests and sweepstakes. Podcasts & Vodcasts involve the downloading of audio and video files via the internet to a handheld device such as a PDA or iPod and listening to them at the consumers convenience. Interactive TV (ITV) lets viewers interact with television programming and advertising using their remote controls and provides marketers with an interactive and involving means to reach targeted audiences. On-line shopping Business-to-Business (B2B) involves selling goods and services, providing information online to businesses, and building customer relationships. Business-to-Consumer (B2C) involves selling goods and services online to final consumers.

 Consumer-to-Business (C2B) involves consumers communicating with companies to send suggestions and questions via company web sites. Consumer-to-Consumer (C2C) occurs on the web between interested parties over a wide range of products and subjects. Blogs: offer a fresh, original, and inexpensive way to reach fragmented audiences. difficult to control. Click-only marketers operate only online without any brick and mortar presence. Ex- e-tailers, search engines and portals, shopping or price comparison sites, internet service providers (ISP), transaction sites, content sites. Click and mortar companies are brick-and-mortar companies with an online presence. Advantages: known and trusted brand names, strong financial resources, large customer bases, industry knowledge, reputation, strong supplier relationships, more options for customers. E-tailers Module # 9 Promotional Mix the specific blend of advertising, public relations, personal selling, and direct-marketing tools that the company uses to persuasively communicate customer valued and build costumer relationships. Advertising - (major promotion tool) any paid for of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. Broadcast, print, internet, outdoor. Personal Selling (major promotion tool) the personal presentation by the firms sales force for the purpose of making sales and building customer relationships. Sales presentations, trade shows, incentive programs. Sales Promotion (major promotion tool) the short-term incentives to encourage the purchase or sale of a product or service. Discounts, coupons, displays, demonstrations. Public Relations (major promotion tool) Involves building good relations with the companys various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. Press releases, sponsorships, special events, web pages. Direct Marketing (major promotion tool) Involves making direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationshipsby using direct mail, telephone, direct-response television, e-mail, and the internet to cocmmunicate directly with specific consumers. Catalog, telemarketing, kiosks. 9 Steps in Communication Process : 1. Sender is the party sending the message to another party. 2. Encoding is the process of putting thought into symbolic form. 3. Message is the set of symbols the sender transmits.

4. Media is the communications channels through which the message moves from sender to receiver. 5. Decoding is the process by which the receiver assigns meaning to the symbols. 6. Receiver is the party receiving the message sent by another party. 7. Response is the reaction of the receiver after being exposed to the message. 8. Feedback is the part of the receivers response communicated back to the sender. 9. Noise is the unplanned static or distortion during the communication process, which results in the receivers getting a different message than the one the sender sent. Rational Appeals relates to the audiences self interest ex: Pine Sol Emotional Appeals - is an attempt to stir up positive or negative emotions to motivate a purchase ex: Alarms Moral Appeals - is directed at the audiences sense of right and proper ex: AIDS Advertising Objectives a specific communication task to be accomplished with a specific target audience during a specific time. Objectives are classified by primary purpose: inform, persuade, remind. Informative Advertising is used when introducing a new product category; the objective is to build primary demand. Persuasive Advertising is important with increased competition to build selective demand. Comparison Advertising directly or indirectly compares the brand with one or more other brands. Reminder Advertising is important with mature products to help maintain customer relationships and keep customers thinking about the product. Reach is a measure of the percentage of people in the target market who are exposed to the ad campaign during a given period of time. Frequency is a measure of how many times the average person in the target market is exposed to the message. Module # 10 Distribution Channels or Marketing Channels is a set of independent organizations that help make a product or service available for use or consumption by the consumer or business users. Market Intermediaries are people or organizations that help get products to the final consumer. They are sometimes called middle men. Direct Marketing Channel has no intermediary levels; the company sells directly to consumers. Indirect Marketing channel contain one or more intermediaries. Intensive Distribution is a strategy used by producers of convenience products and common raw materials in which they stock their products in as many outlets as possible.

 Exclusive Distribution is a strategy in which the producers gives only a limited number of dealers the exclusive right to distribute its products in their territories. Ex- Luxury automobiles, high-end apparel. Selective Distribution is a strategy when a producer uses more than one but fewer than all of the intermediaries willing to carry the producers products. Ex- televisions, appliances. Physical Distribution (Marketing logistics) involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet consumer requirements at a profit. Retailing includes all the activities in selling products or services directly to final consumers for their personal, non-business use. Specialty stores carry narrow product lines with deep assortments within the product lines. Department stores carry a wide variety of product lines. Supermarkets Convenience stores carry a limited line of high-turnover convenience goods. Superstores offer a large assortment of routinely purchased food products, non food items, and services. Discount stores sell standard merchandise at lower prices by accepting lower margins and selling higher volume. Direct marketing selling your product directly to consumers. Direct selling Wholesaling all the activities involved in selling goods and services to those buying for resale or business use. Selling to other businesses who sell to consumers.