Marketing objectives and summaries

Segmentation, Targeting and Positioning

Objectives and Recap Questions      Outline the different methods of segmenting a market.  Describe how firms determine whether a segment is attractive and therefore worth pursuing. Articulate the difference among targeting strategies: undifferentiated, differentiated, concentrated or micromarketing.  Determine the value proposition.  Define positioning and describe how firms do it.   What are the various segmentation methods? What is a perceptual map? Identify the six positioning steps.  

Summary There is no one ‘best’ method to segment a market.  Firms may choose psychographic, geodemographic, benefit and behavioural segmentation. It is recommended that several criteria be used to determine a segment’s attractiveness. A segment must be identifiable, substantial, reachable, responsive and profitable.  Targeting strategies include undifferentiated, differentiated, concentrated and micromarketing Targeting strategies include undifferentiated, differentiated, concentrated and micromarketing.  A firm’s value proposition communicates the benefit(s) a product offers consumers.  Positioning refers to how consumers think about a product in relation to a competitor’s offerings.  When developing a positioning strategy, a perceptual map is often used to outline how the firm’s product is perceived in comparison to their competitors’ products

Product and Branding Decisions

Summary  The core customer value of the product includes brand name, quality level, packaging and additional features  Consumer products tend to fall into four groups –specialty, shopping, convenience and unsought.  Breadth, or variety, entails the number of product lines, whereas depth is the number of categories within one specific product line. Brands enable people to make decisions more easily and encourage customer loyalty.   Brand equity comprises brand awareness, brand associations, brand loyalty and the concept of perceived value.  Firms need to decide if they should offer a manufacturer or private label brand, a corporate brand versus a collection of brands and/or individual brands. They also  need to decide if they want to reach new markets or extend the current one, co-brand with another brand or license their brands to other firms. A brand extension uses the same brand name for a new product in new or existing markets.  A line extension is an increase of an existing product line by brand.  Packaging and labels help to sell the product and facilitate its use.

Objectives and Recap Questions  Describe the components of a product. Identify the types of consumer products. Explain the difference between a product mix’s breadth and a product line’s depth.  Identify the advantages that brands provide to firms and consumers. Explain the various components of brand equity.  Determine the various types of branding strategies used by firms. Distinguish between brand extension and line extension. Indicate the advantages of a product’s packaging and labelling strategy   What is the difference between product mix breadth and product line depth?  Why change product mix breadth?  Why change product line depth?  How do brands create value for the customer and the firm? What are the components of brand equity?  What are the differences between manufacturer and private-label brands? What is co-branding?  What is the difference between brand extension and line extension?  What is brand repositioning?

Objectives and Recap Questions  Identify the reasons firms create new products.  Describe the different groups of adopters articulated by the diffusion of innovation theory. Describe the various stages involved in developing a new product. Explain the product life cycle.   What are the reasons firms innovate? What are the five groups on the diffusion of innovation curve? What factors enhance the diffusion of a good or service?  What are the steps in the new product development process? Identify different sources of new product ideas What are the stages in the product life cycle? How do sales and profits change during the various stages?

Developing New Products

Summary Firms need to innovate to respond to changing customer needs, present declines in sales, diversify their risk and respond to shorter life cycles. The diffusion of innovation theory can help firms predict what types of customers will buy their products These types include innovators, early adopters, early majority, late majority and laggards When firms innovate, they go through several steps Idea generation Concept testing Product design Test market Product launch The product lifecycle helps firms make marketing decisions on the basis of the products stage in its life cycle Knowing where a product is in its lifecycle helps managers to determine its specific strategy

Services - The Intangible Product

Objectives and Recap Questions    Describe how the marketing of services differs from the marketing of products Discuss the four gaps in the Service Gaps Model. Examine the five service quality dimensions. Explain the zone of tolerance.  Identify three service recovery strategies.   What are the four marketing elements that distinguish services from products? Why can’t we separate firms into just service or just product sellers? Explain the five service gaps identified by the Gaps Model  List at least two ways to overcome each of the four service gaps Why is service recovery so important to companies?  What can companies do to recover from a service failure

Summary Services are any intangible offering that involves a deed, performance or effort that cannot be physically possessed. Services are intangible, inseparable, heterogeneous and perishable Services require the use of cues, atmosphere and images to convey benefit of value The four service gaps are the knowledge gap, the standards gap, the delivery gap and the communications gap which combine into the total gap. Customers generally use the following five dimensions to determine service quality; reliability, responsiveness, assurance, empathy and tangibles. The zone of tolerance refers to the area between customers' expectations regarding their desired service and the minimum level of accepted service Service recovery involves listening to the customer, finding a fair solution and resolving problems quickly.

Pricing Concepts for Establishing Value

Objectives and Recap Questions   Know the four pricing orientations Explain the relationship between price and quantity sold Explain price elasticity  Describe how to calculate a product’s breakeven point  Indicate the four types of price competitive levels. Identify three methods that firms use to set their prices. Explain the difference between price skimming and market penetration pricing. Identify tactics used to reduce prices to consumers. Identify tactics used to reduce prices to businesses.   What are the five Cs of pricing?  Identify the four types of company objectives.  What is the difference between elastic and inelastic demand?  How does one calculate the breakeven point in units? How have the internet and economic factors affected the way people react to prices? What are the three different strategies for setting pricing?  How can you use value-based strategies for setting prices? What pricing strategies should be considered when introducing a new product? What are some consumer-oriented pricing tactics?  What are some B2B-oriented pricing tactics?

Summary  The four pricing orientations include profit-oriented, sales-oriented, competitor-oriented and customer-oriented. When prices go up quantity sold generally goes down, however with some products such as prestige ones, demand can actually increase with price. Price elasticity measures the extent to which changes in price affect demand.  A break-even point occurs when the units sold generates enough profit to cover the total costs of producing those units. There are three types of price competitive levels –monopoly, monopolistic competition, and an oligopolistic competitive market. The three methods that firms use to set their prices are cost-based, competitor-based and value-based. Price skimming strategy is used when the product is perceived as breaking new ground, to signal high quality, limit demand and recoup investment quickly. Market penetration strategy builds sales and market share quickly to discourage other firms from entering the market. Marketers use a range of tactics to provide lower prices to customers, including markdowns, quality discount, seasonal discount, coupons, rebates, price bundling, leader pricing and price lining. Firms use a range of tactics to reduce prices to businesses including seasonal discounts, cash discounts, quantity allowances and zone pricing.

Supply Chain Management and Logistics

Objectives and Recap Questions    Understand the importance of marketing channels and supply chain management. Understand the difference between direct and indirect marketing channels. Describe how marketing channels are managed. Discuss the four factors manufacturers should consider as they develop their strategy for working with retailers. Outline the considerations associated with choosing retail partners. List the three levels of distribution intensity. Describe the various types of retailers.  Identify the benefits and challenges of stores and multichannel retailing   What is the difference between an indirect and a direct marketing channel?  What are the differences among the three types of vertical marketing systems? How do firms develop strong strategic partnerships with their marketing channel partners? How does merchandise flow through a typical marketing channel? What activities occur in a distribution center and what technologies facilitate those activities? Why have just-in-time inventory systems become so popular What issues should manufacturers consider when choosing retail partners? What is the difference between intensive, exclusive, and selective levels of distribution intensity What strategies distinguish the different types of food retailers? What strategies distinguish the different types of general merchandise retailers?  Are organisations hat provide services to consumers retailers? What are the components of a retail strategy? What are the advantages of traditional stores versus internet-only stores? What challenges do retailers face when marketing their products through multiple channels

Summary  Marketing channels allow companies to get their products to the appropriate outlets in sufficient quantities to meet consumer demand.  Using a direct marketing channel, a customer can purchase goods directly from the manufacturer. More commonly, manufacturers choose to offer their goods through an intermediary such as a retailer.  The more closely aligned the marketing channel members are, the less likely there will be significant conflict. Manufacturers determine which retailers should carry their products, and then work with them to develop a business strategy. Manufacturers often start with a level of vertical integration, the strength of the retailer and the strength of the brand. Distribution intensity includes intensive, exclusive and selective. Retailers fall into three categories –food, general merchandise or services.  Retailer formats include supermarkets, warehouse clubs, convenience stores, department stores, discount stores, speciality retailers, chemists, category specialists, extreme value and off-price stores.  If a retailer adopts a multichannel strategy, it can exploit the benefits and mitigate the limitations of each channel and expand its overall market presence.

Customer Relationship Management

Objectives and Recap Questions     Describe customer relationship management (CRM) and its role in supporting business operations.  Describe the three phases of CRM. Describe, with examples, the types of CRM systems. Identify the benefits and challenges of CRM and how to measure its success. Critique the future of CRM