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Part (2)
Extended marketing mix
•Booms and Bitner added three additional P`s to
accommodate trends towards a service or
1. People: all people who directly or indirectly influence
the perceived value of the product or service, including
knowledge workers, employees, management and
2. Processes: as a means to achieve an outcome, for
example procedures, mechanisms and flow of activities
which lead to an exchange of value.
3. Physical evidence: the direct sensory experience of a
product or service that allows a customer to measure
whether he or she has received value.
Four Cs
The Four Ps is also being replaced by the Four Cs
model. The Four Cs model is more consumer-oriented
and fits better in the movement from mass marketing to
niche marketing:
1. The product part of the Four Ps model is
replaced by consumer, shifting the focus to
satisfying the consumer.
1. Pricing is replaced by cost, reflecting the reality
that price is set by the market, not necessarily
by the firm. Thus, the firm must focus on cost
considerations rather than on what the correct
price is to set.
Four Cs
3. Place is replaced by the convenience function. With
the rise of internet and hybrid models of purchasing,
place is no longer relevant. Convenience takes into
account the ease to buy a product, find a product, find
information about a product, and several other
advertising, public relations, personal selling, and any
form of communication between the firm and the
Core competencies
A core competence is the result of a specific unique set
of skills or production techniques that deliver value to
the customer. A core competency has three
1. Provides potential access to a wide variety of
2. Should make a significant contribution to the
perceived customer benefits of the end product.
3. Should be difficult for competitors to imitate.
• Customer segmentation is a method for grouping
customers based upon similarities they share with
respect to any dimensions marketer deem relevant to his
or her business, market, product, competition .
• A market segment is a group of people or organizations
sharing one or more characteristics that cause them to
have similar product and/or service needs.
• Market segmentation is how to choose one sector from
the whole market and design your marketing mix that
fit that sector.
Common segmentation objectives
Common objectives for segmentation include, but are
not limited to:
• Developing new products.
• Creating differentiated marketing communications &
• Developing differentiated customer servicing &
retention strategies.
• Targeting prospects with the greatest profit potential.
• Developing multi-channel distribution strategies.
Once you have decided what your objective is for the
segmentation, you can answer the question, "What do I
want the segmentation to do for me .
Successful Segmentation
•Homogeneity within the segment.
•Heterogeneity between segments.
•Segments are measurable and identifiable.
•Segments are stable over time.
•Segments are accessible and actionable.
•Target segment is large enough to be profitable .
Variables Used for Segmentation
Geographic variables :
divides the market into groups based on variables
such as
•Region of the world or country, East, West, South,
North, Central, coastal, hilly, etc.
•Country size/country size: Metropolitan Cities,
small cities, towns.
•Density of Area Urban, Semi-urban, Rural.
•Climate Hot, Cold, Humid, Rainy.
Demographic factors are the most popular bases for
segmenting markets:
• One reason is that consumer needs, wants, and usage
rates often vary closely with demographic variables.
• Another is that demographic variables are easier to
measure than most other types of variables.
Demographic variables:
•Gender Male and Female.
•Family size.
•Family life cycle.
•Education Primary, High School, Secondary,
College, Universities.
•Socioeconomic status.
•Nationality/race (ethnic marketing).
Language .
Psychographic segmentation:
• it divides buyers into different groups based on social
class, lifestyle, or personality characteristics.
• They found that people in the same demographic
group can have very different psychographic
Behavioral Segmentation:
It divides buyers into groups based on their
knowledge, attitudes, uses or responses to a
Many marketers believe that behavior variables
are the best starting point for building market
Orange juice is most consumed at breakfast, Cocacola`s campaign “Coke in the morning” attempt to
increase Coke consumption by promoting the
beverage as an early morning drink.
Some holidays such as Mother`s Day and Valentine
`s Day were originally promoted to increase the sale
of many products.
Benefits sought:
• It divides buyers according to different benefits
that they seek from the product.
• Benefit segmentation requires finding the major
benefits people look for in the product class, the
kinds of people who look for each benefit and the
major brands that deliver each benefit.
User Status:
• Markets can be segmented into groups of
nonusers, ex-users, potential users, first-time users,
and regular users of products.
Loyalty status:
• Consumers can be loyal to brands, stores, and
companies .
• Buyers can be divided into groups according to
their degree of loyalty .
• Some consumers are completely loyal, they buy
one brand all the time.
• Others are somewhat loyal ,they are loyal to two or
three brands of a given product or favor one brand
while sometimes buying others.
• Still others buyers show no loyalty to any brand,
they either want something different each time they
buy or they buy whatever`s on sale.
Usage rate:
• Markets can also be segmented into light, medium,
and heavy product users.
• Heavy users are often a small percentage of the
market but account for a high percentage of total
• Marketers usually prefer to attract one heavy
user to their products or services rather than several
Using Multiple segmentation bases
• Marketers rarely limit their segmentation analysis
to only one or a few variables.
• rather they are using multiple segmentation bases
in an effort to identify smaller, better defined target
• This strategy for segmenting markets refining
demand estimates, selecting target markets and
shaping promotion messages, and making
marketing mix.
Evaluating market segments
• In evaluating different market segments , a firm
must look at a three factors:
1. Segment size and growth.
2. Segment structural attractiveness.
3. Company objectives and resources.
• The company must first collect and analyze data
on current segment sales, growth rates, and
expected profitability for various segments.
• It will be interested in segments that have the right
size and growth characteristics.
• But “ right size and growth” is a relative matter.
• The largest, fastest growing segments are not
always the most attractive ones for every company
Evaluating market segments:
• The smaller companies may lack the skills and
resources needed to serve the larger segments.
• Or they may find these segments too competitive.
•Such companies may select segments that are smaller
and less attractive.
•The company also needs to examine major structural
factors that affect long-run segment attractiveness.
• For example, a segment is less attractive if it already
contains many strong and aggressive competitors.
• The existence of many actual or potential substitute
products may limit prices and the profits that can be
earned in a segment.
Evaluating market segments:
• The relative power of buyers also affects segments
• Buyers with strong bargaining power relative to
sellers will try to force prices down, demand more
services and set competitors against one another, all at
the expense of seller profitability.
•Finally a segment may be less attractive if it contains
powerful suppliers who can control prices or reduce
the quality of ordered goods and services.
• The company must consider its own objectives and
• Some attractive segments can be dismissed because
they don`t mesh with the company`s long- run
Evaluating market segments:
• Or the company may lack the skills and resources
needed to success in an attractive segments.
• The company should enter only segments in which it
can offer superior value and gain advantages over