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Unit 3 Marketing Learning Objectives To define marketing and explain the elements of marketing To understand the functions of marketing and the marketing mix To discuss the way of market segmenting and targeting Can you recognize which company it is from the following website? Can you name some of the household products of IBM? Have you ever thought of why IBM could be so popular all of the world? IBM has undergone a remarkable transformation. All top IBM managers met face-to-face with important customers and report back their problems and priorities. What are Consumer’s Needs, Wants and Demands? Needs - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. i.e. I am hungry. Wants - form that a human need takes as shaped by culture and individual personality. i.e. I want a hamburger, French fries, and a soft drink. Demands - human wants backed by buying power. i.e. I have money to buy this meal. The scope of marketing In fact, marketing people are involved in marketing 10 types of entities: - Goods 商品 - Services 服务 - Experiences 经历 - Events 事件 - Persons 个人 - Places 地点 - Properties 财产权 - Organizations 组织 - Information 信息 - Ideas 观念 What Will Satisfy Consumer’s Needs and Wants? Products Anything that can be Offered to a Market to Satisfy a Need or Want Experiences Persons Organizations Information Services Places Ideas Activities or Benefits Offered for Sale That Are Essentially Intangible and Don’t Result in the Ownership of Anything Modern Marketing System (Fig. 1-3) Suppliers Company (Marketer) Marketing Intermediaries End User Market Environment Environment Competitors Developing the Marketing Mix Price Product Amount of money that consumers have to pay to Obtain the product “Goods-and-service” combination that a company offers a target market Target Customers Intended Positioning Activities that persuade target customers to buy the product Promotion Company activities that make the product available Place Oral Practice An interview A: a host of an economic TV program B: an expert on marketing A: From June 10th to July 10th, the football has been the focus of the world during these 30 days. The accumulated number of audience to these 64 matches has reached about 320,000,000,000, this is a great festival the World Cup brings to us. However, there has been another world cup in the eyes of business men, and those games are more intensive, more fierce and crueler, of course, they are real matches. This is the war of marketing which revolves around the World Cup. B: Everyone who watches the World Cup can definitely feel that not only the players are trying to win the game, the team sponsors are fighting outside of the grassland. A: There are three famous sports brands: Adidas, Nike and Puma, they choose different football teams to support, which one do you think has made a brilliant decision? B: In my opinion, I agree more on Puma. A: May I know your reason? B: In football games, people prefer to focus on Black Horse, I think Puma has acted as a Black Horse. It firstly launched in the African teams, which is a potential market for sports brands, this strategy not only grasp a big emerging market but also very economic. A: We hope Puma can really grasp this new market and make great achievements. The World Cup for football comes every four years, however, the competition on marketing on football or we can call it as a war because it may be more violent, will never end. It is even a start for most Chinese enterprises, because we will play a real home game in 2008. Text One An Overview of Marketing Vocabulary availability n. 可用性 E.g.:local availabilities 可从当地获得的东西。 the availability of a candidate 候选人的当选可能性。 solution n.解决方案 E.g.: He came up with a really elegant solution to our problem. 他给我们的问题想出了一个很棒的解决 方案。 categorize vt. 分类, 归类 E.g.: If you categorize the information you need to remember, you will find it much easier. 如果你把所需记忆的信息分类,你就会 觉得记忆起来要容易得多。 priority n. 优先考虑的事 It’ll take three months to repair the house. Now patience is something should be a priority . 这个房子装修要三个月,所以耐心是最 重要的。 promotion n. 推销商品 E.g.: A: What is the next step following the promotion campaign? B: I guess you need to find someone who can bankroll you. A: 推销战之后要做什么? B: 我想你需要有人来资助你。 conception n. 概念 E.g.: This concept is at the very core of her theory. 这个概念是她的理论的核心. I can not understand the so abstract concept. 我无法理解如此抽象的观念。 split off 分开 E.g.:The road splits off from the main street. 这条路从大街上岔了出来。 tailor-made adj. 定制的, 适合的 E.g.:He seems tailor-made for the job. 他好像很适合这项工作。 brochure n. 宣传册 E.g.: I'll send you the brochure right away. 我会把公司简介即刻给您寄去。 The travel brochure lured me into taking a Caribbean vacation. 这本旅游小册子诱使我去加勒比地区度 假。 modify vt. 更改 E.g.: The policy was agreed by the committee, but only in a modified form. 那项政策经修改后才获得委员会同意。 He'll have to modify his views if he wants to be elected. 他要想当选就得把观点改得缓和些. Explanation of the text The American Marketing Association defines marketing as “the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.” 美国市场营销协会将市场营销的定义为: 计划和执行观念,商品和服务的构思, 定价、促销和分销以便产生满足个人、 组织和社会目标的交易的过程。 The word “create” gives marketing an anticipatory dimension and emphasizes the forward-looking approach necessary to identify future needs and wants. “创造”一词使得市场营销有了一个可 以预期的空间,并且强调了发展性的眼 光对于确定未来需求的必要性。 IBM’s marketing managers tried to win over the game, they have to understand that the customers’ needs are their goals. Without this concept in mind, they could produce only “white elephants” which they could sell to nobody. The concept of “finding the needs of the consumers and satisfying them” is the essence of marketing, a word literally meaning “finding a market and serving it”. Keys to Exercises II. Fill in the table below by giving the corresponding Chinese or English equivalents. 市场营销 deliver solutions 合适的产品 marketing mix 个人推销 pricing 促销 demand for consumption III. Choose one suitable answer from the following four choices to answer the question or to complete the sentence. B A D D A IV. Practical Writing The genius XXX Home Appliance Company has come up with a new model Microwave ovens -EB-3190EG. It can cook the food with amazing speed by heating the food. Furthermore its convection facility provides fans and a certain 'airflow' circulation that cooks the food by using much less electricity. It can bake, broil, cook, rethermalize and warm the food effectively which makes it be the best oven available in the market that provides the users with delicious, tasty and fast cooked foods. Basic functions of this new model: 1. Halogen grill 2. Electronic operation with LED display 3. 10microwave power levels 4. 90minutes time setting 5. Auto menu & auto defrost function 6. Child lock 7. Quick start key Special Features of Microwave Convection Ovens: this new model is a wonderful creation. It provides the couple advantages of microwave methods. There are some other features too that make this oven so special. Baking features - During baking, a heating element raises the temperature inside the oven. So, it can operate temperatures from 225- 450F. The fan circulates the hot air throughout the oven, over the food and produces brown exteriors and moist interiors. Following are some of the other advantages of microwave convection oven: There are heating and cooling switches, which heat and cool the food perfectly. The nutrients are preserved and the actual taste of the food also remains same. The oven operates at much lower temperature and leads to 20% decrease in cooking time compared to other ovens. If you still don't have an excellent microwave oven like this, then hurry up and get yourself this oven to provide wonderful dishes to your family and friends. Text Two Market Selection Text B To know what the buyer’s behavior is; To know how to segment the market To know the methods of targeting a market Consumer Buying Behavior Consumer Buying Behavior refers to the buying behavior of final consumers individuals & households who buy goods and services for personal consumption. All these consumers make up the consumer market. The central question for marketers is: – “How do consumers respond to various marketing efforts the company might use?” Factors Influencing Consumer Behavior Cultural Social Culture Reference groups Subculture Family Social class Roles and status Personal Age and life-cycle Occupation Economic situation Lifestyle Personality and self-concept Psychological Motivation Perception Learning Beliefs and attitudes Buyer Steps in Market Segmentation, Targeting, and Positioning Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles Market Targeting 3. Develop measure of segment attractiveness 4. Select target segments Market positioning 5. Develop positioning for target segments 6. Develop a marketing mix for each segment Step 1. Market Segmentation Geographic Segmentation World Region or Country City or Metro Size Density or Climate Step 1. Market Segmentation Demographic Segmentation Dividing the market into groups based on variables such as: – Age – Gender – Family size or life cycle – Income – Occupation – Education – Religion – Race – Generation – Nationality Step 1. Market Segmentation Psychographic Segmentation Divides Buyers Into Different Groups Based on: Step 1. Market Segmentation Behavioral Segmentation Dividing the market into groups based on variables such as: – Occasions – Benefits – User status – Usage rate – Loyalty status – Readiness stage – Attitude toward product Segmenting International Markets Geographic Location Cultural Factors Factors Used to Segment International Markets Political and Legal Factors Economic Factors Step 1. Market Segmentation Requirements for Effective Segmentation Measurable • Size, purchasing power, profiles Accessible • Segments can be effectively of segments can be measured. reached and served. Substantial Differential Actionable • Segments are large or profitable enough to serve. • Segments must respond differently to different marketing mix elements & programs. • Effective programs can be designed to attract and serve the segments. Discussion Connections Using the segmentation bases you’ve just read about, segment the skin cream market in our country. Describe each of the major segments and sub segments. Step 2. Market Targeting Evaluating Market Segments Segment Size and Growth – Analyze current sales, growth rates and expected profitability for various segments. Segment Structural Attractiveness – Consider effects of: competitors, availability of substitute products and, the power of buyers & suppliers. Company Objectives and Resources – Company skills & resources needed to succeed in that segment(s). – Look for Competitive Advantages. Step 2. Market Targeting Market Coverage Strategies Company Marketing Mix Market A. Undifferentiated Marketing Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 Segment 1 Segment 2 Segment 3 B. Differentiated Marketing Segment 1 Company Marketing Mix Segment 2 Segment 3 C. Concentrated Marketing The promotional tools Advertising 广告 Sales promotion 销售促进 Public relations and publicity Personal selling 人员推销 Direct marketing 直接营销 公共关系与宣传 Vocabulary laundry n.洗衣 E.g.: When does the wash come back from the laundry? 送到洗衣店的衣服什麽时候取回来? The report on the hospital mentions such desiderata as a supply of clean laundry. 报告中提到该医院需要乾净的洗换物品. variable n. 变量 E.g.: Winds are mainly light and variable. 风力较弱,风向多变。 The temperature was a variable in the experiment. 在该实验中温度是个变量。 diversify vt. 使多样化 E.g.: Hill and woods diversify the landscape. 山陵和树林点缀景色。 A factory must try to diversify for further development. 一个工厂要获得进一步发展就要努力使 产品多样化。 zero in on 集中注意力于 E.g.: The congressional opponents zeroed in on the bill. 国会中的反对派把矛头集中指向那项议 案。 The police zeroed in on two suspects who had arrived three days before. 警察把注意力集中在3天前到达的两个 可疑分子身上。 homogeneous adj.相似的 E.g.: The state or quality of being homogeneous. 同质同质或相似的性质或状态 Procter & Gamble Procter & Gamble sells many famous brands of laundry detergent, hand soap, shampoo, skin care potions and disposable diapers in USA why would P&G introduce several brands in one category instead of concentrating its resources on a single leading brand? Market segmentation Market targeting Market Segmentation In this increasingly diversified world, no firm would be so naive or ambitious as to assume that it can satisfy all the needs and wants of all people. Marketing managers have long realized that, for their efforts to be effective and successful, they must “zero in on” one or several, but rarely all, segments of the market. Definition Market segmentation is the process of dividing the total market into several relatively homogeneous groups with similar product interests based on such factors as: demographic psychographic characteristics geographic location perceived product benefits. 1. Geographic variables It calls for dividing the market into different geographical units such as nations, regions, counties or neighborhoods. For example, Campbell sells Cajun gumbo soup in Mississippi and makes it cheese soup spicier in Texas 2. Demographic variables Factors like age, gender, ethnic background, race, religion, education and income make people different from each other. Such demographic differences influence people’s buying decisions. Procter & Gamble boldly targets its Oil of Olay ProVital moisturizing creams and lotions at women over 50 years of age —— it helps to improve the elasticity and revitalize the appearance of “maturing skin.” 3. Psychographic variables People can also be grouped according to their attitudes, motives, activities and opinions. Early in 50’s, Ford and Chevrolet were famous for their advertisements focused on different customers’ personalities. The owners of Ford were likely to be independent, self-central and man-like. However, the customers preferred Chevrolet were conservative and economical. 4. Product-use variables People buying the same product can be further divided according to their use of the product. Take a ball-pen for example, teenagers in school like colorful, fancy and toy-like ballpens, however, office clerks prefer sturdy, practical and reliable ones. Market Targeting After evaluating different segments, the company must now decide which and how many segments to serve. This is the problem of target market selection. A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. 1. Undifferentiated Marketing Using this strategy, a firm might decide to ignore market segment differences and go after the whole market with one offer. This mass-marketing strategy focuses on what is common in the needs of consumers rather than on what is different. Coca Colas original marketing strategy was based on this form. One product aimed at the mass market in the hope that a sufficient amount of buyers would be attracted, although there are now changes in their product line to cater for growing dietary and caffeine free needs of consumers. 2. Differentiated Marketing Using this strategy, a firm decides to target several market segments or niches and designs separate offers for each. General Motors tries to produce a car for every “purse, purpose, and personality.” Nike offers athletic shoes for a dozen or more different sports, from running, fencing, and aerobics to bicycling and baseball. 3. Concentrated Marketing The third strategy is especially appealing when company resources are limited. Instead of going after a small share of a large market, the firm goes after a large share of one or a few segments or niches. Oshkosh Truck is the world’s largest producer of airport rescue trucks and frontloading concrete mixers. Tetra sells 80 percent of the world’s tropical fish food Steiner Optical captures 80 percent of the world’s military binoculars market. Keys to Exercises II. Fill in the table below by giving the corresponding Chinese or English equivalents. 洗衣用去污剂 market segmentation 种族背景 area differentiation 相似的需求 demographics 心理的 market targeting 无差异性市场营销 concentrated marketing III. Read the following extract about marketing. In most lines there is one extra word which does not fit in. 1) of 2) if 5)than 6) be 9)CORRECT 3) will 7) use 10)the 4) high 8) to IV. Finish the crossword quiz with the world’s 25 leading brands. NOKIA NESCAFE AMERICANEXPRESS GILLETTE CITIBANK ATT HONDA IBM BUDWEISER COCACOLA BMW TOYOTA MCDONALD’S MARLBORO INTEL SONY MICROSOFT FORD Case Study Starbucks: Brewing in the Whole World SWOT Analysis Starbucks Strengths. Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2004.The company generated revenue of more than $5000 million in the same year. It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries. Starbucks was one of the Fortune Top 100 Companies to Work For in 2005. The company is a respected employer that values its workforce. The organization has strong ethical values and an ethical mission statement as follows, 'Starbucks is committed to a role of environmental leadership in all facets of our business.' Weaknesses. Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time. The organization has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk. The organization is dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise. Opportunities. Starbucks are very good at taking advantage of opportunties. In 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD. New products and services that can be retailed in their cafes, such as Fair Trade products. The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge. Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential. Threats. Who knows if the market for coffee will grow and stay in favour with customers, or whether another type of beverage or leisure activity will replace coffee in the future? Starbucks are exposed to rises in the cost of coffee and dairy products. Since its conception in Pike Place Market, Seattle in 1971, Starbucks' success has lead to the market entry of many competitors and copy cat brands that pose potential threats. 'Starbucks' mission statement is 'Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.' The following six guiding principles will help Starbucks measure the appropriateness of our decisions: 1. Provide a great work environment and treat each other with respect and dignity. 2. Embrace diversity as an essential component in the way we do business. 3. Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee. 4. Develop enthusiastically satisfied customers all of the time. 5. Contribute positively to our communities and our environment. 6. Recognize that profitability is essential to our future success.