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MT 219 Marketing Unit Four Segmentation and Targeting Products and Branding Note: This seminar will be recorded by the instructor. Customer Driven Marketing Strategy • Four stage process that segments, targets, differentiates and positions a product • Segmentation- Basic Process: Heterogeneous Market Segmentation Homogeneous Sub-Markets • Targeting- Selecting the best segments to focus on • Differentiating- Create unique benefits for target segments • Positioning- Placing product into customer’s minds compared to competition. Target Market Segmentation 1. 2. 3. 4. 5. Identify appropriate strategy Determine segmentation variables Develop segment variables Evaluate segments Select specific segments “Market Segmentation Process” 4 Geographic Variable • • • • • • • Climate Terrain City size Urban/rural values Market Density Geo-demographic Segmentation Micromarketing Demographic Variables – closely related to needs and measurable • • • • • • Age Gender Race Ethnicity Income Education • • • • • • Occupation Family size Family life cycle Religion Social class Sexual orientation Psychographic Variables • Social class • Lifestyle - Achievers - Strivers - Survivors • Personality - Compulsive - Romantic - Authoritarian - Enthusiastic Behavioral Segmentation Variables • • • • • Most Powerful Variables Underlies all other segmentation variables These relate most directly to consumer desires How the product benefits the consumer directly Examples- Occasions - Loyalty - Usage rates Which Segment Variables to Use? • Marketers are not likely to use just one segment variable • Market segments often combine multiple variables together to create a desirable target segment Criteria for Effective Segmentation 1. Measurable- Must be quantifiable 2. Accessible- You must be able to reach them 3. Substantial- Must be large enough so company benefits 4. Differentiable- Segment must respond differently 5. Actionable- Company must be capable of marketing to identified segments Major Segmentation Strategies • Undifferentiated – Single product and single strategy for entire market – requires homogeneous market. • Differentiated- Two or more segments each with its own marketing mix • Concentrated – Single segment , one strategy • Micromarketing- products tailored to individuals or smaller local areas Undifferentiated Marketing Market Segments 1 5 P Service 2 3 4 Technology 12 Differentiated Marketing Market Segments A E Service B C D Technology 13 Concentrated Marketing Market Segments Service P Technology 14 Niche Marketing Market Segments N Service N N Technology 15 Positioning • Where the product lives in the mind of the consumer as it relates to the competition • Identify and select appropriate competitive advantages for the product • Combine competitive advantages to develop an overall positioning strategy Breath Mint Example Breath Mint Market: Tic Tac, Certs, Altoids, Dentyne Ice, BreathSavers, LifeSavers, Mentos, etc. 17 Breath Mint Example Tic Tac Market Segmentation Study 18 Breath Mint Benefit Segmentation Study - Circa 1975 - Based on 2,500 In-depth Interviews Segmentation Variable Segment # 1 Segment # 2 Segment # 3 Segment # 4 Other-Oriented Self-Oriented Pacification Taste Experience Benefits Sought Taste change after eating, smoking, drinking coffee Experiential Functional Mask bad breath, want confidence breath does not smell Tension relief, pick-me-up, passing of time, a wake-up. Eliminate stale mouth, unpleasant taste / feeling in mouth Mints are a good taste experience Sweet candy taste - mild taste Financial Psycho-social Does not want to offend in social situations Category Beliefs Traditional breath mints are effective. Medicinal qualities are important. Mini-mints do eliminate "bad" taste, refresh and perk up mouth. Mini-mints are stronger and better. Chewing gums are the primary tension relief, perk-up product. Mints are a secondary product. Mints taste different. A sweet mild candy taste is good. Brand Preference Certs is the primary brand. Clorets is established # 2 in the segment Tic Tac is a very strong mint. Certs are not as strong. Chewing gums are preferred. Secondary products are flavored Lifesavers, Tic Tac. Lifesavers and other fruit flavored candy. Tic Tac is weak. Usage Rate Heaviest usage, 2 or more packs per week. Average, 1 to 2 packs / week. Lightest usage, 1 or less packs per week. Heaviest usage, 2 or more packs per week. Occasions of Use Before and during social situations. After eating, smoking, and drinking coffee Boring, tense, or endless situations. Driving, waiting, etc. Anytime, all the time. Whenever available. Above average TV viewing. High word-of-mouth communication Average TV viewing. Average TV viewing. Above average radio listening Very heavy TV viewing. Media Habits Socially insecure. High social contact. Dependent on social approval. Consumers with high self involvement. People whose daily life has or encounters routine situations. Hedonistic. Personality / Life Style Teenagers, salespersons, women. Adults 18-49. More women. Students, adults with routine jobs, people that do a lot of driving. Primarily children 6 to 12. Some teenagers and adults. Demographics 19 Segmentation Variable Segment # 1 Segment # 2 Segment # 3 Segment # 4 Other-Oriented Self-Oriented Pacification Taste Experience Taste change after eating, smoking, drinking coffee Tension relief, pick-me-up, passing of time, a wake-up. Mints are a good taste experience Benefits Sought Experiential Functional Mask bad breath, want confidence breath does not smell Eliminate stale mouth, unpleasant taste / feeling Sweet candy taste - mild taste Financial Psycho-social Category Beliefs Brand Preference Does not want to offend in social situations Traditional breath mints are effective. Medicinal qualities are important. Mini-mints do eliminate "bad" taste, refresh and perk up mouth. Mini-mints are stronger and better. Chewing gums are the primary tension relief, perk-up product. Mints are a secondary product. Mints taste different. A sweet mild candy taste is good. Certs is the primary brand. Clorets is established # 2 Tic Tac is a very strong mint. Certs are not as strong Chewing gums are preferred. Mints are secondary 20 products Lifesavers and other fruit flavored candy. Tic Tac is weak. What is a Product? Anything that is offered to a market to fulfill a need or want good service idea place person Classifying Consumer Products • Convenience – relatively inexpensive, frequently purchased items with many substitutes. Don’t confuse with a convenience store. • Shopping – items for which buyers are willing to spend considerable effort to compare and purchase. Don’t confuse with what you buy when just shopping • Specialty - products with unique characteristics for which consumers are willing to expend effort • Unsought – items people do not know of or do not think about buying. Many times due to emergency needs. Also, many impulse items. Services Intangible products involving a deed, performance, or effort that cannot be physically possessed -Haircuts -Concerts -Tax preparation -Annual doctors’ physicals Nature of Services • • • • Intangibility Inseparability Variability Perishability Let’s look at these individually Issues related to service intangibility • Difficult for customers to evaluate • No physical possession • Difficult to advertise and display • Pricing is problematical and subjective • Service process not always protected by patents Issues related to service inseparability • • • • Does not allow for mass production Customer participation required Other customers can affect process Difficult to distribute Issues related to variability • • • • • • Quality difficult to control Standardization is a problem Services vary from provider to provider Services can vary from the same provider Reputation is crucial Franchises try to emphasize service homogeneity • Reason for grading rubrics Issues related to service perishability • • • • Services cannot be stored or inventoried Unused capacity is lost forever Demand may be time sensitive Balancing supply and demand is difficult Factors Leading to Customer Switching Behavior • • • • • • • • Pricing Inconvenience Core Service Failure Service Encounter Failures Response to Service Failure Competition Ethical Problems Involuntary Switching Branding- Brand Equity The marketing and financial value associated with a brand’s strength in a market brand name awareness brand loyalty perceived brand quality brand associations Selecting a Brand Name • • • • • Easy to pronounce, spell and remember Trademarkable Distinctive Conveys brand benefits Travels globally- Big concern today Types of Brands • National (Manufacturer’s) brands • Store (Private) brands • Licensing Brand Development Line extensions- new forms, sizes, fragrances, etc are created in existing product line Brand extensions – use of existing brand on a new category, such as extending from a rock singer into acting Multibrands- use of different brand names by one company. Nestle or Proctor and Gamble New Brands- Creating entirely new brands Any Questions? Thank you for attending! See you next week!