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mktg 409 ch 6

Terms in this set (69)

market
This is a group of people who, as individuals, or as organizations, have needs for products in a product class and have the ability, willingness, and authority to purchase such products
target market
This is a group of people or organizations which a business creates and maintains a marketing mix specifically designed to satisfy the needs of group members
product need, ability, willingness, and authority to purchase the product
These are the four requirements that constitutes a market; without any one of the requirements there is no market
consumer market
This consists of purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make profits
business-to-consumer (B2C) market
This another term for consumer market
business market
This consists of individuals or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations
business-to-business (B2B), industrial, or organizational market
These are other names for a business market
identify the appropriate targeting strategy; determine which segmentation variables to use; develop market segment profiles; evaluate relevant market segments; select specific target markets
This is the target market selection process (5 steps)
identify the appropriate targeting strategy
This is the first step in the target market selection process; it consists of choosing among three basic targeting strategies (undifferentiated, concentrated, and differentiated)
undifferentiated, concentrated, and differentiated
These are the three basic targeting strategies
undifferentiated targeting strategy
This is a strategy in which an organization designs a single marketing mix and directs it at the entire market for a particular product; total market must have similar needs; the organization must be able to develop and maintain a single marketing mix that satisfies customers' needs; less expensive to mass market than it is to specialize; ex. eggs, Model T
homogeneous market
This is a market in which a large proportion of customers have similar needs for a product; required to use undifferentiated strategy
heterogeneous market
This is a market made up of individuals or organizations with diverse needs for products in a specific product class; necessary to use concentrated or differentiated targeting strategy
concentrated targeting strategy
This is a market segmentation strategy in which an organization targets a single market segment using one marketing mix; allows firms to specialize; firm analyzes the characteristics and needs of a distinct customer group and then focuses all energy on satisfying that groups' needs; problem- if market segment's demand declines the company has "all its eggs in one basket" and will have financial trouble; also popularity in one segment could prevent a company from entering others; ex. Mercedes, Mont Blanc pens, Porche, Rolex
differentiated targeting strategy
This is a strategy in which an organization targets two or more segments by developing a marketing mix for each segment; marketing mixes may vary as to product features, distribution methods, promotion methods, and prices; may allow firm to increase aggregate sales due to products aimed at more people, production costs may be higher though; ex. Anheuser Busch (Michelob, Bud, Natural Light), Ford (Lincoln, Mustang, F-150)
market segmentation
This is the process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches those needs
market segment
This consists of individuals, groups, or organizations sharing one or more similar characteristics that cause them to have similar product needs
firms are better able to develop a marketing mix that satisfies a small portion of a heterogeneous market
This is the reason for market segmentation
(1) customers' needs for the product must be heterogeneous (2) segments must be identifiable and divisible (company must find a characteristic or variable for effective separation to group people) (3) the total market should be divided so segments can be compared with respect to estimated sales potential, costs, and profits (4) at least one segment must have enough profit potential to justify developing and maintaining a special marketing mix for that segment (marketing expense) (5) the company must be able to reach the chosen segment with a particular marketing mix (some can be difficult to reach due to legal, social, political, or distribution constraints)
In order for market segmentation to succeed, these five conditions must be met
determine which segmentation variable to use
This is the second step in the target market selection process; consists of choosing characteristics of individuals, groups, or organizations to divide a market into segments
segmentation variables
These are characteristics of individuals, groups, or organizations used to divide a market into segments; should relate to customers' needs for, uses of, or behavior toward a product; must be measurable; ex. location, gender, rate of product usage
demographic, geographic, psychographic, and behavioristic variable
These are the four divisions of segmentation variables for consumer markets
demographic variables
This is a division of segmentation variables for consumer markets that focuses on characteristics such as age, gender, race, ethnicity, income, education, occupation, family size, family life cycle, religion, and social class
family life cycle
This is a demographic variable that deals with marital status and the presence and age of children; ex. single mother, duel-earner couples, childless singles
geographic variables
This is a division of segmentation variables for consumer markets that focuses on characteristics such as region, (urban, suburban, rural), city size, county size, state size, market density, climate, and terrain
market density
This is the number of potential customers within a unit of land area; along with population density this also deals with the proportion of related customers in the area
geodemographic segmentation
This is a method of market segmentation that clusters people in zip code areas and smaller neighborhood units based on lifestyle and demographic information; helps marketers isolate demographic units into precisely small units such as neighborhoods where the demand for specific products is strongest
micromarketing
This is an approach to market segmentation in which organizations focus precise marketing efforts on very small geographic markets such as community and even neighborhood markets; this is part of the geodemographic segmentation method; many marketers use this for determining the merchandise mix for individual stores
psychographic variables
This is a division of segmentation variables for consumer markets that focuses on personality attributes, motives (divided according to consumers' reasons for making a purchase; ex. personal appearance, affiliation, status, safety, and health), and lifestyles (how people spend their time, beliefs about themselves; broad view incorporating numerous characteristics related to peoples' activities such as work, hobbies, entertainment, sports, and interests such as family, home, fashion, food, and technology)
Vals from SRI Consulting Business Intelligence
This is one of the more popular consumer frameworks that classifies customers based on psychological characteristics that are correlated with purchase behavior and key demographics; uses questionaire to determine a consumers type to find out about consumers' lifestyle choices that can be used by marketers to choose a segment group to focus on; types- innovator, thinker, believer, achiever, striver, experiencer, maker, and survivor (8 total)
behavioral variables
This is a division of segmentation variables for consumer markets that focuses on characteristics such as volume usage (heavy, moderate, light), end use, benefit experiences (benefit segmentation), brand loyalty, and price sensitivity
benefit segmentation
This is the division of a market according to benefits that consumers want from the product; benefits customers seek are the product needs; ex. cold relief medication- Tylenol and Excedrin
(1) the benefits sought must be identifiable (2) using these benefits, marketers must be able to divide people into recognizable segments (3) one or more of the resulting segments must be accessible to the firms' marketing efforts
The effectiveness of benefit segmentation depends on these three conditions
geographic location, type of organization, customer size, product use
These are the four segmentation variable for business markets
develop market segment profiles
This is the third step in the target market selection process; consists of compiling the similarities and differences (segment variables) among people and organizations in order to segment; helps marketers determine which segment or segments are most attractive to the business relative to the firm's strengths, weaknesses, objectives, and resources
market profile
This describes the similarities among potential customers within a segment and explains the differences among people and organizations in different segments; assists marketers in determining which segment is most attractive; a compilation of various chosen segmentation variables
evaluate relevant market segments
This is the fourth step in the target market selection process; after analyzing market segment profiles, a marketer will identify relevant market segments that requires further analysis and eliminate other segments; this stage consists of analyzing sales estimates, competition, and estimated costs associated with each segment
sales estimates, competitive assessment, and cost estimates
These are the factors considered when evaluating relevant market segments
product level (specific product item or entire product line), geographic area, time (short range 1 yr or less, medium range 1-5 yrs, and long range 5 yrs +), and level of competition
Potential sales for a market segment can be measured along several dimensions including these
market potential
This is the total amount of a product that customers will purchase within a specified period at a specific level of industrywide marketing activity; not market share; it is the entire market that is estimated to be present and a firm decides their level of marketing effort in that market compared to the rest of the industry; the market for a product
company sales potential
This is the maximum percentage of market potential that an individual firm within an industry can expect to obtain for a specific product; the company's market share of the market potential (portion of the market potential that company can obtain)
(1) the market potential places absolute limits on the size of the company's sales potential (2) the magnitude of industrywide marketing activities has an indirect but definite impact on the company's sales potential (other company marketing can increase sales too) (3) the intensity and effectiveness of a company's marketing activities relative to competitors' affects the size of the company's sales potential (company spends more on effective advertising than competition)
These are the factors that influence company sales potential for a market segment
breakdown approach and buildup approach
These are the two general approaches that measure company sales potential
breakdown approach
In this approach, the marketer develops a general economic forecast for a specified time period, then estimates market potential based on economic forecast, finally he derives the company's sales potential from the general economic forecast and market potential
buildup approach
In this approach, the manager estimates how much of a product a potential buyer in a specified area and specific time period will purchase, then he multiplies that amount by the total number of potential buyers in that area, then does the same for each area the company sales in, then adds the the totals to calculate market potential, then estimates, based on marketing activities, the total market potential the company can obtain in order to calculate company sales potential
competitive assessment
Besides sales estimates, it is crucial to assess this factor when evaluating relevant market segments; How many exist? What are their strengths and weaknesses? Do several competitors have major market shares and together dominate the segment? Can our company create a marketing mix to compete effectively against competitors' marketing mixes?
cost estimates
This factor is considered when evaluating relevant market segments; consists of analyzing the costs of developing and maintaining a marketing mix to satisfy customers within a segment; ex. distinctive product features, attractive packaging, product warranties, advertising, promotional offers, competitive prices, and personal service
select specific target markets
This is the fifth step in the target market selection process; this step consists of evaluating the previous steps to choose a segment based on expected profit; firm evaluates if the business has the financial resources, managerial skills, employee expertise, and facilities to enter and compete in the segment, and if the requirements of the segment will be at odds with the company's overall objectives, or if there is a possibility of legal problems or conflicts with interest groups
product positioning
This consists of creating and maintaining a certain concept of a product in customers' minds relative to competitive brands; ex. Crest (powerful fluoride cavity fighter vs. Close-Up (sexy, whitener, great breath for kissing) vs. Sensodyne (especially for sensitive teeth)
perceptual mapping
This is a technique used to analyze a products position in the market; created by questioning a sample of consumers about their perceptions of products, brands, and organizations with respect to two or more dimensions to compare competing products; also, respondents are asked about product features to establish "ideal points" or "ideal clusters"
ideal points
In perceptual mapping these are an indicated preference for specific product features
ideal clusters
These are found in perceptual mapping through cluster analysis; specific groups of consumers who are in consensus in terms of product features; groups of "ideal points"; allows companies to target a specific segment; good for evaluating market entry
bases for positioning
This describes how an organization chooses to position a product; ex. firm can position a product to compete head-to-head with another brand (Pepsi vs Coca-Cola); ex. firm can choose to avoid competition (7Up vs. Coca-Cola Classic); others ways- price, quality level, product attributes or features, benefits to consumer, and target market (heavily promoting the types of people who use the product)
repositioning
This can be accomplished by physically changing the product, its price, its distribution, through promotional efforts, or aiming at a different target market; evaluating a product's position and making changes can be beneficial to increasing a brand's market share, profitability, and aligning with current trends in the market place; ex. Quaker Oats highlighting its whole grain oats to appeal to the health conscious consumer
sales forecast
This is the amount of a product a company expects to sell during a specified period at a specified level of marketing activities; differs from company sales potential by focusing on what actual sales will be rather than possible sales at various levels of marketing activity; used by businesses for planning, organizing, implementing, and controlling activities
executive judgement, surveys, time series analysis, regression analysis, and market tests
These are the five common categories that businesses use in sales forecasting
executive judgement
This is a sales forecasting method based on the intuition of one or more executives; focus on past experience as a guide for the future
customer forecasting survey
This is a survey of customers regarding the types and quantities of products they intend to buy during a specific period; may be useful to businesses with few customers; ex. Intel could use this method; ex. Pepsi has too many customers to use this method
sales forecasting survey
This is a survey of a firm's sales force regarding anticipated sales in their territories for a specified period; good for analyzing small geographic sales unit and total
expert forecasting survey
This is a survey of sales forecasts prepared by experts outside the firm, such as economists, management consultants, advertising executives, or college professors
delphi technique
This is a procedure in which experts create initial forecasts, submit them to the company for averaging, and then refine the forecasts to reach a consensus
time series analysis
This is a forecasting method that uses historical sales data to discover patterns in the firm's sales over time and generally involves trend, cycle, seasonal, and random factor analyses that then combines the results to develop a sales forecast
trend, cycle, seasonal, and random factor analyses
These are the four types of analyses normally performed in a time series analysis
trend analysis
This is a analysis performed in time series analysis that focuses on aggregate sales data over a period of many years to determine general trends in annual sales
cycle analysis
This is an analysis performed in time series analysis that focuses on sales figures for a three to five year period to ascertain whether sales fluctuate in a consistent periodic manner
seasonal analysis
This is an analysis, performed in time series analysis, of daily, weekly, or monthly, sales figures to evaluate the degree to which seasonal factors influence sales
random factor analysis
This is an analysis, performed in time series analysis, of attempting to attribute erratic sales variations to random nonrecurrent events
regression analysis
This is a method of predicting sales based on finding a relationship between past sales and one or more independent variables, such as population or income; mathematical formula that can be used in sales forecasting
market test
This involves making a product available to buyers in one or more test areas and measuring purchases and consumer responses to marketing efforts; does not use historical sales data so this method of sales forecasting can be used for new products or new geographic locations
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