Marketing Exam 2

• STP:

  1. stands for segmenting, targeting, and positioning
  2. Helps marketers pick out specific customers to please them and group them together
• Market: People or organizations with needs or wants, the ability to buy, and the willingness to buy. All of the criteria is needed for something to be a market. If a person or organization isn't part of the market, organizations wont waste resources
• Market segment: A subgroup of people or organization sharing one or more characteristics that cause them to have similar product needs
• Market segmentation: The process of dividing a market into meaningful and identifiable segments or groups
• What is the purpose of market segmentation:

  1. Different people or organizations have different needs and wants, therefore it is hard to target the entire market
  2. Tailor unique marketing mixes for specific segments
  3. Allocate resources more efficiently
  4. All of the above is to maximize profits
• Successful segmentation: Segments should be substantial, identifiable and measurable, accessible, and responsive. Your segments should be homogenous within and heterogenous between
• Substantial segmentation: The segment is large enough. If a marketing mix is too small, the firm operates on a lass
• Identifiable and measurable segments: If you can't observe a segment, making a marketing mix is impossible
• Accessible segments: The segment is reachable with the marketing mix. The message is lost if you can't reach the segment with your marketing mix
• Responsiveness in segments: Respond to marketing mix the same way, if they react differently or don't react at all, the marketing mix won't work
• Homogenous segments and heterogenous between segments: People in the same segment respond the same way and people in different segments respond differently. You can design a marketing mix and not overlap resources if this is true
• 5 bases for segmenting a market

  1. Geography
  2. Demographic
  3. Psychographics
  4. Benefits sought
  5. Usage rate
• Geographic segmentation: Relates to region, market size, market density, and climate. Mostly to do with where they live
• Demographic segmentation: Relates to age, gender, income, ethnicity, and family life cycle. Family life cycle refers to your stage in life, such as if you're single or married with no kids. Mostly to do with what people in the segment look like
• Psychographics: Relates to the personality, motives, lifestyle, beliefs. and values people have in a segment. Answers why people can be vastly different even when geography and demographic are the same.
• Usage rate:

  1. split into three core groups: Light, medium, and heavy users
  2. 20% of the consumers drive 80% of the spending, so heavy users are always a good focal point. 4ps should be different for heavy users than light users
  3. Split further into 4 additional groups: Former, current, potential, and first time users
• Utilitarian and hedonic use:

  1. Utilitarian is buying something for its use
  2. Hedonic is buying something for fun
• Benefits sought: Relates to needs and wants. Ties people with different geography, demographics, and psychographics with benefits. Can be divided between different benefits that consumers seek from products
• Steps in segmenting markets:

  1. select a market/product category for study
  2. Choose bases for segmentation (Demographic, geographic, psychographic, benefits, and usage). These basis have to be major
  3. Select descriptors: Give each segment a name
  4. Profile and analyze segments: You can choose 1 segment to be your target segment. Answer if the segment is growing or shrinking, how many customers are in each segment, and how much competition is in each segment
• Strategies for select target market:

  1. undifferentiated strategy
  2. Concentrated strategy
  3. Multisegment
• Undifferentiated strategy: Viewing the entire market as 1 segment. Works if your product is a standard commodity but fails with consumer products
• Concentrated strategy: Picking your target market and allocating resources to them while ignoring the other parts of the market
• Multisegmented strategy: Designing 4ps for multiple segments at once.
• Position: consumer's perception of a product relative to competing offerings
• Positioning: Battle for consumer's mind and establishing your place there. you use the 4ps to influence consumer perception of your product. Vital in competitive markets, especially for low involvement purchase decisions.
• Perceptual map:

  1. shows your positioning and product differentiations
  2. you determine the two dimensions to establish competitive advantage and those that matter to your target market
  3. You need to be different and identify who your customers are
  4. One purpose is to identify alternatives
• The trap of the perceptual map

  1. one of the four quadrants by design is meant to be a trap where no company's product wants to go
• Repositioning:

  1. changing your position on the perceptual map to have consumers see you differently
• Research: gathering, analyzing, and telling a story with data
• Marketing research: Planning, collecting, and analyzing date relevant to a marketing decision. Ideal times for marketing research are when you have high level of uncertainty and the benefits from research outweigh the costs.
• Why do we do marketing research

  1. to Describe: regards to the factual statement, research type called descriptive research
  2. to Diagnose: explains data, research type called diagnostic research
  3. to predict: Answers a what if question, research type called predictive research
• Marketing research process: The process is a scientific approach to maximize the probability of setting meaningful and accurate results
• Marketing research steps

  1. identify the problem/question: if this is bad, the entire process wont work
  2. Plan and design primary and secondary data
  3. Specify sampling procedure
  4. Collect data
  5. Analyze data
  6. Prepare/present report
  7. Follow up
• Primary data:

  1. Data collected for solving the problem under investigation.
  2. Primary data is required to answer problems that are specific to you.
  3. Guarantees an answer to the research data but costs a lot.
  4. Data is current and the source is known.
  5. Comes with the benefit of ownership
• Secondary data:

  1. Data previously collected for another reason
  2. Includes internal corporate information, government agencies, trade and industry associations, business periodicals, and news media
  3. Cheaper since the data already exists, but not guaranteed to relate to the issue
  4. Aids in determining direction for primary data collection. Pinpoints the kinds of people to approach
  5. Serves as a basis of comparison for other data
• Major ways to collect primary data:

  1. observation research
  2. Experiments
  3. Survey research
• Observation research: Researchers watching consumer behavior
• Experiments for marketing: Alter one or more variable while observing the effects of the alterations. Aim for causality, which is how much one variable correlates to another
• Survey research:

  1. Most popular way to gather primary data.
  2. A researcher interacts with people to obtain facts, opinions, and attitudes
  3. Types include in-home interviews, mail/online surveys, mall intercept interviews, executive interviews, telephone interviews, and focus groups
• Focus group: Consists of 7-10 people. A moderator leads discussion. This method is used to measure consumer response to product