UMaine Marketing Test 3

STP steps
1. establish overall strategy or objectives
2. use segmentation methods
3. evaluate segment attractiveness
4. select a target market
5.identify and develop positioning strategy
geographic segmentation
organizes customers into groups on the basis of where they live
demographic segmentation
organizes customers in terms of age, gender, education, and income
psychodynamic segmentation
how customers describe themselves
self value
overriding desires that drive how a person lives (life goals)
self concept
the image one ideally has of themself
lifestyle
the way we live
Value and lifestyle survey (VALS)
8 segments, identify underlying motivations, shows correlations between psychology and lifestyle choices
benefit segmentation
groups on basis of the benefits they derive from products and services
behavioral segmentation
basis of how they use a product or service (measures include occasion and loyalty)
occasion segmentation
time when a product or service is purchased or consumed (special event times)
loyalty segmentation
retention and loyalty initiatives using multiple segmentation methods
geodemographic segmentation
combination of geographic, demographic, and lifestyle characteristics
evaluate segment attractiveness (step 3 of STP)
1. identifiable
2. substantial (measure a market’s size)
3. reachable
4. responsive (customers must act similarly and positively to firms offering)
5. profitable
segment profitability formula
(segment size x segment adoption % x purchase behavior x profit margin%) – fixed cost
select target market strategies ( step 4 of STP)
1. undifferentiated targeting strategy
2. differentiated targeting strategy
3. concentrated targeting strategy
4. micromarketing
undifferentiated targeting strategy
“mass marketing,” when everyone might be considered a potential user of its product (ex. coke using polar bears around christmas time )
differentiated targeting strategy
target several market segments with different offering for each
concentrated targeting strategy
selecting a single target market and focusing all its energies on providing a product to fit that markets needs
market positioning
defining market mix variables so that target customers have clear understanding of what product does
value proposition
communicates to the customer the benefits of the product or service
perceptual map
displays in 2+ dimensions, the position of products or brands in customers mind
ideal points
where particular market segments ideal product would be on a map
the marketing research process
1. defining the objectives and research needs
2. designing the research
3. collecting data
4. analyzing the data and developing insights
5. developing and implementing an action plan
secondary data
pieces of info that have been collected prior to the start of the focal research project (includes external and internal data)
primary data
data collected to address specific research needs, more expensive and time consuming (ex. focus groups, in-depth interviews, or surveys)
sample
choosing a group of customers that represent the customers of interest and then generalize opinion to describe all customers with the same characteristics
data
raw #’s or other factual info that on their own have limited value to marketers
info
when data is interpreted, resulting from organizing, analyzing, and interpreting data and putting them into a form that is useful
types of secondary data
1. inexpensive external
2. syndicated external
3. internal
inexpensive external secondary data
provided data about businesses by countries and zip codes
syndicated data
purchased, available from commercial research firms such as IRI
scanner data
used in quantitative research obtained from scanner readings of Universal Product Code (UPC) labels at checkout counters
panel data
info collected from a group of consumers, organized into panels, over time
data warehouses
millions of pieces of individual data stored in large computer files
data mining
uses a variety of statistical analysis tools to uncover previously known patterns in data or relationships among variables
churn
# of participants who discontinue use of service / the avg of total participants
big data
field of marketing research has seen big changes because of explosion in amounts of data that firms can’t handle
primary data collection techniques
1. qualitative research
2. quantitative research
qualitative research
used to understand the phenomena of interest through broad, open ended responses. Provides initial info that helps the researcher more clearly formulate objectives
1. observation
2. social media
3. in-depth interviews
4. focus group interviews
quantitative research
structured responses that can be physically tested, provided info needed to confirm insights and hypothesis from qualitative or secondary data
1. survey
2. panel and scanner based
3. experimental
unstructured questions
open ended, allows respondents to answer in their own words (ex. what’s your favorite food)
structured questions
close ended questions for which a discrete set of response alternatives or specific answers is provided for respondents to evaluate
experimental research
systematically manipulates 1 or more variables to determine which have a causal effect on others
biometric data
includes 1 or more physical traits such as facial characteristics , iris scans, or fingerprints
innovation
process by which ideas are transformed into new offerings, including products, services, processes, and branding concepts
why firms create new products
1. changing customer needs
2. market saturation
3. managing risk through diversity
4. fashion cycles
5. improving business relationships
diffusion of innovation
the process by which the use of an innovation process spreads throughout a market group, over time, and across various categories of adopters
pioneers (breakthroughs)
establish completely new market or radically change both rules of competition and consumer preferences in a market
first movers
first to create the market or product category, they become readily recognizable to customers and establish a commanding and early market and share lead
diffusion of innovation curve
1. innovators
2. early adopters
3. early majority
4. late majority
5. laggards
innovators
1st subgroup buyers who want to be the first on the block to have the new product or service (ex. waits outside or overnight until store opens)
early adopters
2nd subgroup buyers that begin to use product or service innovation, generally don’t like to take as much risk but will wait to purchase until product review
early majority
3rd subgroup of buyers, crucial because its a large group who makes new products and services profitable, waits until bugs are worked out. The time when competitors have reached their peak and theres many price and quality choices
late majority
4th subgroup of buyers, when they buy the product it has reached its full market potential, sales may level off or be in decline at this point
laggards
5th subgroup of buyers, 16% of buyer population, they avoid change and rely on traditional products
promotion and pricing strategies
1. relative advantage
2. compatibility
3. observability
4. complexity
5. trialability
relative advantage
better than most substitutes, most people can use the product
compatibility
diffusion process can be faster or slower depending on international and cultural differences
observability
when products are easily observed, benefits and uses can be easily communicated which enhances process
how firms develop products
1. idea generation
2. concept testing
3. product development
4. market testing
5. product launch
6. evaluation of results
reverse engineering
taking apart a product, analyzing it, and creating an improved product that doesn’t infringe on competitors patterns
lead users
innovative product users who modify existing products according to their own ideas to suit their specific needs
concept testing
process where concept statement is presented to potential buyers to obtain their reaction
concepts
ideas with potential to turn into concepts
product development (product design)
a process of balancing various engineering, manufacturing, marketing, and economic consideration to develop a products form or features
prototype
first physical form or service description of a new product, still in rough or tentative form, which has same properties as a new product but is produced through different manufacturing processes
what prototypes are tested through
1. alpha testing
2. beta testing
alpha testing
firm attempts to determine whether product will perform according to its design and whether it satisfies intentional need
beta testing
uses potential customers who examine product prototype in a real use setting to determine functionality, performance, potential problems, and other issues specific to use
premarket tests
performed before they actually bring a product or service to a market to determine how many customers will try and continue to use it according to a small group of potential customers
test marketing
a method of determining the success potential of a new product by introducing to a limited geographical area
trade promotions
to wholesalers or retailers to get them to purchase the new product
introductory price promotions
limited duration, lower than normal prices designed to provide retailers with an incentive to try the products
trade show
temporary concentration of manufacturers that provides retailers the opportunity to view what is available and new
slotting allowance
a fee paid simply to get new products into stores or to gain more or better shelf space for their products
the product life cycle
defines the stages that products move through as they enter, get established in, and ultimately leave market
1. introduction stage
2. growth stage
3. maturity stage
4. decline stage
introduction stage
when product category first launches, starts with a single firm, initial losses, innovators are ones to try new offering
growth stage
product gains acceptance, demand and sales increase, more competitions emerge and market gets segmented, increase in product adopters and available product, profits rise or firms exit market
maturity stage
industry sales reach peak so firm rejuvenates products by adding new features, adoption of product by late majority, and intense market competition, costs increase, and market has become saturated
decline stage
firms position themselves for a niche segment of diehard consumers or those with specific needs or they exit the market, laggards adopt products
components of a product
1. core customer value
2. actual product
3. associated services
types of products
1. specialty
2. shopping
3. convenience
4. unsought
specialty products/services
those that customers express a strong preference that they will expend considerable effort to search for the best suppliers. (ex. luxury cars, designer apparel)
shopping products/services
consumers will spend a large amount of time comparing alternatives (ex. furniture, apparel, fragrances, appliances, travel alternatives)
convenience products/services
consumer isn’t willing to expense any effort to evaluate prior to purchase, frequently purchased commodity items usually bought with little thought (ex. beverages, bread, soap)
unsought products/services
consumers don’t normally think of buying or don’t know about, these products require a lot of marketing effort and promotion
product mix
the complete set of all products and services offered by a firm, usually consists of various product lines
product lines
groups of associated items that consumers tend to use together or think of as part of a group of similar products or services
breadth
represents firms count of number of product lines offered by firm (ex. BMW has 4)
depth
number of products within a product line
primary packaging
the one the consumer uses that is convenient for storage, use, and consumption (ex. toothpaste tube)
secondary packaging
the wrapper or exterior carton that contains the primary package and provides UPC label used by retail scanners and includes additional product info
heterogeneity
variability in service’s quality
knowledge gap
reflects the difference between customers expectations and the firms perception of those customer expectations
standards gap
the difference between the firm’s perceptions of customers expectations and the service standard it sets
delivery gap
difference between the firms service standards and the actual service it provides to customers (customer directly interacts w service provider)
communication gap
difference between the actual service provided to customers and the service that the firm’s promotion program promises
service recovery
1. listening to the customers and involving them in the service recovery
2. providing a fair solution
3. resolving the problem quickly
distributive fairness
pertains to a customers perception of the benefits he/she received compared with the costs
procedural fairness
refers to the perceived fairness of the process used to resolve them