Quiz Two: Study Guide
Vocab:
Market Segmentation: Dividing potential buyers into groups that a) have common needs (or common benefits from purchasing a product) and b) will respond similarly to a marketing action.
Product Differentiation: Marketing strategy in which a firm uses different marketing strategies to help
consumers perceive a product as being different and better than competing products.
PRICE
PLACE
The Tiffany-Walmart
Strategy:
A two-tier approach to market segmentation that has become increasingly
popular. It offers different variations of the same basic offering to high-end and low-end segments. (ex: Gap,
Banana Republic, Old Navy – jeans are $60 at BR, while $20 at ON)
Product Positioning: The place a product occupies in consumer’s minds based on important attributes relative
to competitive products.
Product Repositioning: Changing the product position
Head to Head Positioning: competing directly with competitors on similar product attributes in the same
target market.
Differentiation Positioning: seeking a less competitive, smaller market in which to locate a brand
Product: A good, service, or idea consisting of both tangible and intangible attributes that satisfy customer
needs, and is exchanged for money or something of value.
Good: Tangible thing that the consumer’s five senses can perceive.
Nondurable good: item consumed in one or a few uses
Durable good: lasts over many years
Services: Intangible activities or benefits that an organization provides to satisfy consumer’s needs
Idea: Thought that leads to action (ie: getting people out to vote)
Advertising: Any paid form of non-personal communication about an organization, a product, a service, or
idea by an identified sponsor.
Consumer Oriented Sales Promotions (Consumer Promotions): Sales tools that support the company’s
advertising and selling to individual consumers
Trade Oriented Sales Promotions: sales tools used to support a company’s selling/advertising to wholesalers,
retailers, and distributors
Quiz Two: Study Guide
Market Segmentation
Markets are segmented when a firm expects that this will increase sales, profits, and return on investment.
There are three potential segmentation strategies:
1. One product, multiple market segments
2. Multiple products, multiple market segments
3. Mass customization (tailoring products customizable to an individual’s needs or wants – built to order)
How To Segment Markets (FIVE STEPS)
PRICE
PLACE
1. Group potential buyers into segments according to the following criteria: Geographic, Demographic, Psychographic (emotions or attitudes), Behavioral (observable actions)
2. Group Products to be Sold into Categories
3. Develop a Market-Product Grid and Estimate the Size of Markets
4. Select Target Markets – which segments will yield the lowest cost/highest return?
5. Take Marketing Actions to Reach Target Markets
Four Types of Consumer Products
Convenience Product
t5PPUIQBTUFIBOETPBQDBLFNJYFUD
t3FMBUJWFMZJOFYQFOTJWFGPVOEJONBOZQMBDFT
t1SPNPUJPOTUSFTTFTQSJDFBOEBWBJMBCJMJUZ
t$VTUPNFSTBSFVTVBMMZBXBSFPGBCSBOECVUXJMMBDDFQUPUIFST
NEW PRODUCTS REQUIRE:
t8FMMEFöOFEUBSHFUBVEJFODF
t4QFDJöDDVTUPNFSTOFFETXBOUTBOE
preferences
t8IBUUIFQSPEVDUXJMMEPUPTBUJTGZUIF
DPOTVNFSTOFFET
Shopping Product
t$BNFSBT57TBJSMJOFUJDLFUT
t'BJSMZFYQFOTJWFTPMEJOBMBSHFOVNCFSPGTFMFDUJWFPVUMFUT
t1SPNPUJPOTUSFTTFTEJòFSFOUJBUJPOGSPNDPNQFUJUJPO
t$VTUPNFSTVTVBMMZQSFGFSTQFDJöDCSBOETCVUXJMMTPNFUJNFTBDDFQUPUIFST
Specialty Product
t3PMFYXBUDIFT-BNCPSHIJOJDBSTIFBSUTVSHFSZ
t7FSZFYQFOTJWFWFSZMJNJUFEJOQMBDFTUPöOEJU
t1SPNPUJPOTUSFTTFTVOJRVFOFTTPGCSBOEFYDMVTJWJUZBOETUBUVT
t$VTUPNFSTBSFHFOFSBMMZWFSZCSBOEMPZBMXJMMOPUBDDFQUTVCTUJUVUFT
Unsought Product
t1SPEVDUTUIFDPOTVNFSEPFTOULOPXBCPVUPSEPFTOUJOJUJBMMZXBOU
t#VSJBMQMPUTMJGFJOTVSBODFUIFTBVSVT
t7BSJFTJOQSJDFMJNJUFEJOEJTUSJCVUJPO
t1SPNPUJPOTUSFTTFTBXBSFOFTT
t8JMMBDDFQUTVCTUJUVUFTPGUFOVOBXBSFPGCSBOE
Quiz Two: Study Guide
The Product Life Cycle
1. Introduction: Product is introduced to its intended target market. Sales grow slowly, profit is minimal,
investment in development and awareness is high. The focus is using advertising and promotion tools to build
awareness.
2. Growth Stage: Rapid increase in sales, competitors may surface, profit peaks during the growth stage.
Advertising emphasis shifts from building awareness to differentiating from competitors and gaining market
shares. Improved versions and new features are often added to the product.
PRICE
PLACE
3. Maturity Stage: Slowing of sales, some competitors leave the market. Most people who would buy the
product have bought it and are either repeat customers or have abandoned it. Profit declines. Advertising is
focused on maintaining existing market share and finding new customers.
4. Decline Stage: Sales drop. Usually due to environmental changes, not any fault of the company. One or two
strategies are used in this phase:
a. Deletion- dropping the product from the company’s product line
b. Harvesting- Company retains the product but reduces marketing costs
INCREASING SALES
Sales can be increased by:
t.PEJGZJOHUIF1SPEVDUUXFBLTWFSTJPOTDPMPSTQBDLBHFTGFBUVSFTTJ[FT
t.PEJGZJOHUIF.BSLFUöOEOFXDVTUPNFSTJODSFBTFBQSPEVDUTVTFBNPOHDVSSFOUDVTUPNFSTPSDSFBUFOFX
VTFTJUVBUJPOT
t1SPEVDU3FQPTJUJPOJOHDIBOHFUIFQMBDFBQSPEVDUPDDVQJFTJOUIFDPOTVNFSTNJOESFMBUJWFUP
DPNQFUJUJWFQSPEVDUT
Branding
What is a Brand?
t$PMMFDUJPOPGQFSDFQUJPOTUIBUSFTJEFJOUIFNJOETPGUIFDVTUPNFS
t5IFHVUGFFMJOHBDVTUPNFSIBTBCPVUZPV
t"CFMJFGTZTUFN
t8IBUDVTUPNFSTDBODPOöEFOUMZFYQFDUGSPNZPVSPSHBOJ[BUJPO
t:PVSQSPNJTFUPUIFDVTUPNFS
What Makes a Good Brand?
t$PNNVOJDBUFTBDMFBSNFTTBHFBCPVUXIBUJUTUBOETGPS
t$PNNVOJDBUFTBDMFBSNFTTBHFBCPVUIPXJUEJòFSTGSPNDPNQFUJUPST
t*UJTVTFEDPOTJTUFOUMZBOEDVTUPNFSTVOEFSTUBOEJU
t&WFSZJOUFSBDUJPOXJUIDVTUPNFSTSFJOGPSDFTUIFTBNFDPOTJTUFOUNFTTBHF
"DPNQBOZEPFTOPUIBWFDPOUSPMPWFSJUTCSBOEo&WFSZJOUFSBDUJPOBDVTUPNFSIBTJOøVFODFTUIFJS
perception of your company – the product experience, the customer experience, slogans, ads, logos, product
manuals, etc.
Quiz Two: Study Guide
Product Advertisements
Pioneering (Informational) – Tell what the product is, what it can do, and where it can be found. Key objective: To inform the target market
Competitive (Persuasive) – Promotes a brands specific features and benefits. Objective: Convince the target
market to choose their brand over the competition
Reminder – Used to reinforce previous knowledge or that they made the right choice.
PRICE
PLACE
Institutional Advertisements
Objective: Build goodwill or an image for an organization rather than promote a specific good or service.
Usually used to support a public relations plan, or to counter negative publicity.
Advocacy Advertisements – State the position of a company on an issue or make a request for an action or
behavior
Pioneering Institutional Advertisements – Announce what a company is, what it does or can do, and where it’s
located.
Competitive Institutional Advertisements – Promote the advantages of one institution over other.
Reminder Institutional Advertisements – Bring the company’s name to the attention of the target market again.
*The first step tp developing any advertising plan is to IDENTIFY THE TARGET MARKET. a.
When we design ads, we use APPEALS to persuade the audience into action. Basic appeal strategies:
Fear: suggest that the consumer can avoid a negative experience by purchasing a product, or service, a change
in behavior, etc.
Sex: Suggests that the product will increase the attractiveness of the user.
Humor: suggests the product is more fun or exciting than the competition.