Week 1
1. Why do non-marketing specialists in such fields as accounting and IT need to understand
anything about marketing?
So they know about internal customers. Your usefulness is based on what you can do for you
internal customers. For example, a dispatch department may be the internal customer of a
packing department.
2. What does marketing management entail?
It entails selecting customers to be served, communicating with them, and catering to their needs
and preferences to realize the marketer’s objectives.
3. What is the Marketing Mix Model? What are the 4Ps? Why are models useful? P30
The Marketing Mix Model includes the 4P’s which are tools you use to pursue your objectives in
the target market. In other words these variables are decision variables and by altering them a
customer will decide to become a customer or not.
The 4P’s are:
 Product (customer solutions) – company’s offer to customers, includes physical and
intangible aspects like warranties.
 Price (customer cost) – what a buyer must give up in exchange for the seller’s product.
Sellers have greater flexibility in pricing when their offer is unique and less as their offers
become commodity like or none unique.
 Promotion (communication) – communication activities used to ensure customers know
about the company’s offerings, have a favorable impression of them, and actually make a
transaction.
 Place (convenience/distribution) – refers to the point of sale and the distribution of the
product or service. Ex. Website, catalog, retail store.
Models are useful because they are lenses through which we see the world. Additionally, they
direct inquiry – i.e., they suggest what to look for.
4. As a field of study, marketing is abstract, eclectic, dynamic, and contextual. Explain.




Abstract: Few hard facts; mostly ideas, heuristics, and hypotheses backed to varying
degrees by empirical evidence.
Eclectic: Marketers aren’t too proud to steal ideas. They get ideas from many field of
study.
Dynamic: The world of marketing changes continually; hence, yesterday’s success
formulas may be today’s prescriptions for disaster.
Contextual: Situational factors – e.g., type of product and product life cycle (PLC) stage
– often determine whether a particular marketing strategy succeeds or fails.

Consequently, there are few, if any, pat answers to marketing questions or enduring
solutions to marketing problems. Further, the study of marketing is less about
memorizing facts than it is about critical thinking, gaining perspective, and continuous
problem solving.
5. Briefly explain the product, production, selling, marketing, and societal marketing concepts.





The product concept – Make what you want to make; ignore what customers
want to buy. Make a better mousetrap, even if customers don’t want it.
The production concept – Low cost is the key to success; reduce cost via
efficiency, scale economies, etc. It worked for Henry Ford, at least for awhile.
The selling concept – Focus on the needs of the seller, rather than the needs of
the customer. Good marketers can sell anything. Usually used to sell high
demand items.
The marketing concept:
• The customer is king!
• Find needs, then fill them.
Societal marketing – like the marketing concept but with the added proviso that
there will be a curtailment of any harmful activities to society, in product,
production, or selling methods.
6. What are some pitfalls of the Marketing Concept, especially when it is taken to mean outsidein marketing or, "Find needs, then fill them"? Should businesses always let marketing research
be their guide? Why or why not?
Inside out marketing develops product then sells it like the Walkman. Outside in marketing
studies the people then develops the product then sells it ("Find needs, then fill them").
Companies should not always let marketing research be their guide because people can’t always
relate to the product like the Walkman years ago. Some things you think you would use and
never do and vice versa.
7. On what do market oriented companies focus?
•
Market/Customer Orientation Checklist:
• Are we easy to do business with?
• Do we keep our promises?
• Do we meet the standards we set?
• Are we responsive?
• Do we work together?
8. What is an internal customer?
An internal customer can be a co-worker, another department, or a distributor who depends upon
us to provide products or services which in turn are utilized to create a deliverable for the
external customer. The focus on developing effective internal customer service helps
organizations cut costs, increase productivity, improve interdepartmental communication and
cooperation, boost employee morale, align goals, harmonize processes and procedures, replace
interdepartmental competition with interdepartmental cooperation and deliver better service to
the external customer. Excellent service to the external customer is dependent upon healthy
internal customer service practices.
9. Is it generally best to leave all the marketing a firm must do to professional marketers?
Marketing is too big a job for marketing departments alone; it requires concerted organizational
effort. Often, it is better to distribute marketing functions widely throughout an organization
rather than assign them to a single department – the marketing department.
10. Does marketing success imply that customers are satisfied or treated fairly? Explain.
No, for example a monopoly can be the only provider and its success in the market doesn’t mean
the customers are happy with the service or are treated well.
Week 2
1. What is the aim of business strategy? Are business and market strategy the same things? Is
marketing strategy the same thing as market strategy?P6-7
The aim of business strategy is forging and maintaining a profitable fit between a business and
its dynamic environment.

Maintaining fit generally requires changing the business over time (e.g., via stretch and
leverage).
 Stretch: Challenging goals
 Leverage: Competitive advantages
Business strategy looks at marketing for the following input competitive threats; profitable
opportunities; areas of growth, maturity, and decline; latent and explicit customer needs, and
ideas for distribution and pricing.
Every activity in the enterprise should align with business strategy. In case of marketing this
means that everything it does from pricing, to distribution, to how it communicates with
customers should be planned in a way that serves strategic goals.
Market Strategy focuses on “How should we market this product?”, it includes competitive,
growth and survival strategies. While marketing strategy are the plans or actions you take to
execute that Market Strategy and asks the question “Why should our customers buy our product
(or service) and not those of our competitors”. Marketing strategy defines the target market, how
the product or service will be positioned, and how it will be branded.
2. Both biological organisms and firms must fit into their environments to survive. What can
firms sometimes do that biological organisms cannot do to attain a better fit?
For plants and animals, improving fit is limited to adapting, but firms may consciously try to
change the environment in which they vie.
3. What is value added? What determines how value added is split between shareholders and
customers?
Customer Value - In class it’s the maximum you are willing to pay given no substitutes or other
options. In other words it’s the value received by the end-customer of a product or service.
Shareholder Value - The value delivered to shareholders because of management's ability to
grow earnings, dividends and share price.
Value Added - The difference between the sale price and the production cost of a product. The
customer gains some additional advantage without having to pay for it or pay very little,
compared with its value to the customer.
Value Added = Customer Value–Cost=
(Customer Value–Price)+(Price–Cost)=
Customer Surplus+Shareholder Value
Where Cost is production cost
4. When is rivalry most intense? Is rivalry generally good for business and shareholders? Why do
businesses generally strive to escape perfect competition, and how may they do so?
Rivalry is most intense while barriers to entry are low because it is easier to enter a market, more
contestants enter, at least while profit premiums are available. However, the more competition
the less profit you can gain. Market environments approach perfect competition when SCAs
(Sustainable Competitive Advantages) cannot be gained. To escape perfect competition they try
to create competition through differentiation.
5. Is any form of collusion legal in the U.S.?
Collusion is an agreement between rival firms so that they can fix prices. It isn’t illegal in sports
like baseball and insurance.
6. What do competitive advantages do for a business?
Competitive advantage means a company is performing better than rivals by doing different
activities or performing similar activities in different ways. They help the business survive, by
sustaining profits that exceed the average for its industry. Competitive advantages are
sustainable to the extent that they cannot be negated by imitation; they are durable to the extent
that their economic value lasts (e.g., Shure and phonograph cartridges) and they are sustainable.
7. Name and explain Porter’s generic advantages and strategies. What is meant by the scope of
an advantage? Why do most competitive advantages erode? Any exceptions?P73
Porter’s Generic Strategies
Competitive Scope
Competitive Advantage
Cost or Low Cost
Broad
Cost Leadership
Narrow
Cost Focus
(ex. Southwest AL)
Differentiation (horz. or
vert.)
Differentiation (ex. Coke,
Pepsi)
Differentiation Focus
Offerings are vertically differentiated if they differ in quality and price; they are horizontally
differentiated if they are similar in quality and price, but differ otherwise.
Strategic scope is a demand-side dimension and looks at the size and composition of the market
you intend to target.
5 forces that govern industry competition (competitive advantage eroders):
 The threat of new entrants
 The bargaining power of suppliers
 Jockeying for position among current competitors
 The bargaining power of customers
 Threat of substitute products or services (most likely eroder)
Note: you must always have satisfactory products because if you reduce price in the long run you
reduce profits which erode competitive advantages.
Exceptions may include utilities like water, which are usually natural monopolies, have a
sustainable competitive advantage. [According to class the exception is brand names. However,
these also can erode if they are not enforced. For example Coca Cola would be hard to erode.]
8. Explain economies of scale, scope, and experience. What is synergy?
Economies of scale - primarily refers to reductions in total average cost associated with
increasing the scale of production for a single product type. Typically, a company that achieves
economies of scale lowers the average cost per unit through increased production since
fixed costs are shared over an increased number of goods.
Economies of scope - An economic theory stating that the average total cost of production
decreases as a result of increasing the number of different goods produced. In this case there can
also be synergies between products such that offering a complete range of products gives the
consumer a more desirable product offering than a single product would.
Economies of Experience – reduce total average cost by gaining experience and using the
experience to provide more efficiency. Ex. More experienced people, better processes from
learning.
MES – Minimum efficiency scale, where you need to be in terms of quantity to be competitive.
9. To realize their objectives, what must aspiring poachers do? What do the terms transparency,
accessibility, and exploitability mean?
When imitation is easy, differentiation affords little or no protection from poachers. In other
words aspiring poachers must enter markets that other markets can’t get into. For example
Southwest AL focused on the middle class without the bells and whistles however other airlines
could not enter their market because they would lose their executive customers.
Profitable imitation is facilitated by
 Transparency/ambiguity; i.e., ease of identification or easy to copy
 Accessibility
 Exploitability – can flood the market without destroying it
10. What are switching costs and network externalities? What is a de facto industry standard?
Switching Costs - the negative costs that a consumer incurs as a result of changing suppliers,
brands or products.
Network externalities - the effect that one user of a good or service has on the value of that
product to other people. Ex. Facebook, Ethernet speed
De facto industry standard - has become a standard not because it has been approved by a
standards organization but because it is widely used and recognized by the industry as being
standard.
Network externalities and high switching costs serve to
 lock customers in
 create de facto (i.e., unofficial) industry standards
 discourage innovation
 protect incumbents from poachers
11. Why may switching costs and network externalities slow innovation?
They may slow down innovation because the number of users determines a products value. For
example most people stay with Microsoft Windows because most people use it and there would
be a high cost to switching. So most people wouldn’t try other products which slows innovation.
12. What Is Planning? Why plan?
Planning is deliberated forward-looking decision making. The more you understand planning the
more prepared you will be for advancement. Also, effective planning improves a business'
chance of prospering.
Alleged Benefits of Planning:
 Identify opportunities (e.g., ways of leverage of core capabilities)
 Allocate resources deliberately rather than haphazardly
 Formulate strategy
 Chart a performance roadmap for monitoring progress and identifying performance
problems
13. What does defining a business entail?

Benefits: functions and solutions
o Portray offerings as bundles of benefits, e.g., via value propositions
o Highlight distinctive benefits eg. Contacts, glasses, LASIK
 Customer groups targeted – Demographics, psychographics, geography, and SIC
categories are common bases.
 Technologies used to deliver benefits and solicit customers
o product technology – e.g., recordings may be digital or analog, magnetic or optical
o production technology – e.g., steel can be made using electric-arc or oxygen furnaces
o supply, distribution, and marketing technology – e.g., conventional or just-in-time
(JIT) parts ordering upstream; intermediaries may or may not be used downstream;
products may be packaged, displayed, and promoted in countless ways; stores may be
large or small; assortments may be expansive or narrow
Note: price promotions can be bad because they give you bad customers who bail quickly and
cheapens you.
14. What is the main purpose of a value proposition? What is marketing myopia?
Value proposition main purpose is to summarize why a consumer should buy a product or use a
service. This statement should convince a potential consumer that one particular product or
service will add more value or better solve a problem than other similar offerings.
Marketing myopia focuses on products rather than benefits in instead other the other way around.
It is like focusing on the drill bit instead of the hole.
15. Define "critical assumptions" within the context of planning.
Critical assumptions are assumptions that if proved incorrect will result in the plan falling apart
or a plan that is unlikely to work.
16. How does forecast-based planning differ from scenario-based planning?
Forecast-based planning: Forecast, then plan as if the forecast were certain
Scenario-based planning is different; it is not planning as if the most likely future were certain
but rather a dramatically different world than expected.
Week 3
1. Who Is a Customer? Should intermediaries be considered customers?
Intermediaries and end users should be considered customers. Intermediaries want products that
sale while end users want products that work. Suppliers should be treated “like” customers,
although, they are not considered customers.
2. What questions does customer analysis addresses?





Who are the current and potential customers for the focal product or service?
(Segmentation and profiling research affords answers)
Why do they buy?
o What are their functional needs?
o What are their psychic needs?
How do they make purchasing decisions?
Where do they buy the product or service (what channels of distribution are used)?
When do they buy?
3. What should end-user analysis include?
Note: Wallet share differs from market share in that wallet share is the share of money you get
from customers wallet, while market share is the share you have in the given market.
4. Name and describe the four broad categories of influences on consumer buying decisions.
Enumerate and describe the reference groups discussed in class. Is the family a reference group?


Cultural
o Culture
o Subculture – cultural enclaves
Social
o Social Class
o Reference Groups
 Membership; e.g.,
 Church


 Family of orientation of procreation
 Aspirational
 Dissociative (Don’t want to be one of those. Like sports and hats.)
o Family Life-Cycle Stage
Personal
o Age
o Occupation
o Economic situation
o Lifestyle/Psychographics (AIOs)
o Personality
Psychological
o Motivation
o Perception
o Learning
o Beliefs and attitudes
5. What did Freud, Maslow, and Hertzberg contribute toward understanding consumer behavior?
Freud – subconscious motives; laddering starts with overt instrumental motives or desires (e.g.,
want prestigious car) then probes deeper (a la 5 whys): flaunt success>gain social acceptance>
mitigate inferiority complex
Maslow – needs hierarchy (from shelter and so on to self-actualization)
Herzberg – two-factor theory: absence of dissatisfiers (e.g., no rattles) is insufficient; satisfiers
must be present to motivate purchase (0-60 in 3.3 sec.)
6. In which ways is perception selective?

Perception
o Selective attention – you select what you want to pay attention to. For example
your car breaks down and you start looking at car ads and such.
o Selective distortion – we distort what we see. Example a picture can look like a
duck or rabbit.
o Selective retention – we select what to remember.
7. Distinguish between beliefs and attitudes.
Belief - Mental acceptance of a claim as truth.
Attitude - hypothetical construct that represents an individual's degree of like or dislike for an
item
8. How do stimuli, including cues, and reinforcement enter into learning?
Stimuli with cues (physical cues allude to functional benefits, psychic cues allude to psychic
needs) are intended to draw you in. Reinforcement can be positive or negative. Positive
experience or reinforcement will make the behavior repeat itself. Negative experience or
reinforcement will not repeat the behavior.
9. List and describe four types of buying behavior. What is the Expectancy Value Model (a.k.a.,
Multi-Attribute Model)? Is it realistic? Is it useful? To which type of buying behavior does it
apply most?
Four Types of Buying Behavior
MBA
6140
High
Involvement
Low
Involvement
Significant
differences
among
brands
Complex
buying
behavior
Varietyseeking
behavior
Insignificant
differences
among
brands
Dissonancereducing
buying
behavior
Habitual
buying
behavior
10
3/20/2011
Dissonance (tries to make the safest choice), variety seeking behavior (not a big deal if you make
the wrong decision like ordering at a restaurant), habitual buying behavior (why change, makes
the same choices). The expectancy value model aka Multi Attribute Model is based on weights
the higher the weight the more important. The weighted sum is the best choice when compared
to the weighted some of others. It is not very realistic but people act as if they did this and it is
useful in the explanation of social behaviors, achievement motivation, and work motivation.
Complex buying behavior is the buying behavior it applies most to. You must be aware of
cognitive dissonance (have you made the right choice ex. What you do in a test). Phone numbers
for help after the purchase help reduce cognitive dissonance.
Performance Attributes/Choice Criteria
Brand
Style
Power
Weighted
Price
Comfort
Sum
Weight
Rating
Weight
Rating
Weight
Rating
Weight
Rating
A
.4
10
.3
8
.2
6
.1
4
8.0
B
.4
8
.3
9
.2
8
.1
3
7.8
C
.4
6
.3
8
.2
9
.1
7
7.3
D
.4
4
.3
3
.2
7
.1
8
4.7
10. List and briefly explain three factors, or qualities, that affect the product and service
evaluation process.
Search qualities visually convey much about benefits, quality, etc. Visual inspection by looking
at it how much can you tell.
Experience qualities can be ascertained only via experience. Ex. Trying on clothes in the fitting
room however you might not be able to tell durability.
Credence qualities may never be confirmed, or they may be confirmed only long after purchase.
Ex. Vitamins and antibodies.
11. What motivates business customers to choose one brand or vendor over another? What is
GMROI?
To business customers, the most valued suppliers excel at enhancing the customer's "bottom
line.” So offer goods with high margins and high turnover, and reliable supplies.
GMROI = GM x IT, GM = (Sales – Cost of Sales)/Cost of Sales, IT = (Cost of Sales/ Average
Inventory at Cost) = firm's ability to turn inventory into cash above the cost of the
inventory=gross margin/ average inventory cost
12. What are some common characteristics of business markets? Within the context of B2B
marketing, explain reciprocity, inelastic industry demand, elastic company demand, and derived
demand and its impact on the economy.





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
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Fewer buyers
Larger buyers
Close supplier-customer relationship
Professional purchasing
Direct purchasing
Leasing
Reciprocity- buy from me I buy from you
Multiple buying influences (buying center)
Geographically concentrated industries (ex. Hardware which was made a lot in Silicon
Valley.)
Industry demand often is inelastic – (Inelastic – price changes don’t really matter ex. Life
saving drug; Elastic - can’t change prices easily, like the cost of buttons.)
Derived demand – all business demand are derived from consumer demands.
Consumer Demand (Outer)
Business Demand (Inner)
As soon as consumer demand levels off business demand drops a lot.
13. Describe three key determinants of customer retention. When is retaining customers easiest?
What do "hostages" do?



Determinants of Retention:
 Customer Satisfaction
 Alternatives
 Costs of Switching
Retaining customers is easiest when choices are few and switching costs are high.
The more alternatives and the lower the cost of switching for the customer, the more
important satisfaction is to retention.

Firms that rely on lack of substitutes and high switching costs to retain customers do not
have customers – they have hostages who will bolt at the earliest opportunity.
14. Can a small increase in retention engender a much larger increase in net income?
Yes
15. Should firms focus on the least satisfied customers? Should they try to fix whatever rankles
the least satisfied customers? How useful are customer satisfaction surveys?
Firms should not focus on the least satisfied customers or least satisfied customer because they
aren’t likely to be pleased any way, also other problems may rise. For example you make a car
more suitable to basketball players by adding a sun roof. More than likely the basket ball player
won’t purchase it any way and even if they do you more than likely turned away the average
customer who didn’t need the sun roof.
Customer satisfaction surveys aren’t useful because they usually aren’t done right. Satisfaction
surveys alone will not enable a company to fend off new competitors or to keep products and
services attuned to customers' changing needs.
Why study defectors more than loyal customers? How effective is benchmarking?
You study defectors so that you can figure out why they left. Benchmarking is a good thing
however blindly adopting successes is horrible. For example Frankenstein had all the best parts
taken to make him but he still turned out a monster.
What are the 5 “why’s”? Why do firms shy away from studying customer defections?
5 whys refer to the notion that one must ask at lest five successive "why" questions to get at the
root cause of failure.
Firms shy away from studying customer defections because they can be painful and hazardous to
your career.
16. If the annual retention rate is 50%, how long, on average, are customers? What if it's 80%?
95%?
Customer Life (N) in years, N= 1/(1-CR)
Customer Retention (CR) as a %, CR = 1 – (1/N)
N = 1/(1-0.50) = 2 years, N = 1/(1-0.80) = 5 years, N = 1/(1-0.95) = 20 years
17. According to brand-switching models, what determines steady-state market share?
A: (1:1 = 50%, 50%) B: (2:1 = 67%, 33%) C: (4:1 = 80%, 20%)
Note: Starting market share doesn’t matter in the long run
Steady state market share is determined by retention rate and turnover rate.
18. What is the margin multiple? It is a function of which three variables?
CLV or customer lifetime value = m(r/(1+i-r))
m = margin or profit from a customer per period
r = retention rate
i = discount rate
margin multiple = r/(1+i-r)
19. What is CLV? It is a function of which three variables? How do changes in the three
variables affect CLV? Typically, a percentage change in which variable has the greatest impact
on CLV?
CLV is the present value of all current and future profits generated from a customer over the life
of his or her business with a firm. Customer lifetime value depends on just three factors — $
margin (m), retention rate (r), and discount rate (d). CLV = m(r/(1+i-r)). The margin multiple is
low when the discount rate is high (for risky companies) and customer retention rate is low. This
same multiple is high for low risk companies with high customer retention. A change in retention
rate has the greatest impact.
20. According to Gupta & Lehmann, are Reichheld's assertions totally valid?
May be valid in some industries but not all meaning greater CLV doesn’t always increase profit.
Week 4
1. Distinguish between internal and external matters with which marketing executives must cope.
Internal matters are the 4P’s while external matters are customers, suppliers, environment
(economic, political, etc.).
2. Describe three basic marketing options.



Mass marketing – “one size fits all”; often relies on standardization to gain efficiency at
the cost of effectiveness
Target marketing – broadly or narrowly focused marketing; requires deliberate
differentiation
Differentiation
 Expeditionary – fishing for customers (throw out a product and see what catches,
if it catches keep producing if not don’t)
 Deliberate – matched to targeted customers’ preferences (finds needs then fills
them)
3. Describe the steps in the target marketing process. Is market segmentation target marketing?
Market segmentation is not target marketing. Market segmentation is one step in target
marketing process.
4. Name and describe four segmentation bases. How useful have general personality variables
been in marketing? What's another name for psychographics? What are AIOs? What does benefit
segmentation entail? What is meant by "the heavy half"?





General personality variables are not very helpful (ex. Suicedes) in marketing, AIO’s are
better.
Another name for psychographics is “life style.”
AIO are activities, interests, and opinions.
Benefit Segmentation – entails grouping potential customers by benefits most desired,
then profiling each group in terms of distinctive demographics and/or psycholographics.
In other words it answers who wants what and then splits them up by other variables.
Heavy half – represent the 20% of your customers that are responsible for 80% of your
sales.
5. Describe Winter’s a priori segmentation technique.
Use/Loyal
1-Loyal to our brand
2-Loyal to competing brand
Use/Not Loyal
3-Select by retailer
4-Select by brand (a little contradictory ignore this contradiction)
Don’t Use
5-Care about lawn: Have (You should try to convince these customers to buy)
excuses or don’t think
lawn needs fertilizer
6-Don’t care about lawn (You shouldn’t care about gaining this segment)
7-Contract for lawn services (You shouldn’t care about gaining this segment, gain the
contractors)
Priori segmentation is very helpful because if forces you to think about grouping, who to target,
how they buy, etc.
6. Very briefly describe PRIZM and VALS.





Both PRIZM and VALS are segmentation schemes based on psychographic (a.k.a., lifestyle, AIOs) and demographic variables.
In a sense, VALS segmentation is “reverse” benefit segmentation. People are clustered
first in terms of psychographics and demographics (rather the benefits they value most);
after that, their preferences, media habits, etc. are investigated and added to their profiles.
VALS is two dimensional:
 Resources (abundant-minimal)
 Orientation (principle, status, action oriented)
Subscribers to the VALS service receive not only complete psychographic and
demographic profiles of the eight VALS segments, but also information about each
segment’s preferences, purchasing patterns, media habits, etc.
PRIZM does the same thing as VALS it profiles by zip codes demographically. It also
allows you to see the data for a fee.
7. Define salient attributes, determinant attributes, mass customization, transaction marketing,
relationship marketing, CRM, and demand modification.
Salient attributes – important attributes or important characteristics






Determinate attributes - attributes are the characteristics that are important (salient) to
your customers, yet distinguish your products or services from competing products or
services.
Mass Customization – the objective is to customize at costs approaching one size fits all.
Transaction marketing – emphasis on a single sale
Relationship marketing – emphasis on customer life time value
CRM (customer relationship management) – database driven to find people hot buttons
and push them (ex. the reading about the casinos).
Demand modification – make what you have a good reputation for and make it salient or
try to change people’s minds about things in your favor. (ex. Volvo and safety, Folger’s
crystals, Underalls)
8. Describe common criteria for selecting target segments. What determines whether sharp or
broad targeting is best in heterogeneous markets?
Common criteria include:
 Potential competitive position
 Segment size (in general the bigger the more attractive. Note: large segments tend to
draw a lot of competitors, and sometimes small segments can actually gain more profit.)
 Segment growth rate
 Segment accessibility via media and channels (if channels don’t exist you can create
them but they will cost money otherwise you may decide not to enter)
 Other environmental factors (ex. climate on regulation, environment, antitrust, etc.)
Per target segment, the marketing mix must be unique in some way. If the same mix is used to
target two segments, then, in effect, the segments are combined.
Determinates of sharp or broad targeting in heterogeneous markets
 Demand heterogeneity (diversity and intensity): If variety in offerings exceeds variety in
needs, wants, and preferences, then some offerings won’t be valuable.
 Price sensitivity
 Cost of differentiation (which depend on technology)
9. What is positioning? What is a perceptual map?
Positioning – is perceptual; it reflects physical product cues (ex. coca cola isn’t as sweet as
pepsi) and/or psychic promotional cues (achieved through the mind).
Perceptual map – shows how products are perceived.
10. How can the Expectancy Value Model (a.k.a., Multi-Attribute Model) be used to segment
markets?
Performance Attributes/Choice Criteria
Brand
Style
Power
Weighted
Price
Comfort
Sum
Weight
Rating
Weight
Rating
Weight
Rating
Weight
Rating
A
.4
10
.3
8
.2
6
.1
4
8.0
B
.4
8
.3
9
.2
8
.1
3
7.8
C
.4
6
.3
8
.2
9
.1
7
7.3
D
.4
4
.3
3
.2
7
.1
8
4.7
You could cluster people, in other words segment people, based on weights. If there are vast
differences then try to find out why. Note: flaw of averages - averages imply homogeneity and
obscure heterogeneity; thus, measures of brand strength give the false impression that a brand is
perceived similarly by all customers.
11. What are the 4Rs?
Relations, retention, referrals, and recovery.