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Market Segmentation
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THE MARKETING MIX
The FOUR FACTORS OF MARKETING are:
ProductPrice
Place
Promotion
CONTROLLABLE PARTS of the marketing process involve:Designing a want-satisfying PRODUCT
Setting a PRICE for the product
Placing the product in a PLACE where people will buy it
PROMOTING the product
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Elements in the Marketing Mix
ProductProduct
MarketingMarketingProgramProgram
PlacePlace
PromotionPromotion
Buy atBuy atComputersComputers
R UsR Us
PricePrice
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DESIGNING A PRODUCTTO MEETNEEDS
First, develop a product to fill the identified need.
A PRODUCTis any physical good, service, or idea that satisfies a want or need
plus anything that would enhance the product in the eye of
consumers, such as the brand.
The next step is CONCEPT TESTING
developing an accurate description of your product and asking
people whether or not the concept (the idea of the cereal)
appeals to them.
TEST MARKETING
is the process of testing products among potential users.Next, decide which brand names should be offered to attract
customers.
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A BRAND NAME
is a word, letter, or group of words or letters that differentiates one
sellers goods and services from th
ose of competitors.
These steps create
THE FIRST PPRODUCT.
SETTING AN APPROPRIATE PRICE (the second P)The price depends on a number of factors, such as the price of
competing restaurants.
You also have to consider the costs of pro-ducing, distributing, and
promoting the product.
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GETTING THE PRODUCT TO THE RIGHT PLACE
(the third P)
Once the product is manufactured, you have to decide how to get it
to the consumer.
You may want to sell your product through
INTERMEDIARIES, (MARKETING MIDDLEMEN,) organizations that
specialize in distributing goods from producer to customer.
DEVELOPING AN EFFECTIVE
PROMOTIONAL STRATEGY (the fourth P)
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PROMOTION
consists of all the techniques sellers use to
motivate people to buy products or services.
RELATIONSHIP BUILDING
WITH
CUST
OME
RSincludes responding to any suggestions they may
make to improve the product or the marketing of
the product.
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Marketing is an ONGOING PROCESS; companies must
continually adapt to changes in the market.
Listening to customers is the key to marketing.
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TWO DIFFERENT MARKETS: CONSUMER AND BUSINESS-TO-BUSINESS (B2B)
THERE ARETWO MAJOR MARKETS:
The CONSUMER MARKETconsists of all the individuals orhouseholds that want goods and services for personal
consumption or use.
The BUSINESS-TO-BUSINESS (B2B) MARKETconsists of all theindividuals and organizations that want goods and services touse in producing other goods and services or to sell, rent, or
supply goods to others (traditionally called INDUSTRIAL GOODS.)
The buyers REASON FOR BUYING and the END USE of theproduct determine whether it is considered a consumer product
or a B2B product.
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Business-to-Business (B2B)
1. Number
2. Size
3. GeographicConcentration
4. Rational
5. Direct Sales
6. Personal Selling
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THE CONSUMER MARKET
Consumer groups differ greatly in age, education level, income,
and taste.
Marketers must first decide which group to serve and then develop
products and services specially tailored to their needs (as
Campbell Soup Company does.)
MARKET SEGMENTATION
is the process of dividing the total market into groups whose
members have similar characteristics.
TARGET MARKETINGis marketing directly toward those groups (market segments) an
organization decides it can serve profitably.
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Market segmentation the process of dividing a total market into several
relatively homogeneous groups.
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SEGMENTINGTHE CONSUMER MARKET
Learning goal 4
Explain how marketers meet the needs of the consumer market
through market segmentation, relationship marketing, and the
study of consumer behavior.
GEOGRAPHIC SEGMENTATION
is dividing the market by geographic area.
DEMOGRAPHIC SEGMENTATION
is dividing the market by age, income, and education level.
PSYCHOGRAPHIC SEGMENTATION
is dividing the market using the groups values, attitudes, and
interests.BENEFIT SEGMENTATION
is dividing the market by determining which benefits of the
product to talk about.
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Market Segmentation
Target Marketing
Geographic
Demographic
Psychographic
Benefit
Volume
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Geographic Segmentation
Divides market into homogeneous groups on the basis of their
locations.
Demographic Segmentation
Divides market on the basis of various demographic or socioeconomic
characteristics: gender, income, age, occupation, household size, stage
in the family life cycle, education, and ethnic group.
Psychographic Segmentation
Divides consumer market into groups with similar psychological
characteristics, values, and lifestyles.
Product-Related Segmentation
Divides market based on buyers relationship to the good or service.
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Geographic segmentation targets geographically concentrated industries.
Demographic, or customer-based, segmentation a good or service intended
for a specific organizational market (i.e. healthcare).
End-use segmentation - focuses on the precise way a B2B purchaser will use a
product.
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Consumer behavior - actions of ultimate consumers directly involved in
obtaining, consuming, and disposing of products and the decision processes
that precede and follow these actions.
Personal factors: needs and motives, perceptions, attitudes, self-concept.
Interpersonal factors: cultural, social, and family influences.
Business buying behavior- often includes a variety of influences from
multiple decision makers.
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Relationship marketing - developing and
maintaining long-term, cost-effectiveexchange relationships with partners.
Consumers enter into relationships only if
there is some benefit to them.
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Lower costs and higher profits for the business.
Efficient targeting of best customers increases the lifetime value of a
customer.
Stronger relationships with business partners and opportunities to combine
capabilities and resources to better accomplish goals.
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80/20principle: Frequent customers have a higher lifetime value, so
businesses allocate resources accordingly.
Frequency marketing: reward purchasers with cash, rebates, and other
premiums.
Affinity programs: solicit involvement based on common interest. Comarketing: businesses jointly market each others products.
Cobranding: firms link their names in a single product.
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VOLUME, OR USAGE, SEGMENTATION is
dividing the market by usage (volume of use.)
The best segmentation strategy is to USE ALL THE VARIABLES tocome up with a consumer profile thats sizable, reachable, and
profitable.
REACHING SMALLER MARKET SEGMENTS
NICHE MARKETINGis the process of finding small but profitable market segments
and designing custom-made products for them.
ONE-TO-ONE MARKETING
means developing a unique mix of goods and services for each
individual customer.
This is easier to do one-to-one marketing in B2B markets, but is
becoming possible in consumer markets as well.
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Different Markets
Consumer
Niche
One-to-One
Business-to-Business
(B2B)
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MOVINGTOWARD RELATIONSHIP MARKETING
MASS MARKETING means developing products and promotions to
please large groups of people.The mass marketer tries to sell products to as many people as
possible.
That means using mass media, such as TV, radio, and newspapers.
RELATIONSHIP MARKETING is a marketing strategy with the goal ofkeeping individual customers over time by offering them
products that exactly meet their requirements.
RELATIONSHIP MARKETING moves away from mass production
toward CUSTOM-MADEGOODS.
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Customizing products and
marketing and rapidly delivering
goods.
Customer relationship
managementsoftwareh
elpscompanies gather, sort, and
interpret data about specific
customers.
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Influences on
ConsumerBehavior
CultureCulture
SubcultureSubculture
ReferenceReference
GroupGroup
CognitiveCognitive
DissonanceDissonance
CustomerCustomer
LearningLearning
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SOCIOCULTURAL INFLUENCES
such as reference groups and culture
Consumer behavior is also influenced by other factors:LEARNING
involves changes in an individuals behavior resulting from previous
experiences and information.
A REFERENCE GROUPis the group that an individual uses as a reference point in
formation ofhis or her beliefs, attitudes, values, or behavior.
CULTURE
is the set of values, attitudes, and ways of doing things that are
transmitted from one generation to another in a given society..
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SUBCULTURE
is the set of values, attitudes, and ways of doing things that results
from belonging to a certain group with which one closely identifies.COGNITIVE DISSONANCE
is the type of psychological conflict that can occur after a
purchasesuch as doubts about whether they got the best product
at th
e best price.
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The latest in TECHNOLOGY enables sellers to work with buyers to
determine their individual wants and needs and to develop
goods and services specifically designed for those individuals.
One-way messages in mass media are replaced by a personal
dialogue among participants.
The text uses two examples: service firms such as airlines, rental car
companies, and hotels; and the Hard Rock Caf.
THE CONSUMER DECISION-MAKING PROCESS
Studying consumer behavior centers on studying the CONSUMER
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PURCHASE DECISION PROCESS:
Problem recognitionInformation search
Evaluate alternatives
Make purchase decision
Postpurchase evaluation
Consumer behavior researchers also study the various
INFLUENCES THATIMPACT CONSUMER BEHAVIOR.
MARKETING MIX VARIABLES (the four Ps)PSYCHOLOGICAL INFLUENCES such as perception and attitudes
SITUATIONAL INFLUENCES such as the type of purchase and
physical surroundings
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Several factors make
BUSINESS-TO-BUSINESS MARKETING
DIFFERENT NUMBER:
There are relatively FEW CUSTOMERS compared to the
consumer market.
SIZE
Though few in number, industrial customers are relatively
VERY LARGE.
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GEOGRAPHICALLY CONCENTRATED:
B2B markets tend to be CONCENTRATED in certain areas of the
country.
RATIONAL
Business buyers are generally MORE RATIONAL in their purchase
decisions.
DIRECT
B2B sales tend to be DIRECT.
PERSONAL SELLING
There is much more emphasis in personal selling than in theconsumer market.
YOUR PROSPECTS IN MARKETING
There is a wider variety of careers in marketing than in most business
areas.
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Place Decisions
Direct Sales
Reseller Sales
Market Coverage Intensive
Selective
Exclusive
Inventory Size
Logistics
Source: Perdue University, May 2005
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Why Should You
Market To Women?
Women control 80% of all household spending.
Women purchase 81% of all products andservices manufactured.
80% of all checks written are signed by women.
85% of all automobile purchases are influencedby women.
In 2005, 4.7 Million women were self-employed.
Source: St. Louis Small Business Monthly, May 2004
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Consumer Decision Making
Marketing mix
Product
Price
Place
Promotion
Marketing mix
Product
Price
Place
Promotion
Psychological
Perception
Attitudes
Learning
Motivation
Psychological
Perception
Attitudes
Learning
Motivation
Situational
Type of Purchase
Social surroundings
Physical surroundings
Previous experience
Situational
Type of Purchase
Social surroundings
Physical surroundings
Previous experience
Sociocultural
Reference groups
Family
Social class
Culture
Subculture
Sociocultural
Reference groups
Family
Social class
Culture
Subculture
DecisionDecision--Making ProcessMaking Process
Problem RecognitionProblem Recognition
Information SearchInformation Search
Alternative evaluationAlternative evaluation
Purchase decisionPurchase decision
Postpurchase evaluationPostpurchase evaluation
(cognitive dissonance)(cognitive dissonance)