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Marketing 100


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Title: Marketing 100


Welcome Day 2
  • Marketing 100
  • October 2009
  • Markets, consumer behaviour
  • Product strategy
  • Lecturer - Ms Jodie Hanson

Lecture 4 Mkt segmentation Positioning
  • What are markets?
  • Why we segment the market
  • Segmentation, target marketing, positioning
  • 4. Product Growth opportunity matrix

1. What are Markets?
  • Total Market
  • An aggregate/group of people who have needs for
    products or services and who have the ability,
    willingness, and authority to make a purchase
  • Target market
  • A group, or segment, at which a particular
    product is aimed is referred to as the target
    market or the target segment.
  • Note the group must have similar
    characteristics and/or needs. Known as an
    homogenous group.

2. Why we segment the market
  • The total market can be too broad
  • The total market is often not homogenous
    difficult to target with a core message or offer
  • Difficult to be all things to all people
  • Need to narrow our focus to be competitive
  • Target our marketing effort and our offer to
    smaller homogenous groups of consumers on the
    basis of a need or want

3. Market Segmentation, Targeting, and
Divide a market into smaller groups of buyers
with distinct needs, characteristics, or
behaviors who might require separate products or
marketing mixes
Market Segmentation a. Identify basis for
segmenting the market b. Develop segment profiles
Market Targeting c. Develop measures of
segment attractiveness d. Select target segments
Positioning e. Develop positioning for
target segments f. Develop a marketing mix
for each segment
Most marketers have moved away from mass
marketing and toward market segmentation and
targeting (rifle approach vs shotgun)
3 a. Segmentation - Identify the variables and
basis on which you will segment the market
  • These are characteristics of individuals. groups
    or organisations used to divide a market into
  • This can be done using the following groups of
  • Demographic, Geographic, Psychographic,

  • Demographic variables - ie age, gender, income,
    ethnicity, social class etc. Based on the
    buyers rational behaviour
  • Demographic most popular (easiest often
    meaningful differences) Dividing the market into
    groups based on population characteristics such
  • Age group Gender
  • Family size or life-cycle stage
  • Income Occupation
  • Education Religion
  • Race Nationality

  • Geographic variables - regional differences in
    population, climate socio-economic status etc.
    Retailers decide on store location based on where
    their target segment reside
  • Geographic
  • Country or region
  • City or metro size
  • Population density (e.g., urban, suburban,
  • Climate

  • Psychographic variables - using personality and
    life style dimensions to segment the market. This
    approach recognises that some types of purchases
    are more emotional-oriented.
  • Psychographic beyond demographics
  • Lifestyle
  • Personality
  • Social class

  • Behavioural Variables - based on the customers
    behaviour towards the product, or specific
    purchase situation and include benefit sought,
    usage rate, loyalty etc.
  • Behavioral may be best starting point
  • Dividing the market into groups based on
    knowledge, attitudes, uses, or responses to a
    product very direct specific
  • Occasions purchase or usage occasion
  • Benefits sought
  • User status nonusers, potential users,
    first-time users, regular users, ex-users
  • Usage rate heavy, medium, light users
  • Loyalty status

3 b Develop segmentation profiles
  • Segmentation profiles describes the similarities
    among potential customers within a segment and
    explains the differences among people and
    organisations in different segments

Popular Target Market Acronyms
  • S.W.E.L.L.s - Single Women Earning Lots and Lots
    (exclusive apartments, upmarket personal care
    products, health club memberships, etc)
  • Y.U.P.P.I.E.S - Young Urban Professionals (inner
    city living, BMWs, exclusive clubs, mobile
  • S.N.A.G.s - Sensitive New Age Guys (sharing,
    caring, sensitive, home body, equality etc)
  • D.I.N.K.s - Double Income, No Kids (exclusive
    homes, entertainment home theatre systems, dining
    out, night entertainment etc)

Class Activity
  • These acronyms are western concepts. Can you see
    them working in China?
  • Can you create any of your own?
  • What would you do?

3 c Measures of an attractive/effective Segment
  • Can size, purchasing power, and segment profiles
    be measured?

  • Can segments can be effectively reached and

  • Are segments large or profitable enough to serve?
  • Do segments respond differently to
    different marketing mix elements and programs?
  • Can effective programs be designed to attract
    and serve the segments?

Evaluate Relevant Market Segments
  • Several important factors, including sales
    estimates, competition, and estimated costs
    associated with each segment should be determined
    and analysed
  • Sales estimates - market potential, company
    sales potential, Breakdown approach, Buildup
  • Competitive Assessment - who are our competitors
  • Cost Estimates - can we keep our costs equal to
    or below our competitors?
  • Company Objectives and Resources
  • Skills and resources needed to succeed in the
    segment(s) ?
  • Competitive advantages ?

3c Choosing Target Market Strategy
Marketing Mix
Mass Market
  • Undifferentiated Marketing

Marketing Mix 1
Segment 1
Segment 2
Marketing Mix 2
Marketing Mix 3
  • Differentiated Marketing

Segment 3
Segment 1
Marketing Mix
Segment 2
Segment 3
  • Concentrated (Niche) Marketing
  • MicroMarketing
  • Local Marketing, Individual Marketing

Subgroups of a segment or small segments
Consider Company objectives company
resources competitors strategies product
variability product life-cycle stage market
Popular Target Market Approaches
  • Undifferentiated Target Market (almost mass
  • Looks for commonalities and combines several
    segments into one marketing mix attempting to
    satisfy the majority of buyers
  • Ie most brands of mainstream supermarket products
  • Unlikely for a brand to be all things to all
    people. Invites competition
  • Differentiated - Multiple Target Market
  • Two or more segments each with own marketing mix
    (ie most large companies with multiple products
    and brands within the same product category
  • High marketing and operating costs
  • Niche - Single Target Market (specialist/niche)
  • Concentrates resources (marketing mix) on a
    single segment
  • Ie LandRover, Bang Olufsen
  • But risky as all eggs are in one basket

Class Activity
  • Are there enough differences in customers needs
    to warrant the use of market segmentation in all
    cases? Is there a case where we may not need
    market segmentation?
  • Example of a mass market

3d. Positioning for Competitive Advantage
  • Products Position
  • the way the product is defined by consumers
  • the place the product occupies in customers
    minds, relative to competing products (based on
  • The position represents a complex set of
    perceptions, impressions, feelings in
    simplified form
  • Consumers will position products with or without
    the help of marketers

  • Marketers must
  • Plan positions to give their products the
    greatest competitive advantage in selected target
  • Design marketing mixes to create these planned
    positions (not empty promises)
  • What makes this product unique and
  • Implant the brands unique benefits and
    differentiation in customers minds

  • Positions that are meaningful/worthwhile
  • Important target customers value the
    difference as a meaningful benefit
  • Distinctive competitors dont already position
    on it
  • Superior better than competitors
  • Communicable difference can be communicated,
    made visible and understandable
  • Preemptive first, and competitors cannot
    easily copy
  • Affordable target market can afford to pay for
  • Profitable the company can deliver it

  • Use the marketing mix to create a unique
    proposition relative to competitors
  • Product attributes
  • Price value
  • Place Easy access, select or mass
  • Promotion unique message channel

4. Product Growth Strategies
Existing Markets/clients
New Markets/clients
Existing Products
Market Penetration
Market Development
New Products
Product Development
Optional Review
  • List and discuss the major bases for segmenting
    consumer markets
  • Explain how companies identify attractive market
    segments to target and choose a target marketing
  • Discuss how companies can position their products
    for maximum competitive advantage in the

Lecture 5 Consumer behaviour
  1. Consumer behaviour defined
  2. Buying Decision Process
  3. Factors influencing the buying decision
  4. Consumer problem solving
  5. Types of buying decision behaviour
  6. Purchase situation

1. A Definition
  • The decision processes and acts of ultimate
    consumers involved in buying and using products
  • A consumer will try to acquire and maintain an
    assortment of products that satisfy his or her
    current and future needs.
  • When making different purchases, consumers engage
    in different types of problem solving processes.
  • Marketers who understand the consumer buying
    cycle can utilise their marketing mix to help
    them solve problems at the various stages of the

2. Buyer Decision Process
Client Journey
4 Purchase Decision
2 Information Search
1 Need Recognition
5 Postpurchase Behavior
3 Evaluation of Alternatives
Actual state vs. desired state Triggered by
internal or external stimuli
Marketers Journey
Demonstrate differentiation
Easy access, sales support
After sale service/product guarantee
Build awareness
Promote product attributes to solve need
Evaluation of Alternatives
Post purchase Behavior

Perception of Product Performance -
Expectations Customer Satisfaction
Cognitive Dissonance
- Dissatisfied Customer
Satisfied Customer !
Lost customer Negative w-o-m (tells 11)
Retention g more profit Positive w-o-m (tells 3)
  • Create moderately high expectations (realistic,
    not exaggerated) and exceed them
  • Encourage complaints care, respond (it exceeds

3. Factors Influencing Consumer Behaviour
Uncontrollable Factors
Culture Subculture Social class
Social Reference groups Family Roles and Stat
us Culture
Personal Age and life-cycle Occupation Economi
c situation Lifestyle Personality and self-conce
Psycho- logical Motivation Perception Learning
Beliefs and attitudes
Most specific Most individual
Most basic influences Broadest, deepest
Cultural Factors
  • Culture - the most basic cause of a person's
    wants and behavior
  • set of values, perceptions, wants behavior
    learned by a member of society (learned from
    family social institutions)
  • achievement success, activity involvement,
    efficiency practicality, progress, material
    comfort, individualism, freedom, humanitarianism,
    youthfulness, fitness health
  • Subculture - groups of people with shared value
    systems based on common life experiences and
    situations (e.g., based on nationality, religion,
    race, geographic location, age, etc.)
  • represent important market segments
  • e.g., Hispanic, African-American, Asian-American
  • e.g., Gen Y, Gen X, Baby Boomers, Mature Market

Cultural Factors cont.
  • Social Class - Societys relatively permanent and
    ordered divisions, where members share similar
    values, interests, and behaviors (including
    buying behavior)
  • Based on resources, power, prestige
  • Measured by
  • Occupation
  • Wealth and income (both amount and source)
  • Education
  • Housing, neighborhood, possessions, values

Social Factors
  • Reference Groups - most influential for purchase
    and use of
  • products that are visible to others
  • Reference Groups direct or indirect influence
  • Membership groups direct influence (e.g.,
  • family)
  • Aspirational groups does not belong but
    influenced by
  • Opinion leaders influential individuals
  • Skills, knowledge, personality often
  • specific
  • Buzz marketing
  • Family - most important consumer buying
    organization in
  • society, and an influential reference group
  • Consumption roles decider, buyer, user,
  • Changing roles and changing family structures

Personal Factors
Personal Influences
Age and life cycle stage
Personality self-concept
Economic situation
Family life cycle transition g changes buyer
behavior Single Honeymoon Full Nest 1,2,3
Empty Nest Retired Divorced, etc.
Brand personality
Lifestyle Psychographics
Psychological Factors
  • Motivation driving force behind behavior,
    resulting from tension
  • Motive a need that is sufficiently pressing to
    direct a person to
  • seek satisfaction
  • Maslow hierarchy of needs
  • Perception process by which people select,
    organize, and interpret information to form a
    meaningful picture of the world
  • Selective attention screen out most of what we
    are exposed to
  • Selective distortion misinterpret information
    to support existing beliefs and
  • attitudes
  • Selective retention forget much of what is

Psychological factors affecting behaviour
Maslows Heirarchy of Needs
So it costs a bit more. But Im worth it.
When you care enough to send the very best.
Because so much is riding on your tyres. Michelin
It really quenches your thirst. Gatorade
4. Types of Consumer ProblemSolving Processes
  • Level of Involvements
  • Enduring Involvement A persons interest in a
    product category is ongoing and long-term
  • Situational Involvement temporary and dynamic
    resulting from a particular set of circumstances

Types of Consumer Problem-Solving Processes
  • Routinised Response Behaviour Used when buying
    frequently, low-cost items that require very
    little search-and-decision effort
  • Limited Problem Solving Buyers engage in this
    when they purchase products occasionally and need
    to obtain information about an unfamiliar brand
    in a familiar product category
  • Extended problem solving Process employed when
    unfamiliar, expensive, or infrequently bought
    products are purchased
  • Impulse Buying An unplanned buying behaviour
    involving a powerful urge to buy something

5. Types of Buying-Decision Behavior
  • Influences the buyers decision process
  • Suggests appropriate marketing strategy

Complex buying behavior
Variety- seeking behavior
High Consumer Involvement
Low Consumer Involvement
Significant perceived differences between brands
Dissonance- reducing buying behavior
Habitual buying behavior
Few perceived differences between brands
Cognitive dissonance (buyers remorse)
expensive, infrequently purchased, important,
risky, self-expressive, etc.
6. Purchase decision influences
  • Purchase outcomes are affected by the clients
    reason for the purchase
  • Who would pay XX for a bunch of flowers
  • What if it was your mothers birthday and you
    forgot to buy her a gift. It was 5 minutes
    before closing time and its the last bunch of
    flowers available.
  • Now who would pay XX.

  • Discuss a specific major purchase you made
  • What type of buying decision was it
  • Discuss your buyer decision process and the
    factors that influenced your decision

Class Activity
  • List the ways that your family, your friends, and
    the media influence your buying decision making
    process. Explain your answers
  • What would you do?

Optional Review
  • Describe the four major categories of factors
    that influence consumer buyer behavior, and the
    major influences within each factor
  • Understand the stages in the buyer decision
    process and how marketers can use this knowledge
    to develop their marketing strategy

Lecture 6 Product strategy
  • Product classification Services Marketing
  • What is a product
  • Product service attributes
  • Classification of products
  • Services Marketing

1. What is a Product?
  • Product anything tangible or intangible that
    can be offered to a market for attention,
    acquisition, use, or consumption that might
    satisfy a consumers want or need
  • Physical Goods A tangible physical entity
  • Service An intangible result of the application
    of human and mechanical efforts to people or
  • Events
  • Persons
  • Places
  • Organizations
  • Ideas Concepts, philosophies, images,
    experiences or issues

Products, Services, and Experiences
Service with accompanying minor goods
Tangible good with accompanying services
Hybrid offer
Pure tangible good
Pure service
Product Service Continuum
Automobile with accompanying repair services
Doctors exam
Flight with meal
  • Delivering an experience
  • personal, takes place in the minds of customers
  • increasingly used to differentiate offers
  • consumers buy what products will do for them

Benefits vs features
  • Because consumers purchase a product that will
    solve a problem or satisfy a need or want
  • effective marketers should focus on selling the
    benefits of the product, not the features.

Feature - Cars Benefit
ABS brakes Dual airbags Safety - security
Small size Fuel efficient Easy to park Economical Convenient
Levels of Product and Services
3. Augmented Product Additional (unexpected)
services benefits to provide the most
satisfying customer experience
Product is a complex bundle of benefits
Brand name
Delivery credit
After- sale service
Quality level
Core benefit or service
1. Core product What the consumer is really
buying (addresses underlying need or problem )
2. Actual Product The physical product or service
Class Activity
  • Nominate one product/service and identify the
    core product, actual product, and augmented
    product characteristics.
  • ?

Class Activity
  • Customer Value

Give examples of the features, benefits or costs
that might contribute to the customer value of
each of the following products. a) wrist watch,
b) a weight-loss diet supplement, c) a cruise on
a luxury liner, d) checking account from bank.
List each under one or other of the 4 Ps.
2. Product and Services Attributes
Marketings role represent the voice of the
customer Developing a product or service
involves defining the benefits that it will offer
such as
Define in terms of customer satisfaction -
Ability of product to perform its functions
(performance quality) - Consistency (conformance
Product quality
Product features
Can differentiate the product from the
Product style design
Style appearance Design performance /
function (as well as appearance)
3. Product classification
  • Consumer Product Products purchased to satisfy
    personal and family needs
  • Organisational Products Products bought to use
    in a firms operations, to resell, or to make
    other products
  • A product can be both a consumer and an
    organisational product

Consumer Product/Services Classification
Based on buying behavior g influences strategy
Also based on the level of involvement in the
  • Shopping Products - med - high
  • Buy less frequently, planned, carefully compare
  • Selective distribution
  • Promotion by producer retailers
  • E.g., clothing, cars, appliances
  • Convenience Products - low
  • Buy frequently immediately
  • with minimum purchase effort
  • Intensive/widespread distribution
  • Mass promotion by producer
  • E,g., candy, laundry detergent
  • Unsought Products
  • Innovations (little awareness) products
    consumers dont want to think about (no initial
  • Require much promotion
  • (usually personal selling)
  • E.g., life insurance, blood donation
  • Specialty Products - high
  • Special purchase effort, but little comparison
    of brands
  • Exclusive distribution
  • Carefully targeted promotions
  • by producer retailer
  • E.g., Lamborghini, Rolex, Prada

Organisational Products
  • Raw Materials
  • Major Equipment
  • Accessory Equipment
  • Component Parts
  • Process Materials
  • Consumable Supplies
  • Organisational Services

Product Marketing mix
Product/service attributes
Example Marketing Strategies
4. Services Marketing
  • Examples
  • Profession Tradespeople, lawyers, consultants
  • Education Private and public Colleges,
  • Financial-insurance Banks and financial
    institutions, insurance and investment firms
  • Tourism destination, packaged tours, hotels and
  • Travel airlines, public transport (trains,
  • Food and Entertainment Restaurants (partial
    service), theatres

Services MarketingDramatic growth additional
Cant be seen, tasted, felt, heard, or smelled
before purchase (provide signals,
tangibilize) Cant be separated from service
providers (internal marketing company to
employees) (interactive marketing employees to
customers) Quality depends on who provides
service, when, and how Cant be stored for
later sale or use (match supply demand)
Services Marketing
  • 1. Intangibility
  • Most services are experienced during or after
    consumption, but not before. Services cannot be
    owned like goods
  • Problems
  • Difficult for marketer to demonstrate/display
    service before consumption
  • Difficult for customer to evaluate before

Services Marketing
  • Solutions
  • Use tangible indicators of service quality (make
    it easier for the customer to check out quality
    before consumption)
  • Brand name, logo, brand image association
    appearance of premises, location staff
    presentation price charged year of
    establishment testimonies/past clients
  • Trial use (if possible) ie first hour free
  • Emphasise benefits (end results) rather than

Services Marketing
  • 2. Variability (and Inseparability)
  • Service quality depends on WHO the provider is,
    WHEN (time of year or day) and to WHOM (the
  • Problems
  • Difficult for marketer to ensure quality in
  • Difficult for customer to determine quality in

Services Marketing
  • Solutions
  • Regular customer feedback (Use questionnaires and
    improve weak areas)
  • Staff training (for high and consistent service
  • Standardise some operating procedures
    (standardised operating and admin procedures)
  • As with intangibility

Services Marketing
  • 3.Perishability
  • Cannot be stored since most services are produced
    and consumed at the same time
  • Problems
  • Difficult to match demand and supply since an
    unused service (Supply but no demand) is usually
    income lost forever. Potential income Is lost
    when a classroom is not filled to capacity, an
    aeroplane leaves with empty seats or when a
    dental appointment is missed.

Services Marketing
  • Solutions
  • Regulate supply (when demand is given)
  • Increase-decrease staff (supply) to match
    seasonal demand)
  • Increase-decrease capacity (opening times,
    frequencies, etc) to match seasonal demand
  • Automation (ATMs etc) to match seasonal or
    unpredictable demand
  • Multiple services to provide steady income. Ie
    cobblers today repair shoes, cut keys, laminate,
    engrave etc
  • (Need to be aware of quantity-quality trade off.
    When increasing supply (Capacity) the service
    quality may decrease)

Services Marketing
  • Solutions
  • Regulate demand (when supply is given)
  • Pricing Discounts for low seasons and full price
    for high seasons
  • Cultivate non-peak demand. Increase demand
    without discounting price. A hotel etc can offer
    special attractions/events during low seasons
    without having to substantially discount prices.
  • Reservation/booking

Services Marketing mix
Product/service attributes
Physical evidence
Class Activity
  • Select an existing service. Name and describe
    briefly, then write down the strategies you think
    the marketing team have used in each of the 7
    elements of the marketing mix.
  • What would you do?

Optional Review
  • Define product, product levels (core, actual,
    augmented), and the consumer products
  • Discuss the differences between product and
    services marketing
  • Discuss how marketers can use their extended
    marketing mix strategies to address the various
    challenges of services marketing
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