WHAT IS MARKETING?

1. Review What is Marketing?

2. What is Marketing? Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

3. What is Marketing? • Product design? • Advertising? • Selling? • Getting the product to • the consumer? • Developing Marketing plans?

4. Or more simply… Marketing is meeting consumers’ needs profitably.

5. Marketing To meet consumers’ needs and make a profit, marketers must know and “understand their consumer so well that the product or service fits him and sells itself.”…Peter Drucker

6. Why is Marketing Important? Effective Marketing ensures a company’s long term financial success

7. BADM 520 Lecture 2

8. What will we do today? • Why segment? • What are the different levels of market segmentation? • How should a company choose the most attractive target markets? • How could a company position its products?

9. Segmentation STP – Segmentation Target Market Selection Positioning

10. Where does segmentation fit in? • Important stages in the marketing process • MARKET SEGMENTATION • TARGET MARKET SELECTION • POSITIONING

11. STP • SEGMENTING • Identify and profile distinct groups of buyers who differ in their needs and preferences. • TARGETING • Select one or more market segments to enter. • POSITIONING • Establish and communicate the distinctive benefits of the market offering.

12. Why segment? • Why should companies segment the market? If you do not segment, then you would be mass marketing…

13. Dimensions on which to Segment Consumer Markets Geographic Demographic Psychographic Behavioral

14. World Region or Country • City or Metro Size • Density or Climate Geographic Segmentation

15. Demographic Segmentation Age and Life Cycle Life Stage Gender Income Generation Social Class

16. Psychographic Segmentation • Divides Buyers Into Different Groups Based On: Social Class Lifestyle Personality

17. Figure 8.4 The VALS Segmentation System VALS Survey

18. Behavioral Variables Occasions User Status Usage Rate Loyalty Status Behavioral Segmentation

19. Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable

20. Measurable: Accessible: Substantial: Requirements for Effective Segmentation

21. Differential: Actionable: Requirements for Effective Segmentation

22. Initial Steps in Segmentation Process • Understand the benefits that customers seek (i.e. needs) • Segment the market and develop prototypical customer profiles based on the customer benefits • Find the observable variables (e.g. demographic characteristics) most likely to discriminate among the benefit segments.

23. Effective Segmentation • CLASS EXERCISE (WORK IN TEAMS) • Identify two products or services for which segmentation criteria is not necessary and two categories where segmentation criteria is absolutely essential.

24. Market SegmentationLevels of Market Segmentation • Segmentation can be carried out at several different levels No Complete Segmentation Segmentation Mass Marketing Segment Marketing Niche Marketing Customerization

25. Market Segmentation Levels of Market Segmentation • Mass Marketing • Manufacturing and distributing the same product in about the same way to all customers. • Ford Model T Automobile • Why? • Why not?

26. Market Segmentation Levels of Market Segmentation • Segment Marketing • Isolating broad segments that make up a market and adapting the company’s products to match the needs of one or more segments. • Why?

27. Market Segmentation Levels of Market Segmentation • Niche Marketing • Focuses on smaller subgroups within larger market segments. • More narrowly defined group; identified by defining a group with a distinctive set of traits that may seek a special combination of benefits • Why?

28. Market Segmentation Levels of Market Segmentation • Micromarketing • Tailoring products and marketing programs to suit the tastes of specific individuals and locations • Local Marketing • Tailoring brands and promotions to the needs and wants of specific neighborhoods and stores. • Can drive up costs • Individual Marketing (Customization) • Tailoring products and marketing programs to suit the preferences of individual consumers

29. Customization Combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice.

30. Targeting This is the process of selecting the segment to serve. The firms goals and strengths must fit with the needs of the segment.

31. Evaluating Target Markets • Involves collecting and comparing data on the company and its competitors to evaluate which is more likely to succeed

32. Evaluating Target Markets • Involves collecting and comparing data on the company and its competitors to evaluate which is more likely to succeed

33. Evaluating Target Markets • EVALUATION CRITERIA • Ability to conceive and design • Competitors’ R&D capability and budget • Ability to produce (quantity and quality) • Production technology and capacity • Ability to market • Ability to finance • Ability to manage/execute

34. Market TargetingEvaluating Market Segments • OTHER FACTORS: • Segment Size and Growth • Analyze current segment sales, growth rates, and expected profitability for various segments. • Segment Structural Attractiveness • Consider effects of: competitors, availability of substitute products, and the power of buyers & suppliers.

35. Positioning Act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.

36. Positioning for Competitive Advantage • Product’s Position - the way the product is defined by consumers on important attributes. • Product is compared with competing products. • Simplifies the buying process by helping consumers organize products into categories. • Marketers must: • Plan positions to give their products the greatest advantage in selected target markets, • Design marketing mixes to create these planned positions.

37. Writing a Positioning Statement (Our product/brand) is (single most important claim) among all (competitive frame) because (single most important support)