Marketing Study Guide Exam 2 Essay

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Marketing Study Guide Exam 2
Chapters 6, 7, 8, 9

Chapter 6 – Customer-Driven Marketing Strategy and Creating Value for Target Customers
Customer Driven Marketing Strategy

1. Segmentation
Geographic segmentation > dividing into different nations, states, etc. Localizing products, advertising, etc.
Demographic segmentation > age, life-cycle (Disney Cruise vs. Viking Cruise), state, gender (Dove vs. Harley Davidson), income (Walmart vs. Whole Foods)
Psychographic segmentation > lifestyle, personality, social class
Behavioral segmentation > knowledge, attitudes, responses to products, occasion (Xmas M&Ms), user status, usage rate, loyalty status
User status > nonusers, ex-users, potential users, first-time users, regular users
Usage rate > light, medium, heavy product users
*** Requirements for Effective Segmentation***
Differentiable (heterogeneous)
Measureable: size and purchasing power
Substantial: large or profitable enough
Accessible: can be reached and served
Actionable: effective programs can be developed
2. Targeting
Evaluating different market segments (size, growth, company objectives/resources)

Market Targeting Strategies

1. Undifferentiated marketing – firm ignores market segment differences and goes after the whole market with one offer, focuses on common needs of customer, appeal to largest # of buyers
2. Differentiated marketing – target several market segments & create different offers for each
3. Concentrated marketing – firm goes after large share of one segment, can fine-tune products, prices to needs of the segments, good strategy to start a business (Whole Foods, SouthWest Airlines)
4. Micromarketing – needs and wants of specific individuals/local customer segments, local marketing (neighborhoods) & individual marketing (mass customization)
3. Differentiation and Positioning
Differentiated value for target segments
Desirable position in those segments (CARS – sportiness, safety, comfort, design)

Competitive advantage – advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices
Choosing competitive advantages: choose a single benefit or multiple > important, distinctive, superior, communicable, pre-emptive, affordable, profitable
A firm can create differentiation on: product, services, channels, people, image
Value Proposition – full positioning of a brand -> full mix of benefits
Possible Value Propositions

More benefits, lower price > good for customers (Cost-co)
Same benefits, less price > Walmart
Winning Value Propositions
More for more (Starbucks, Mercedes, Rolex)
More for the same (Lexus)
Same for less (DSW, Walmart)
Less for much less (Holiday Inn, Dollar Store)
More for less (Home Depot)

Chapter 7 – Products, Services, and Brands, Building Customer Value
Product – anything that can be offered to market for attention, use, or consumption that satisfies need/want
Service – activity, benefit, satisfaction offered for sale that is intangible and doesn’t result in ownership
Products, Services and Experiences
Market offerings often include tangible goods and services
Pure tangible good (Tide detergent)
Pure service (Bank of America)
Many companies now market experiences (BMW, American Airline, Apple)
Three Levels of Products

Consumer products – product bought by final customer for personal consumption, classified by how consumers buy them:

1. Convenience products – bought frequently, immediately, minimal comparison effort, low priced, easily located (toothpaste, candy, etc.) > routine products
2. Shopping products – quality, price, style, less frequently purchased, fewer outlets, greater sales support (washing machines, computers, couches, etc.)
3. Specialty products – special purchase effort, expense/personal (Gucci, Rolex, luxury car, etc.)
4. Unsought products – require a lot of advertising, personal selling, etc. (Metlife, funeral services, etc.) > needed but not wanted
Industrial Products