DISCUSSIONQUESTIONS – MARKETING PRINCIPLES QUESTIONS Differences between Market Segmentation & Target Market Explain companywide strategic planning and its four steps Discuss how to design business portfolios and develop growth strategies List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing return on marketing investment List and discuss the major bases for segmenting consumer and business markets Explain how companies identify attractive market segments and choose a markettargeting strategy Discuss how companies differentiate and position their products for maximum competitive advantage Define the consumer market and construct a simple model of consumer buyer behavior Name the four major factors that influence consumer buyer behavior 10 List and define the major types of buying decision behavior and the stages in the buyer decision process 11 Describe the adoption and diffusion process for new products 12 Define the marketing information system and discuss its parts 13 Outline the steps in the marketing research process 14 Discuss the special issues some marketing researchers face, including public policy and ethics issues 15 Define product and the major classifications of products and services 16 Describe the decisions companies make regarding their individual products and services, product lines, and product mixes 17 Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require ANSWERS Market segmentation and target marketing are two steps of the marketing process Although the two go hand-in-hand, there are distinct differences between them, as market segmentation must take place before a target market is determined Processes: Market segmentation occurs when a company decides that they want to identify a specific type of consumer to which they can market their product or service A target market is determined once the company identifies which consumers to sell to Function: Market segmentation is used to research the entire market as a whole and then place consumers into separate groups based on common characteristics The company then decides which group is best and concentrates on selling to them, which is also called target marketing Features: Market segmentation may be based on variables such as behavior, demographics (e.g., gender, age, education, and income), geography, and psychographic characteristics, or those based on lifestyle and personality Identification: A target market is identified once a company evaluates all possible market segments and determines which would be the most appropriate, and therefore profitable Positioning: Marketing a product through advertising, also known as positioning, cannot be properly executed before market segmentation takes place and a target market is determined Strategic planning sets the stage for the rest of the company’s planning Marketing contributes to strategic planning, and the overall plan defines marketing’s role in the company Strategic planning involves developing a strategy for long-run survival and growth It consists of four steps: (1) defining the company’s mission, (2) setting objectives and goals, (3) designing a business portfolio, and (4) developing functional plans The company’s mission should be market oriented, realistic, specific, motivating, and consistent with the market environment The mission is then transformed into detailed supporting goals and objectives, which in turn guide decisions about the business portfolio Then each business and product unit must develop detailed marketing plans in line with the company-wide plan Guided by the company’s mission statement and objectives, management plans its business portfolio, or the collection of businesses and products that make up the company The firm wants to produce a business portfolio that best fits its strengths and weaknesses to opportunities in the environment To this, it must analyze and adjust its current business portfolio and develop growth and downsizing strategies for adjusting the future portfolio The company might use a formal portfolio-planning method But many companies are now designing more-customized portfolio-planning approaches that better suit their unique situations To find the best strategy and mix and to put them into action, the company engages in marketing analysis, planning, implementation, and control The main components of a marketing plan are the executive summary, the current marketing situation, threats and opportunities, objectives and issues, marketing strategies, action programs, budgets, and controls To plan good strategies is often easier than to carry them out To be successful, companies must also be effective at implementation-turning marketing strategies into marketing actions Marketing departments can be organized in one or a combination of ways: functional marketing organization, geographic organization, product management organization, or market management organization In this age of customer relationships, more and more companies are now changing their organizational focus from product or territory management to customer relationship management Marketing organizations carry out marketing control, both operating control and strategic control Marketing managers must ensure that their marketing dollars are being well spent In a tighter economy, today’s marketers face growing pressures to show that they are adding value in line with their costs In response, marketers are developing better measures of return on marketing investment Increasingly, they are using customer-centered measures of marketing impact as a key input into their strategic decision making There is no single way to segment a market Therefore, the marketer tries different variables to see which give the best segmentation opportunities For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, and behavioral In geographic segmentation, the market is divided into different geographical units, such as nations, regions, states, counties, cities, or even neighborhoods In demographic segmentation, the market is divided into groups based on demographic variables, including age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality In psychographic segmentation, the market is divided into different groups based on social class, lifestyle, or personality characteristics In behavioral segmentation, the market is divided into groups based on consumers’ knowledge, attitudes, uses, or responses to a product To target the best market segments, the company first evaluates each segment’s size and growth characteristics, structural attractiveness, and compatibility with company objectives and re- sources It then chooses one of four market-targeting strategies ranging from very broad to very narrow targeting The seller can ignore segment differences and target broadly using undifferentiated (or mass) marketing This involves mass producing, mass distributing, and mass promoting about the same product in about the same way to all consumers Or the seller can adopt differentiated marketing developing different market offers for several segments Concentrated marketing (or niche marketing) involves focusing on one or a few market segments only Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations Micromarketing includes local marketing and individual marketing Which targeting strategy is best depends on company resources, product variability, the PLC stage, market variability, and competitive marketing strategies Once a company has decided which segments to enter, it must decide on its differentiation and positioning strategy The differentiation and positioning task consists of three steps: identifying a set of possible differentiations that create competitive advantage, choosing advantages on which to build a position, and selecting an overall positioning strategy The brand’s full positioning is called its value proposition - the full mix of benefits on which the brand is positioned In general, companies can choose from one of five winning value propositions on which to position their products: more for more, more for the same, the same for less, less for much less, or more for less Company and brand positioning are summarized in positioning statements that state the target segment and need, the positioning concept, and specific points of difference The company must then effectively communicate and deliver the chosen position to the market The consumer market consists of all the individuals and house- holds who buy or acquire goods and services for personal consumption The simplest model of consumer buyer behavior is the stimulus-response model According to this model, marketing stimuli (the four Ps) and other major forces (economic, technological, political, cultural) enter the consumer’s “black box” and produce certain responses Once in the black box, these inputs produce observable buyer responses, such as product choice, brand choice, purchase timing, and purchase amount Consumer buyer behavior is influenced by four key sets of buyer characteristics: cultural, social, personal, and psychological Although many of these factors cannot be influenced by the marketer, they can be useful in identifying interested buyers and shaping products and appeals to serve consumer needs better Culture is the most basic determinant of a person’s wants and behavior Subcultures are “cultures within cultures” that have distinct values and lifestyles and can be based on anything from age to ethnicity Many companies focused their marketing programs on the special needs of certain cultural and subcultural segments Social factors also influence a buyer’s behavior A person’s reference groups - family, friends, social networks, professional associations - strongly affect product and brand choices The buyer’s age, life-cycle stage, occupation, economic circumstances, personality, and other personal characteristics influence his or her buying decisions Consumer lifestyles - the whole pattern of acting and interacting in the world - are also an important influence on purchase decisions Finally, consumer buying behavior is influenced by four major psychological factors: motivation, perception, learning, and beliefs and attitudes Each of these factors provides a different perspective for understanding the workings of the buyer’s black box 10 Buying behavior may vary greatly across different types of products and buying decisions Consumers undertake complex buying behavior when they are highly involved in a purchase and perceive significant differences among brands Dissonance-reducing behavior occurs when consumers are highly involved but see little difference among brands Habitual buying behavior occurs under conditions of low involvement and little significant brand difference In situations characterized by low involvement but significant perceived brand differences, consumers engage in variety-seeking buying behavior When making a purchase, the buyer goes through a decision process consisting of need recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior The marketer’s job is to understand the buyer’s behavior at each stage and the influences that are operating During need recognition, the consumer recognizes a problem or need that could be satisfied by a product or service in the market Once the need is recognized, the consumer is aroused to seek more information and moves into the information search stage With information in hand, the consumer proceeds to alternative evaluation, during which the in- formation is used to evaluate brands in the choice set From there, the consumer makes a purchase decision and actually buys the product In the final stage of the buyer decision process, post-purchase behavior, the consumer takes action based on satisfaction or dissatisfaction 11 The product adoption process is made up of five stages: aware- ness, interest, evaluation, trial, and adoption New-product marketers must think about how to help consumers move through these stages With regard to the diffusion process for new products, consumers respond at different rates, depending on consumer and product characteristics Consumers may be innovators, early adopters, early majority, late majority, or laggards Each group may require different marketing approaches Marketers often try to bring their new products to the attention of potential early adopters, especially those who are opinion leaders Finally, several characteristics influence the rate of adoption: relative advantage, compatibility, complexity, divisibility, and communicability 12 The marketing information system (MIS) consists of people and procedures for assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights A well-designed information system begins and ends with users The MIS first assesses information needs The MIS primarily serves the company’s marketing and other managers, but it may also provide information to external partners Then the MIS develops information from internal databases, marketing intelligence activities, and marketing research Internal databases pro- vide information on the company’s own operations and departments Such data can be obtained quickly and cheaply but often needs to be adapted for marketing decisions Marketing intelligence activities supply everyday information about developments in the external marketing environment Market research consists of collecting information relevant to a specific marketing problem faced by the company Lastly, the MIS helps users analyze and use the information to develop customer insights, make marketing decisions, and manage customer relationships 13 The first step in the marketing research process involves defining the problem and setting the research objectives, which may be exploratory, descriptive, or causal research The second step consists of developing a research plan for collecting data from primary and secondary sources The third step calls for implementing the marketing research plan by gathering, processing, and analyzing the information The fourth step consists of interpreting and reporting the findings Additional information analysis helps marketing managers apply the information and provides them with sophisticated statistical procedures and models from which to develop more rigorous findings Both internal and external secondary data sources often pro- vide information more quickly and at a lower cost than primary data sources, and they can sometimes yield information that a company cannot collect by itself However, needed information might not exist in secondary sources Researchers must also evaluate secondary information to ensure that it is relevant, accurate, current, and impartial Primary research must also be evaluated for these features Each primary data collection method - observational, survey, and experimental - has its own advantages and disadvantages Similarly, each of the various research contact methods - mail, telephone, personal interview, and online - also has its own advantages and drawbacks 14 Some marketers face special marketing research situations, such as those conducting research in small business, not-for-profit, or international situations Marketing research can be conducted effectively by small businesses and nonprofit organizations with limited budgets International marketing researchers follow the same steps as domestic researchers but often face more and different problems All organizations need to act responsibly to major public policy and ethical issues surrounding marketing research, including issues of intrusions on consumer privacy and misuse of research findings 15 Broadly defined, a product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need Products include physical objects but also services, events, persons, places, organizations, or ideas, or mixtures of these entities Services are products that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible, such as banking, hotel, tax preparation, and home-repair services Products and services fall into two broad classes based on the types of consumers that use them Consumer products - those bought by final consumers - are usually classified according to consumer shopping habits (convenience products, shopping products, specialty products, and unsought products) Industrial products - purchased for further processing or for use in conducting a business - include materials and parts, capital items, and supplies and services Other marketable entities - such as organizations, persons, places, and ideas - can also be thought of as products 16 Individual product decisions involve product attributes, branding, packaging, labeling, and product support services Product attribute decisions involve product quality, features, and style and de- sign Branding decisions include selecting a brand name and developing a brand strategy Packaging provides many key benefits, such as protection, economy, convenience, and promotion Package decisions often include designing labels, which identify, describe, and possibly promote the product Companies also develop product support services that enhance customer service and satisfaction and safeguard against competitors Most companies produce a product line rather than a single product A product line is a group of products that are related in function, customer-purchase needs, or distribution channels All product lines and items offered to customers by a particular seller make up the product mix The mix can be described by four dimensions: width, length, depth, and consistency These dimensions are the tools for developing the company’s product strategy 17 Services are characterized by four key characteristics: they are intangible, inseparable, variable, and perishable Each characteristic poses problems and marketing requirements Marketers work to find ways to make the service more tangible, increase the productivity of providers who are inseparable from their products, standardize quality in the face of variability, and improve demand movements and supply capacities in the face of service perishability Good service companies focus attention on both customers and employees They understand the service profit chain, which links service firm profits with employee and customer satisfaction Services marketing strategy calls not only for external marketing but also for internal marketing to motivate employees and interactive marketing to create service delivery skills among service providers To succeed, service marketers must create competitive differentiation, offer high service quality, and find ways to increase service productivity ... effective at implementation-turning marketing strategies into marketing actions Marketing departments can be organized in one or a combination of ways: functional marketing organization, geographic... customer relationship management Marketing organizations carry out marketing control, both operating control and strategic control Marketing managers must ensure that their marketing dollars are being... segments Concentrated marketing (or niche marketing) involves focusing on one or a few market segments only Finally, micromarketing is the practice of tailoring products and marketing programs to