MKT 100 Study Guide - Final Guide: Predatory Pricing, Media Mix, Premium Pricing
9 May 2018
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CHAPTER 7
STP Process
Step 1: establish overall strategy or objectives
Step 2: segmentation bases
Step 3: evaluate segment attractiveness
-Identifiable, reachable, responsive, substantial and profitable
Step 4: select target market
Step 5: identity and develop positioning strategy
Psychographics- how consumers describe themselves; allows people to describe themselves by using
those characteristics that help them choose how they occupy their time (behavior) and what underlying
psychological reasons determine those choices
Self-values- goals for life; component of psychographics that refers to overriding desires that drive how a
person lives their life
Self-concept- the image a person has of himself or herself; a component of psychographics
Lifestyles- refers to the way a person lives his or her life to achieve goals; component of psychographics
VALS- a psychographic tool developed by Strategic Business Insights
-Classifies consumers into eight segments
• Innovators
• Thinkers
• Believers
• Achievers
• Strivers
• Experiencers
• Makers
• Survivors
STEP 2
Behavioral segmentation- groups consumers based on the benefits they derive from products or services,
their usage rate, their user status, and their loyalty
Benefit segmentation- groups consumers based on the benefits they derive from products or services
Loyalty segmentation- stategy of iestig i etetio ad loyalty iitiaties to etai the fi’s ost
profitable customers
Geodemographic segmentation- the grouping of consumers on the basis of a combination of geographic,
demographic, and lifestyle characteristics
PSYTE clusters- the grouping of all neighborhoods in Canada into 60 different lifestyles clusters
Undifferentiated segmentation strategy (mass marketing)- marketing strategy a firm can use if the
product or service is perceived to provide the same benefits to everyone, with no need to develop
separate strategies for different groups
STEP 3
Segment attractiveness: identifiable, reachable, responsive, substantial and profitable
Identifiable:
• Who is in their market?
• Are the segments unique?
• Does each segment require a unique marketing mix?
Reachable:
• Know the product exists, understand what it can do, recognize how to buy
Responsive, Customers must:
• React positively to firms offering
• Move toward the firms products/services
• Accept the firms value proposition
Substantial and Profitable:
• Size matters
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• Too small and segment is insignificant, not profitable
• Growth potential equally important
• Identify a segment does not necessarily mean it is a good market
STEP 4
Segmentation strategies: mass or undifferentiated, differentiated, concentrated, micromarketing 1 to 1
Differentiated segmentation strategy- a strategy through which a firm targets several market segments
with a different offering for each
Concentrated (or niche) segmentation strategy- marketing strategy of selecting a single, primary target
market and focusing in all energies on providing a product to fit that markets needs
Micromarketing (one-to-one)- an extreme form of segmentation that tailors a product or service to suit
a idiidual ustoe’s ats o eeds
Mass customization- the practice of interacting on a one-to-one basis with many people to create
custom-made products or services; providing one-to-one marketing to the masses
STEP 5
Positioning- the mental picture that people have about a company and its products or services relative to
competitors
Positioning methods: value, product attributes, benefits & symbolism, competition, market leadership
Positioning steps:
.deteie osue’s peeptios ad ealuatios i elatio to opetitos
.idetify opetito’s positios
3.determine consumer preferences
4.select the position
5.monitor the positioning strategy
Brand repositioning (rebranding)- a strategy in which marketers change in a brands focus to target new
markets or realign the brands core emphasis with changing market preferences
Repositioning examples- whirlpool (new design) Elizabeth arden (new faces) Hyundai (new image)
Positioning statement- expresses how a company wants to be perceived by consumers
Perceptual map- displays, in 2 or more dimensions, the position of products or brands in the consumers
mind
Ideal point- the position at which a particular market segments ideal product would lie on a perceptual
map
Steps to derive a perceptual map
1. Determine consumers perceptions and evaluations of the product or service in relation to
competitors
2. Identify competitors positions
3. Determine consumer preferences
4. Select the position
5. Monitor the positioning strategy
CHAPTER 8
Product- anything that is of value to a consumer and can be offered through a marketing exchange
Innovation- the process by which ideas are transformed into new products and services that will help
firms grow
Pioneers- new products introductions that establish a completely new market or radically change both
the rules of competition and consumer preferences in a market (breakthroughs)
First movers- product pioneers that are the first to create a market or product category, making them
readily recognizable to consumers and thus establishing a commanding and early market share lead
Diffusion of innovation- the process by which the use of an innovation, whether a product or a service,
spreads throughout a market group over time and over various categories of adopters
Innovators- those buyers who want to be the first to have the new product or service
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Early adopters- the second group of consumers in the diffusion of innovation model, after innovators, to
use a produt o seie ioatio; geeally do’t like to take as uh isk as ioatos
Early majority- a group of consumers in the diffusion of innovation model that represents approximately
peet of the populatio; ees do’t like to take uh isk and therefore tend to wait until bugs
are worked out
Late majority- the last group of buyers to enter a new product market
Laggards- consumers who like to avoid change and rely on traditional products until they are no longer
available
Factors Affecting Product Diffusion Speed: compatibility, observabilty, relative advantage, complexity &
trialability
Product Development Process:
Idea Generation- development of viable new product ideas
Concept Testing- testing the new product idea among a set of potential customers
Product Development- development of prototypes and/or the product
Market Testing- testing the actual products in a few test markets
Product Launch- full-scale commercialization of the product
Evaluation of Results- analysis of he performance of the new product & making appropriate modifications
Reverse engineering- involves taking apart a competitors product, analyzing it, and creating an improved
product that does not infringe on the competitors patents, if any exist
Lead users- innovative product users who modify existing products according to their own ideas to suit
their specific needs
Concepts- brief written descriptions of a product or service; its technology, working principles, and forms;
and what customer needs it would satisfy
Concept testing- the process in which a concept statement that describes a product or a service is
presented to potential buyers or users to obtain their reactions
Product development (product design)- entails a process of balancing various engineering,
manufacturing, marketing, and economic considerations to develop a product
Prototype- the first physical form or service description of a new product, still in rough or tentative form,
that has the same properties as a new product but is produced through different manufacturing
processes, sometimes even crafted individually
Alpha testing- an attempt by the firm to determine whether a product will perform according to its design
and whether it satisfies the need for which it was intended; occurs in the firms R&D department
Beta testing- having potential consumers examine a product prototype in a real-use setting to determine
its functionality, performance, potential problems, and other issues specific to its use
Premarket test- conducted before a product or service is brought to market to determine how many
customers will try and then continue to use it
Test marketing- introduces a new product or service to a limited geographical area (usually a few cities)
prior to a national launch
Product life cycle- defines the stages that new products move through as they enter, get established in
and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy
planning
Introduction stage- stage of the product life cycle when innovators start buying the product
Growth stage- stage of the product life cycle when the product gains acceptance, demand and sales
increase, and competitors emerge in the product category
Maturity stage-stage of the product life cycle when industry sales reach their peak, so firms try to
rejuvenate their products by adding new features or repositioning them
Decline stage- stage of the product life cycle when sales decline and the product eventually exits the
market
CHAPTER 9
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MKT 100 Full Course Notes
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Document Summary
Psychographics- how consumers describe themselves; allows people to describe themselves by using those characteristics that help them choose how they occupy their time (behavior) and what underlying psychological reasons determine those choices. Self-values- goals for life; component of psychographics that refers to overriding desires that drive how a person lives their life. Self-concept- the image a person has of himself or herself; a component of psychographics. Lifestyles- refers to the way a person lives his or her life to achieve goals; component of psychographics. Vals- a psychographic tool developed by strategic business insights. Behavioral segmentation- groups consumers based on the benefits they derive from products or services, their usage rate, their user status, and their loyalty. Benefit segmentation- groups consumers based on the benefits they derive from products or services. Loyalty segmentation- st(cid:396)ategy of i(cid:374)(cid:448)esti(cid:374)g i(cid:374) (cid:396)ete(cid:374)tio(cid:374) a(cid:374)d loyalty i(cid:374)itiati(cid:448)es to (cid:396)etai(cid:374) the fi(cid:396)(cid:373)"s (cid:373)ost profitable customers.
