MGT301 Principles of Marketing Lecture-19

Summary of Lecture-18

Market Segmentation (cont..)

Requirements for Effective Segmentation

Measurable Accessible Substantial Differential Actionable Effective Segmentation This CTR relates to the material on pp. 215. Accessible Size, purchasing power, profiles of segments can be measured. Substantial Segments must be effectively reached and served. Differential Requirements for Effective Segmentation Measurability . This refers to the degree to which the size and purchasing power of the segments can be measured. The accuracy and availability of measures of market potential are important. Accessibility. This refers to the degree to which a market segment can be reached and served. Identifying a segment is useless if the marketer has limited access to the customer. Substantiality. This refers to the degree to which the segments are large or profitable enough to service. Actionability. This is the degree to which an effective marketing program can be designed for attracting and serving segments. Company resource limitations figure prominently in actionability issues. Segments must be large or profitable enough to serve. Actionable Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

Target Marketing

Positioning for Competitive Advantage

Identifying Possible Competitive Advantages Product Differentiation i.e. Features, Performance, Style & Design, or Attributes Services Differentiation i.e. Delivery, Installation, Repair Services, Customer Training Services Image Differentiation i.e. Symbols, Atmospheres, Events Personnel Differentiation i.e. Hiring, Training Better People Than Competitors Do

Today’s Topics Marketing Mix 4 Ps

Marketing is the involved process of determining the 4 P’s of the Marketing Mix Product Price Promotion Place (Distribution)

The Marketing Mix Product Target Market Price Place Promotion Four marketing activities—product, Price, Place and Promotion—that a firm can control to meet the needs of customers within its target market Product Target Market Price Place Promotion

Marketing Mix Variables Product Goods, services, or ideas that satisfy customer needs Pricing Decisions and actions that establish pricing objectives and policies and set product prices Place The ready, convenient, and timely availability of products Promotion Activities that inform customers about the organization and its products

Components of Strategic Marketing

Value-Driven Marketing A customer’s subjective assessment of benefits relative to the costs in determining the worth of a product Customer value = customer benefits – customer costs Customer benefits Anything desired by the customer that is received in an exchange Customer costs Anything a customer gives up in an exchange for benefits Monetary price of the benefit Search costs (time and effort) to locate the product Risks associated with the exchange

Benefits Consumers don’t buy products; they buy benefits Functional benefits: relating to the practical purpose a product serves Psychological benefits: relating to how a product makes one feel

Question: Why do you buy laptop?

What is a Product? Whatever is offered for “sale” in a marketing exchange Can be tangible goods (Laptop), services (VU education), ideas (Don’t smoke), places (Muree hills ), persons.

What is a Product ? Products, Services, and Experiences Market offerings, pure tangible goods, pure services, experiences

Definitions Product Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want. Service Any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything.

Goods Services

Sold Then Produced and/ Goods Services Tangible Produced Then Sold Intangible Sold Then Produced and/ or Consumed Same Time

Sold Then Produced and/ Goods Services Tangible Intangible Produced Then Sold Sold Then Produced and/ or Consumed Same Time Can Store and Transport Produced Separate From Consumer Perishable Often Produced In Consumer's Presence

Levels of Products

Core Benefit or Service Augmented Product Product Levels This CTR corresponds to Figure 8-1 on p. 239 and relates to the material on pp. 239-240. Installation Packaging Brand Name Features Delivery & Credit After- Sale Service Core Benefit or Service Product A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. Products can be physical objects, services, persons, places, organizations, and ideas. Product Levels Core Product. This concept refers to the use-benefit, problem-solving service that the consumer is really buying when purchasing a product. Actual Product. The actual product is the tangible product or intangible service that serves as the medium for receiving core product benefits. Five characteristics: Quality Level refers to product performance. Features include combinations of product attributes. Design consists of aesthetic or ergonomic aspects of the product. Brand Name may help consumers position and identify the product. Packaging serves to both protect the product and to promote it to consumers. Augmented Product. The augmented consists of the measures taken to help the consumer put the actual product to sustained use. Measures can include installation, delivery & credit, warranties, and after sale service. Quality Level Design Warranty Core Product Actual Product

Product Classifications Consumer products Industrial products

Product Classifications

A Product.. Anything tangible or intangible that, through the exchange process, satisfies consumer or business customer needs. Products can be: physical goods, services, ideas, people, or places

Classification of Products How Long the Products Will Last

Provide Long-Term Benefits (cars, furniture, appliances) Durable Goods Provide Long-Term Benefits (cars, furniture, appliances) High Involvement Decisions Nondurable Goods Provide Short-Term Benefits (newspapers, food) Low Involvement Decisions

Product Classifications Consumer Products

Types of Consumer Products Frequent purchases bought with minimal buying effort and little comparison shopping Low price Widespread distribution Mass promotion by producer Convenience Shopping Specialty Unsought

Types of Consumer Products Less frequent purchases requiring more shopping effort and price, quality, and style comparisons. Higher than convenience good pricing Selective distribution in fewer outlets Advertising and personal selling by producer and reseller Convenience Shopping Specialty Unsought

Types of Consumer Products Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity High price Exclusive distribution Carefully targeted promotion by producers and resellers Convenience Shopping Specialty Unsought

Types of Consumer Products Little product awareness and knowledge (or if aware, sometimes negative interest) Pricing varies Distribution varies Aggressive advertising and personal selling by producers and resellers Convenience Shopping Specialty Unsought

Industrial products Materials and parts Capital items Supplies and services

Enough for today. . .

Summary Marketing Mix 4 Ps

Levels of Products

Core Benefit or Service Augmented Product Product Levels This CTR corresponds to Figure 8-1 on p. 239 and relates to the material on pp. 239-240. Installation Packaging Brand Name Features Delivery & Credit After- Sale Service Core Benefit or Service Product A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. Products can be physical objects, services, persons, places, organizations, and ideas. Product Levels Core Product. This concept refers to the use-benefit, problem-solving service that the consumer is really buying when purchasing a product. Actual Product. The actual product is the tangible product or intangible service that serves as the medium for receiving core product benefits. Five characteristics: Quality Level refers to product performance. Features include combinations of product attributes. Design consists of aesthetic or ergonomic aspects of the product. Brand Name may help consumers position and identify the product. Packaging serves to both protect the product and to promote it to consumers. Augmented Product. The augmented consists of the measures taken to help the consumer put the actual product to sustained use. Measures can include installation, delivery & credit, warranties, and after sale service. Quality Level Design Warranty Core Product Actual Product

Product Classifications

Next…. Product (cont..)

MGT301 Principles of Marketing Lecture-19