1. Review
Market - Group of people with sufficient purchasing power, authority, and willingness to buy
Target market - Group of people a firm believes is most likely to buy its goods and services
Types of markets
Consumer products: Consumer’s personal use
Business products: Resale purposes 1

2. Market Segmentation
Division of the total market into smaller, relatively homogenous groups
Criteria for effective market segmentation
Measurable purchasing power and size
Promote and serve the market segment effectively
Sufficiently large
Aim for segments that match its marketing capabilities

3. Segmenting Consumer Markets
Geographic segmentation
Demographic segmentation
Psychographic segmentation
Product-related segmentation

4. The Market Segmentation Process
Develop a relevant profile for each segment
Forecast market potential
Forecast probable market share
Select specific market segments

5. Strategies for Reaching Target Markets
Undifferentiated marketing
Differentiated marketing
Strategy that focuses on producing a single product and marketing it to all customers; also called Mass Marketing
Strategy that focuses on producing several products and pricing, promoting, and distributing them with different marketing mixes designed to satisfy smaller segments

6. Concentrated Marketing and Micromarketing
Concentrated marketing - Focuses its efforts on profitably satisfying a single market segment
Micromarketing - Targeting potential customers at very narrow, basic levels such as by Zip code, specific occupation, or lifestyle—possibly even individuals themselves

7. Positioning
Placing a product at a certain point or location within a market in the minds of prospective buyers
Possible approaches
Attributes
Price/quality
Competitors
Application
Product user/class

8. Pricing Laws for Contemporary Marketers
Robinson-Patman Act
Unfair-trade laws
Fair-trade laws

9. Robinson-Patman Act
Federal legislation prohibiting price discrimination that is not based on a cost differential
Prohibits selling at an unreasonably low price to eliminate competition
Inspired by price competition triggered by the rise of grocery store chains

10. Robinson-Patman Act
Price discrimination - Some consumers pay more than others for the same product
A defense based on cost differentials works only:
If the price differences do not exceed the cost differences resulting from selling to various classes of buyers

11. Unfair-Trade Laws
State laws requiring sellers to maintain minimum prices for comparable merchandise
Intended to protect small specialty stores from loss-leader tactics

12. Fair-Trade Laws
Statutes enacted in most states that once permitted manufacturers to stipulate a minimum retail price for their product
Assumes a product’s price is part of its image, which the manufacturer owns
These laws became invalid with the passage of the Consumer Goods Pricing Act (1975)

14. Methods for Determining Prices
Prices are traditionally determined in two basic ways
Supply and demand
Cost-oriented analyses
Competition-oriented
Customary prices - Traditional prices that customers expect to pay for certain goods and services

15. Price Determination in Economic Theory
Demand - The amounts of a firm’s product that consumers will purchase at different prices during a specified time period
Supply - The amounts of a good or service that will be offered for sale at different prices during a specified period
Pure competition - A market structure with so many buyers and sellers that no single participant can significantly influence price

16. Distinguishing Features of the Four Market Structures

17. The Concept of Elasticity in Pricing Strategy
Elasticity - Measure of responsiveness of purchasers and suppliers to a change in price
Elasticity of demand
Elasticity of supply

18. Breakeven
Pricing technique used to determine the number of products that must be sold at a specified price to generate enough revenue to cover total cost

19. Target Returns
Most managers include a targeted profit in their analyses