1. 2-1 CHAPTER 2 Understanding and Approaching the Market

2. 2-2 Role of market in the exchange process Distinguish basic kinds of markets Difference between undifferentiated and segmental approach Various bases for market segmentation Modes of selecting target markets

3. 2-3 Market is people Market is a place Market is an economic entity

4. 2-4 Individuals, groups, organizations Overt or latent wants or need Ability to pay for the product via accepted means Willingness to buy the product Authority to buy the product Large enough people/organizations to ensure profitability

5. 2-5 A geographic location where trading takes place

6. 2-6 Market characterized by dynamic system of economic forces Supply and demand – buyer’s or seller’s market (different bargaining power) Competition – pure, monopoly, oligopoly Government control – free, socialistic

7. 2-7 Consumer Industrial Institutional Reseller

8. 2-8 Individuals and households who buy and consume goods and services for their own personal use

9. 2-9 Organizations and their employees, who buy products or services for use in their own businesses, or to make other products

10. 2-10 Includes profit and non-profit institutions Satisfy mostly esoteric, often intangible needs Profits are re-invested into the institution

11. 2-11 Intermediaries that buy finished or semi-finished products and resell them for profit

12. 2-12 The person (s) / organization (s) selected as potential customers by the product provider e.g., Harley Davidson

13. 2-13 Undifferentiated Market (Market Aggregation) Product Differentiation Segmented Market

14. 2-14 Market is viewed as a homogeneous aggregate e.g., milk consumers Main considerations – per unit profit margin and the amount of competition Carries the potential threat of lack of appeal to anyone and waste of resources

15. 2-15 Tangible or intangible distinction of the same product from those of competitors e.g., endurance, status Mention core appeals of the product Too much difference from the norm might be ineffective The differentiation basis should be meaningful and important for the consumer

16. 2-16 Identify, classify people into homogeneous groups/segments Reduce risk in deciding where, when, how and to whom product will be marketed Increase marketing efficiency by directing effort appropriately

17. 2-17 Concentration –focus on only one market segment; better depth but lack of demand can cause financial loss Multi-segment –focus on two or more distinct markets; different marketing mix; increased costs offset by increased sales; but too many products along with misdirected marketing efforts may result

18. 2-18 Geography Demography Usage Psychological

19. 2-19 Conditions like weather, topography, physical factors like oceans, population density affect consumer needs and desires Too large a geographic area may mean heterogeneous population making it a less effective ‘segment’

20. 2-20 Age e.g., Baby Boomers Gender Family life cycle e.g., newly married couple vs. parents Income Education Religion Occupation e.g., bankers vs. plumbers with different lifestyles Geographic Mobility Race and national origin (affects products and media preferences)

21. 2-21 Consumption is measured directly Marketing mix aimed at groups considered either heavy, medium, light or non-users Sub-bases of segmentation – purchase occasion (reasons for buying); user status (non, heavy, ex, first-time); loyalty; stage of readiness (unaware, aware, desirous, intend to buy soon)

22. 2-22 Attitudes – predispositions to behave in certain ways to given stimuli Personality – long-lasting characteristics and behaviors that allow one to cope with the environment Motives – positive or negative reasons for behavior Lifestyle – orientation, interests, opinions about consumption, work and leisure

23. 2-23 Type of customer North American Industry Classification System/Standard Industrial Classification End use Common buying factors Buyer size and geography

24. 2-24 Original equipment manufacturers e.g., Caterpillar End users e.g., farmers who use John Deere farm equipment Aftermarket e.g., those who buy spare parts for automobiles

25. 2-25 Main product or service provided SIC classify firms under 10 basic industries with a two digit coding system NAICS has added newer industries e.g., healthcare NAICS has a six digit coding system

26. 2-26 The manner in which a product is used by the potential buyer in different situations

27. 2-27 Product Performance Product Quality Service Delivery Price

28. 2-28 Small, medium and large buyers and their location in relation to the seller

29. 2-29 Clarity of identification – who is in and who is out Actual or potential needs Effective demand: desire plus ability to buy Economic accessibility Positive responses

30. 2-30 Identify relevant customers, purchase situation variables beyond core product Collect, analyze other related data Evaluate segments Select one or more target markets Develop appropriate action programs

31. 2-31 The act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind in relation to other competitors, e.g., Volvo

32. 2-32 Markets of one person or one company, customized product design, relationship marketing, and one-on- one marketing are the trends of future