Chapter 9 Class Notes

Contents of Chapter 9 Class Notes

What is a Market?

A market is:
An aggregate of people who, as individuals or organizations, have needs for products in a product class and who have the ability, willingness and authority to purchase such products (conditions needed for an exchange).

Types of markets:

  1. Consumer Intend to consume or benefit, but not to make a profit.
  2. Organizational/Business For:

Handout...Catering to Middle-Aged BBs...

TM = Baby Boomers...40-60 year olds
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Developing a Target Market Strategy

Developing a target market strategy has three phases:
  1. Analyzing consumer demand
  2. Targeting the market(s)
  3. Developing the marketing strategy
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Selecting Target Markets (Analyzing Demand)

Need to aggregate consumers with similar needs.
Demand patterns: Do all potential customers have similar needs/desires or are there clusters? Types of demand patterns are: Return To Contents

Targeting The Market

Undifferentiated Approach (Total Market Approach)

Single Marketing Mix for the entire market.

All consumers have similar needs for a specific kind of product. Homogeneous market, or demand is so diffused it is not worthwhile to differentiate, try to make demand more homogeneous.

Single MM consists of:

The elements of the marketing mix do not change for different consumers, all elements are developed for all consumers.
Examples include Staple foods-sugar and salt and farm produce. Henry Ford, Model T, all in black.

Popular when large scale production began. Not so popular now due to competition, improved marketing research capabilities, and total production and marketing costs can be reduced by segmentation.

Organization must be able to develop and maintain a single marketing mix.

Major objective is to maximize sales.
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Market Segmentation Approach.

Individuals with diverse product needs have heterogeneous needs.
Market segmentation is the process of dividing a total market into market groups consisting of people who have relatively similar product needs, there are clusters of needs.

The purpose is to design a MM(s) that more precisely matches the needs of individuals in a selected market segment(s).

A market segment consists of individuals, groups or organizations with one or more characteristics that cause them to have relatively similar product needs.

There are two Market Segmentation Strategies.
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Concentration Strategy.

A single market segment with one MM.

                        |A Market Segment
One MM------------------>A Market Segment
                        |A Market Segment
PROS include: CONS include: Objective is not to maximize sales, it is efficiency, attracting a large portion of one section while controlling costs.

Examples include
ROLEX, Anyone wear one.
Who are their target market?? Over $100,000
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Multi-segment strategy

2 or more segments are sought with a MM for each segment, different marketing plan for each segment. This approach combines the best attributes of undifferentiated marketing and concentrated marketing.

 MM--------------------->|A Market Segment
 MM--------------------->|A Market Segment
 MM--------------------->|A Market Segment
 MM--------------------->|A Market Segment
Example: Marriott International:
  1. Marriott Suites...Permanent vacationers
  2. Fairfield Inn...Economy Lodging
  3. Residence Inn...Extended Stay
  4. Courtyard By Marriott...Business Travellers
PROS include: CONS include:

Handout...The only difference is when you throw them away.

Discusses the individual branding of contact lenses.
3 brands: The core product is the same, use different Packaging, Brand Name, Price to differentiate and create a different marketing mix.
What will happen if consumers find out??

Objective: Sales maximization, but can remain a specialist. Can get firmly established in one segment, then pursue another.
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Criteria needed for segmentation

For segmentation to occur:
  1. Segments must have enough profit potential to justify developing and maintaining a MM
  2. Consumer must have heterogeneous (different) needs for the product.
  3. Segmented consumer needs must be homogeneous (similar)
  4. Company must be able to reach a segment with a MM, IE Review to reach Delaware undergraduates.
    How do marketers reach children? Look at how media has changed recently due to changing demographics etc. and therefore the need of marketers to reach these groups.
    Media must respond because they are essentially financed by the marketers or at least heavily subsidised

    Handout...Stations switching to lucrative...

    Indicates how media format changes due to changing population needs.
  5. Must be able to measure characteristics & needs of consumers to establish groups.
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Variables that can be used to segment markets.

Need to determine the variables that distinguish marketing segments from other segments.

Variables for segmenting Consumer Markets include:

Single Variable vs. Multi-Variable Segmentation

Will additional variables help improve the firms MM. If not there is little reason to spend more money to gain information from extra variables.

Handout Techno savvies....

Madison Avenue has identified a new target market to market products to.
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