BES 218
Professor Brown
Chapter 11 Summaries
Marketing Issues
Week 9
I.
The first step in selecting a target market is to initiate a study of the industry in which the firm
intends to compete and determine the potential markets for that firm. This in known as market
segmentation analysis. Markets can be analyzed by geographic regions, demographic types,
product types, behavior patterns, and market trends.
To test if you have successfully performed a market segmentation analysis, one should consider
the following questions:
Once a firm has segmented the market, the next step is to select a target market. Usually the
firm will not target an entire market segment since many segments are too large to target
successfully. Instead, firms target a niche market within a target market, known as a niche
market. This is a place within a market segment that represents a narrow group of customers
with similar interests.
After selecting a target market, the firms next task is to establish a position" within the niche
that differentiates it from its competitors. One way to do this is by developing a product
differentiation map. This is done by creating an x and y graph that compares two market
demand variables (known as attributes) that are relevant for that market segment. For example,
in the retail industry, one differentiation map involves comparing the quality of goods at a higher
price compared to cheaper quality goods for the convenience of a lower price. Once the firm
has determined its differentiation from competitors within its segment, it needs to develop a
tagline, which summarizes the firms market niche specialization.
II.Branding
Branding (known as advertising) is the set of attributes, positive or negative, that people
associate with a firm or product. It is important for firms to maintain a positive branding image,
which is known as brand management. Negative brand management can hurt a firms ability to
generate sales.
Focusing too mush on features and benefits of a firms new product is a common mistake
entrepreneurs do when conducting brand management. Many journalists are skeptical when
entrepreneurs start talking about how great their products are relative to their competitors.
Journalists are more impressed by human interest stories that explain why a firm went into
business and why the start up firm is unique.
A strong brand name can be a very powerful asset for a firm. In surveys consumers say that
known and trusted brands are the biggest reasons why they buy products. An effective brand
name can increase a market value of a firm up to 50% to 75%. This increased valuation can be
important to a firm if it is acquired or merged with another firm. Brand equity is the term that
denotes the set of assets and liabilities linked to a brand and enable it to raise a firms valuation.
An effective brand name has the following attributes:
Promotion refers to the activities the firm undertakes to promote the merits of its product. This is
primarily done with advertising. Advertising tries to:
Raise consumer awareness of product
Explain a products comparative features and benefits
Create associations between a product and a certain lifestyle
There are some drawbacks to advertising:
Low credibility
Possibility to ad viewers are not interested
Message clutter
Costliness
Perception that advertising is intrusive
Public relations is another cost-effective way to increase awareness of the products a firm wants
to sell. Public relations refers to efforts to maintain a companys image with the public,
promoting its sales. A cost effective way of maintaining public relations is through use of social
media. The key to maintaining a social media account is keep it fresh, informative, and fun.
Social media can be used to promote viral marketing, which facilitates and encourages people
to pass along a marketing message about a particular product.
Place or distribution encompasses all activities that move a product from its place of production
to the customer. The distribution channel is the route a product takes from the place it is made
to the customer or end user.
Many firms sell direct to customers. Controlling the process of moving their products from their
place of origin to the end user instead of using middle men is a major advantage of direct
selling. Other firms sell though intermediaries, which involves selling goods to wholesalers.
Once products are sold to wholesalers, retailers purchase these goods from them to sell to
consumers. Exclusive distribution arrangements give a retailer or other intermediary the
exclusive rights to sell a firms products.