MARKETING TEST 3

CHAPTER 9: IDENTIFYING MARKET SEGMENTS AND TARGETS

Definitions
o Life stage- a persons major concern, such as going through a divorce, going into a second marriage, taking care of
an older parent, deciding to cohabit with another person, deciding to buy a new home, and so on
o Psychographics- the science of using psychology and demographics to better understand consumers
o Supersegment- a set of segments sharing some exploitable similarity
Summary
o Target marketing includes three activities: market segmentation, market targeting, and market positioning. Market
segments are large, identifiable, distinct groups within a market
o The major segmentation variables for consumer markets are geographic, demographic, psychographic, and
behavioral. Marketers use them singly or in combination
o Business marketers use all these variables along with operating variables, purchasing approaches, and situational
factors
o To be useful, market segments must be measurable, substantial, accessible, differentiable, and actionable
o We can target marketers at four main levels: mass, multiple segments, single (or niche) segment, and individuals.
o A mass market targeting approach is adopted only by the biggest companies. Many companies target multiple
segments defined in various ways such as various demographic groups who seek the same product benefit
o A niche is a more narrowly defined group. Globalization and the Internet have made niche marketing more feasible
for many
o More companies now practice individual and mass customization. The future is likely to see more individual
consumers take the initiative in designing products and brands
o Marketers must choose target markets in a socially responsible manner at all times
Other concepts
o Different types of segments
Geographic
Divided into nations, states, regions, countries, cities, or neighborhoods
PRIZM (Potential Rating Index by Zip Markets)- classifies by residential neighborhoods into 14
different groups and 66 distinct lifestyles- take education/affluence, family life cycle, urbanization,
race/ethnicity, and mobility into account
Demographic
Includes variables such as age, family size, family life cycle, gender, income, occupation,
education, religion, race, generation, nationality, and social class
o Age & Life-cycle
Wants change with age
Target market for some products may be the psychologically young (Targeted
for a certain age, but indirectly attract those who want to be young again)
o Life stage
o Gender
Women more traditionally communal-minded & men more self-expressive and
goal-directed
Women take in more data in their immediate environment & men focus on on
the part of the environment that helps them achieve the goal
These differences are starting to shrink as roles start to expand
o Income
Many companies find an hour-glass shaped market, where middle-market
customers migrate towards both discount and premium products
o Generation
Also known as cohorts
Millennials (Gen Y)-born between 1977-1994. Digital native-come off as
entitled from the abundance of opportunities by baby boomer parents, but
socially conscious & concerned about environmental issues. Characterized by
sizeable debt & experience the boomerang effect (move out to college but amass
debt and move back in with family after)
Gen X- born between 1964-1978. Unflattering image of disaffection, short
attention spans, and weak work ethic (gone away now). Characterized by selfsufficiency and ability to handle circumstances-pragmatic and individualistic
Baby Boomers- 1946-1964. Control three quarters of the countrys wealth. Have
the idea that they are younger than their age

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Silent Generation- 1925-1945- strategies including them as grandparents are
normally well received
o Race and Culture
Multicultural marketing approaches the different needs and wants based off of
different cultural norms
Hispanic American, African American, and Asian American markets growing at
2-3 times the rate of nonmulticultural populations
Hispanic Americans
o Largest minority group in the US (17% of US by 2020). Call
themselves fusionistas because they see as fully American
and Latino. Strong family values-desire respect, have high
brand loyalty, and keen interest in product quality
Asian Americans
o Anyone from the Far East, Southwest Asia, or Indian
subcontinent (79% of this population comes from China,
Philippines, India, Vietnam, Korea, and Japan). Known as the
invisible market compared to the others because they arent
marketed to as much. More brand-conscious and least loyal.
Care about what others think and share core values of safety
and education. Attractive target for luxury brands
African Americans
o Most fashion-conscious & strongly motivated by quality and
selection. Active consumers of media
LGBT
o 5-10% of the population
Psychographic Segmentation
Buyers divided into groups on the basis of psychological/personality traits, lifestyle, or values
o VALS framework-psychological traits for people and classifies individuals into 8 primary
groups
Main dimensions are consumer motivation & consumer resources-then inspired
by three motivations: ideals, achievement, and self-expression
Behavioral Segmentation
Marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or
response to a product
People play five roles in a buying decision: initiator, influencer, decider, buyer, and user
User and usage-related variables
o Occasions-time of day, week, month, year, or other well-defined temporal aspects of a
consumers life
o User status-nonuser, ex-user, potential user, first-time user, and regular user. Way to
attract a user is figuring out what are the reason they are not using
o Usage rate-light, medium, & heavy product users
o Buyer-readiness status- unaware of product, aware, informed, interested, desire the
product, and intend to buy
o Loyalty status: hard-core loyals (one brand consistently), split loyals (loyal to 2 or 3
brands), shifting loyals (go from one to another), switchers (no loyalty to any brand)
o Attitude: enthusiastic, positive, indifferent, negative, and hostile
o Multiple Bases
Effective Segmentation Criteria
Must rate favorably on:
Measurable- size, purchasing power, and characteristics of the segments can be measured
Substantial-large and profitable enough to serve
Accessible- segments can be effectively reached and served
Differentiable- conceptually distinguishable and respond differently to different marketing-mix
elements and programs
Actionable-effective programs formulated for attracting and serving the segment
Michael Porters 5 Forces Model
Treat of intense segment rivalry

MARKETING TEST 3
Threat of new entrants
Threat of substitute products
Threat of buyers growing bargaining power
Threat of suppliers growing bargaining power
Evaluating and Selecting Market Segments
Full market coverage
Serve all customer groups with all products they may need thru differentiation and undifferentiated
marketing
o In undifferentiated marketing, firm ignores segment differences and goes after whole
market with one approach
o Can create lower costs for company and result in higher margins
Multiple segment specialization
Selective specialization-firm selects a subset of all the possible segments
Product specialization-certain product to several different market segments
Market specialization-firm concentrates on serving many needs of a particular customer group by
selling an assortment of products
Single-segment concentration
Market to one particular segment
Niche market-fairly small but has size, profit, and growth potential. Unlikely to attract many
competitors, and it gains certain economies thru specialization
Individual marketing
Framework for one-to-one marketing:
o Identify your prospects and customers
o Differentiate customers in terms of their needs and their value to your company
o Interact with individual customers to improve your knowledge about their individual
needs and to build stronger relationships
o Customize products, services, and messages to each customer
Legal & Ethical issues with market targets
When practices are unfair and take advantage of vulnerable or disadvantage groups

CHAPTER 10: CRAFTING THE BRAND POSITION

Definitions:
o Positioning- the act of designing a companys offering and image to occupy a distinctive place in the minds of the
target market
o Competitive frame of reference- closely linked to target market decisions, defines which other brands a brand
competes with and which should thus be the focus of competitive analysis. Decisions about the competitive frame of
reference are closely linked to target market decisions
o Category membership- the products or sets of products with which a brand competes and that function as close
substitutes
o Industry- a group of firms that offer a product or class of products that are close substitutes for one another
o Points-of-difference (PODs)- attributes or benefits that consumers strongly associate with a brand, positively
evaluate, and believe they could not find to the same extent with a competitive brand
o Points-of-parity (POPs)- attribute or benefit associations that are not necessarily unique to the brand but may in
fact be shared with other brands
o Competitive advantage- a companys ability to perform in one or more ways that competitors cannot or will not
match
Summary
o To develop an effective positioning, a company must study competitors as well as actual and potential customers.
Marketers need to identify competitors strategies, objectives, strengths, and weaknesses
o Developing a positioning requires identifying a frame of referenceby locating the target market and the nature of
the competitionand the optimal points-of-parity and points-of-difference brand associations
o A companys closest competitors are those seeking to satisfy the same customers and needs and making similar
offers. A company should also pay attention to latent competitors, who may offer new or different ways to satisfy the
same needs. Industry-and market-based analyses both help uncover competitors
o Points-of-difference are those associations unique to the brand that are also strongly held and favorably evaluated by
consumers. These differences may be based directly on the product or service itself or on other considerations
related to employees, channels, image, or services. Points-of-difference must be desirable (from a consumer
standpoint), deliverable (from a company standpoint), and differentiated (from a competitor standpoint)

MARKETING TEST 3
Points-of-parity are those associations not necessarily unique to the brand but perhaps shared with other brands.
They help to negate any potential weaknesses for the brand. Category point-of-parity are associations consumers
view as being necessary to a legitimate and credible product offering within a certain category. Correlational pointsof-parity are associations designed to overcome perceived weaknesses or vulnerabilities of the brand. Competitive
point-of-parity are associations designed to negate competitors points-of-difference
o Emotional branding is becoming an important way to connect with customers and create differentiation from
competitors. Emotional differences are often more powerful when they are connected to underlying functional
differences
o Several different alternative approaches exist to position a product or service. These less structured, more qualitative
approaches are based on concepts such as brand narratives, storytelling, and cultural branding
o Although small businesses should adhere to many of the branding and positioning principles larger companies use,
they must place extra emphasis on their brand elements and secondary associations, be more focused, and create
buss for their brand
Other Concepts
o All marketing strategy is built on segmentation, targeting, and positioning (STP)- a company discovers different
needs and groups of consumers in the marketplace, targets those it can satisfy in a superior way, and then positions
its offerings so the target market recognizes its distinctive offerings and images
o Understanding position and value propositions
Goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm
Brand substitution test
Good positioning has one foot in the present and one foot in the future
Value proposition-cogent reason why the target market should buy a product or servicecaptures the way a
product or services key benefits provide value to customers by satisfying their needs
Deciding on a position requires: 1. Choosing a frame of reference by identifying the target market and
relevant competition, 2. Identifying the optimal points-of-parity and points-of-difference brand associations
given that frame of reference, and 3. Creating a brand mantra summarizing the positioning and essence of
the brand
o Choosing a competitive frame of reference
Competitors-companies that satisfy the same customer need
o Points-of-Difference
3 criteria determining whether a brand association can truly function as a point-of-difference
Desirable to consume- consumers must see the brand association as personally relevant to them
Deliverable by the company- company must have the internal resources and commitment to
feasibly and profitably create and maintain the brand association in the minds of consumers
Differentiating from competitors- consumers must see the brand association as distinctive and
superior to relevant competitors
o Points-of-Parity
Category points-of-parity are attributes or benefits that consumers view as essential to legitimate and
credible offering within a certain product or service category (they represent necessarybut not sufficient
conditions for brand choice. They can change over time
Correlational points-of-parity-potentially negative associations that arise from the existence of positive
associations for the brand
Competitive points-of-parity-associations designed to overcome perceived weaknesses of the brand in light
of competitors points-of-difference
o Two options for multiple frames of reference-1. Develop the best possible positioning for each type or class of
competitors and see whether there is a way to create one combined position robust enough to effectively address
them all. 2. If there are many competitors, may be useful to either develop the positioning at the categorical level for
all relevant categories or with an exemplar from each category
o Straddle positioning-the points-of-difference for one category become points-of-parity for the other and vice versa.
Allows brands to expand their market coverage and potential customer base
o Leverageable advantage is one that a company can use as a springboard to new advantages
o Brand attributes generally play more of a supporting role by providing reasons to believe or proof points as to
why a brand can credibly claim it offers certain benefits
o Means of differentiation- any product or service benefit that is sufficiently desirable, deliverable, and differentiation
can serve s a point-of-difference for a brand
o Perceptual maps-visual representations of consumer perceptions and preferences. Provide quantitative pictures of
market situation and the way consumers view different products, services, and brands along various dimensions
o Brand Mantras
o

MARKETING TEST 3
3-5 word articulation of the heart and soul of a brand and is closely related to other branding concepts like
brand essence and core brand promise
Provide guidance about what products to introduce under the brand, what ad campaigns to run, and where
and how to sell the brand- what brand is and what the brand is not
Must communicate (clarify what is unique about the brand), simplify (short and memorable), and inspire
(stake out ground that is personally meaningful and relevant to as many employees as possible)

CHAPTER 11: CREATING BRAND EQUITY

Definitions:
o Brand- a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services
of one seller or group of sellers and to differentiate them from those of competitors
o Branding- endowing products and services with the power of a brand
o Brand equity- the added value endowed to products and services
o Customer-based brand equity- the differential effect that brand knowledge has on a consumer response to the
marketing of that brand
o Brand knowledge- all the thoughts, feelings, images, experiences, beliefs, and so on, that become associated with
the brand
o Brand promise- the marketers vision of what the brand must be and do for consumers
o Brand elements- those trademarkable devices that serve to identify and differentiate the brand such as a brand
name, logo, or character
o Brand contact- any information-bearing experience a customer or prospect has with the brand, the product
category, or the market that relates to the marketers product or service
o Integrated marketing- mixing and matching marketing activities to maximize their individual and collective efforts
o Internal branding- activities and processes that help to inform and inspire employees
o Brand audit- a consumer-focused exercise that involves a series of procedures to assess the health of the brand,
uncover its sources of brand equity, and suggest ways to improve and leverage its equity
o Brand-tracking studies- quantitative data collected from consumers over time to provide consistent, baseline
information about how brands and marketing programs are performing
o Brand valuation- an estimate of the total financial value of the brand
o Brand strategy (brand architecture)- the number and nature of common and distinctive brand elements applied to
the different products sold by the firm
o Brand extension- a companys use of an established brand to introduce a new product
o Sub-brand- a new brand combined with an existing brand
o Parent brand- an existing brand that gives birth to a brand extension
o Master brand (family brand)- situation in which the parent brand is already associated with multiple products
through brand extensions
o Line extension- the parent brand is used to brand a new product that targets a new market segment within a product
category currently served by the parent brand
o Category extension- using thee parent brand to brand new product outside the product category currently served by
the parent brand
o Brand line- all products, original as well as line and category extensions, sold under a particular brand name
o Brand mix- the set of all brand lines that a particular seller makes available to buyers
o Branded variants- specific brand lines uniquely supplied to different retailers or distribution channels
o Licensed product- one whose brand name has been licensed to other manufactures who actually make the product
o Brand portfolio- the set of all brands and brand lines a particular firm offers for sale to byers in a particular
category
o Brand dilution- when consumers no longer associate a brand with a specific product or highly similar products or
start thinking less favorably about the brand
o Customer equity- the sum of lifetime values of all customers
Summary
o A brand is a name, term, sign, symbol, design, o some combination of these elements, intended to identify the goods
and services of one seller or group of sellers and to differentiate them from those competitors. The different
components of a brandbrand names, logos, symbols, package designs, and so onare called brand elements
o Brands are valuable intangible assets that offer a number of benefits to customers and firms and need to be managed
carefully. The key to branding is that consumers perceive differences among brands in a product category
o Brand equity should be defined in terms of marketing effects uniquely attributable to a brand. That is, different
outcomes result when a product or service is marketed under its brand than when it is not.

o
o

o
o

MARKETING TEST 3
Building brand equity depends on three main factors: 1) the initial choices for the brand elements or identities
making up the brand, 2) the way the brand is integrated into the supporting marketing program, 3) the associations
indirectly transferred to the brand by links to some other entity (the company, country of origin, channel of
distribution, or another brand)
Brand audits measure where the brand has been, and tracking studies measure where the brand is now and
whether marketing programs are having the intended effects
A branding strategy identifies which brand elements a firm chooses to apply across the various products it sells. In a
brand extension, a firm uses an established brand name to introduce a new product. Potential extensions must be
judged by how effectively they leverage existing brand equity to a new product, as well as how effectively they
contribute to the equity of the parent brand in turn.
Brands may expand coverage, provide protection, extend an image, or fulfill a variety of other roles for the firm.
Each brand-name product must have a well-defined positioning to maximize coverage, minimize overlap, and thus
optimize the portfolio
Customer equity is a concept that is complementary to brand equity and reflects the sum of lifetime values of all
customers for a brand

CHAPTER 12: ADDRESSING COMPETITION AND DRIVING GROWTH

Summary
o Growing the core or seeking organic growthfocusing on opportunities with existing products and marketsis
often a prudent way to increase sales and profits
o A market leader has the largest market share in the relevant product market. To remain dominant, it looks to expand
total demand and protect and perhaps increase its current share
o A market challenger attacks the market leader and other competitors in an aggressive bid for more market share.
There are five types of general attack and specific attack strategies
o A market follower is a runner-up firm willing to maintain its market share and not rock the boat. It can be a cloner,
imitator, or adapter
o A market nicher serves small market segments ignored by larger firms. The key is specialization, which can
command a premium price in the process
o Companies should maintain a good balance of consumer and competitor monitoring and not overly focus on
competitors
o Technologies, product forms, and brands exhibit life cycles with distinct stages, usually introduction, growth,
maturity, and decline. Most products today are in the maturity stages
o The introduction stage is marked by slow growth and minimal profits. If successful, the product enters a growth
stage marked by rapid sales growth and increased profits. In the maturity stage, sales growth slows and profits
stabilize. Finally, the product enters a decline stage. The companys task is to identify truly weak products and phase
them out with minimal impact on company profits, employees, and customers
o Like products, markets evolve through stages: emergence, growth, maturity, and decline
o In a slow-growth economy, marketers must explore the upside of increasing investments, get close to customers,
review budge allocations, put forth the most compelling value proposition, and fine-tune brand and product offerings