Chapter 6 - Creating Value for Target Customer

Question 1

target market

Answer 1

a set of buyers sharing common needs or characteristics that the company decides to serve

Question 2

4 ways to create value for target customers (2 main ways with 2 terms each)

Answer 2

Select Customers to Serve:

• segmentation
• targeting

Decide on a value proposition:

• differentiation
• positioning

Question 3

Any marketing strategy must be consistent with … and be based on …

Answer 3

• the firm’s mission statement

- current assessments from a SWOT analysis

Question 4

4 segmentation methods (with examples)

Answer 4

• geographic segmentation (nations, regions, cities)
• demographic segmentation (age, gender, income, ethnicity)
• psychographic segmentation (lifestyle, personality)
• behavioral segmentation (benefit, loyalty)

Question 5

define psychographic segmentation

Answer 5

Divides a market into segments based on how people spend their time and what they perceive important in life (self concept/ideal self, and lifestyle)

Question 6

pro and con of psychographic segmentation

Answer 6

Pro - More useful to predict consumer behavior than demographics

Con - More expensive to identify consumers

Question 7

benefit segmentation

Answer 7

• type of behavioral segmentation

- groups consumers on the basis of the benefits they derive from products

Question 8

user status (types)

Answer 8

nonusers, ex-users, potential users, first-time users, and regular users

Question 9

usage status (types)

Answer 9

light, medium, and heavy product users

Question 10

loyalty - why is it good to target these consumers

Answer 10

• Cheaper to keep an existing customer
• Profitable in the long term
• Think 80/20 rule

Question 11

to be useful, market segments must be … (5 things)

Answer 11

• substantial
• measureable
• accessible
• differentiable
• actionable

Question 12

substantial

Answer 12

• Market segment must be large or profitable enough to serve

- assess current size and growth and market competitiveness

Question 13

measurable

Answer 13

Size and purchasing power (income) of market segment can be measured

Question 14

accessible

Answer 14

market segment must be effectively reached and served

Question 15

differentiable

Answer 15

different market segments may respond differently to a firm’s offering

Question 16

actionable

Answer 16

A marketing firm has resources to design and serve with effective marketing mix

Question 17

Since no marketer has sufficient resources to create value for all consumers, what must marketers assess to select a target market?

Answer 17

A marketing firm must assess both the attractiveness of target market and its own competencies carefully

Question 18

competencies

Answer 18

strengths and weaknesses based on a SWOT analysis

Question 19

4 flow chart steps in selecting a target market:

Answer 19

1. undifferentiated (mass marketing)
2. differentiated (segmented) marketing
3. concentrated (niche) marketing
4. micromarketing (local or individual marketing)

Targeting broadly –> targeting narrowly

Question 20

value proposition

Answer 20

The company must decide on the positioning of its product or brand. How it will create differentiated value for the target market and which position it wants to occupy in that market

Question 21

product proposition

Answer 21

the way a product is defined by consumers on important attributes (Can be realized by persuasive communications)

Question 22

6 positioning methods

Answer 22

• Product (Salient attributes, Benefits)
• Price
• People (Customer service)
• Channels (Location, delivery)
• Image (Symbol, Logo)
• Competition

Question 23

4 positioning steps

Answer 23

1. Determine consumers’ perceptions and evaluations of the company’s product in relation to competitors’.
2. Identify a set of competitive advantages of the product on which to build a position.
3. Select the position.
4. Monitor the positioning strategy.

Question 24

How to develop a positioning statement

Answer 24

• A statement that summarizes company or brand positioning using this form: To (target segment and need), our (brand) is (concept) that (point of difference)
• All the company’s marketing mix efforts must support the chosen positioning strategy