Principles of Marketing

Customer-Driven Marketing Strategy: Creating Value for Target Customers

Marketing

 Marketing is a form of communication between you and your customers with the goal of selling
your product or service to them.

 Communicating the value of your product or service is a key aspect of marketing.

 Segmentation

Act of dissecting the marketplace into submarkets that require different marketing mixes

 Targeting

Process of reviewing market segments and deciding which one(s) to pursue

 Positioning

Establishing a differentiating image for a product or service in relation to its competition

Market Segmentation

Market segmentation is the process that companies use to divide large heterogeneous markets
into small markets that can be reached more efficiently and effectively with products and services that
match their unique needs.

Segmenting Consumer Markets

• Geographic

• Demographic

• Psychographic

• Behavioral

1. Geographic segmentation divides the market into different geographical units such as nations,
regions, states, counties, or cities
2. Demographic segmentation divides the market into groups based on variables such as age,
gender, family size, family life cycle, income, occupation, education, religion, race, generation,
and nationality.
Demographic segmentation is the most popular segmentation method because consumer needs, wants,
and usage often vary closely with demographic variables and are easier to measure than other types of
variables.

a. Age and life-cycle stage segmentation is the process of offering different products or using
different marketing approaches for different age and life-cycle groups
b. Gender segmentation divides the market based on sex (male or female)
c. Income segmentation divides the market into affluent or low-income consumers.

3. Psychographic segmentation divides buyers into different groups based on social class, lifestyle,
or personality traits
4. Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses,
or responses to a product

• Occasion

• Benefits sought

• User status

• Usage rate

• Loyalty status

a. Occasion segmentation divides buyers into groups according to occasions when they get the
idea to buy, actually make purchases, or respond to a product
b. Benefit segmentation requires finding the major benefits people look for in the product class,
the kinds of people who look for each benefit, and the major brands that deliver each benefit
c. User status divides buyers into ex-users, potential users, first-time users, and regular users of a
product
d. Usage rate divides buyers into light, medium, and heavy product users
e. Loyalty status divides buyers into groups according to their degree of loyalty

Segmenting international markets

• Geographic location

• Economic factors

• Political and legal factors

• Cultural factors

Inter market segmentation divides consumers into groups with similar needs and buying behaviors even
though they are located in different countries.
Requirements for Effective Segmentation

To be useful, a market segment must be:

• Measurable

• Accessible

• Substantial

• Differentiable

• Actionable

Market Segmentation

Requirements for Effective Segmentation

Measurable examples include the size, purchasing power, and profiles of the segments

Accessible refers to the fact that the market can be effectively reached and served

Substantial refers to the fact that the markets are large and profitable enough to serve

Differentiable refers to the fact that the markets are conceptually distinguishable and respond
differently to marketing mix elements and programs

Actionable refers to the fact that effective programs can be designed for attracting and serving the
segments
 MARKETING MIX Formatted: Font: Bold
Formatted: Centered
The marketing mix is one of the most famous marketing terms. The marketing mix is the tactical or
operational part of a marketing plan.

The marketing mix is also called the 4Ps.

• The 4Ps are : Formatted: Font: Bold

 Price

 Place

 Product

 Promotion

• The services marketing mix is also called the 7Ps includes the addition of:

 Process

 People

 Physical Environment

PRICE

Amount of money in exchange for the goods and services.

It is the value needed to obtain satisfaction.

In pricing the merchandise, consider the following factors:

• 1. SEASON

• 2. BENEFITS DERIVED FROM THE GOODS AND SERVICES.

• 3. COST OF GOODS

• 4. COMPETITION

• 5. PROFITABILITY OF THE PRODUCT

 PROMOTION

• Promotion is the function of informing, persuading, and influencing a purchase decision.

Promotional mix

• combination of personal and non-personal selling techniques designed to achieve promotional

objectives.

• Personal selling - interpersonal promotional process involving a seller’s face-to-face

presentation to a prospective buyer.

• Nonpersonal selling - advertising, sales promotion, direct marketing, and public relations.

• Consumers receive 5,000 marketing messages each day.

• Firms need to be more and more creative and efficient at getting consumers’ attention.

Advertising

paid nonperson communication delivered through various media and designed to inform,
persuade, or remind members of a particular audience.

• Product advertising - messages designed to sell a particular good or service.

• Institutional advertising - messages that promote concepts, ideas, philosophies, or goodwill for
industries, companies, organizations, or government entities.

• Cause advertising - institutional messaging that promotes a specific viewpoint on a public issue
as a way to influence public opinion and the legislative process.

TYPE OF ADVERTISING

Television

• Easiest way to reach a large number of consumers.

• Most expensive advertising medium.

Newspapers

• Dominate local advertising.

 • Relatively short life span.

Radio

• Commuters in cars are a captive audience.

• Satellite radio offers new opportunities.

Online and Interactive Advertising

• Viral advertising creates a message that is novel or entertaining enough for consumers to
forward it to others, spreading it like a virus.

Sponsorship

• Providing funds for a sporting or cultural event in exchange for a direct association with the
event.

• Other Media Options

• Marketers look for novel ways to reach customers: infomercials, ATM receipts, directory
advertising.