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Chapter 7

Chapter 7. Competition is Everywhere. A market segment is a group of individuals or organizations within a larger market that share one or more important characteristics.

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Chapter 7

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  1. Chapter 7 Competition is Everywhere

  2. A market segment is a group of individuals or organizations within a larger market that share one or more important characteristics. • Market segmentation is the process of dividing a large group of consumers into subgroups based on specific characteristics and common needs. • Mass marketing directs a company’s marketing mix at a large and heterogeneous group of customers. All customers are considered potential customers. Market Segmentation Frameworks 5.6

  3. Each person can be a part of more than one market segment. • Businesses use marketing information and market research to complete market segmentation. • Most products are sold using market segmentation. • Companies that use the marketing concept will use market segmentation. • Mass marketing might allow greater sales volume and some cost savings, but it is not usually as effective as a segmentation strategy. Market Segmentation Frameworks 5.5

  4. Oil Companies tend to use Mass Marketing Mass Marketing Frameworks 5.6

  5. Soft drinks tend to be mass marketed Mass Marketing Frameworks 5.6

  6. Soft drink companies also use market segmentation Market Segmentation http://en.wikipedia.org/wiki/List_of_Coca-Cola_brands Frameworks 5.6

  7. Segmentation categories • Geographic segmentation • Demographic characteristics • Psychographics • Product usage • Benefit expectations Market Segmentation Categories Frameworks 5.5

  8. Geographic market segmentationis based on the concept that people who live in the same geographic area might have the same needs and wants. Market Segmentation Frameworks 5.5

  9. What is the BEST state in the United States for bratwurst sales? Market Segmentation The population of Wisconsin is 42.6% of German ancestry. Frameworks 5.5

  10. Demographic market segmentation consists of dividing the market based on age, gender, race, income level, ethnicity, educational attainment level, or religious affiliation. Market Segmentation Frameworks 5.5

  11. Demographic Characteristics of Education and Income

  12. Examples of Gender and Age segmentation Market Segmentation

  13. Psychographic market segmentation is based on people’s interests and values. • This is directly related to lifestyles and social interests. Market Segmentation Frameworks 5.5

  14. Psychographic market segmentation … Market Segmentation Professional game player Jonathan Wendel of St. Louis, MO goes by the handle Fatal1ty. Frameworks 5.5

  15. Product usage segmentation refers to how often a consumer uses a product and/or the amount used. Market Segmentation

  16. Segmentation based on benefit expectations divides consumers into groups based on the benefit they expect from the product. Market Segmentation

  17. The business market can also be segmented. Market Segmentation

  18. Video: Jonathan Wendel Professional game player Jonathan Wendel of St. Louis, Missouri goes by the handle Fatal1ty.

  19. A market opportunity is an identified market with excellent potential based on careful research. • Market potential is the total revenue that can be obtained from the market segment. • Target markets should be selected from the segments that have the greatest potential. Identifying and AnalyzingMarket Segments

  20. Identifying and AnalyzingMarket Segments One method of positioning a product is to associate a personality or type of user with the product.

  21. One method of positioning a product is to associate a personality or type of user with the product.

  22. If the market potential for gasoline sales in one community is $10,385,990 and one convenience store has a market share of 8%, the value of its gasoline sales is … Identifying and AnalyzingMarket Segments $830,879.20

  23. Number of potential customers • Interest in the product or service and other mix elements • Money available to make the purchase • Ability to communicate with and distribute product to consumers Determining Market Potential

  24. Whether you call them "echo boomers," "Generation Y" or "millennials," they already make up nearly a third of the U.S. population, and already spend $170 billion a year of their own and their parents' money. Born between 1982 and 1995, there are nearly 80 million echo boomers, and they’re already having a huge impact on entire segments of the economy. Video: Echo Boomers

  25. Market Share Market share is a firm’s percentage of the total sales volume generated by all competitors in a given market. “In a sign of Apple's continued dominance of the market for hard drive-based portable players, research company NPD has claimed that the iPod now accounts for 82% of the US retail market, compared to 64% 12 months ago.”

  26. Market Position Market position refers to the unique image of a product or service in a consumer’s mind relative to similar competitive offerings. “McDonald’s continues to be the fast food restaurant leader with international sales totaling $14 billion.”

  27. Market Positioning The image a product projects. The Buckle Wrangler Jeans $ 17.99 Lucky Brand Sonic Wonder Jean$ 96

  28. The various bases for positioning a product to distinguish it from the competition. • Attribute – “whiter teeth” • Price and quality – “lowest price” or “best quality” • Use or application – Arm & Hammer baking soda • Product user – “The Pepsi Generation” • Product classification – “Pork: The Other White Meat” • Competitor – “Apple is better than a PC” Product Positioning for Competitive Advantage

  29. Use or application – Arm & Hammer baking soda Product Positioning for Competitive Advantage

  30. Product user – “The Pepsi Generation” Product Positioning for Competitive Advantage

  31. Consumer perceptions are the images consumers have of competing goods and services in the marketplace. • Competition – a business wants to be considered superior to their competitors. • Business environment – businesses must pay attention to changes in the business environment – emphasis on green marketing, new technology, negative publicity, or concerns about health issues. Selecting a Positioning Strategy

  32. One method of positioning a product is to associate a personality or type of user with the product. • The type of competition faced by a business will affect it positioning. Selecting a Positioning Strategy

  33. Positioning based on a direct competitor Selecting a Positioning Strategy Justin Long is how old? 31

  34. Direct vs. Indirect Competition Competing for Market Segments Direct competition occurs with businesses that offer the same type of product or service.

  35. Direct vs. Indirect Competition Indirect competition occurs when a business competes with other companies offering products that are not in the same category but satisfy a similar need. Competing for Market Segments

  36. Price vs. non-price competition Price competition is a rivalry among businesses on the basis of price and value. Competing for Market Segments Frameworks 5.4.2 Chapter 7

  37. Price vs. non-price competition Competing for Market Segments Non-price competition occurs when businesses decide to emphasize factors of their marketing mix other than price. Frameworks 5.4.2

  38. Market intelligence is the process of gaining competitive market information. • Information Sources • Salespeople and other employees • Analysis of competitors’ products. • Articles, research reports, and public information • Professional and trade publications • Customers and customer records • Trade shows – exhibitions where companies associated with an industry gather to showcase their products. • The Internet • Ethics in information gathering – stealing proprietary information is unethical and can be illegal. A business can’t bribe the employee of another business in order to get confidential information. Collecting Competitive Information

  39. Competition forces businesses to offer reasonable prices for the products and services that consumers use. • Competition encourages improvements in products with the addition of unique features and benefits. • Businesses are always looking for new and improved products to match their competition. • Competition offers consumers the benefit of a wide variety of products from which to choose. Benefits of Competition

  40. Bill Gates is an entrepreneur and chairman of Microsoft, the software company he founded with Paul Allen. He is ranked by Forbes magazine as the wealthiest man in the world with a net worth of over $50 billion. Who is Bill’s BIGGEST competitor?

  41. Larry Ellisonis an entrepreneur and founder of the Oracle Corporation, a major software company. He is listed on the Forbes list of billionaires as the fourth richest person in the world. Video: The most competitive man in the world.

  42. Chapter 8 E-Commerce and Virtual Marketing

  43. E-commerce involves business activities, including the exchange of goods services, and information, completed electronically via the Internet. • A click-only business completes almost all of its activities through the Internet. • A brick-and-mortar business completes most of its activities by means other than the internet. They rely on actual buildings and/or retail stores. • A brick-and-click business is a company that combines traditional business operations with the use of the Internet. What is E-Commerce?

  44. Stages of development • Informationstage – the business’s website just provides information to prospective customers. • Interactionstage – the website begins to offer a method of interaction with customers, usually via e-mail. • Full integration stage – the website will allow customers to get all the information needed to select, order, pay for, track, and if needed, return their purchases. Example: Amazon.com Stages of E-commerce Development

  45. Instant communication with computers, and wireless devices. • Instant research information for the business. • Open for business 365 days a year, 24 hours a day. • Development of new products. Example: The E-ticket for concerts and airlines. • Ease of competition and entering of new markets. Advantages of E-commerce

  46. Cost Savings Average Cost Savings for Businesses when Customers Use the Internet to Make Purchases

  47. Customers might not know exactly what they are getting. • Difficult to return purchases. • Lack of personal interaction. • Difficult to predict demand due to the constant change in consumer behavior. Disadvantages of E-commerce

  48. The internet was first developed in the 1950’s as a military and research tool. • E-commerce did not begin until 1991 with the introduction of the World Wide Web. • Approximately one billion people around the world can access the internet. • The United States has 211 million users, or 21%, of the world’s internet users. This has decreased from 50% ten years ago. • China’s internet users have tripled in 4 years, but still reaches only 10% of the population. Growth of the Internet

  49. The development of the personal computer in the late 1970’s eventually allowed for the development of e-commerce. Bill Gates is credited with creating the software needed for operating millions of personal computers. But … who actually CREATED the first real personal computer??

  50. Steve Wozniak (along with Steve Jobs) is credited with creating the FIRST personal computer marketed to average consumers.

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