33 Marketing Notes

8/8/2019 33 Marketing Notes

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VALS

Marketers use VALS to understand why consumers make the choices they do. The moremarketers know about the target, the better they can design messages that resonate withthe target. By using VALS to understand the motivations that stimulate consumer behavior(such as buying a product or participating in a loyalty program), marketers increase their

chance of cutting through today's advertising clutter. VALS - short for values andlifestyles - is a way of viewing people on the basis of their attitudes, needs, wants, beliefs,and demographics.Descriptions of the VALS types:

y Innovators

y Thinkers

y Achievers

y Experiencers

y Believers

y Strivers

y Makers

y Survivors

VALS is a marketing and consulting tool that helps businesses worldwide develop andexecute more effective strategies. The system identifies current and future opportunitiesby segmenting the consumer marketplace on the basis of the personality traits that driveconsumer behavior. VALS applies in all phases of the marketing process, from new-product development and entry-stage targeting to communications strategy andadvertising.The basic tenet of VALS is that people express their personalities throughtheir behaviors. VALS specifically defines consumer segments on the basis of thosepersonality traits that affect behavior in the marketplace. Rather than looking at whatpeople do and segregating people with like activities, VALS uses psychology to segmentpeople according to their distinct personality traits. The personality traits are themotivationthe cause. Buying behavior becomes the effectthe observable, externalbehavior prompted by an internal driver.VALS reflects a real-world pattern that explains

the relationship between personality traits and consumer behavior. VALS usespsychology to analyze the dynamics underlying consumer preferences and choices. VALSnot only distinguishes differences in motivation, it also captures the psychological andmaterial constraints on consumer behavior.VALS is based on current personality researchinto specific components of social behavior. VALS asserts that people express theirpersonalities through their behaviors. People with different personalities engage indifferent behaviors or exhibit similar behaviors for different reasons.APPLICATIONS: COMMERCIALISATION:VALS facilitates successful product launchesand helps avoid costly mistakes. Understanding the needs of different consumer groupsguides new product and services development.POSITIONING:VALS identifies which market opportunities are strongest. Relating featuresand benefits to distinct segment needs clarifies strategies for targeting and expansion.COMMUNICATIONS:

VALS shows you how to craft more effective messaging campaigns. Understanding whatmotivates consumers illuminates how to speak to them in ways that will initiate action.


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PRIVATE LABELS

Private label products orservices are typically those manufactured or provided by onecompany for offer under another company'sbrand. Private label goods and services areavailable in a wide range of industries from food to cosmetics to web hosting. They areoften positioned as lower cost alternatives to regional, national or international brands,although recently some private label brands have been positioned as "premium" brands tocompete with existing "name" brands.Private labels serve many purposes.

y Exclusivity and Differentiation to retailers.

y Plugging a need gap -- for instance, Big Bazaar's label DreamLine is aimed atproviding shoppers the entire gamut of home improvement solutions under onebrand.

y Retailers are also spurred to launch private labels given the low penetration ofmost categories in India.

y Then there is the aspect of supply chain efficiencies.

y Private labels also help in cutting down on intermediaries

y Dropping cost

y Better margins for retailersy More customer discounts

EXAMPLE: Big Bazaar: DreamLine, Kryo, Pure, Premium Harvest, Tasty Treat,Clean Mateand Care Mate

SEGMENTATION

Segmentation is essentially the identification of subsets of buyers within amarket who share similar needs and who demonstrate similar buyer behavior.The world is made up from billions of buyers with their own sets of needs andbehavior. Segmentation aims to match groups of purchasers with the sameset of needs and buyer behavior. Such a group is known as a 'segment'. Think

of you r market as an orange, with a series of connected but distrinctivesegments, each with their own profile.Segmentation is a form of critical evaluation rather than a prescribed process orsystem, and hence no two markets are defined and segmented in the same way.However there are a number of underpinning criteria that assist us withsegmentation:Is the segment viable? Can we make a profit from it?

y Is the segment accessible? How easy is it for us to get into the segment?

y Is the segment measurable? Can we obtain realistic data to consider its potential?

The are many ways that a segment can be considered. For example, the automarket could be segmented by: driver age, engine size, model type, cost, and soon. However the more general bases include:

y by geography - such as where in the world was the product bought.

y by psychographics - such as lifestyle or beliefs.

y by socio-cultural factors - such as class.

y by demography - such as age, sex, and so on.


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A company will evaluate each segment based upon potential business success.Opportunities will depend upon factors such as: the potential growth of the segmentthe state of competitive rivalry within the segment how much profit the segment willdeliver how big the segment is how the segment fits with the current direction of thecompany and its vision.

A Market segment is a subgroup of people or organizations sharing one or more

characteristics that cause them to have similar product needs.

Market segmentation is the process in marketing of dividing a market into distinct subsets

(segments) that behave in the same way or have similar needs. Because each segment isfairly homogeneous in their needs and attitudes, they are likely to respond similarly to a

given marketing strategy. That is, they are likely to have similar feelings and ideas abouta marketing mix comprised of a givenproduct orservice, sold at a givenprice,

distributed in a certain way andpromoted in a certain way.

Broadly, markets can be divided according to a number of general criteria, such as by

industry or public versus private sector. Small segments are often termed niche marketsor specialty markets. However, all segments fall into either consumer or industrial

markets. Although industrial market segmentation is quite different from consumermarket segmentation, both have similar objectives.

The process of segmentation is distinct from targeting (choosing which segments to

address) andpositioning (designing an appropriate marketing mix for each segment). Theoverall intent is to identify groups of similar customers and potential customers; to

prioritize the groups to address; to understand their behaviour; and to respond withappropriate marketing strategies that satisfy the different preferences of each chosen

segment. Revenues are thus improved.

Improved segmentation can lead to significantly improved marketing effectiveness. With

the right segmentation, the right lists can be purchased, advertising results can beimproved and customer satisfaction can be increased.

Requirements for a successful segment

y homogeneity within the segment

y heterogeneity between segments

y segments are measurable and identifiabley segments are accessible and actionabley segment is large enough to beprofitable

These criteria can be summarized by the word DAMAS:

y D Differential: it must respond differently to a different marketing mix

y A Actionable: you must have a product for this segment to be accured


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y M Measurable: size and purchasing power can be measuredy A Accessible: it must be possible to reach it efficiently

y S Substantial: the segment has to be large and profitable enough

The variables used for segmentationinclude:

y Geographic variables

o region of the world or country, East, West, South, North, Central, coastal,hilly, etc.

o country size/country size : Metropolitan Cities, small cities, towns.o Density of Area Urban, Semi-urban, Rural.

o climate Hot, Cold, Humid, Rainy.y Demographic variables

o ageo genderMale and Female

o sexual orientationo family sizeo family life cycleo Education Primary, High School, Secondary, College, Universities.

o incomeo occupation

o educationo socioeconomic status

o religiono nationality/race (ethnic marketing)

o languagey Psychographic variables

o personalityo life style

o valueo attitude

y Behavioural variableso benefit sought

o product usage rateo brand loyalty

o product end useo readiness-to-buy stage

o decision making unit

o profitabilityo income status

When numerous variables are combined to give an in-depth understanding of a segment,this is referred to as depth segmentation. When enough information is combined to

create a clear picture of a typical member of a segment, this is referred to as a buyer

profile. When theprofile is limited to demographic variables it is called a demographic


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profile (typically shortened to "a demographic"). A statistical technique commonly usedin determining a profile is cluster analysis.

Targetmarket is, the market segment to which a particular product is marketed. It's

often defined by age, gender, geography, and/orsocio-economic grouping.

Targeting strategy ortargeting is the selection of the customers you wish to service.The decisions involved in targeting strategy include:

y which segments to targetingy how many products to offer

y which products to offer in which segments

There are three steps to targeting:

y market segmentationy

target choicey productpositioning

Targeting strategy decisions are influenced by:

y market maturity

y diversity of buyers' needs and preferencesy strength of the competition

y the volume of sales required for profitability

Targeting can be selective (eg.: focus strategy, market specialization strategy orniche

strategy), or extensive (eg.: full coverage, mass marketing, orproduct specialization).

In marketing, positioning has come to mean the process by which marketers try to createan image or identity in the minds of their target market for itsproduct,brand, or

organization. It is the 'relative competitive comparison' their product occupies in a givenmarket as perceived by the target market.

Re-positioning involves changing the identity of a product, relative to the identity of

competing products, in the collective minds of the target market.

De-positioning involves attempting to change the identity of competing products,

relative to the identity of your own product, in the collective minds of the target market.

For many a product is simply the tangible, phsysical entity that they may bebuying or selling. You buy a new car and that's the product - simple! Ormaybe not. When you buy a car, is the product more complex than you firstthought? In order to actively explore the nature of a product further, letsconsider it as three different products - the CORE product, the ACTUALproduct, and finally the AUGMENTED product.These are known as the 'Three Levels of a Product.' So what is the differencebetween the three products, or more precisely 'levels?'


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The CORE product is NOT the tangible, physical product. You can't touch it.That's because the core product is the BENEFIT of the product that makes itvaluable to you. So with the car example, the benefit is convenience i.e. theease at which you can go where you like, when you want to. Another corebenefit is speed since you can travel around relatively quickly.

The ACTUAL product is the tangible, physical product. You can get some useout of it. Again with the car example, it is the vehicle that you test drive, buyand then collect.The AUGMENTED product is the non-physical part of the product. It usuallyconsists of lots of added value, for which you may or may not pay apremium. So when you buy a car, part of the augmented product would bethe warranty, the customer service support offered by the car's manufacture,

and any after-sales service.

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33 Marketing Notes