Chapter 7

Target marketing includes three activities: market segmentation, market targeting, and market
positioning. Market segments are large, identifiable groups within a market.

Effective Segmentation Criteria

 Measurable. The size, purchasing power, and characteristics of the segments can be
measured.
 Substantial. The segments are large and profitable enough to serve. A segment should be
the largest possible homogeneous group worth going after with a tailored marketing
program. It would not pay, for example, for an automobile manufacturer to develop cars
for people who are less than four feet tall.
 Accessible. The segments can be effectively reached and served
 Differentiable. The segments are conceptually distinguishable and respond differently to
different marketing-mix elements and programs. If married and unmarried women
respond similarly to a sale on perfume, they do not constitute separate segments.
 Actionable. Effective programs can be formulated for attracting and serving the
segments.

Michael Porter has identified five forces that determine the intrinsic long-run
attractiveness of a market or market segment

 Threat of intense segment rivalry: The first of the Five Forces refers to the number of
competitors and their ability to undercut a company. The larger the number of
competitors, along with the number of equivalent products and services they offer, the
lesser the power of a company.
 Threat of new entrants: A company's power is also affected by the force of new
entrants into its market. The less time and money it costs for a competitor to enter a
company's market and be an effective competitor, the more an established company's
position could be significantly weakened.
  Threat of substitute products: The last of the Five Forces focuses on substitutes.
Substitute goods or services that can be used in place of a company's products or services
pose a threat.
 Threat of buyers’ growing bargaining power: A smaller and more powerful client base
means that each customer has more power to negotiate for lower prices and better deals.
A company that has many, smaller, independent customers will have an easier time
charging higher prices to increase profitability.
 Threat of suppliers’ growing bargaining power: The next factor in the Porter model
addresses how easily suppliers can drive up the cost of inputs. The fewer suppliers to an
industry, the more a company would depend on a supplier. As a result, the supplier has
more power and can drive up input costs and push for other advantages in trade.

Evaluating and Selecting the Market Segment

We can target markets at four main levels: mass, multiple-segments, single (or niche) segment,
and individuals.

 A mass market targeting approach is adopted only by the biggest companies who serves
the full market with almost every kind of product. Ex. Amazon, Alibaba.
 Multiple-segment specialization is a marketing strategy that divides your target audience
into multiple groups, which comprise consumers with similar demographics and
preferences.
 A single niche is a more narrowly defined group. With this approach, you select a single
segment to concentrate on. With limited resources, this is a good approach.
 Individual marketing also known as personalized marketing, involves –
 flexibility in any organization
 the ability of a brand to change its behavioral pattern for an individual customer
 to suit its marketing policy keeping in mind the wants of each individual
 taking small baby steps along the way to make the consumer familiar with its
products
 In individual marketing, it is necessary to meet the demands of each person successfully.
Technology has made remarkable advances and has helped in the promotion of individual
marketing.

Chapter 8
Market challenger Strategy

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; challeng- ers must also choose specific
attack strategies.

Market follower Strategy

A market follower is a runner-up firm willing to maintain its market share and not rock the boat.
It can play the role of counterfeiter, cloner, imitator, or adapter...

Market Nicher Strategy

A market nicher serves small market segments not being served by larger firms. The key to
nichemanship is specialization. Nichers develop offerings to fully meet a certain group of
customers' needs, commanding a premium price in the process.

Product Life Cycles

Most product life-cycle curves are portrayed as bell-shaped. This curve is typically divided into
four stages: introduction, growth, maturity, and decline.
1. Introduction— A period of slow sales growth as the product is introduced in the market.
Profits are nonexistent because of the heavy expenses of product introduction.
2. Growth—A period of rapid market acceptance and substantial profit improvement.
3. Maturity—A slowdown in sales growth because the product has achieved acceptance by most
potential buyers. Profits stabilize or decline because of increased competition.
4. Decline—Sales show a downward drift and profits erode.
Marketing Strategies in Product life cycle

Each product life cycle stage calls for different marketing strategies. The introduction is marked
by slow growth and minimal profits. If successful, the product enters a growth stage marked by
rapid sales growth and increasing profits. There follows a maturity stage in which sales growth
slows and profits stabilize. Finally, the product enters a decline stage. The company's task is to
identify the truly weak products, develop a strategy for each, and phase them out in a way that
minimizes impact on company profits, employees, and customers.

Chapter 13
Setting the Price
Step 1 selecting the price objective
Step 2 Determining Demand
Step 3 Estimating Cost
Step 4 Analyzing Competitor’s Costs, prices and offers.
Step 5 Selecting a Pricing Method
Step 6 Selecting the Final Price

Markup pricing: The most elementary pricing method is to add a standard markup to the
product’s cost.

Target-return Pricing: The Target-Return Pricing is a method wherein the price is set for a
product to a desired profit on investment.

Perceived-Value Pricing: Perceived value pricing is that value which customers are willing to
pay for a particular product or service based on their perception about the product.

Value Pricing: Value Pricing used to win loyal customers by charging a fairly low price for a
high-quality offering.

Going-Rate Pricing: In going-rate pricing, the firm bases its price largely on competitors’
prices.

Auction-Type Pricing: it a pricing method of buying and selling goods and services by offering
bids or taking bids, and then selling the item to the highest bidder.
There are three types of Auction-type Pricing

1. English auctions (ascending bids): the seller puts up an item and bidders raise the offer
price until the top price is reached. The highest bidder gets the item.
2. Dutch auctions (descending bids): an auctioneer announces a high price for a product
and then slowly decreases the price until a bidder accepts.
3. Sealed-bid auctions:

Adapting the Price

Companies usually do not set a single price but rather develop a pricing structure that reflects
variations in geographical demand and costs, market-segment requirements, purchase timing,
order levels, delivery frequency, guarantees, service contracts, and other factors. As a result of
discounts, allowances, and promotional support, a company rarely realizes the same profit from
each unit of a product that it sells.

1. Geographical Pricing: In geographical pricing, the company decides how to price its
products to different customers in different locations and countries.
2. Price Discounts and Allowances: Most companies will adjust their list price and give
discounts and allowances for early payment, volume purchases, and off-season buying
3. *** Promotional Pricing:

Companies can use several pricing techniques to stimulate early purchase:

a. Loss-leader pricing. Supermarkets and department stores often drop the price on
well-known brands to stimulate additional store traffic.
b. Special event pricing. Sellers will establish special prices in certain seasons to
draw in more customers. Every August, there are back-to-school sales.
c. Special customer pricing. Sellers will offer special prices exclusively to certain
customers.
d. Low-interest financing. Instead of cutting its price, the company can offer
customers lowinterest financing.
e. Longer payment terms. Sellers, especially mortgage banks and auto companies,
stretch loans over longer periods and thus lower the monthly payments.
 f. Warranties and service contracts. Companies can promote sales by adding a
free or low-cost warranty or service contract.
g. Psychological discounting. This strategy sets an artificially high price and then
offers the product at substantial savings; for example, “Was $359, now $299.”
4. Differentiated Pricing Companies often adjust their basic price to accommodate
differences in customers, products, locations, and so on.