4 Ps, positioning, segmentation, targeting, augmented product theory, product life-cycle theory, differences

between product and brands, differences between B2B and B2C markets, customer needs, and customer
satisfaction.

Degrees of Segmentation
-Mass marketing: An attempt to sell the same thing to a wide range of customers: often
cheap,
but can as well be expensive (e.g., in advertising).
-Market segmentation: Dividing a market into distinct groups of buyers with different needs
and behavior who might require separate products or programs.
-Niche marketing: A segment of a segment with very specialized interests or lifestyles which
allows for profitable business under certain conditions.
-customized marketing: Serving each customer individually.
-Mass customization: Utilizing techniques that allow for choosing ingredients/parts to
produce
custom designed goods.

B2C and B2B markets use many of the same variables for segmentation. Yet, B2B marketers may also
use:
 Operating characteristics and type of industry
 Purchasing approaches and degree of customization necessary
 Situational factors, order size, product usage
 Personal characteristics of the decision-making unit
Segmenting International Markets:
 Geographic location
 Economic factors
 Political and legal factors
 Cultural factors
Intermarket segmentation:
 Segments of consumers who have similar needs and buying behavior even
though they are located in different countries.

Value for customers: Market perceived quality adjusted for the relative price of products/services
Value of customers (also customer lifetime value): profits made with an average customer over an
average retention period → important but not sufficient to achieve the former customer value

B2C vs. B2B marketing,

Businesses that Sell to Consumers
Product /transaction driven
Maximize the value of the transaction
Large target market
Single step buying process, shorter sales cycle
Brand identity created through repetition and imagery
Merchandising and point of purchase activities
Emotional buying decision based on status, desire, or price
Businesses that Sell to Businesses
Relationship driven
Maximize the value of the relationship
Small, focused target market
Multi‐step buying process, longer sales cycle
Brand identity created on personal relationship
Educational and awareness building activities
Rational buying decision based on business value
Products are mostly more complicated
industrial products are often expensive products- customer
has a significantly higher risk of making a wrong decision
Product Life Cycle
The Product Life Cycle ( PLC ) is an important concept in marketing that provides insights into a
product’s competitive dynamics. The PLC portrays distinct stages in the sales history of a product.

Practically, it should help the marketer with decisions like

• when has a product to be supported by marketing?
• when should it be eliminated?
• when can sufficient return on investment be expected?

Basic Assumptions about the Product Life Cycle:

 All products and offerings have a limited life
 All products pass through different stages of evolution
 For each stage, there is an idealized marketing mix that best fits the environment in that stage
 Different stages offer different opportunities and threats – segmentation and targeting should
reflect the changes
 Profits vary over the product life cycle

How Can You Determine Where an Offering Is in the PLC?

 Develop and review trend information for the past 3‐5 years or business cycles.
 Examine changes in the number and nature of competitors.
 Review short‐term competitive tactics – are competitors pricing to utilize new capacity or
improve short term sales volume?
  Are new product introductions aimed at segments currently served by existing offerings?
 Will a competitor innovate your organization out of business?

Knowing where you are in the PLC

• gives you a “conventional wisdom” for marketing strategy
• reduces the vast number of alternative strategies

PLC: Development Stage

Continuous period between development and introduction
• No sales volume
• Product is not yet completely defined
• Profits do not exist
• Price/value are being determined
• Promotion may be oriented towards publicity about technological developments
• Heavy investment to prepare the offering that satisfies customer needs

PLC: Introduction Stage

• Low sales volume
• Product is some what basic
• Profits are typically negative
• Price/value are being determined
• Promotion is used to build awareness
• If offering elements are outsourced or reside in a first‐time value network, the logistical process
experiences a learning curve

PLC: Growth Stage

• Profits increase, new adopters and pragmatists accept product
• Market penetration pricing
• Product differentiation is important
• Distribution is often important in the training and education of customers
• Product acceptance by pragmatists and the need for differentiation
• Significant changes from economies of scale when crossing
the chasm

PLC: Maturity Stage

• Profits have peaked
• Promotion reinforces buyer decisions and focuses on supplier reputation and value
• Remaining major players compete in an oligopoly
• Distribution serves market sub‐segments
• Price is a major component of the marketing mix
• New customers do not replace sales volumes as old customers move to newer products

PLC: Decline Stage

• Consolidation usually occurs among suppliers
• Product line is reduced to minimize product variation
• Promotion reduced to minimal levels to accommodate existing customers
• Price in relation to long‐term contracts is a major part of the marketing mix

Criticism of PLC
• theoretical and not useful
• you can’t predict how long the cycle will stretch
• you can’t tell where you are until you’ve been there
• there are no criteria to separate the phases
• external influences can influence the cycle strongly
• lacking evidence (!)
• self‐fulfilling prophecy