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Essential Reading 3 Abell'S Business Model
Essential Reading 3 Abell'S Business Model
There has been a development in axis with the evolution of industry. Example, Telecom
service evolved to Internet service providers to provide internet gateway to the existing
customer groups. The content service providers (Watsapp, snapchat) emerged and took over the
industry leading to cannibalization of important services such as VAS.
BIBLIOGRAPHY
Abell, Derek F. (1980). Defining the Business: The Starting Point of Strategic Planning.
Prentice Hall. ISBN 9780131978140
COGNITIVE DISSONANCE
This theory centres around the idea that if a person knows various things that are not
psychologically consistent with one another, he will, in a variety of ways, try to make them
more consistent. Two items of information that psychologically do not fit together are said to
be in a dissonant relation to each other. The items of information may be about behaviour,
feelings, opinions, things in the environment and so on. The word "cognitive" simply
emphasizes that the theory deals with relations among items of information. Such items can of
course be changed. A person can change his opinion; he can change his behaviour, thereby
changing the information he has about it; he can even distort his perception and his information
about the world around him. Changes in items of information that produce or restore
consistency are referred to as dissonance-reducing changes. Cognitive dissonance is a
motivating state of affairs. Just as hunger impels a person to eat, so does dissonance impel a
person to change his opinions or his behavior. The world, however, is much more effectively
arranged for hunger reduction than it is for dissonance reduction. It is almost always possible
to find something to eat. It is not always easy to reduce dissonance. Sometimes it may be very
difficult or even impossible to change behavior or opinions that are involved in dissonant
relations. Consequently there are circumstances in which appreciable dissonance may persist
for long periods.
The "product" of the technology may just be a commodity such as the polyethylene plastic or a
sophisticated product like the ICs used in a smartphone.
The development of a competitive product or process can have a major effect on the lifespan
of the technology, making it shorter. Equally, the loss of intellectual property rights through
litigation or loss of its secret elements (if any) through leakages also work to reduce a
technology's lifespan. Thus, it is apparent that the management of the TLC is an important
aspect of technology development.
BIBLIOGRAPHY
Technology Management - Growth & Lifecycle, Shahid kv, Sep 28, 2009, Attribution
Noncommercial
Bayus, B. (1998). An Analysis of Product Lifetimes in a Technologically Dynamic Industry.
Management Science, 44(6), pp.763-775.
PULL MARKETING
DESCRIPTION: A strategic approach where a firm emphasizes marketing activities aimed at
building up consumer demand, thereby prompting consumers to demand the offerings from
intermediaries (e.g. retailers who, in turn, demand the offerings from wholesalers) who, in turn,
demand the offerings from the firm.
KEY INSIGHTS: Pull marketing emphasizes a demand pull (or pull strategy) approach to
marketing, which is where marketing activities such as advertising and consumer promotion
are directed strategically at consumers as a way to encourage them to buy the firm’s offerings,
thereby prompting demand for the firm’s offerings from channel intermediaries such as retailers
and wholesalers—a demand which is then ultimately met by the firm. Pull marketing is in
contrast to push marketing which is where the firm’s marketing is directed at intermediaries
who, in turn, promote the offerings to consumers. (See push marketing.) While pull marketing
strategies may be used by any firm that relies upon intermediaries, such strategies are common
in consumer marketing, where advertising and sales promotions are dominant as a result of
such goods typically being inexpensive or low risk and where there are often many buyers and
sellers in the marketplace. Ultimately, however, many large companies use both pull marketing
and push marketing approaches.
KEY WORDS: Consumer demand, demand creation, advertising, sales promotion
IMPLICATIONS: Marketers in any firm should seek to understand how and to what extent
pull marketing may be used to the firm’s strategic advantage given the characteristics of the
firm’s offerings and the firm’s customers. In many consumer product markets in particular, pull
marketing becomes a prominent strategic approach, but one that is also supplemented by push
marketing. When a consumer products firm engages in push marketing, however, the astute
marketer in such a firm will recognize that it may also involve certain marketing disadvantages,
including diminishing the firm’s efforts to build long-term brand equity that result from more
intensive pull marketing efforts.
BIBLIOGRAPHY
Seddon, John (2000). ‘From “push” to “pull”: Changing the Paradigm for Customer
Relationship Management,’ Journal of Interactive Marketing, 2(1), July, 19–28.
Varadarajan, P. R. (1985). ‘A Two-Factor Classification of Competitive Strategy Variables,’
Strategic Management Journal, 6, 357–375.
PUSH MARKETING
DESCRIPTION: A strategic approach where the firm’s marketing is directed at intermediaries
who, in turn, promote the firm’s offering to consumers.
KEY INSIGHTS: Push marketing emphasizes a supply push (or push strategy) approach to
marketing, which is where marketing activities such as personal selling and trade promotion
are directed strategically at intermediaries as a way to encourage them to buy the firm’s
offerings and subsequently promote them to consumers via advertising, sales promotion, and
other means. Push marketing is in contrast to pull marketing, which is where the firm’s
marketing activities are directed at consumers, thereby prompting demand for the firm’s
offerings from channel intermediaries such as retailers and wholesalers—a demand which is
then ultimately met by the firm. (See pull marketing.) While push marketing strategies may be
used by any firm that relies upon intermediaries, such strategies are common in business-
tobusiness marketing involving industrial goods, where personal selling practices dominate as
a result of such goods being expensive and/or risky and where there may also be relatively few
buyers and sellers. Ultimately, however, many large companies use both pull marketing and
push marketing approaches.
KEY WORDS: Personal selling, trade promotion
IMPLICATIONS: As with pull marketing, marketers in any firm should seek to understand
how and to what extent push marketing may be used to the firm’s strategic advantage given the
characteristics of the firm’s offerings and the firm’s customers. In many business-to-business
markets in particular, push marketing becomes a prominent strategic approach, but one that is
also supplemented by pull marketing. In some cases, push marketing may be relatively more
effective than pull marketing for stimulating short-term sales, but the astute marketer will
recognize the need to consider the long-term implications of either approach as well.
BIBLIOGRAPHY
Achenbaum, A., and Mitchel, F. K. (1987). ‘Pulling away from Push Marketing,’ Harvard
Business Review, May–June, 38–40.
CAUSE BRANDING
The term “Cause Branding” was invented by Carol Cone, the Founder and Director of Cone
Inc., a Boston based PR and Marketing Agency. She defined Cause Branding as “business
strategy that helps an organization stand for a social issue(s) to gain significant bottom line
and social impacts while making an emotional and relevant connection to stakeholders.” This
clearly differentiated Cause Branding as being a long-term association between the brand and
the cause, integrated completely in the brand- related decision making process at higher levels.
Enterprises often confuse their traditional cause-related marketing strategies and acts of
philanthropy with Cause Branding. In reality, Cause branding associates the brand and the
cause supported by the brand in a much deeper way. While Cause Branding can be a long term
strategy of a brand to remain connected with a certain cause, Cause Marketing could be a mere
short term tactic incorporated in the process of Cause Branding in a certain moment
opportunity.
BIBLIOGRAPHY
Prasad, M. V. (2011). Cause Branding and its Impact on Corporate Image. Journal of
Marketing & Communication, 7(1).
STP MARKETING
SEGMENTATION
DESCRIPTION: Dividing a market into distinct groups of buyers who have relatively distinct
behaviors, needs, or other characteristics.
KEY INSIGHTS: Segmentation refers to the process of aggregating customers into groups
based on common characteristics and needs, where they are expected to respond similarly to
marketing actions. Segmentation can be beneficial to the extent the approach provides the
marketer with insights and opportunities to offer one or more distinct market segments a
particular market offering. Offerings corresponding to particular segments may vary in any
number of ways including distinct products or services, or other elements of the marketing mix
such as price, promotion, or distribution. There are many different ways that segmentation may
be performed including:
Age segmentation—a type of demographic segmentation, dividing a market into groups based
on consumers’ ages (e.g. under 18, 18–25, 25–45, 46 and over).
Behavioural segmentation—dividing a market into groups based on consumers’ knowledge,
attitudes, or product or service usage behaviors (e.g. heavy product users, light product users).
Benefit segmentation—dividing a market into groups based on the different gains to be derived
from purchase and consumption (e.g. using a bicycle for fitness versus transportation to and
from work).
Demographic segmentation—dividing a market into groups based on demographic variables
(e.g. age, gender, income, family size, education, occupation).
Gender segmentation—a type of demographic segmentation, dividing a market into males and
females.
Geographic segmentation—dividing a market into different geographic units (e.g. states, cities,
neighbourhoods).
Income segmentation—a type of demographic segmentation, dividing a market into groups
based on consumers’ annual incomes (e.g. under $100,000, over $100,000).
Intermarket segmentation—segmentation involving the identification of particular groups of
consumers who have similar needs or characteristics even though consumers in such groups
are located in different country markets (e.g. babies, teenagers).
Life-cycle segmentation—a type of demographic segmentation, dividing a market into groups
based on life-cycle stages (e.g. babies, toddlers, children, young adults, adults).
Lifestyle segmentation—a type of psychographic segmentation, dividing a market into groups
based on preferences for the way one wishes to live one’s life (e.g. active, passive, outdoor,
indoor).
Occasion segmentation—dividing a market into groups based on situational factors or
contingencies driving purchase and consumption (e.g. buying chocolate for a Valentine’s Day
gift vs. everyday consumption).
Psychographic segmentation—dividing a market into different groups based on psychological
traits or characteristics (e.g. personality, values).
Sagacity segmentation—dividing a market into groups based on how discerning and
discriminating consumers are in their judgments in relation to some activity (e.g. in drinking a
fine wine, those that are highly discerning and those that are relatively undiscerning).
Dibb, Sally (1998). ‘Market Segmentation: Strategies for Success,’ Marketing Intelligence and
Planning, 16(7), 394–406.
Kotler, Philip, and Armstrong, Gary (2006). Principles of Marketing, 11th edn. Upper Saddle
River, NJ: Pearson Education, Inc.
Uncertainty Avoidance is the degree to which the members of a society feel uncomfortable with
uncertainty and ambiguity. This feeling leads them to beliefs promising certainty and to
maintaining institutions protecting conformity. Strong Uncertainty Avoidance societies
maintain rigid codes of belief and behavior and are intolerant towards deviant persons and
ideas. Weak Uncertainty Avoidance societies maintain a more relaxed atmosphere in which
practice counts more than principles and deviance is more easily tolerated. The fundamental
issue addressed by this dimension is how a society reacts on the fact that time only runs one
way and that the future is unknown: whether it tries to control the future or to let it happen.
Like Power Distance, Uncertainty Avoidance has consequences for the way people build their
institutions and organizations.
4. Masculinity versus Femininity
Masculinity stands for a preference in society for achievement, heroism, assertiveness, and
material success. Its opposite, Femininity, stands for a preference for relationships, modesty,
caring for the weak, and the quality of life. This fundamental issue addressed by this dimension
is the way in which a society allocates social (as opposed to biological) roles to the sexes. Some
societies strive for maximum social differentiation between the sexes. The norm is then that
men are given the more outgoing, assertive roles and women the caring, nurturing roles. As in
all societies most institutions are populated by men. Such maximum-social-differentiation
societies will permeate their institutions with an assertive mentality. Such societies become
"performance societies" evident even from the values of their women. I have called these
societies "masculine". (In the English language, "male" and "female" are used for the biological
distinctions between the sexes; "masculine" and "feminine" for the social distinction. A man
can be feminine, but he cannot be female.) Other societies strive for minimal social
differentiation between the sexes. This means that some women can take assertive roles if they
want to but especially that some men can take relationship-oriented, modest, caring roles if they
want to. Even in these societies, most institutions are populated by men (maybe slightly less
than in masculine societies). The minimum-social differentiation societies in comparison with
their opposite, the maximum-social-differentiation societies, will permeate their institutions
with a caring, quality-of-life orientated mentality. Such societies become "welfare societies" in
which caring for all members, even the weakest, is an important goat for men as well as women.
I have called such societies "feminine". "Masculine" and "feminine" are relative qualifications:
they express the relative frequency of values which in principle are present in both types of
societies. The fact that even modern societies can be differentiated on the basis of the way they
allocate their social sex role is not surprising in the light of anthropological research on non-
literate, traditional societies in which the social sex role allocation is always one of the essential
variables. Like the Individualism-Collectivism dimension, the Masculinity- Femininity
dimension relates to people's self-concept: who am l and what is my task in life? Although the
four dimensions were originally derived from data on the values scored by multinational
corporation employees, subsequent research has shown that the same or closely similar
dimensions could be found in other research data, collected by different researchers with
different methods from different sources: from groups of students, from random samples of
entire national populations, from statistics compiled by international bodies like the World
Health Organization. Thus, there is solid evidence that the four dimensions are, indeed,
universal. Together they account only for a small part of the differences in cultural systems
around the world, but this small part is important if it comes to understanding the functioning
of work organizations and the people within them. This is the domain of management. Fifty
countries and three multicounty regions could be given index scores on each of the four
dimensions on the basis of their local employees' values data collected by the multinational
corporation. These scores are collected in Exhibit 1. They are always relative scores in which
the lowest country is situated around zero and the highest around 100.
BIBILOGRAPHY
Hofstede, G. (1984). Cultural dimensions in management and planning. Asia Pacific journal of
management, 1(2), 81-99.
BELIEFS
DESCRIPTION: According to Rokeach (1973: 2), ‘Beliefs are inferences made by an observer
about underlying states of expectancy’. A belief is any simple proposition, conscious or
unconscious, inferred from what a person says or does, capable of being preceded by the phrase
‘I believe that’ (Rokeach 1973: 113). The content of a belief cannot be directly observed by
others but must be inferred by an observer on the basis of the overt behavior of the believer.
What the believer says or does becomes the clue to his or her belief system. A white man who
publicly states that he believes black people are equal to him but who resists black people
moving into his neighborhood demonstrates that expressed beliefs are very poor predictors of
behavior (Fishbein and Ajzen 1975). Beliefs among black groups and the white majority can
differ. For instance, a black person and a white person may share the same value of equality.
The white person who has never been refused employment or promotion may believe that
equality of opportunity exists – after all he/she never had any trouble. However, the black
person who has always been relegated to menial tasks with no possibility for advancement
perceives the situation differently. He or she believes that he or she has been discriminated
against, and that equality of opportunity in employment does not exist.
BIBILOGRAPHY
Robinson, L. (2004). Beliefs, values and intercultural communication. Communication,
Relationships and care: a reader, 110-120.
VALUES
Values are influential in dictating the behavior of a communicator in interethnic settings.
Rokeach
(1979: 2) defines a value ‘as a type of belief that is centrally located within one’s total belief
system’. Values tell us of how we should behave. Values may be explicit (stated overtly in a
value judgement) or implicit (inferred from nonverbal behaviour), and they may be individually
held or seen as part of a cultural pattern or system. In addition to our unique set of personal
values, individuals hold cultural values. Culture-bound values are especially relevant for
intercultural communication. These include power-distance, uncertainty avoidance,
individualism versus collectivism, and masculinity (Hofstede 1983); low and high context
communication, immediacy and expressiveness (Hall 1966); emotional and behavioural
expressiveness, and self-disclosure. There are several different conceptualizations of how
cultures differ. Hofstede’s work represents the best available attempt to measure empirically
the nature and strength of value differences among cultures. He published the results of his
study of over 100000 employees of a large multinational in 40 countries (Hofstede 1983) and
identified four dimensions that he labelled power-distance, uncertainty avoidance,
individualism and masculinity.
BIBILOGRAPHY
Robinson, L. (2004). Beliefs, values and intercultural communication. Communication,
Relationships and care: a reader, 110-120.
CONSUMER PROFILING
Consumer profiling (also referred to as "customer profiling") is the only way to gather the
insights needed to identify, segment and define your target audience. Going far beyond basic
demographics, it means getting as close to your consumer as possible, so you can reach them
the right way. Consumer profiling is about creating value from data to understand everything
there is to know about your target consumers and the market that surrounds them. Leading
brands are putting insight in the driving seat to put consumers at the heart of their messaging,
guiding everything from campaign planning to brand positioning.
This process starts with focusing on your current customers, followed by your desired target
audience and target market, getting the validation you need that you’re looking at the right
people. Once you have this, it’s about understanding and defining these consumers to get your
messaging right, focusing on the ideal customer insights that can drive meaningful creativity.
BIBLIOGRAPHY
Guy, C., Piggott, J. R., & Marie, S. (1989). Consumer profiling of Scotch whisky. Food Quality
and Preference, 1(2), 69-73.
CONSUMER CULTURE
Consumer Culture focuses on the spending of the customers money on material goods to attain
a lifestyle in a capitalist economy. One country that has a large consumer culture is the United
States of America. Over the past hundred years, 1900 to 2000, market goods came to dominate
American life and for the first time in history, consumerism had no practical limits. Consumer
culture has provided affluent societies with peaceful alternatives to tribalism and class war, it
has fuelled extraordinary economic growth. The challenge for the future is to find ways to
revive the valid portion of the culture of constraint and control the overpowering success of the
all-consuming twentieth century.
According to Berger, "Social scientists Aaron Wildavsky and Mary Douglas suggest that there
are four political cultures, which also function as consumer cultures: hierarchical or elitist,
individualist, egalitarian, and fatalist."
1. An elitist, is a person who believes that a system or society should be ruled or dominated
by an elite.
2. An individualist, is a person who does things without being concerned about what other
people will think.
3. An egalitarian, believes in the principle that all people are equal and deserve equal rights
and opportunities.
4. A fatalist, is someone who feels that no matter what he or she does, the outcome will
be the same because it is predetermined.
Consumer culture is based on the idea of demographics, which is targeting a large group of
people with similar interests, traits or cultural attributes.
BIBLIOGRAPHY
DIFFERENTIATED MARKETING
DESCRIPTION: The strategic approach of focusing on two or more groups of consumers and
using a different marketing approach for each.
KEY INSIGHTS: Differentiated marketing’s scope ranges from the use of different retailing
approaches for different consumer groups to the provision of different product or service
offerings. The aim of differentiated marketing is to achieve a strong competitive position within
each segment pursued, where the net result is superior individual and aggregate performance
in relation to that achievable by an undifferentiated marketing approach reaching all segments
in a market. Such an approach, however, does result in higher marketing costs relative to that
for undifferentiated marketing since there is a need to develop and implement distinct
marketing plans and strategies for each segment.
KEY WORDS Market segmentation
IMPLICATIONS: Many firms, particularly large consumer products firms, use a differentiated
marketing approach by offering multiple products or services to carefully defined customer
segments, as where a clothing manufacturer and retailer uses several retail store formats as a
means for each to provide greater appeal to a specific customer segment. Ultimately, however,
the relative emphasis a firm gives to differentiated marketing must depend on projections of its
development and implementation costs versus the potential to increase sales in relation to an
undifferentiated marketing approach.
BIBLIOGRAPHY
Kotler, Philip, and Levy, Sidney J. (1969). ‘Broadening the Concept of Marketing,’ Journal of
Marketing, 33(1), January, 10–15.
UNDIFFERENTIATED MARKETING
DESCRIPTION: A marketing approach that forgoes segmentation and product tailoring,
targeting an audience with a single offering and a single marketing mix.
KEY INSIGHTS: Undifferentiated marketing was a prevailing approach of the product oriented
era of marketing, where businesses viewed the marketplace as an aggregate market and, hence,
focused on the common needs of customers rather than their differences. Today, such an
approach is often associated with serving commodity markets where firms strive to be a lowcost
producer (Jain 1985).
KEY WORDS Single offering
IMPLICATIONS: As a marketing approach, undifferentiated marketing can provide the
advantage of cost leadership through producing a comparatively standard and low-cost product
and offering it to customers at the lowest prevailing market price (Dalgic and Leeuw 1994). As
such, the marketer’s firm can pursue higher sales volumes in comparison to firms using a niche
marketing strategy which are in the pursuit of higher profit margins (see also niche marketing).
BIBLIOGRAPHY
Jain, Subhash C. (1985). Marketing Planning and Strategy. Cincinnati: South-Western
Publishing Co.
Dalgic, T., and Leeuw, M. (1994). ‘Niche Marketing Revisited: Concept, Applications and
Some European Cases,’ European Journal of Marketing, 28(4), 39–56.
MASS MARKETING
DESCRIPTION: A marketing approach involving an offering intended for wide appeal among
a large market of consumers.
KEY INSIGHTS: Mass marketing involves marketing to a very large group of individuals.
Such an approach frequently involves standardization in one or more elements of the firm’s
offering (see undifferentiated marketing). In the area of marketing communications, for
example, mass marketing involves the use of mass media marketing, an approach where
marketing efforts emphasize the use of one or more mass media including television, radio,
magazines, books, newspapers, and movie theatres for purposes including advertising and sales
promotion. Mass marketing involving the use of the internet can also take many forms,
including spam marketing, or junk e-mail marketing, which involves indiscriminately sending
unsolicited and unwanted e-mails in mass quantities in the hope that at least some recipients
will respond favourably to the e-mail messages. A mass marketing approach can be contrasted
with a niche marketing approach (see niche marketing) in that the aim is to profit from
standardized marketing efforts conducted on a large scale as opposed to profiting from uniquely
serving the needs of one or a few segments.
KEY WORDS: Large markets, broad appeal
IMPLICATIONS: The offerings of many firms are intended for mass market appeal where the
aim is to benefit from economies of scale associated with serving a large market. Yet, astute
marketers also recognize that the effective mass marketing of offerings with broad appeal also
involves market segmentation and targeting to at least some or even a great extent. Such a view
distinguishes mass marketing practices in the early-to-mid twentieth century from those in
much of marketing today.
BIBLIOGRAPHY
Aaker, David A. (2004). Strategic Market Management, 7th edn. New York: John Wiley &
Sons.
STP MARKETING
DESCRIPTION: A methodical approach in marketing planning whereby a marketer follows a
three-step process involving segmentation, targeting, and positioning.
KEY INSIGHTS: STP marketing adopts the view that segmentation is a key part of the
competitive strategy of many organizations. As such, it can be argued that the tasks of
identifying, characterizing, and targeting appropriate marketing segments form the basis for
much of strategic marketing and an organization’s strategic thinking more generally. In the
process of STP marketing, the marketer gives critical consideration to segmentation, which is
the identification of groups of customers that have similarities in characteristics or needs who
are likely to exhibit similar purchase behavior (Smith 1956); targeting, or selecting particular
segments to target; and positioning, which necessarily involves selecting a desirable
positioning strategy (see positioning) and subsequently developing marketing programs that
convey the desired brand position.
KEY WORDS: Marketing planning, planning process, segmentation, targeting, positioning
IMPLICATIONS: As part of the overall strategic marketing planning process, a marketer may
conduct an internal analysis of the firm, a competitive analysis, and a market analysis. All such
marketing research efforts may support the firm’s efforts to engage in STP marketing, where,
after establishing market segments and targeting appropriate segments, positioning plays a
centrally important role after segmenting and targeting the appropriate market segments. As
follow-on to the STP marketing process, marketers must then ensure the development of
effective marketing programs and mixes, implement such efforts, and then ensure their
adequate control.
BIBLIOGRAPHY
Weinstein, Art (1997). ‘Strategic Segmentation: A Planning Approach for Marketers,’ Journal
of Segmentation in Marketing, 1(2), 7–16.
Smith, Wendell (1956). ‘Product Differentiation and Market Segmentation as Alternative
Marketing Strategies,’ Journal of Marketing, 21, July, 3–8.
Kotler, Philip (1999). Kotler on Marketing: How to Create, Win, and Dominate Markets. New
York: Free Press.
SEGMENTATION
DESCRIPTION: Dividing a market into distinct groups of buyers who have relatively distinct
behaviors, needs, or other characteristics.
KEY INSIGHTS: Segmentation refers to the process of aggregating customers into groups
based on common characteristics and needs, where they are expected to respond similarly to
marketing actions. Segmentation can be beneficial to the extent the approach provides the
marketer with insights and opportunities to offer one or more distinct market segments a
particular market offering. Offerings corresponding to particular segments may vary in any
number of ways including distinct products or services, or other elements of the marketing mix
such as price, promotion, or distribution. There are many different ways that segmentation may
be performed including:
Age segmentation—a type of demographic segmentation, dividing a market into groups based
on consumers’ ages (e.g. under 18, 18–25, 25–45, 46 and over).
Behavioural segmentation—dividing a market into groups based on consumers’ knowledge,
attitudes, or product or service usage behaviors (e.g. heavy product users, light product users).
Benefit segmentation—dividing a market into groups based on the different gains to be
derived from purchase and consumption (e.g. using a bicycle for fitness versus transportation
to and from work).
Demographic segmentation—dividing a market into groups based on demographic variables
(e.g. age, gender, income, family size, education, occupation).
Gender segmentation—a type of demographic segmentation, dividing a market into males and
females.
Geographic segmentation—dividing a market into different geographic units (e.g. states,
cities, neighborhoods).
Income segmentation—a type of demographic segmentation, dividing a market into groups
based on consumers’ annual incomes (e.g. under $100,000, over $100,000).
Intermarket segmentation—segmentation involving the identification of particular groups of
consumers who have similar needs or characteristics even though consumers in such groups
are located in different country markets (e.g. babies, teenagers).
Life-cycle segmentation—a type of demographic segmentation, dividing a market into groups
based on life-cycle stages (e.g. babies, toddlers, children, young adults, adults).
Lifestyle segmentation—a type of psychographic segmentation, dividing a market into groups
based on preferences for the way one wishes to live one’s life (e.g. active, passive, outdoor,
indoor).
Occasion segmentation—dividing a market into groups based on situational factors or
contingencies driving purchase and consumption (e.g. buying chocolate for a Valentine’s Day
gift vs. everyday consumption).
Psychographic segmentation—dividing a market into different groups based on
psychological traits or characteristics (e.g. personality, values).
Sagacity segmentation—dividing a market into groups based on how discerning and
discriminating consumers are in their judgments in relation to some activity (e.g. in drinking a
fine wine, those that are highly discerning and those that are relatively undiscerning).
KEY WORDS: Consumer groups, consumer characteristics
IMPLICATIONS: Segmentation forms a basis for much of marketing strategy. Studying
markets to identify their segments before choosing target groups is a process that can be vital
to the success of subsequent marketing actions. Choosing the right product or service, price,
promotional programs, and distribution channels, for example, are all areas that can be dictated
by the needs of consumer groups identified through market segmentation.
BIBLIOGRAPHY
Dibb, Sally (1998). ‘Market Segmentation: Strategies for Success,’ Marketing Intelligence and
Planning, 16(7), 394–406.
Kotler, Philip, and Armstrong, Gary (2006). Principles of Marketing, 11th edn. Upper Saddle
River, NJ: Pearson Education, Inc.
DESCRIPTION
VALS ("Values, Attitudes And Lifestyles") is a proprietary research methodology used for
psychographic market segmentation. Market segmentation is designed to guide companies in
tailoring their products and services in order to appeal to the people most likely to purchase
them.
VALS was developed in 1978 by social scientist and consumer futurist Arnold Mitchell and his
colleagues at SRI International. It was immediately embraced by advertising agencies, and is
currently offered as a product of SRI's consulting services division. VALS draws heavily on
the work of Harvard sociologist David Riesman and psychologist Abraham Maslow. The
VALS system classifies consumers based upon two primary criteria:
• Primary motivation
– Ideals: guided by knowledge and principles
– Achievement: look for products and services that demonstrate success to their peers
– Self-Expression: desire social or physical activity, variety, and risk
• Resources and Innovation
– The resources that one consumes extend beyond age, income, and education. Energy,
selfconfidence, intellectualism, novelty seeking, innovativeness, impulsiveness, leadership,
and vanity play a critical role. These psychological traits in conjunction with kics determine an
individual's resources.
Researchers faced some problems with the VALS method and SRI developed the Vals 2 program
me in 1978 and significantly revised it in 1989. VALS2 puts less emphasis on activities and interests
and more on a psychological base to tap relatively enduring attitudes and values. VALS2 has two
dimensions. The first dimension –Self orientation, determines the type of goals and behaviors that
individuals will pursue, and refers to pattern of attitudes and activities which help individuals
reinforce, sustain or modify their social self-image. This is a fundamental human need. The second
dimension- Resources-reflects the ability of individuals to pursue their dominant self-orientation
that includes full range of physical, psychological, demographic and material means such as self-
confidence, interpersonal skills, inventiveness, intelligence, eagerness to buy, money, position,
education, etc. According to VALS2, a consumer purchases certain products and services because
the individual is a specific type of person. The purchase is believed to reflect a consumer’s lifestyle,
which is a function of self –orientation and resources. In 1991, the name VALS 2 was switched
back to VALS, because of brand equity.
BIBLIOGRAPHY
Vyncke, P. (2002). Lifestyle segmentation: From attitudes, interests and opinions, to values,
aesthetic styles, life visions and media preferences. European journal of communication, 17(4), 445-
463.
TARGETING
DESCRIPTION: The process of selecting one or more market segments that the firm decides
to serve with its offerings.
KEY INSIGHTS: Targeting involves the process of defining the specific needs and profiles of
customer market segments and selecting from those segments the ones to target with
appropriate offerings, strategies, and marketing programs. The process of targeting involves a
number of strategies from which marketers may select, including concentrated targeting (e.g.
focusing on a particular niche), undifferentiated targeting (e.g. adopting a mass marketing
strategy), and differentiated targeting (e.g. adopting a selective marketing strategy).
Advertising, along with many other forms of marketing communication, for example, may
involve targeting particular groups of consumers with particular messages which are
specifically aimed at audiences possessing the characteristics of such consumer groups.
KEY WORDS: Segment selection
IMPLICATIONS: At a strategic level, making choices about targeting strategies to use in
relation to chosen customer segments is something that can have a major influence on a firm’s
overall operations in the selected markets. At an operational level, appropriate targeting in, say,
advertising has the potential to improve the advertiser’s return on investment and make an
advertising campaign efficient in accomplishing its objectives.
BIBLIOGRAPHY
Nash, Edward L. (1982). Direct Marketing: Strategy, Planning, Execution. New York:
McGraw-Hill.
POSITIONING
DESCRIPTION: The way a firm’s offering is perceived by its target market in relation to that
of competitor offerings.
KEY INSIGHTS: Whether a firm’s offering is a product, service, or brand, the firm frequently
has a choice regarding how the offering should be positioned in the market. Offerings may be
positioned along a few or many dimensions, where the specific dimensions considered and used
are ones that are meaningful to consumers and strategically important to the firm. When there
are many competitors in the marketplace, the firm must consider carefully how current and
potential consumers will perceive the offering in relation to competing offerings. A key aim of
positioning is to differentiate the firm’s offerings from those of competitors, as there is often
little to be gained by positioning in a completely identical way to a competitor. Just two
examples of positioning dimensions are attribute positioning (or functional benefit positioning),
where the firm seeks to position itself in a superior way relative to competitors on a product
attribute valued by customers (e.g. cavity-fighting ability for a toothpaste) and product line
breadth positioning, where the firm seeks to position itself in a desirable way relative to
competitors on the sheer number of products that the firm offers (as a means to signal
convenience and market leadership, for example). There are, of course, any number of ways a
firm can position its offerings, including the important dimensions of price and quality.
Additionally, firms may adopt a position that the firm is able to make meaningful in the minds
of consumers, even though such a position may have no real substance. Thus, meaningless
differentiation involves positioning an offering on an attribute that may be unique to offering
but in actuality is not related to its performance (e.g. the unique but ultimately meaningless
attribute of ‘coffee crystals’ in a firm’s instant coffee offering).
KEY WORDS: Attributes, benefits, product perceptions, competitive positioning, strategic
positioning
IMPLICATIONS: While it is certainly easy to focus on major positioning dimensions such as
price and quality, marketers have a wide array of positioning approaches from which to choose.
As many product and service offerings involve the use of three to five important positioning
dimensions, marketers must be sure to give sufficient attention to the broader set of positioning
dimensions that the firm and its competitors are currently using and may use at some future
point for strategic advantage.
BIBLIOGRAPHY
Myers, J. H. (1996). Segmentation and Positioning for Strategic Marketing Decisions. Chicago:
American Marketing Association.
Carpenter, Gregory S., Glazer, Rashi, and Nakamoto, Kent (1994). ‘Meaningful Brands from
Meaningless Differentiation: The Dependence on Irrelevant Attributes,’ Journal of Marketing
Research, 31(3), August, 339–350.
Broniarczyk, S., and Gershoff, A. (1997). ‘Meaningless Differentiation Revisited,’ in Merrie
Brucks and D. J. McInnis (eds.), Advances in Consumer Research, 24. Provo, Ut.: Association
for Consumer Research, 223–228.
Ries, Al, and Trout, Jack (2001). Positioning: The Battle for Your Mind. New York:
McGrawHill.
Trout, Jack, and Ries, Al (1972). ‘The Positioning Era Cometh’, Advertising Age, 17, April 24,
35–38.
CO CREATION
Co-creation Is the act of creating together. When applied in business, it can be used as is an
economic strategy to develop new business models, products and services with customers,
clients, trading partner or other parts of the same enterprise or venture. Co-creation as a
professional discipline is a set of capabilities, models, skills, methods and activities that enable
the act of co-creation. Co-creation projects or events bring different parties together (for
instance, a company and a group of customers), in order to jointly produce a mutually valued
outcome. Co-creation brings a blend of ideas from direct customers or viewers (who are not
the direct users of the product) which in turn creates new ideas to the organization.
Scholars C. K. Prahalad and Venkat Ramaswamy popularized the concept in their 2000 Harvard
Business Review article, "Co-Opting Customer Competence". They developed their arguments
further in their book, published by the Harvard Business School Press, The Future of
Competition, where they offered examples including Napster and Netflix showing that
customers would no longer be satisfied with making yes or no decisions on what a company
offers.
Within the study of Prahalad and Ramaswamy, they defined co-creation as “The joint creation
of value by the company and the customer; allowing the customer to co-construct the service
experience to suit their context” (Prahalad and Ramaswamy, 2004, p. 8). Maarten Pietersand
Stefanie developed existing co-creation theories and introduced the term Complete co-creation
in 2013, creating clarity for organisations who struggled with into their daily operations.
Types of Co-creation
Depending on the degree of control exercised by the firm/public over the contribution and
selection activities, co-creation may be broadly classified into 4 categories:
1. Tinkering: Public exercises control over the contribution activity while the firm exercises
control over the selection activity
3. Co-designing: Firm exercises control over the contribution activity while the public
exercises control over the selection activity
BIBLIOGRAPHY:
Payne, A. F., Storbacka, K., & Frow, P. (2008). Managing the co-creation of value. Journal of
the academy of marketing science, 36(1), 83-96.
CO-BRANDING
Co-branding, defined here as pairing two or more branded products (constituent brands) to form
a separate and unique product (composite brand), is a strategy currently popular for introducing
new consumer products. Recent marketplace examples include Betty Crocker Brownie Mix
with Hershey's chocolate flavouring. Furthermore, many different types of cobranding
strategies exist. Joint promotions represent an attempt by one or both brands to secure corporate
endorsements that will improve their market positions (e.g., McDonald's and Disney).
Consumer product manufacturers are increasingly interested in co-branding strategies as a
means to gain more marketplace exposure, fend off the threat of private label brands, and share
expensive promotional costs with a partner.
BIBLIOGRAPHY: Washburn, J. H., Till, B. D., & Priluck, R. (2000). Co-branding: brand
equity and trial effects. Journal of consumer marketing, 17(7), 591-604.
B2B vs B2C
Business-to-business (B2B), also called B-to-B, is a form of transaction between businesses,
such as one involving a manufacturer and wholesaler, or a wholesaler and a retailer. Businessto-
business refers to business that is conducted between companies, rather than between a
company and individual consumer. Business-to-business stands in contrast to business-
toconsumer (B2C) and business-to-government (B2G) transactions.
The term business-to-consumer (B2C) refers to the process of selling products and services
directly between a business and consumers who are the end-users of its products or services.
Most companies that sell directly to consumers can be referred to as B2C companies. B2C
became immensely popular during the dotcom boom of the late 1990s when it was mainly used
to refer to online retailers who sold products and services to consumers through the Internet.
POINT-OF-PURCHASE MARKETING
DESCRIPTION: Marketing where there is an emphasis on strategies and tactics involving the
precise locations of purchase activity.
KEY INSIGHTS
Point-of-purchase marketing is concerned with increasing a firm’s marketing effectiveness by
focusing marketing efforts on the precise spots where products or services are able to be
acquired by current and/or prospective customers. In retail stores, for example, point-of
purchase marketing activity involves attention to shelf space considerations (e.g. positioning a
large quantity of the firm’s products at eye level) and displays (e.g. colourful, eye-catching
signs and other promotional materials). In some industries, such as tobacco, the majority of a
firm’s marketing efforts may be in point-of-purchase marketing.
DESCRIPTION: Merchandise planning is the process conducted by a retailer to ensure that the
right product is available to the customer at the right place, time, quantity and price. This
process involves selecting the products the retailer will carry and determining the purchase
quantities of these products. Merchandise Planning then is "A systematic approach. It is aimed
at maximizing return on investment, through planning sales and inventory in order to increase
profitability. It does this by maximizing sales potential and minimizing losses from mark -
downs and stock - outs."
BIBLIOGRAPHY
Rajaram, K. (1998). Merchandise planning in fashion retailing: Models, analysis and
applications.