Principles of Business & Marketing BMarket Analysis & Strategy &

Market Analysis & Differentiation

Principles of Business and Marketing BAnnouncements

● Expectations this week○ Lesson 6|Market Analysis & Strategy(Portfolio in

Connexus)- Becomes a temp Zero on 11/9○ All past due Quizzes: 1, 3, 4, & 5 if any

● Open office hours○ Wednesday 8-9 am (Ms. Adame’s LL room)○ Thursday 9-10 am (Mr. Velarde’s LL room)

● LiveLessons○ Thursday 3-4 pm (Your business teacher’s LL room)

● Future Business Leaders of America (FBLA) Meeting○ Wednesday 3-4 pm (Ms. Adame’s LL room)

LiveLesson AttendanceAttend the LiveLesson if:

● You are invited personally by the teacher● Your last quiz score was 7/10 or less.● You want 5 points for participation. You must respond to

the code activity from the LL to get credit.

We go into more detail during the LiveLesson and bring these topics to life!

There will not be lesson/grade replacement activities in this section - you must pass the quizzes and understand the non-assessment lessons to prepare for the comprehensive final exam.

COURSE TIMELINE

Lesson 6 - Market Analysis & Strategy

LESSON 6 NOTES:MARKET ANALYSIS & STRATEGY

Lesson 6 - Market Analysis & Strategy

ObjectivesAt the end of this lesson, you will be able to:

● Explain the concept of market segmentation● Define targeting● Differentiate various targeting strategies

TOPICS IN LESSON 6MARKET ANALYSIS & STRATEGY

LESSON 6 NOTES: MARKET ANALYSIS & STRATEGY

Interactive Presentation Topic Corresponding Reading

Review Activities

Topic 1: Segmentation pp. 165–174 Objectives p. 189 (#1 and 2); Discussion Questions p. 191 (#1, 2, and 3)

Topic 2: Targeting pp. 162–165 and 175–182

Objectives p. 189 (#1); p. 190, Objectives p. 190 (#3); Discussion Questions p. 191 (#1 and 4)

What is Market Analysis?

SEGMENTATION & TARGETING

Think of segmentation and targeting as a jigsaw puzzle. Each piece is a segment and all the pieces symbolize the market. Some pieces have more relevance than others. These are the segments that a company chooses to target.

Various segmentation variables include demographic variables like age, income, gender and geography. Other segmentation variables are psychographic, based on psychology and sociology, and behavioral, based on how people act or feel toward a product.

SegmentationSEGMENTATION groups people with similar interests, tastes and habits. After the market is segmented and marketers understand the preferences of each segments, they can target the segments that are of most interest to their company.

Segmentation

AGE● Builders: born 1920 to 1945● Baby boomers: born about 1945–1965● Generation X: born about 1966–1976● Generation Y: also known as Millennials; born about 1977–1994● Generation Z: also known as Centennials; born 1995–2015 (You!)

Each of these groups of people is a market segment with similar characteristics. Trends exist in these segments that help marketers decide how to market to that particular segment.● Note: Different sources identify different spread years for these generations. IE your textbook says

Millenials to 2000. There is some overlap/cusp.

Segmentation

GENDERMarketers create products that are often targeted toward one gender.

Segmentation

INCOMEPeople with high income levels make different purchases than people with middle income levels and people with low or very low income levels.

● Very Low Income● Low Income ● Middle Income● Upper-Middle Income● High Income● Wealthy

Segmentation

MARKETING TO MID OR UPPER INCOMESThese shoppers are able to reap the bargains offered by these stores because the cash or credit outlay is high but affordable.

People who make less may not be able to take advantage of the bargains because they don't have the cash flow to afford it.

Mid to Upper incomes may buy socks at affordable retailers instead of Nordstrom.

Segmentation

FAMILY LIFE CYCLEA common purchase cycle on which marketers capitalize.

STAGE ONE - Entering AdulthoodSTAGE TWO - AdulthoodSTAGE THREE - Late AdulthoodSTAGE FOUR - Senior Adulthood

SegmentationETHNIC ORIGINUnderstanding the tastes, preferences, and habits of people in various ethnic categories is important for a marketer. Understanding cultural differences and nuances provides insight into the identification of segments.

SegmentationGEOGRAPHY

Cold Weather LocationsTake the sale of snow shovels, for example. These products are obviously sold to those who live in climates that get a lot of snow.

Warm Weather LocationsSun protection lotion, although sold almost everywhere, generally is available in varieties in warmer regions.

Preferred ActivitiesMore outdoor and active wear is sold in the western half of the United States than the eastern half. Reasons for this include topography, weather patterns, and attitudes about outdoor activities.

Segmentation

ZIP CODE CLASSIFICATIONSZIP codes are used as a geographical classification because people of similar tastes and incomes often live near one another.

SegmentationPSYCHOGRAPHICSUsing demographic variables alone, we can learn about the type of person who buys a particular product. However, psychographics can provide a different level of insight into segments.

Demographics: Single men between 25 and 35 with incomes between $25,000 and $40,000 per year who live in the south eastern region of the US spend an average of $800 each year on NASCAR memorabilia.

Psychographics which uses psychology and sociology to identify and understand why certain segments of men choose NASCAR items like watches and jackets whereas others select model cars and track surfaces.

Segmentation

SegmentationBEHAVIORAL SEGMENTATIONBehavior segmentation helps marketers understand segments by looking at how people use products they buy.

Targeting

TARGETING

The next step is to determine on whom or which segment to actually focus on, since not all segments are equally valuable to a marketer.

Targeting occurs when marketers decide on which segment they want to focus. To do this, they evaluate the segments in which they are interested in pursuing. Segmenting the market helps a marketer understand the entire marketplace, but it does not direct a company on what to do. That is where targeting comes in. In addition to segmentation, differentiation, and positioning, targeting all allows marketers to help their company create value for the desired customer base.

EVALUATING SEGMENTSAfter a company has developed segmentation plans, it needs to decide which of them to target, or which segments are best for that particular company to study. There are several different ways to evaluate segments, including these strategies:

1. Marketers try to size the segment, to get an idea of how big it is. 2. Marketers evaluate whether the segment is growing or shrinking. 3. Marketers analyze the levels and types of competition in a segment.

SEGMENT REACHABILITYAnother important consideration when evaluating segments, is whether they are reachable. In other words, whether the company can communicate with the segment. If the segment is large enough to be profitable and is growing, but the company has no way to communicate with it, then that particular segment would not be targeted for business.

TARGETING STRATEGIES There are four different targeting strategies a company can use.

UNDIFFERENTIATED MARKETINGUndifferentiated marketing is designed to appeal to as many people as possible. This strategy is similar to mass marketing, in which companies believe there are no differentiating characteristics in the products people buy, and the ways in which they buy them. Undifferentiated marketing can be profitable, because production costs are lower compared with other targeting strategies. The classic example of undifferentiated marketing is Henry Ford's Model T. A customer could get any color they wanted, as long as it was black. Today, many staple products, such as salt and sugar, are marketed using an undifferentiated strategy.

DIFFERENTIATED MARKETINGDifferentiated marketing involves looking at the marketplace, identifying segments that are homogeneous, evaluating each segment, and deciding which segments the company is best suited to target. The company then develops distinct offerings for each segment. Consider the market for eyewear. There are high fashion glasses, functional glasses, glasses for teens and children, and glasses that support different types of vision. Each of these product lines targets a distinct segment.

CONCENTRATED MARKETINGUsing concentrated marketing, companies evaluate and select a segment, then offer several different products for that segment. Take Nioxin, for example. This product line consists of foams and topical solutions of various strengths, as well as shampoos and conditioners. All Nioxin products are targeted to individuals concerned about the same thing - thinning hair, and hair loss.

CUSTOMIZED MARKETINGCustomized marketing is when customers decide the specifications of the product they want, and the company makes it to order. A classic example of customized marketing is Dell. Customers specify the exact components they want in their computer. A more simple example is a bakery. The baker makes cakes according to the specific wishes of each customer, including cake flavor, icing flavor, and design. In practice, customized marketing can be impractical, because it takes a great amount of resources to create specific products for a large number of individual customers.

TARGETING - REVIEW

In this topic, we discussed targeting, various ways that segments can be evaluated, and four different targeting strategies. Targeting strategies include undifferentiated marketing, differentiated marketing, concentrated marketing, and customized marketing. This topic supported these objectives: Define targeting. Differentiate various targeting strategies.

Lesson 7 - Market Analysis & Differentiation

LESSON 7 NOTES:MARKET ANALYSIS & DIFFERENTIATION

Lesson 7 - Market Analysis & Differentiation

ObjectivesAt the end of this lesson, you will be able to:

● Define positioning and differentiation● Illustrate examples of market positioning and differentiation● Define Customer Relationship Management (CRM)● Analyze different approaches to Customer Relationship

Management (CRM)

TOPICS IN LESSON 7MARKET ANALYSIS & DIFFERENTIATION

LESSON 7 NOTES: MARKET ANALYSIS & DIFFERENTIATION

Interactive Presentation Topic

Corresponding Reading

Review Activities

Topic 3: Positioning and Differentiation

pp. 182–189 Objectives p. 190 (#3) Discussion Questions p. 191 (#6)

Topic 4: Customer Relationship Management (CRM)

pp. 115–116 Objectives pp. 122–12

Positioning & DifferentiationPositioning strategy involves deciding how you want your product to appear relative to its competition.

Differentiation involves identifying what it is that makes your product unique from its competitors.

To develop an effective positioning and differentiation strategy, marketers have to understand how the target audience perceives its products and the competition products.

Positioning & Differentiation

CHOOSE FEATURES AND SERVICESSpecific features and services to offer is another step in a company's positioning and differentiation strategy.

CHOOSE MARKETING ELEMENTSOnce you have assessed the competitive situation and have determined your competitive advantage, you must determine pricing, promotional and distributional elements.

Positioning & DifferentiationImagine that you belong to a marketing company that is planning to market a particular product, discuss what steps that you would use to device an effective positioning and differentiation plan?

Step 1. Analyze and evaluate the competition.

Step 2. Decide what features or services you can offer that give your product a competitive advantage.

Step 3. Decide elements of the marketing mix.

Step 4. Evaluate and reposition.

Customer Relationship Management (CRM)CRM is about tracking customer experiences and behaviors over time. Its ultimate goal is to get to know each customer in terms of preferences, habits and behaviors so that individualized marketing efforts can be realized. Various approaches to CRM include considering the lifetime value of a customer, examining the share of a customer and identifying high value customers.

Ways Companies Use CRM with You

1. A letter, phone call or email from the optometrist's office telling you that it has been a year since your last appointment.

2. A coupon from your favorite store that offers you 10% off your next purchase.

3. A new product announcement informing you about a computer upgrade.

4. A birthday card from your bank that wishes you a great year.

How do they know to do this?

Customer Relationship Management (CRM)

DEFINING CUSTOMER RELATIONSHIP MANAGEMENTScenario:Sheila buys a car from a dealership and perhaps gets financing as well. As time goes by, she takes the car in for oil changes and other types of services. A few times, Sheila contacts the customer service department of the auto manufacturer to get answers on how to use particular features of the car. At each of these points the company has an opportunity to begin to create a profile of Sheila. If a company had one or just a few customers, CRM might not be complex. However, with hundreds of thousands of customers, each contacting the company at different times and stage of ownership, keeping track of all of their information seems insurmountable.

Customer relationship management involves(CRM) using complex software programs and computers to capture and assimilate customer data at each touch point. A touch point is any moment when the customer is in direct contact with the company.

Customer Relationship Management (CRM)

SPECIFIC CUSTOMER RELATIONSHIP MANAGEMENT APPROACHES

LIFETIME CUSTOMER VALUEReturning to our car example, the auto maker might look at how many cars it expects customers to purchase along with how often and what type of services they require.

CUSTOMER SHARESuppose a person makes 12 airline trips each year using various air lines. Through the use of a CRM system, a particular airline may make marketing efforts to that customer in an attempt to gain a greater percentage of the 12 trips that customer takes each year.

HIGH VALUE CUSTOMERSOften the 80/20 rule comes into play. This means that 80% of the revenues are generated by 20% of the customers. Customer relationship management helps you identify the 20% so that specialized, personalized targeted marketing efforts can be undertaken to retain these customers.

Customer Relationship Management (CRM)CRM is a tool that involves complex systems to track, maintain and evaluate customer data and interactions with the company. The use of this tool determines the success of future business.

Upcoming Portfolio Due 11/8/20

You’ve Been Targeted Portfolio (Submit via Connexus)You will identify four products and describe who you believe the target audience to be and why, completing a Targeting Table.

Portfolio DetailsComplete the following:

Select the link to access the Examples of Targeting Table. You will use this table to complete this activity.Examples of Targeting Table

Examples of Targeting Table

Upcoming Portfolio Due 11/8/20Consider the following to guide you as you fill in the Target Audience (third)column of the table:

• Describe the targeting strategy used for each product or service.• Consider the features of the product as well as its advertising and

communications strategy.• Describe the specific characteristics of the target audience. (HINT: Think about

their age, income, geographic location, hobbies, and interests, etc.)

Upcoming Portfolio Due 11/8/20Choose four products or services that you are interested in learning about. These products or services should come from a range of industries (such as consumer products, financial services, automotive, entertainment, etc.).

● Two of the four products can be a product or service that interests you and that you would actually buy, and the other two products should be unfamiliar or something you are simply not interested in personally. (HINT: If you have trouble with this, look in the house or cabinet of a friend, relative, or family member who you believe is very different to you in their consumer habits. What kinds of products or services do they have?)

● List the products or services you have selected in the first column of the table.

● Provide a description in the second column. Include price, advertising, or communications strategy, and where the product or service is sold.

Upcoming Portfolio Due 11/8/20Consider the following information as you complete the fourth and fifth columns of the table:

• For the fourth column, Target Audience Evaluation, clearly state why you believe that the features and characteristics of the products or services are appropriate (or not) for the target audience.

• In the last column, Positioning and Differentiation, clearly state how each product is positioned relative to its competitors and what its differentiating features are.

The You’ve Been Targeted scoring rubric is linked here:

You've Been Targeted Rubric

Crash Course Review

Lessons 1, 2, 3, 4, & 5

Watch past recordings for full presentations - on the website

Lesson 1 - INTRODUCTION TO MARKETING

LESSON 1 NOTES:INTRODUCTION TO MARKETING

Lesson 2 - STRATEGIC PLANNING

LESSON 2 NOTES:STRATEGIC PLANNING

Lesson 3 - The Planning Process

LESSON 3 NOTES:THE PLANNING PROCESS

Lesson 4 - Analyzing the Business Environment

LESSON 4 NOTES:ANALYZING THE BUSINESS ENVIRONMENT

Lesson 5 - Market Research & Intelligence

LESSON 5 NOTES:MARKET RESEARCH & INTELLIGENCE

Let’s Review!

Lesson 1 Quiz Review

Lesson 3 Quiz Review

Lesson 4 Quiz Review

Lesson 5 Quiz Review

FBLA Club MeetingMs. Adame’s LiveLesson Room

Wednesday 11/4 at 3 pm