More effective use of dollar

• Rifle approach vs. shotgun 
• Spending marketing dollars where they have the most impact

Clearer understanding of the needs and wants of selected customer groups

• Focusing on a specific group and the shared characteristics of its members builds a better understanding of customer needs and wants

More effective positioning 

• Understanding customers needs and wants helps in developing a mArketing Mix that will occupy a specific place in the minds of potential customers

Greater precision in selecting promotional vehicles and techiques

• Better understanding customers needs and wants and positioning makes it possible to select and design targeted promotional offerings like web content and navigation, advertising in media places, sales promotions and personal selling approaches--the Promotional mix

More expensive than using non-segmented approach

• Each segment requires an individualized market approach, which entails expense
• More effective use of marketing dollars, not neccessarily fewer dollars

Difficult to choose which characteristics of customers to use when selecting customer groups

• Many primary and secondary characteristics of any group to choose from--which will be the best indicator of their needs and wants related to our product

Difficult to determine how focused segments should be

• Selected target markets need to be viable --produce more profit than cost

Non-viable segments

• Target markets should also be durable: not a trend or fad-they are an investment

1. Measurable – target markets and their response to marketing should be measurable in order to track progress toward marketing objectives and evaluate the success of the marketing program

• Definable and discernable – determine the size of the market and be able to identify members of the market group as they become customers 

2. Sustainable – target markets should be large enough to produce customers whose purchases will produce more additional profit than the cost of promotion

3. Accessible – target market should be reachable – address, email addresses, phone numbers, driving routes, signage exposure should be able to reach the market selected

4. Defensible – some marketing approaches work from more than one target market – the marketer should make sure that each approach is adapted to the specific needs, wants and motivations of the specific market

• Selected markets should be “defensible” from competitors – defend your share of the market

5. Durable – selected markets should be long-term enough to exceed the cost of promotion in additional profit.  Avoid short term trends or fads and focus on markets that have long-term potential

6. Competitive – is the organizations marketing mix, or products/service offering unique enough to differentiate from competitor’s offering?

7. Homogeneous – a selected market should be as different from other market segments as possible – too much overlap can dilute message

• Individuals within a market should also be as similar to one another as possible “homogeneous”
• Helps to ensure that the message is being heard in a relatively consistent way and will generate similar responses

8. Compatible – selected markets, especially new markets, should be compatible with existing customer mix

Choosing one primary, most important factor or characteristic for the market

      Ex: Coporate v. individual traveler, families v.          singles

Includes a primary factor with a secondary segemtnation characteristic that will further differentiate this target market from other potential markets

     Ex: purpose of trip (business/leisure) and geography

Includes a primary characteristic, and two or more secondary characteristics

     Ex: purpose of trip, geography, ager, gender, psychograpic measures

Adventure travelers from chicago that are 35-55 years old, female, achievers (into achievement like climbing or rafting)

Introduction – begins when a product is first introduced to the public

• Generally yields low profits due to the cost of effective marketing and establishing your product within the market
• Rapid skimming strategy (high price/high promotion): 

New service is highly promoted when it’s first introduced – the objective is to earn the highest gross profit (introduction of the iPhone by Apple in 2007 is a rapid-skimming case)

• Slow skimming strategy (high price/low promotion): lower amount of money spent on promotion

Small number of potential customers but most are aware of the new service (space tourism)

• Rapid-penetration strategy (low price/high promotion): price level is a key component

Prices are initially set low to capture as much of the market as possible

Strong threat of competitors copying product so a high level of promotion is key

(Most low cost airlines use this strategy)

• Slow-penetration strategy (low price/low promotion): new service is introduced at a low price with low promotion

>Potential market is large and price is sensitive 

            --Customers are highly aware of the new

               service

            --(Some airlines use this strategy and rely 

              solely on website forpromotion

• Growth stage: sales climb rapidly, profit levels improve, and more competitors enter the fray

       --Improving service quality and adding new 

          service features and service elements

       --Pursuing new target markets

       --Using new channels of distribution

       --Lowering prices to attract more price sensitive 

          customers

       --Shifting some advertising emphasis from building awareness to creating desire and action

•       Maturity stage strategies:

--Market modification strategy – organization goes after competitors customers, adds new target markets, and tries to convert non users into users

--Product modification strategy – re designing the organizations physical services to make them seem newer and more contemporary

--Marketing mix modification strategy – sales can be stimulated by changing the marketing mix

               >Hotels can place more emphasis on finding new online distribution channels

--Brand extension strategy – adds different types of product line to existing offerings

                   >Hilton will sell their beds, linens, accessories

• Decline stage strategies – reducing costs and milking the company, selling out to someone is another alternative

When your product is in the introduction phase you are starting out with a new service offered to the public.You aren't necessarily trying to focus on making a profit but rather retaing customers. You may advertise a lot with a high priced product, not advertise much but still have a high priced product, have a low priced product and do a lot of promoting, or have a low priced prduct and low amounts of promotion.

When you have a product that is in the groth phase, you already have a customer base. Now you are trying to expand your customer base, improve your technology and market how your product is unique to competitors. 

What are the five D's of Positioning?

1. Documenting: Identifying benefits that are most important to the customers who buy the organization's service and products
2. Deciding: Deciding on image that the organization wants to have within its selected target market
3. Differentiation: Pinpoint competitors the org wants to appear different from and the things that make it different
4. Designing: Creating a product/service differences and communicating these in positioning statements and other aspects of the marketing  mix (8p's)
5. Delivering: Making good on the orgs promises

Write a positioning statement for one of te businesses that you discussed in your hw assignment. Why is postioning important when developing a marketing strategy?

     Newlyweds: The positioning approach that should be used is positioning on specific product features. My business would make the link between how my service is adventurous and fun and then relate it to couples.  An example would be, “intimate fly-fishing high in the Rockies.”

1. Target Market Specific: objectives must be set for each target market selected for marketing attention
2. Results oriented: need to be expressed in terms of desired results. Should be writtenusing one of the yardsticks (increase in volume, revenues, or market share). They control, measure, and evaluate the success of marketing plans
3. Quantitative: must be expressed numerically so progress and results can be measured
4. Time Specific: Objectives must be set for specific time periods

Example using all four criteria: To increase the amount of trips purchased (result) from parents (target market) by 10% (quantified) in the next calendar year (time specific)

1. Fact-based: a plan must build on previous research.
2. Organized and coordinated: must be specific and detailed as possible. Clearly identify departments and people responsible for specific tasks, and describe the promotional and other materials that are required.
3. Programmed: must be orchestrated so that activities are carefully sequenced. Timing is important in marketing, thus a plan must have a detailed, staged timetable.
4. Budgeted: must be budgeted carefully, several tentative budgets should be prepared before the organization decides on the final.
5. Flexible: unforeseen events occur a plan needs to be adjusted at times, Contingency planning must be built this means allowing some room in the plan and marketing budget to take care of unexpected events.
6. Controllable: every plan must contain measurable objectives and ways to determine them. It must also define who is responsible for measuring progress.
7. Internally consistent and interrelated: most plans are interrelated so therefore need to be consistent.
8. Clear and simple: being detailed doesn’t have to mean difficult. Objectives and tasks must be clearly communicated; possible areas of overlap, confusion, or misunderstanding need to be eliminated. 

1. Executive Summary- 3rd-Summary of main highlights of marketing plan

2. Marketing Plan rationale- 1st-research findings and assumptions of plan

3. Implementation Plan-2- Marketing objectives and action plan. Marketing budget and timetable and responsibilities. Control and evaluation procedures

1. Situation analysis
2. marketing research studies
3. market segmentation
4. segmentation approach and characteristics target-market selection
5. marketing strategy
6. positioning approaches
7. marketing mixes
8. marketing objectives

It would be appropriate to use a marketing analysis v a situation analysis if youi were developing a rationale for a new or expanding business rather than an existing business.

Benefits:

1.  Access to new markets

  2.  Expansion of product/service mix

  3.  Increased ability to serve customer needs

  4.  Increased marketing budget

  5.  Sharing of facilities or routes

  6.  Enhanced image or position

  7.  access to partner customer data

  8.  Access to partner expertise

Disadvantages:

1. 

A.       Top management buy-in and visionary leadership: organizations leaders must be committed to improving service quality.

B.       Human resource management as a key component of quality: must see as a competitive advantage.

C.      Technical systems emphasis - Process orientation: design service delivery processes so customers can receive service with no hassles.

D.       Information and analysis system: employees must be given adequate information on processes and customers. Done through internal marketing.

E.      Benchmarking: organizations must continually gather data on customer and employee satisfaction, as well with peers in same industry.

F.      Continuous improvement: organizations must be always growing.

G.        Customer focus: must operate on belief that customer satisfaction is ultimate measure of service quality.

H.       Employee satisfaction commitment: organizations must continually satisfy employee’s needs.

I.      Union inclusion/partnership: must work together with unions.

J.         Social responsibility: must meet their social responsibility and community obligations.

K.        “Servicescapes” – quality of physical environment supports quality service

L. Service culture: must develop and maintain effective service cultures

Servqual measures the gap between what customers expect from a service and what they perceive they receive.

Five dimensions that measure this gap between customer’s expectations and perceptions:

0.       Tangibles: organizations physical facilities, equipment, and appearance of staff.

1.       Reliability: organizations ability to perform service dependably and accurately.

2.       Responsiveness: willingness of staff to help customers and provide prompt service.

3.       Assurance: knowledge and courtesy of staff and their ability to convey trust and confidence.

4.       Empathy: degree of caring, individualized attention that the organizations staff provides to customers.

It is measured through a special questionnaire, 22 statements, reflecting the five dimensions. Perceptions-Expectations= quality. 

Packaging:

o   The combination of related and complementary services into a single-price offering

Programming:

o   The development of special activities, events, or programs to increase customer spending, or to give added appeal to a package or other hospitality/travel service

·       A main reason packaging and programming has become so popular is the benefits for both the consumer and the organizations.  When organizations partner up with each other to create package deals for vacation or events, customers get a low price for the services.  Also, this creates a more reliable market for the organizations because customers in the modern world seek opportunities with low prices. 

o   Customers reasons for popularity:

§  Convenience, value, consistent quality, appeals to special interests, ease of budgeting and planning, added excitement

o   Business reasons;

§  Increased off-peak business, appeal to new target markets, ability to capitalize on new market trends, enhanced appeal to special-interest guests, more accurate forecasting and increased efficiency

§  Increased per capita spending and length of stay, use of complementary facilities and services, public relations and publicity value of unique packages, more repeat and frequent use, increased customer satisfaction

Dynamic Packaging:

Emerged with the development of the internet. It is an interactive online feature that allows customers to assemble packages to meet their needs.

§  Based on an individual customer search request

§  Ability to combine multiple travel elements

§  Provides a single, fully priced package in 5 to 15 seconds.