DISCUSSION QUESTIONS – MARKETING PRINCIPLES

QUESTIONS
1. Differences between Market Segmentation & Target Market
2. Explain companywide strategic planning and its four steps
3. Discuss how to design business portfolios and develop growth strategies.
4. List the marketing management functions, including the elements of a marketing plan, and discuss the
importance of measuring and managing return on marketing investment.
5. List and discuss the major bases for segmenting consumer and business markets.
6. Explain how companies identify attractive market segments and choose a market- targeting strategy.
7. Discuss how companies differentiate and position their products for maximum competitive advantage.
8. Define the consumer market and construct a simple model of consumer buyer behavior.
9. Name the four major factors that influence consumer buyer behavior.
10. List and define the major types of buying decision behavior and the stages in the buyer decision process.
11. Describe the adoption and diffusion process for new products.
12. Define the marketing information system and discuss its parts.
13. Outline the steps in the marketing research process.
14. Discuss the special issues some marketing researchers face, including public policy and ethics issues.
15. Define product and the major classifications of products and services.
16. Describe the decisions companies make regarding their individual products and services, product lines, and
product mixes.
17. Identify the four characteristics that affect the marketing of services and the additional marketing
considerations that services require.

ANSWERS
1. Market segmentation and target marketing are two steps of the marketing process. Although the two go hand-
in-hand, there are distinct differences between them, as market segmentation must take place before a target
market is determined.
Processes: Market segmentation occurs when a company decides that they want to identify a specific type of
consumer to which they can market their product or service. A target market is determined once the company
identifies which consumers to sell to.
Function: Market segmentation is used to research the entire market as a whole and then place consumers into
separate groups based on common characteristics. The company then decides which group is best and
concentrates on selling to them, which is also called target marketing.
Features: Market segmentation may be based on variables such as behavior, demographics (e.g., gender, age,
education, and income), geography, and psychographic characteristics, or those based on lifestyle and personality.
Identification: A target market is identified once a company evaluates all possible market segments and
determines which would be the most appropriate, and therefore profitable.
Positioning: Marketing a product through advertising, also known as positioning, cannot be properly executed
before market segmentation takes place and a target market is determined.

2. Strategic planning sets the stage for the rest of the company’s planning. Marketing contributes to strategic
planning, and the overall plan defines marketing’s role in the company.
Strategic planning involves developing a strategy for long-run survival and growth. It consists of four steps: (1)
defining the company’s mission, (2) setting objectives and goals, (3) designing a business portfolio, and (4)
developing functional plans. The company’s mission should be market oriented, realistic, specific, motivating,
and consistent with the market environment. The mission is then transformed into detailed supporting goals and
objectives, which in turn guide decisions about the business portfolio. Then each business and product unit must
develop detailed marketing plans in line with the company-wide plan.

3. Guided by the company’s mission statement and objectives, management plans its business portfolio, or the
collection of businesses and products that make up the company. The firm wants to produce a business portfolio
that best fits its strengths and weaknesses to opportunities in the environment. To do this, it must analyze and
adjust its current business portfolio and develop growth and downsizing strategies for adjusting the future
portfolio. The company might use a formal portfolio-planning method. But many companies are now designing
more-customized portfolio-planning approaches that better suit their unique situations.

4. To find the best strategy and mix and to put them into action, the company engages in marketing analysis,
planning, implementation, and control. The main components of a marketing plan are the executive summary,
the current marketing situation, threats and opportunities, objectives and issues, marketing strategies, action
programs, budgets, and controls. To plan good strategies is often easier than to carry them out. To be successful,
companies must also be effective at implementation-turning marketing strategies into marketing actions.
Marketing departments can be organized in one or a combination of ways: functional marketing organization,
geographic organization, product management organization, or market management organization. In this age of
customer relationships, more and more companies are now changing their organizational focus from product or
territory management to customer relationship management. Marketing organizations carry out marketing
control, both operating control and strategic control.
Marketing managers must ensure that their marketing dollars are being well spent. In a tighter economy, today’s
marketers face growing pressures to show that they are adding value in line with their costs. In response,
marketers are developing better measures of return on marketing investment. Increasingly, they are using
customer-centered measures of marketing impact as a key input into their strategic decision making.

5. There is no single way to segment a market. Therefore, the marketer tries different variables to see which give
the best segmentation opportunities. For consumer marketing, the major segmentation variables are geographic,
demographic, psychographic, and behavioral. In geographic segmentation, the market is divided into different
geographical units, such as nations, regions, states, counties, cities, or even neighborhoods. In demographic
segmentation, the market is divided into groups based on demographic variables, including age, gender, family
size, family life cycle, income, occupation, education, religion, race, generation, and nationality. In
psychographic segmentation, the market is divided into different groups based on social class, lifestyle, or
personality characteristics. In behavioral segmentation, the market is divided into groups based on consumers’
knowledge, attitudes, uses, or responses to a product.
6. To target the best market segments, the company first evaluates each segment’s size and growth characteristics,
structural attractiveness, and compatibility with company objectives and re- sources. It then chooses one of four
market-targeting strategies - ranging from very broad to very narrow targeting. The seller can ignore segment
differences and target broadly using undifferentiated (or mass) marketing. This involves mass producing, mass
distributing, and mass promoting about the same product in about the same way to all consumers. Or the seller
can adopt differentiated marketing - developing different market offers for several segments. Concentrated
marketing (or niche marketing) involves focusing on one or a few market segments only. Finally, micromarketing
is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.
Micromarketing includes local marketing and individual marketing. Which targeting strategy is best depends on
company resources, product variability, the PLC stage, market variability, and competitive marketing strategies.

7. Once a company has decided which segments to enter, it must decide on its differentiation and positioning
strategy. The differentiation and positioning task consists of three steps: identifying a set of possible
differentiations that create competitive advantage, choosing advantages on which to build a position, and
selecting an overall positioning strategy.
The brand’s full positioning is called its value proposition - the full mix of benefits on which the brand is
positioned. In general, companies can choose from one of five winning value propositions on which to position
their products: more for more, more for the same, the same for less, less for much less, or more for less. Company
and brand positioning are summarized in positioning statements that state the target segment and need, the
positioning concept, and specific points of difference. The company must then effectively communicate and
deliver the chosen position to the market.

8. The consumer market consists of all the individuals and house- holds who buy or acquire goods and services
for personal consumption. The simplest model of consumer buyer behavior is the stimulus-response model.
According to this model, marketing stimuli (the four Ps) and other major forces (economic, technological,
political, cultural) enter the consumer’s “black box” and produce certain responses. Once in the black box,
these inputs produce observable buyer responses, such as product choice, brand choice, purchase timing,
and purchase amount.

9. Consumer buyer behavior is influenced by four key sets of buyer characteristics: cultural, social, personal, and
psychological. Although many of these factors cannot be influenced by the marketer, they can be useful in
identifying interested buyers and shaping products and appeals to serve consumer needs better. Culture is
the most basic determinant of a person’s wants and behavior. Subcultures are “cultures within cultures” that have
distinct values and lifestyles and can be based on anything from age to ethnicity. Many companies focused their
marketing programs on the special needs of certain cultural and subcultural segments.
Social factors also influence a buyer’s behavior. A person’s reference groups - family, friends, social networks,
professional associations - strongly affect product and brand choices. The buyer’s age, life-cycle stage,
occupation, economic circumstances, personality, and other personal characteristics influence his or her buying
decisions. Consumer lifestyles - the whole pattern of acting and interacting in the world - are also an important
influence on purchase decisions. Finally, consumer buying behavior is influenced by four major psychological
factors: motivation, perception, learning, and beliefs and attitudes. Each of these factors provides a different
perspective for understanding the workings of the buyer’s black box.

10. Buying behavior may vary greatly across different types of products and buying decisions. Consumers
undertake complex buying behavior when they are highly involved in a purchase and perceive significant
differences among brands. Dissonance-reducing behavior occurs when consumers are highly involved but see
little difference among brands. Habitual buying behavior occurs under conditions of low involvement and little
significant brand difference. In situations characterized by low involvement but significant perceived brand
differences, consumers engage in variety-seeking buying behavior.
When making a purchase, the buyer goes through a decision process consisting of need recognition,
information search, evaluation of alternatives, purchase decision, and post-purchase behavior. The marketer’s
job is to understand the buyer’s behavior at each stage and the influences that are operating. During need
recognition, the consumer recognizes a problem or need that could be satisfied by a product or service in the
market. Once the need is recognized, the consumer is aroused to seek more information and moves into the
information search stage. With information in hand, the consumer proceeds to alternative evaluation, during
which the in- formation is used to evaluate brands in the choice set. From there, the consumer makes a purchase
decision and actually buys the product. In the final stage of the buyer decision process, post-purchase behavior,
the consumer takes action based on satisfaction or dissatisfaction.

11. The product adoption process is made up of five stages: aware- ness, interest, evaluation, trial, and adoption.
New-product marketers must think about how to help consumers move through these stages. With regard to the
diffusion process for new products, consumers respond at different rates, depending on consumer and product
characteristics. Consumers may be innovators, early adopters, early majority, late majority, or laggards. Each
group may require different marketing approaches. Marketers often try to bring their new products to the attention
of potential early adopters, especially those who are opinion leaders. Finally, several characteristics influence the
rate of adoption: relative advantage, compatibility, complexity, divisibility, and communicability.

12. The marketing information system (MIS) consists of people and procedures for assessing information needs,
developing the needed information, and helping decision makers use the information to generate and validate
actionable customer and market insights. A well-designed information system begins and ends with users.
The MIS first assesses information needs. The MIS primarily serves the company’s marketing and other
managers, but it may also provide information to external partners. Then the MIS develops information from
internal databases, marketing intelligence activities, and marketing research. Internal databases pro- vide
information on the company’s own operations and departments. Such data can be obtained quickly and cheaply
but often needs to be adapted for marketing decisions. Marketing intelligence activities supply everyday
information about developments in the external marketing environment. Market research consists of collecting
information relevant to a specific marketing problem faced by the company. Lastly, the MIS helps users analyze
and use the information to develop customer insights, make marketing decisions, and manage customer
relationships.

13. The first step in the marketing research process involves defining the problem and setting the research
objectives, which may be exploratory, descriptive, or causal research. The second step consists of developing a
research plan for collecting data from primary and secondary sources. The third step calls for implementing the
marketing research plan by gathering, processing, and analyzing the information. The fourth step consists of
interpreting and reporting the findings. Additional information analysis helps marketing managers apply the
information and provides them with sophisticated statistical procedures and models from which to develop
more rigorous findings.
Both internal and external secondary data sources often pro- vide information more quickly and at a lower cost
than primary data sources, and they can sometimes yield information that a company cannot collect by itself.
However, needed information might not exist in secondary sources. Researchers must also evaluate secondary
information to ensure that it is relevant, accurate, current, and impartial.
Primary research must also be evaluated for these features. Each primary data collection method - observational,
survey, and experimental - has its own advantages and disadvantages. Similarly, each of the various research
contact methods - mail, telephone, personal interview, and online - also has its own advantages and drawbacks.
14. Some marketers face special marketing research situations, such as those conducting research in small
business, not-for-profit, or international situations. Marketing research can be conducted effectively by small
businesses and nonprofit organizations with limited budgets. International marketing researchers follow the same
steps as domestic researchers but often face more and different problems. All organizations need to act
responsibly to major public policy and ethical issues surrounding marketing research, including issues of
intrusions on consumer privacy and misuse of research findings.

15. Broadly defined, a product is anything that can be offered to a market for attention, acquisition, use, or
consumption that might satisfy a want or need. Products include physical objects but also services, events,
persons, places, organizations, or ideas, or mixtures of these entities. Services are products that consist of
activities, benefits, or satisfactions offered for sale that are essentially intangible, such as banking, hotel, tax
preparation, and home-repair services.
Products and services fall into two broad classes based on the types of consumers that use them. Consumer
products - those bought by final consumers - are usually classified according to consumer shopping habits
(convenience products, shopping products, specialty products, and unsought products). Industrial products -
purchased for further processing or for use in conducting a business - include materials and parts, capital items,
and supplies and services. Other marketable entities - such as organizations, persons, places, and ideas - can also
be thought of as products.

16. Individual product decisions involve product attributes, branding, packaging, labeling, and product support
services. Product attribute decisions involve product quality, features, and style and de- sign. Branding decisions
include selecting a brand name and developing a brand strategy. Packaging provides many key benefits, such as
protection, economy, convenience, and promotion. Package decisions often include designing labels, which
identify, describe, and possibly promote the product. Companies also develop product support services that
enhance customer service and satisfaction and safeguard against competitors.
Most companies produce a product line rather than a single product. A product line is a group of products that
are related in function, customer-purchase needs, or distribution channels. All product lines and items offered to
customers by a particular seller make up the product mix. The mix can be described by four dimensions: width,
length, depth, and consistency. These dimensions are the tools for developing the company’s product strategy.

17. Services are characterized by four key characteristics: they are intangible, inseparable, variable, and
perishable. Each characteristic poses problems and marketing requirements. Marketers work to find ways to make
the service more tangible, increase the productivity of providers who are inseparable from their products,
standardize quality in the face of variability, and improve demand movements and supply capacities in the face
of service perishability.
Good service companies focus attention on both customers and employees. They understand the service profit
chain, which links service firm profits with employee and customer satisfaction. Services marketing strategy calls
not only for external marketing but also for internal marketing to motivate employees and interactive marketing
to create service delivery skills among service providers. To succeed, service marketers must create competitive
differentiation, offer high service quality, and find ways to increase service productivity.