Principles of marketing: Lecture 19

MGT301
Principles of Marketing
Lecture­19


Summary
of  
Lecture­18


Market Segmentation (cont..)


Requirements for Effective 
Segmentation


Measurable
Measurable

Accessible
Accessible

Substantial
Substantial
Differential
Differential

Actionable
Actionable

• Size, purchasing power, profiles of
segments can be measured.

• Segments must be effectively
reached and served.

• Segments must be large or
profitable enough to serve.

• Segments must respond
differently to different marketing
mix elements & actions.

• Must be able to attract and serve
the segments.


Target Marketing


Positioning for Competitive Advantage


Identifying Possible Competitive 
Advantages
Product 
Differentiation
i.e. Features, 
Performance, Style & 
Design, or Attributes

Image
Differentiation
i.e. Symbols, 
Atmospheres, Events

Services
Differentiation
i.e. Delivery, Installation, 
Repair Services, Customer 
Training Services
Personnel 
Differentiation
i.e. Hiring, Training 
Better People Than 
Competitors Do


Today’s Topics

Marketing Mix
4 Ps


Marketing is the involved process of determining the  4 P’s of the 
Marketing Mix
– Product 
– Price
– Promotion
– Place (Distribution)

The Marketing Mix

– Four marketing activities—product, Price, Place and 
Promotion—that a firm can control to meet the needs of 
customers within its target market

Product
Price
Place
Promotion

Target
Market


Marketing Mix Variables
Product

Goods, services, or ideas that
satisfy customer needs

Pricing

Decisions and actions that
establish pricing objectives and
policies and set product prices

Place
Promotion

The ready, convenient, and timely
availability of products
Activities that inform customers
about the organization and its
products


Components of Strategic Marketing




Value­Driven Marketing
Value
– A customer’s subjective assessment of benefits relative to 
the costs in determining the worth of a product
Customer value = customer benefits – customer costs
– Customer benefits
Anything desired by the customer that is received in an 
exchange
– Customer costs
Anything a customer gives up in an exchange for benefits
–Monetary price of the benefit
–Search costs (time and effort) to locate the product
–Risks associated with the exchange


Benefits


Consumers don’t buy products; they buy benefits



Functional benefits: relating to the practical purpose a product 
serves



Psychological benefits: relating to how a product makes one 
feel


Question: Why do you buy laptop?


What is a Product?
Whatever is offered for “sale” in a marketing exchange
Can be tangible goods (Laptop), services (VU education), 
ideas (Don’t smoke), places (Muree hills ), persons.


What is a Product ?
Products, Services, and Experiences
Market offerings, pure tangible goods, pure services, 
experiences


Definitions

Product
– Anything offered to a market for attention, acquisition, use, 
or consumption that might satisfy a need or want.
Service
– Any activity or benefit that one party can offer to another 
that is essentially intangible and does not result in 
ownership of anything.


Goods

Services


Goods

Services

Tangible

Intangible

Produced Then Sold

Sold Then Produced and/
or Consumed Same Time


Goods

Services

Tangible

Intangible

Produced Then Sold

Sold Then Produced and/
or Consumed Same Time

Can Store and Transport

Perishable

Produced Separate
From Consumer

Often Produced In
Consumer's Presence


Levels of Products