Data sources are divided into primary research (data collected specifically for the current problem) and secondary research (existing data that was collected for another purpose). Secondary data can be sourced internally (from within the company) or externally (from outside organizations). Because researchers cannot study every single person in a population, they use sampling to select a representative group and then make statistical inferences to draw conclusions about the larger population.
Exam Tip: Be prepared to distinguish between primary and secondary data. Remember that secondary data is faster and cheaper, but primary data is more specific to your current research need.
Segmentation, Targeting, and Positioning
Once research is complete, companies must decide whom to serve through market segmentation—the process of dividing a market into distinct groups of buyers with different needs or behaviors.
Segmentation Variables
- Geographic: Segmenting by location (e.g., region, city size, climate).
- Demographic: Segmenting by measurable statistics (e.g., age, gender, income, occupation).
- Psychographic: Segmenting based on lifestyle, personality, or social class.
Target Marketing Strategies
After segmenting the market, a firm must choose a target marketing strategy:
- Undifferentiated Marketing: Ignoring segment differences and going after the whole market with one offer.
- Differentiated Marketing: Targeting several market segments and designing separate offers for each.
- Concentrated (Niche) Marketing: Going after a large share of one or a few smaller segments (niches).
To communicate how a brand sits in the consumer's mind relative to competitors, marketers use perceptual maps (also called positioning maps). These visual tools help identify gaps in the market or areas where a brand is perceived weakly.
New Product Development and the Product Life Cycle
Bringing a new product to market is a structured process known as the new product development process. This includes stages such as idea generation, followed by the idea screening stage (or screening and evaluation), where ideas are vetted to ensure they align with company objectives.
Product Life Cycles (PLC) and Adoption
All products follow a Product Life Cycle (PLC), moving through stages of introduction, growth, maturity, and decline. Marketing management must shift its strategy (price, promotion, distribution) as the product moves through these stages.
Consumers do not adopt new products at the same time. They fall into buyer adopter categories:
- Innovators: The first to try new products.
- Early Adopters: Opinion leaders who adopt early but with more discretion.
- Early Majority: Adopt new ideas before the average person.
- Late Majority: Skeptical; adopt only after the majority has tried it.
- Laggards: Traditionalists who are the last to adopt.
Services and Quality
Services differ from physical goods due to unique dimensions of quality. While goods are tangible, services are often intangible and inseparable from the provider. Marketers often use GAP analysis to identify discrepancies between customer expectations and the actual service delivered.
Brand and Product Management
A central goal for many firms is building brand equity, which is the added value a brand name gives to a product beyond its functional benefits.
Managing the Product Portfolio
A product manager is responsible for making strategic decisions regarding the company's offerings. They manage two key dimensions:
- Product Mixes: The set of all product lines and items that a particular seller offers for sale.
- Product Lines: A group of products that are closely related because they function in a similar manner or are sold to the same customer groups.
To grow these offerings, companies use two main strategies:
- Line Extensions: Adding new items within the same product category (e.g., a new flavor of an existing soda).
- Brand Extensions: Using an existing, successful brand name to launch a product in a new category (e.g., a clothing brand launching a perfume line).
Exam Tip: Don't confuse line extensions with brand extensions. A line extension stays in the same "family" of products, while a brand extension jumps into a new "family" using the same name.
