Marketing Principles

1.  Vitamins segmentation can be done under two factors of demographic segmentation: age and life-cycle stage and gender. For example: many companies have vitamins for kids that taste fruity and come in an assortment of colors compared to the vitamins for adults. Vitamins are also different for men and women.

When we take credit cards into consideration, although consumer segmentation is important, segmenting business markets is quite important too. Customers may already carry a certain credit card but they must also have an outlet to use that credit card. Henceforth, companies must maintain relationships with the merchants segment that already carry the cards and try to convince new ones to carry the card as well.

The most important segmentation variable for coffee would be under behavioral segmentation. A large part of the American population drinks coffee; it’s a morning ritual for most. To do effectively segment the market, coffee companies such as Starbucks should asses the usage rate to see whether the consumer is a light, medium, or heavy product user. Heavy users are more likely to be loyal customers therefore the company should fulfill all their needs to keep them loyal. Light users should be the target of advertisements to bring them in and hopefully turn them in to loyal customers.

2. International markets can be segmented geographically, economically, politically and culturally. Companies can also use inter-market segmentation where the form “segments of consumers who have similar needs and buying behavior even though they are located in different countries.” (Kotler and Armstrong 207) This concept can be used to segment an ipod because the basic purpose is storing an enormous amount of music into a small portable device. It doesn’t matter what kind of music is stored in the ipod so all the barriers are broken.

3.  Question 1- What is the size of the population that can afford to purchase this product?

Question2- Will the segments be reached through television advertisements?

Question 3- Are we targeting the same segment that we’ve chosen for our already successful mega-whopper burger?

Question 4- Or are we segmenting on a completely different basis?

Question 5- Can we successfully promote our product to the particular segment?

4. You are product manager of a financial services product that is being sold directly to consumers over the Internet. The most important measure to the company is customer acquisition cost – the cost associated with convincing a consumer to buy the service. You have been conducting tests with both a concentrated and undifferentiated segmentation strategy, and the results are presented here. Which strategy is the best? Why?

An undifferentiated segmentation strategy is best because the cost is already low since the customer is reached through the internet. The internet allows company’s to do a lot for a lot less and you can reach out to a large amount of people therefore having less costs and more customers.

5.  Microsoft’s Window XP Professional is a product. A service provides the company to make a direct face to face contact with a customer. The level of satisfaction can be predicted right away in providing a service. On the other hand, a product must be taken home and thoroughly used to find out if it fulfills all the needs and wants of a customer and whether the customer was delighted. When someone buys a laptop that has Windows XP Professional installed on it they can judge it after they have used it for a while and figure out whether it was fully satisfying or not.

Core benefit- Like the Microsoft XP homepage tagline, the customer purchases the freedom to do what he/she wants at the office or at home.

Actual Product- the box that the software comes in and the cd

Augmented product- a warrantee and free repair service incase of virus damage, customer service for dealing with any difficulties encountered with the product

6. a laptop- shopping

a surgeon- specialty

automobile tires- convenience

7.  Line extensions- two-seater snowboard; large, small, or medium snowboard

Brand extensions- from Johny’s snowboards to Johny’s golf clubs or Johny’s basketball gearMultibrands- Sonia’s snowboards for women

New brands- Tommy’s luxury snow goods

8. Concept testing is very important because it tells about what the consumers think about your product. Ideas are generated into concepts which then serve the market. To make sure that they are successful in the market a concept test is necessary. Through a marketers eyes the innovative idea he came up with might be great but it has to work with that the publics wants and needs. To ensure that your product will not be a failure or have a fair idea that it will go towards the ladder of success and not incur a multimillion dollar loss to the company, concept testing is a must.

9.  I would not test market a necessity product, more specifically, an unbranded necessity product such as wheat, or rice, or perhaps tap water. Tap water has to be paid for, and it can even be a little branded. In some peoples opinions New York City’s tap water is way better than the chlorinated water of Houston but no one goes and does concept testing for this.

10. In the growth stage a company can have a dominant position by spending a lot on promotion and distribution and continuously improving their product. By doing this the firm gets a high market share, however, it has to give up short term profit. Therefore, to get a high market share, the company has to give a current high profit. 

11. Product- the product is doing well but innovation is the key to success

Price- price adjustments have to made according to situation

Place- market share can be increased if the toys are placed in more stores

Promotion- heavy promotion can be done during Christmas season

12. Cost based pricing is done by adding a standard markup to the cost of producing the product. Whereas, value based pricing can have a very high range because it’s based on the customer’s perception of the value of the product. Value based pricing can usually be done adding a few value added benefits and charging a high price for them.

13. Internal factors of pricing include marketing objectives, the marketing mix strategy, costs and organizational considerations. Depending on what Sony wants to accomplish through its MP3 player will dictate the price. If Sony wants to skim the market it’s going to charge a high price initially but if Sony wants to penetrate the market it will have lower prices initially. Also price decisions have to be coordinated with the whole picture. They must be in sync with the way the product is designed, the promotion and distribution.

14.       Break-Even Volume= Fixed cost/(Price –variable cost)

Fixed cost= 3133 + 8560 + 2213 + 27653 + 1650 + 18386 + 1904 + 4855 + 3159 + 3960 = 76461

Price= 10.35

Assumed variable cost= 7

Break-Even Volume= 22824.179

15. Psychological factors play a huge rule in the way a consumer responds to purchasing a product. Companies often use this tactic to psychologically motivate customers to purchase their product. For example, instead of pricing a product $100, the company might price it $99.99 or $99.98. People usually set targets for how much to spend when they are out shopping. If a person has made up his mind to not to spend $100 he might be psychologically motivated by an item that is priced at $99.99 and go ahead and make the purchase although its pretty much the same thing as spending $100.

16. Different countries face different economic conditions which affects the markets buying power. If an international company sets a uniform worldwide price for a commodity type product it may not make too many profits. Something that is sold for $5 dollars in the United States would translate to approximately Rs. 250 in India. If in Indian has Rs.250 he/she might not spend that money for the same thing the American would pay $5 dollars for.

17. Cingular offers lower prices for their plans compared to Sprint. For example, if Cingular charges 59.99 or 79.99 or 94.99 for 900 minutes, Sprint offers 89.99 for 900 minutes but offers unlimited for 99.99. Although Cingular might be giving better options for a lower price, Sprint prices strategically by offering unlimited in just a few dollars more. Both companies tactfully use psychological pricing.

Works Cited

“Family Cell Phone Plans.” AT&T. 31 Mar 2008 <https://www.att.com/shop/wireless/data-plans.html>.

“Individual Cell Phone Plans.” AT&T. 31 Mar 2008 <https://www.att.com/shop/wireless/plans/planconfigurator.html?tab=whpi>.

Kotler, Philip, and Gary Armstrong. Principles of Marketing. 11. Prentice Hall, 2001.

Kotler, Phillip, and Kevin Keller. Marketing Management. 12. Prentice Hall, 2001.

“Microsoft Windows XP professional.” Microsoft. 31 Mar 2008  <https://support.microsoft.com/ru-ru/allproducts>.

“Services.” AT&T. 31 Mar 2008 <https://www.att.com/shop/wireless/features/featureslist.html>.