M-300

Data mining:

The process of sifting through the mounds of data to dig out interesting (and profitable!) findings about customers.

Extended Problem Solving?

The purchase decision is important to you so you spend much time, effort and even money gathering information so you will make the right decision. (Houses, Automobiles, College)

To be effective, a segment must meet the following four criteria.

-The segment must be measurable. -The segment must be reachable through promotion and distribution. -The segment must be profitable. -The segment must be relevant or able to be served effectively by the firm.

What are the psychological influences on the consumer decision process?

- Personality - learning - lifestyle - Perception - Risk - Motivation

Segmentation can help increase the effectiveness of

- Promotion, such as media advertising, to avoid wasting money on unprofitable segments. - Product Development; For example, P&G has identified nine laundry detergent segments and has developed products to meet each segment's needs. - Pricing; For example, USAir charges business travelers $571 to fly to Newark, NJ, and vacationers $189.

Steps in Segmenting and Targeting the Market?

- Step 1: Define the Market (describe all possible customers) - Step 2: Use Variables to Divide Market into Segments - Step 3: Select Segments to Target - Step 4: Use 4Ps to Position & Build Performance

What assumptions and reasons do people not like marketing?

- They think it raises prices (look at how much is spent on advertising and branding essentially similar products) - They think that it interrupts and increasingly invades their privacy - They think that it exaggerates benefits and hides the disbenefits - They think that it stimulates cravings that we would not normally have

What is Possession value?

- enhancing the ability of the customer to acquire and use the product over time. Example: Free samples at Costco.

what are the five bases of segmentation

- geography - needs - usage - demographics - psychographics

What is Time value?

- making the product available when the customer needs it. Example: Waffle House is open 24 hours, allowing different market segments to purchase food items of debatable form-value at times best for them.

What is place value

- making the product available where customers need it. Example: Chase has hundreds of bank branches throughout the United States.

Situational Influences?

- physical environment - time - personal factors

What is service value?

- providing excellent service on an ongoing basis. Example: Samsung offers a website, a toll-free number, mobile, and Twitter support to customers and suppliers who have problems with their products.

What is Information Value

- providing relevant information about the product. Example: Amazon.com offers a tremendous amount of information about books and other products on their website.

physical environment?

- the atmosphere of the store, restaurant, etc. Color, smell, crowding, size, clutter, noise, light, etc.

What is an opinion leader?

-An opinion leader is a person who has the ability to influence others' attitudes or behaviors. -Opinion leaders provide valuable information to others because they are perceived to -be knowledgeable about a product category, -be earlier adopters - often first to buy new products, -hold significant status among consumers

What are the 4 parts of the Marketing Research Process

1) Defining the problem and research objectives 2) Developing the research plan for collecting information 3) Implementation - collecting & analyzing data 4) Interpreting and reporting the findings

What is the Consumer Decision Process?

1) Problem Recognition 2) Information Search 3) Evaluation of Alternatives 4) Purchase Decision 5) Post-Purchase Behavior

What is the process for a Customer?

1) Trigger (Want or Need) 2) Exploration (How?) 3) Choice (Shop) 4) Compare (Plan of action) 5) Take Action (Purchase) 6) Review (Good decision)

What are the 4 steps in a General Marketing Model?

1) Understand the marketplace and customer needs 2) Design a Customer value-driven marketing strategy 3) Deliver the Marketing Strategy (4p's: promotion, place, product price) 4) Build profitable customer relationships

Theodore Levitt, a well-known marketing theorist, offers four ideas that can help firms build customer value.

1. There are no commodities; all products can be differentiated. What is a commodity? Avoid the commodity trap. 2. Products are problem solving tools. Consumers think more about holes and thirst than drill bits and colas. 3. There is a bias toward the measureable (sales, profit, etc). Firms should also attempt to measure more difficult phenomenon, like customer satisfaction, fun, and friendliness. 4. Intangibles matter. (reputation and brand equity or the power of the brand). Make the intangible tangible.

Colegate's new product development division has developed a new toothpaste designed to increase frequency of brushing among its current customers: Colgate toothpaste with pictures of Elvis and Madonna embedded in a red gel. This product is best described as an example of: 1) diversification strategy 2) market development strategy 3) penetration strategy 4) product development strategy

4) product development strategy

Data warehouse:

A company-wide electronic database of finely detailed customer information that needs to be sifted through for gems. It's a central location of accessible data on customers.

Ethnographic Research:

A form of observational research that involves sending trained observers to watch and interact with consumers in their "natural environments."

Sample:

A segment of the population selected for marketing research to represent the population as a whole.

Concentrated / niche marketing

A strategy most often used by small firms that directs the firm's efforts toward serving a very small segment.

Differentiated marketing

A strategy where numerous products are offered to different segments through differential use of the 4Ps. This approach is the "opposite" of the undifferentiated strategy.

Lifestyle is often described as the values, attitudes and behaviors exhibited by customers. Some researchers have categorized customers using lifestyle variables to help predict what they will purchase. For example,

Achievers live busy, goal directed lives with a strong commitment to career and family. They are heavy consumers of time saving devices and prestige products that demonstrate their success to their peers. Strivers are trendy and fun-loving but less confident customers who purchase for safety reasons (e.g., buying a Volvo because it is safe). Thinkers are mature, reflective, and well educated who buy durable and functional products versus stylish products.

Promotion?

Activities that communicate the merits of the product and persuade target customers to buy it

evoked set ?

An evoked set is a small group of products being evaluated, like the three cars here. The evoked set is usually smaller than the total number of products available for purchase.

What is the purpose of delivering values to customers?

Build strong and profitable Customer Relationships to capture value from customers.

Intrusions on Consumer Privacy

Companies face the challenge of unearthing valuable but potentially sensitive consumer data while maintaining consumer trust.

Place?

Company activities that make the product available to target consumers

Socio-cultural influences

Culture: -Group within a society whose members share a distinctive set of beliefs, characteristics, or experiences. -Religious Groups -Racial/ Ethnic Groups -Regional Groups Social class: -Refers to the overall rank of people in society. -Measured by: Occupation, Income, Education, and Wealth. -Common tastes in clothing, styles, leisure activities, etc.

Customized Marketing

Customized is an extreme version of differentiated marketing as the company strives to meet the needs of very small segments by customizing their offering to fit the individual customer's needs. Also called one-to-one marketing, customized marketing has arisen due to the availability of more detailed data on customers. Typically, only large firms are able to employ customized marketing.

Descriptive Research:

Describe marketing problems, situations, or markets. The things which are described could include the market potential for a product or the demographics and attitudes of the consumers who buy the product.

Base #4: Usage

Divide a population into groups based on purchase frequency and usage level. The usage segmentation base employs actual behavior of customers to segment the market which is different from the other bases which describe characteristics of various customers in the marketplace.

Base #5: Needs

Divide a population into groups based on the ability of the product or service to satisfy their needs.

Base #2: Demographics

Divide consumers into groups based on sex, income, age, occupation, race, religion, education, etc.

Base #1: Geography

Divide the overall market into groups based on geography. Most products derive the majority of their sales from a very small number of regions.

Base #3: Psychographics or Lifestyle variables

Divide the population into homogeneous groups based on behavioral and lifestyle profiles developed by analyzing consumer Activities, Interests, and Opinions (AIO) and Values, Attitudes, and Lifestyles (VALS) through surveys. Lifestyle is described as the values, attitudes and behaviors exhibited by customers.

Why do marketers use celebrity spokespeople so frequently?

Pay more attention, build brand awareness Reference group or opinion leader You can even get free air time

What are the Internal Databases?

Electronic collections of consumer and market information obtained from data sources within the company network (e.g., customer characteristics, sales transactions, and website visits)

Exploratory Research:

Gather preliminary information that will help define the problem and suggest hypotheses

Survey Research:

Gathering primary data by asking people questions about their knowledge, attitudes, preferences, and buying behavior. Best suited for descriptive research.

Observational Research:

Gathering primary data by observing relevant people, actions, and situations. Best suited for exploratory research.

Experimental Research:

Gathering primary data by selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses. Best suited for gathering causal information.

self concept?

Importantly for marketers, personality is often revealed through a person's self concept, which is how people see themselves and how they think others see them. People typically purchase products that reinforce their self concept.

Primary Data:

Information collected for the specific purpose at hand.

What is the Marketing Information System?

People and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers to use the information to generate and validate actionable customer and market insights.

Customer Relationship Management (CRM):

Managing detailed information about individual customers and carefully managing customer touch points to maximize customer loyalty.

What is Marketing?

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. To create value for, and capture value from, stakeholders

Marketing Manager and Researcher

Marketing manager - Knows more about the problem & actual processes - Can be biased Researcher - Keeps the manager honest - Knows what claims can and cannot be made - May not fully understand the problem or the logistical challenges

Why do companies segment?

Marketing recognizes that in most cases only certain groups or segments want to buy our products or services.

Motivation?

Motivation is a force within the customer driving them to purchase or not purchase. Customers can purchase to better themselves (learning to speak Spanish). Customers can purchase products to reflect their success to others (BMW, Mercedes, a large house). Customers can purchase for social reasons because it links them to a larger group (getting a tattoo, buying similar clothes). Customers can purchase for safety reasons - buying a Volvo because it is safe. Customers can purchase for physical reasons - they are hungry.

Describe and name the 5 risks

Performance Risk - The product may not perform well; it may break down. Financial Risk - The buyer may lose money, pay too much, or miss buying something else. Physical Risk - The product may be harmful to the user's health; it may cause injury. Social Risk - friends, relatives, or your significant other may not approve of the purchase. Time-Loss Risk - Maintenance time or time required to return the product to the place of purchase may be excessive.

what is market segmentation?

The process of dividing the total market for a product into several relatively homogeneous groups using factors, such as demographics, psychographics, and geography.

Misuse of Research Findings

Some companies intentionally rig their research or "stretch" the findings to make amazing claims.

Causal Research:

Test hypotheses about cause-and-effect relationships. For example, would a 10% decrease in tuition at a private college result in an enrollment increase sufficient to offset the reduced tuition?

Product?

The "goods-and-services" the company offers to the target market

Price?

The amount of money customers have to pay to obtain the product

Limited Problem Solving?

The purchase decision is somewhat important to you. Some time and effort and perhaps a small amount of money are spent gathering information so you will make the "right" decision. (Clothing, Dinner, Cosmetics)

What is Competitive Marketing Intelligence?

The systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketing environment. There are many (free!) ways to collect competitive intelligence.

What is Marketing Research

The systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization.

Public Policy & Ethics in Marketing Research

Two major public policy and ethics issues in marketing research are intrusions on consumer privacy and the misuse of research findings.

The best outcome from a PECTS model analysis for a marketing manager is: a) data from which additional analyses can be performed b) factual knowledge about one of the company's slow selling products c) an insight or understanding of a market place d) deep knowledge about why the companies sales force is not performing well

c) an insight or understanding of the market place

Routine Decision Making

You have much experience solving this need. The purchase decision may be almost automatic for you so little time and effort and no money are spent making this decision. (Milk, Soda, Candy)

Anna is contemplating getting a belly ring for her 19th birthday. Which risk is not present if Anna decides to go ahead with the piercing. a) Environmental risk b) financial risk c) physical risk d) social risk

a) Environmental risk

Estée Lauder owns different cosmetics brands such as Estée Lauder, Clinique, Origins, MAC, LA Mer, Aveda, etc. Estée Lauder uses the different brands to pursue a) concentrated segmentation strategy. b) a differentiated segmentation strategy. c) an undifferentiated segmentation strategy. d) a niche segmentation strategy.

b) a differentiated segmentation strategy.

Talbots' targets customers who are college-educated women between 35-55 years old, with average household income of $75,000 or more. Talbots is describing its market using a segmentation approach. a) geographic b) demographic c) psychographic d) usage

b) demographic

routine problem solving is likely to produce a large evoked set as consumers seek to find a product they can purchase over and over again to save time. a) true b) false

b) false

If Tom Crean is quoted by Indiana saying that Nike shoes are partly responsible for the success of the program. What terms would we use to describe coach Creans place among the fans? a) influence b) opinion leader

b) opinion leader

A build strategy is most appropriate for: a) dogs and question marks b) stars and question marks c) stars only d) cows and stars

b) stars and question marks

One step in the consumer purchase decision process may involve consumers asking their friends for insights on whether to purchase a particular product. this step is called: a) alternative evaluation b) problem recognition c) information search d) purchase

c) information search

Nike enables its customers to design their own shoes online. In this case, Nike is pursuing what kind of segmentation strategy? a) a concentrated segmentation strategy b) a differentiated segmentation strategy c) an undifferentiated segmentation strategy d) A Niche segmentation strategy e) a customized strategy

e) a customized strategy

Personality?

refers to consistent behaviors or responses to stimuli exhibited by a person on a consistent basis. Personality traits include assertiveness, introversion, compliance, dominance, etc.

Time?

the amount of time you have available to make a decision.

What is Consumer Behavior?

the process of individuals or groups selecting, purchasing, using, and disposing of goods, services, ideas, or experiences, to satisfy needs and desires.

What is form value?

utility provided by changing raw materials into a finished product. Form value is created by production but influenced by marketing. Example: Elio Motors manufacturers automobiles, creating form value for consumers.

personal factors?

your mood, the amount of money you have in hand, with whom you are shopping, etc