MARK 3000 Exam 2
Primary Research: Advantages
- Specific to the immediate data needs and topic at hand - Offers behavioral insights generally not available from secondary research
3) Collecting the data
- Types of Data Sources: -> Secondary Data: pieces of information that have already been collected from other sources and usually are readily available -> Primary Data: data collected to address specific research needs - Sample: a group of customers who represent the customers of interest in a research study
Secondary Research: Advantages
- Saves time in collecting data because they are readily available - Free or inexpensive (except for syndicated data)
Elasticity
%∆ in QD of Good A / %∆ in Price of Good A - if E > 1: elastic - if E < 1: inelastic - if E = 1: unitary
Competitors' Products
- Reverse Engineering: taking apart a competitor's product, analyzing it, and creating an improved product that does not infringe on the competitor's patents
Diffusion of Innovation Theory (4)
*predict the which types of customers will buy their new product/service when its initially released. Can use information to develop effective promotion, pricing, and other marketing strategies 1) Relative Advantage: when a product/service is perceived to be better than substitutes, diffusion will be relatively quick 2) Compatibility: various consumer features, such as international cultural differences, can affect the speed of diffusion 3) Observability: when products/services benefits or uses are easily communicated to others, the diffusion process is faster 4) Complexity and Trialability: products that are relatively less complex are also relatively easy to try, making then diffuse more quickly
3) Brand and Line Extensions
- Brand Extension: the use of the same brand name for new products being introduced to the same or new markets; represents an increase in product mix breadth - Line Extension: the use of the same brand name within the same product line; represents an increase in product line's depth - Brand Dilution: occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold
Breadth vs Depth
- Breadth (Variety): number of product lines offered by a firm - Depth: the number of categories within the product line
Regulate/Monitor data mining of consumer information
- Center for Democracy & Technology (CDT) - Electronic Privacy Information Center (EPIC) - Federal Trade Commission
Primary Research: Disadvantages
- Costly - Time consuming - Requires more sophisticated training and experience to design study and collect data
4) Analyzing the data and developing insights
- Data: raw numbers or facts (have limited value to marketers on their own) - Information: organized, analyzed, interpreted data that offer value to marketers
1) Deceptive or Illegal Price
- Deceptive Reference Prices - Loss-Leader Pricing: takes the tactic of leader pricing one step further by lowering the price below the store's cost - Bait and Switch: a deceptive practice of luring customers into the store with a very low advertised price on an item, only to aggressively pressure them into purchasing a higher-priced model by disparaging the lower-priced item, comparing it unfavorably with the higher-priced model, or professing an inadequate supply of the lower-priced item
1) Demand Curves and Price
- Demand Curve: shows how many units of a product or service consumers will demand during a specific period at different prices - Prestige Products/Services: products/services that consumers purchase for status rather than functionality
4) Price Fixing
- Horizontal Price Fixing: occurs when competitors that produce and sell competing products collude, or work together, to control prices, effectively taking price out of the decision process for consumers - Vertical Price Fixing: occurs when parties at different levels of the same marketing channel collude to control the prices passed on to consumers -> Manufacturer's Suggested Retail Price (MSRP): the price that manufacturers suggest retailers use to sell their merchandise * Gray Market Pricing: employs irregular but not necessarily illegal methods; generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer
Secondary Research: Disadvantages
- May not be precisely relevant to information needs - Information may not be timely - Sources may not be original, and therefore usefulness is an issue - Methodologies for collecting data may not be appropriate - Data sources may be biased
4) Competition
- Monopoly - Oligopolistic Competition -> Price War: a situation (for competition) that occurs when 2 or more firms compete primarily by lowering their prices -> Predatory Pricing: a firm's practice of setting a very low price with the intent to drive its competition out of business (Illegal under both the Sherman Antitrust Act and the Federal Trade Commission Act) - Monopolistic Competition - Pure Competition: competition that occurs when different companies sell commodity products that consumers perceive as substitutable; price usually is set according to the laws of supply and demand
Advantages to using Distribution Centers
- More accurate sales forecasts are possible when retailers combine forecasts for many stores services by one distribution center rather than doing a forecast for each store - Distribution center enable the retailer to carry less merchandise in the individual stores, which result in lower inventory investments systemwide - It is easier to avoid running out of stock or having too much stock in any particular store because merchandise is ordered from the distribution center as needed - Retail store space is typically much more expensive than is space at a distribution venter, and distribution centers are better equipped for stores to prepare merchandise for sale
3) New Product Pricing Strategies
- Penetration Pricing: a new product/service pricing strategy in which the initial price is set relatively low with the objective of building sales, market share, and profits quickly and deter competition from entering the market -> Experience Curve Effect: the drop in unit cost as the accumulated volume sold increases; as sales continue to grow, the costs continue to drop, allowing even further reductions in price - Price Skimming: a strategy of selling a new product/service at a high price that innovators and early adopters are willing to pay in order to obtain it; after the high-price market segment becomes saturated and sales begin to slow down, the firm generally lowers the price to capture (or skim) the next most price-sensitive segment
4) Market Testing
- Premarket Tests: conducted before a product/service is brought to market to determine how many customers will try and then continue to use it - Test Market: a method of determining the success potential of a new product, it introduces the offering to a limited geographic area prior to a national launch
Product Mix vs. Product Line
- Product Mix: the complete set of all products offered by a firm - Product Line: group of associated items, such as those that consumers use together or think of as part of a group of similar products
5) Channel Member
- Retailers' Cooperative: a marketing channel intermediary that buys collectively for a group of retailers to achieve price and promotion economies of scale. It is similar to a wholesaler, except that the retailer member have some control over, and sometimes ownership of, the cooperative operations.
1) Customer to Store
- Universal Product Code(UPC): the black and white bar code found on most merchandise, indicates the manufacturer of the item, a description of the item, and information about special packaging and special promotions - Radio Frequency Identification Device(RFID): tiny computer chip that automatically transmits to a special scanner all the information about a container's contents or individual products
3) Costs
- Variable Costs - Fixed Costs - Total Cost
Break-Even Analysis and Decision Making
- break-even analysis: technique used to examine the relationships among cost, price, revenue, and profit over different levels of production and sales to determine the break-even point - break-even point: the point at which the number of units sold generates just enough revenue to equal the total costs, and where profits are zero - Contribution Per Unit: the price less the variable cost per unit. (used to determine the break-even point in units)
Branding: Brand Equity of the Owner (4)
1) Brand Awareness 2) Perceived Value 3) Brand Association 4) Brand Loyalty
Branding Strategies (8)
1) Brand Ownership 2) Naming Brands and Product Lines 3) Brand and Line Extensions 4) Co-Branding 5) Branding Licensing 6) Brand Repositioning/Rebranding 7) Packaging 8) Product Labeling
Branding: Value of Branding for the Customer (5)
1) Brands Facilitate Purchases 2) Brands Establish Loyalty 3) Brands Protect from Competition and Price Competition 4) Brands are Assets 5) Brands Affect Market Value
Why Do Firms Create New Products (5)
1) Changing Customer Needs 2) Market Saturation 3) Managing Risk Through Diversity 4) Fashion Cycles 5) Improving Business Relationships
5 C's of Pricing
1) Company Objectives 2) Customers 3) Costs 4) Competition 5) Channel Member
Complexity of Products (3)
1) Core Customer Value: the basic problem-solving benefits that consumers are seeking 2) Actual Product: the physical attributes of a product including the brand name, features/design, quality level, and packaging 3) Associated Services(Augmented Product): the nonphysical attributes of the product, including product warranties, financing, product support, and after-sale service
Legal and Ethical Aspects of Pricing (4)
1) Deceptive or Illegal Price Advertising 2) Predatory Pricing 3) Price Discrimination 4) Price Fixing
Marketing Research Process (5)
1) Defining the objectives and research needs 2) Designing the research 3) Collecting the data 4) Analyzing the data and developing insights 5) Developing and implementing an action plan
2) Customers
1) Demand Curves and Price 2) Price Elasticity of Demand 3) Factors Influencing Price Elasticity of Demand
Designing Marketing Channels (3)
1) Direct Marketing Channel: a marketing channel in which there are no intermediaries; the manufacturer sells directly to the buyer 2) Indirect Marketing Channel: when one or more intermediaries work with manufacturers to provide goods and services to customers 3) Franchising: a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor
Marketing Channel Management Affects Other Aspects of Marketing (3)
1) Distribution Center: a facility for the receipt, storage, and redistribution or goods to company stores; may be operated by retailers, manufacturers, or distribution specialists 2) Fulfillment Center: warehouse facilities used to ship merchandise directly to customers 3) Just-in-Time(JIT) / Quick Response (QR) Inventory Systems: inventory management system designed to deliver less merchandise on a more frequent basis than traditional inventory systems; the firm gets the merchandise "just in time" for it to be used in the manufacture of another product, in case the parts or components, or for sale when the customer wants it, in the case of consumer goods
Pricing Strategy (3)
1) Everyday Low Pricing (EDLP) 2) High/Low Pricing 3) New Product Pricing Strategies
2) Naming Brands and Product Lines (2)
1) Family Brands: a firm's own corporate name used to brand its product lines and products - Ex) Kraft mac and cheese, Kraft mayo 2) Individual Brands: the use of individual brand names for each of a firm's products - Ex) Jell-O, Philadelphia cream cheese (all owned by Kraft)
How Firms Develop New Products (6)
1) Idea Generation 2) Concept Testing 3) Product Development 4) Market Testing 5) Product Launch 6) Evaluation of Results
3) Factors Influencing Price Elasticity of Demand (3)
1) Income Effect: the change in the quantity of a product demanded by consumers due to change in their income 2) Substitution Effect: consumers ability to substitute other products for the focal brand, thus increasing the price elasticity of demand for the focal brand 3) Cross-Price Elasticity: the percentage change in demand for Product A that occurs in response to a percentage change in price of Product B - Complementary Products: products whose demand curves are positively related, such that they rise or fall together - Substitute Products: products for which changes in demand are negatively related
Diffusion of Innovation Model (5)
1) Innovators 2) Early Adopters 3) Early Majority 4) Late Majority 5) Laggards
1) Idea Generation (7)
1) Internal R&D 2) R&D Consortia 3) Licensing 4) Brainstorming 5) Outsourcing 6) Competitors' Products 7) Customer Input
Product Life Cycle (4)
1) Introduction Stage: when the product category first launches and innovators start buying the product 2) Growth Stage: the product gains acceptance, demand and sales increase, and more competitors emerge in the product category 3) Maturity Stage: industry sales reach their peak, so firm try to rejuvenate their products by adding new features or repositioning them - Entry into New Markets of Market Segments - Development of New Products 4) Decline Stage: sales decline and product eventually exits the market
Guidelines for Conducting Research (3)
1) It prohibits selling or fund-raising under the guise of conducting research 2) It supports maintaining research integrity by avoiding, misrepresentation, or the omission of pertinent research data 3) It encourages the fair treatment of clients and suppliers * Bottom line is that marketing research should be used only to produce unbiased, factual information
1) Brand Ownership (2)
1) Manufacturer Brands (national brands): brands owned and managed by the manufacturer 2) Retail/Store Brands (private-label brands): products developed by retailers
7) Packaging (3)
1) Primary Package: the packaging the consumer uses, such as the toothpaste tube, from which they typically seek convenience in terms of storage, use, and consumption 2) Secondary Package: the wrapper or exterior carton that contains the primary package and provides the UPC label used by retail scanners; can contain additional product information that may bot be available on the primary package 3) Sustainable Packaging: product packaging that has less of a negative impact on the environment
3) Product Development (4)
1) Product Development/Design 2) Prototype 3) Alpha Testing 4) Beta Testing
1) Company Objectives (4)
1) Profit Orientation 2) Sales Orientation 3) Competitor Orientation 4) Customer Orientation
Getting Merchandise to Customers (3)
1) Ship Merchandise to Stores 2) Customer Store Pickup - Mobile Task Management: is a wireless network and a mobile device that received demand notification and enables a speedy response 3) Deliver Merchandise Directly to Customer from Fulfillment Center
Types of (Consumer) Products (4)
1) Specialty Products/Services: products/services toward which the customer shows a strong preference and for which they will expend considerable effort to search for the best suppliers 2) Shopping Products/Services: products/services for which consumers will spend time comparing alternatives such as apparel, fragrances, and appliances 3) Convenience Products/Services: products/services for which the consumer is not willing to spend any effort to evaluate prior to purchase 4) Unsought Products/Services: products/services consumers either do not normally think of buying or do not know about
6) Manufacturer to Distribution Center and Buyer
Advanced Shipping Notice(ASN): an electronic document that the suppler sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment
5) Developing and implementing an action plan
Analyst prepares the results and presents them to the appropriate decision makers - Presentation typically includes: an executive summary, the body of the report, the conclusions, the limitations, and appropriate supplemental tables, figures, and appendixes
Making Information Flow Through Marketing Channels (6)
Flow: 1) Customer to Store 2) Store to Buyer 3) Buyer to Manufacturer 4) Store to Manufacturer 5) Store to Distribution Center 6) Manufacturer to Distribution Center and Buyer
2) Designing the research
Identify the type of data needed + Determine the research necessary to collect them
Customer Input
Lead users: innovative product users who modify existing products according to their own ideas to suit their specific needs
6) Evaluation of Results
Measure the success of a new product by 3 interrelated factors: - Its satisfaction of technical requirements, such as performance - Customer acceptance - Satisfaction of the firm's financial requirements, such as sales and profits
3) Internal Secondary Data
One of the most valuable resources such firms have at their disposal: customer information and purchase history - Data Warehouses: large computer files that store millions/billions of individual data - Data Mining: the use of a variety of statistical analysis tools to uncover previously unknown patterns in the data stored in databases or relationships among variables - Churn: the number of consumers who stop using a product or service divided by the average number of consumers of that product/service
2) Store to Buyer
Point-of-Sale (POS) terminal: records the purchase information and electronically sends it to the buyer
Primary Data Collection Techniques (7)
Qualitative vs Quantitative Research 1) Observation 2) Social Media 3) In-Depth Interviews 4) Focus Group Interviews 5) Survey Research 6) Panel-Based and Scanner Research 7) Experimental Research
5) Survey Research
Survey: a systematic means of collecting information from people generally using a questionnaire. Arguably the most popular type of quantitative primary collection method - Questionnaire: form that features a set of questions designed to gather information from respondents and thereby accomplish the researchers' objectives; questions can be either unstructured or structured -> Can be Unstructured or Structured Questions
2) Syndicated External Secondary Data (2)
Syndicated Data: data available for a fee from commercial research firms such as Information Resources Inc (IRI), National Purchases Diary Group, and Nielsen 1) Scanner Data: a type of syndicated external secondary data used in quantitative research that is obtained from scanner readings of Universal Product Codes (UPC) at checkout counters 2) Panel Data: information collected from a group of consumers, organized into panels, over time
1) Inexpensive External Secondary Data
US Bureau of the Census (www.census.gov): provides data about businesses by county and zip code - Typically inadequate to meet the researchers needs Quickly become outdated
2) Sales Orientation
a company objective based on the belief that increasing sales will help the firm more than will increasing profits - Premium Pricing: a competitor-based pricing method by which the firm deliberately prices a product above the prices set for competing products to capture those consumers who always shop for the best or for whom price does not matter
3) Competitor Orientation
a company objective based on the premise that firm should measure itself primarily against its competition - Competitive Parity: a firm's strategy of setting prices that are similar to those of major competitors - Status Quo Pricing: a competitor-oriented strategy in which a firm changes prices only to meet those of the competition
4) Customer Orientation
a company objective based on the premise that the firm should measure itself primarily according to whether it meets its customer's needs
1) Profit Orientation
a company objective that can be implemented by focusing on target profit pricing, maximizing profits, or target return pricing - Target Profit Pricing: a pricing strategy implemented by firms when they have a particular profit goal as their overriding concern; uses price to stimulate a certain level of sales at a certain profit per unit - Maximizing Profits: a profit strategy that relies primarily on economic theory. If a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits, it should be able to identify the price at which its profits are maximized - Target Return Pricing: a pricing strategy implemented by firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments
5) Brand Licensing
a contractual arrangement between firms whereby one firm allows another to use its brand, name, logo, symbols, and/or characters in exchange for a negotiated fee
3) Early Majority
a group of consumers in the diffusion innovation model, representing approx. 34% of the population. They don't like to take as much risk and therefore tend to wait until bugs are worked out of a particular product/service. - Few new products/services can be profitable until this large group buys them
R&D Consortia
a group of firms and institutions that explore new ideas or obtain solutions for developing new products
Licensing
a method used in developing new products in which a firm buys the rights to use a technology or idea from another firm
Outsourcing
a practice in which the client firm hires an outsourced firm to help develop new products/service
2) High/Low Pricing
a pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases - Reference Price: the price against which buyers compare the actual selling price of the product and that facilitates their evaluation process
4) Focus Group Interviews
a research technique in which small groups of persons (usually 8-12) comes together for an intensive discussion about a particular topic, with the conversation guided by a trained moderator using an unstructured method of inquiry
Marketing Channel Management / Supply Chain Management
a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into seamless value chain which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize systemwide costs while satisfying the service levels their customers require
Marketing Research
a set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers involved in marketing goods, services, or ideas
1) Everyday Low Pricing (EDLP)
a strategy companies use to emphasize the continuity of their retail prices at a level somewhere between the regular, non-sale price and the deep-discount sale prices their competition may offer
6) Brand Repositioning/Rebranding
a strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences
7) Experimental Research
a type of conclusive and quantitative research that systematically manipulates one or more variables to determine which variables have a causal effect on other variables
Alpha Testing
an attempt by the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firms R&D department
1) Observation
an exploratory research method that entails examining purchase and consumption behaviors through personal or video camera scrutiny
5) Laggards
consumers, representing approx. 16% of the population, who like to avoid change and rely on traditional products until they are no longer available
Secondary Data (4)
can be accessed through external (by purchase) or internal sources (sales invoices, customer lists, etc.) 1) Inexpensive External Secondary Data 2) Syndicated External Secondary Data 3) Internal Secondary Data 4) Big Data
2) Concept Testing
concept: brief written description of a product/service; its technology, working principles, and forms; and what customer needs it would satisfy - Concept Testing: the process in which a concept statement that describes a product/service is presented to potential buyers/users to obtain their reactions
4) Big Data
data sets that are too large and complex to analyze with conventional data management and data mining software - The field of marketing research has seen enormous changes in the last few years bc: -> The increase in amounts of data to which retailers, service providers, and manufacturers have access -> Their ability to collect these data from transactions, customer relationship management systems, and social media platforms that firms increasingly use -> The ease of collection and storing these data -> The computing ability readily available to manipulate data in real time Access to in-house or available software to convert the data into valuable decision-making insights using analytic dashboards
Product Development/Design
entails a process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product's/service's form and features
Beta Testing
having potential consumers examine a product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use
2) Social Media
important source of data for marketers - Virtual Community: online networks of people who communicate about specific topics - Sentiment Mining: data gathered by evaluating customer comments posted through social media sites -> Analyzed to distill customer attitudes toward and preference for products and advertising campaigns
The Shape of the Product Life Cycle Curve
in theory, it is bell shaped with regard to sales and profits. In reality, however, each product/service category has its own individual shape
Qualitative Research
informal research methods, including observation, monitoring of social media sites, in-depth interviews, and focus groups
2) Price Elasticity of Demand
measures how changes in price affect the quantity of the product demanded; specifically, the ratio of the percentage change in quantity demanded to the change in price - Elastic vs Inelastic - Dynamic Pricing: refers to the process of charging different prices for goods/services based on the type of customer; time of the day, week, or even season; and level of demand
1) Brand Awareness
measures how many consumers in a market are familiar with the brand and what it stands for; created through repeated exposures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm's communication to consumers
4) Brand Loyalty
occurs when a consumer buys the same brand's products/services repeatedly over time rather than buying from multiple suppliers within the same category
8) Product Labeling
provide information the consumer needs for their purchase decision and consumption of the product - Labeling requirements from: -> Federal Trade Commission Act of 1914 -> Fair Packaging and Labeling Act of 1967 -> The Nutrition Labeling Act of 1990 -> FDA
Quantitative Research
structured response that can be statistically tested to confirm insights and hypothesis generated via qualitative research or secondary data
Prototype
the first physical form/service description of a new product, still in rough or tentative form, that has the same properties as a new product but it produced through different manufacturing processes
4) Late Majority
the last group of buyers to enter the new product market, representing approx. 34% of the population - When they do, the product has achieved its full market potential
3) Brand Association
the mental links that consumers make between brand and its key product attributes; can involve a logo, slogan, or famous personality
Cannibalize
the negative impact on a firm's sales, profits, or market share when one product competes closely with a similar product offered by the same company
4) Co-Branding
the practice of marketing 2 or more brands together on the same package, promotion, or store
3) Price Discrimination
the practice of selling the same product to different resellers (wholesalers, distributors, or retailers) or to the ultimate customer at different prices - Some, but not all, forms of price discrimination are illegal
Diffusion of Innovation
the process by which the use of an innovation, whether a product or service, spreads throughout a market group over time and across various categories of adopters - Pioneers/Breakthroughs: new product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market - First Movers: product pioneers that are the first to create a market or product category, making them readily recognizable to consumers and thus establishing a commanding and early market share lead
Neuromarketing
the process of examining consumers' brain patterns to determine their responses to marketing communication, products, or services for the purpose of developing marketing tactics or strategies
2) Perceived Value
the relationship between a product's/service's benefit and its cost
2) Early Adopters
the second group of consumers in the diffusion of innovation model to use a product/service innovation, representing approx. 13.5% of the population. They generally don't like to take as much risk as innovators but instead wait to purchase the product after careful review
Brand Equity
the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product/service
Predictive Analytics
the use of statistics on data to determine patterns and predict future outcomes and trends
1) Innovators
those buyers, representing approx. 2.5% of the population, who want to be the first to have the new product/service
3) In-Depth Interviews
trained researchers ask questions and listen to and record the answers and then pose additional questions to clarify or expand on a particular issue
