Econ 108: Midterm 1

Major Demographic changes

Changing Family Structure■'70's: 39% households married; 2012: 19% ■2012: 34% are non-family households■More divorce, not marrying, no children, etc.○Geographic Shifts■South & West grow; East & North shrink■Micro-metropolitan areas & return to cities○Better educated and more white-collar■16% BA's in 1980; 32% in 2012○Increasing diversity■89% White in 1950; 64% today

Descriptive research

Describe things, such a product's market potential or customer attitudes to it.

Developing a Research Plan for Primary Data

Research approaches: a.Observation b.Survey c.Experiment Contact Methods a.Mail b.Telephone c.Personal d.Online Sample Plan a.Sampling Unit b.Sample Size c.Sampling Procedure Research Instruments a.Questionnaire b.Mechanical instruments

Step 1: defining the problem

Research objectives is the most important step in the whole marketing research process. Without a correct definition what you are looking for and a clear understanding of where you are heading, the whole enterprise can be a waste. Once the problem is defined (!!), there are three types of research objectives.

Subliminal advertising doesn't exist.

n this context it is useful to say a few words about the power of advertising. Many people FALSELY believe advertisers have the power to control your ideas and buying decisions. They don't. Over 50 years ago, someone reported he flashed the words "Eat Popcorn" and "Drink Coca-Cola" in a New Jersey theater for 1/300th of a second and sales of both increased 58%. Thus the myth of subliminal advertising was created. SPOILER ALERT: He lied and made up data.

Macroenvironment

"larger societal forces that impact the microenvironment, demographic, economic, natural, technological, political and cultural."

online social networks

(or online social communities) consist of blogs, social networking web sites or other online social spaces where people socialize or exchange information and opinions. Today most brands endeavor to build a comprehensive social media presence. 90% of brand-related talk still occurs the old-fashioned way: person to person.

Marketing research entails four steps:

1. Define the problem and research objectives. 2. Develop the research plan for collecting data. 3. Implement the research plan- collect & analyze data. 4. Interpret and report the findings

Six areas where values may change

1.People's views of themselves1.Interest in self-actualization2.People's views of others3.People's views of organizations1.Decrease in confidence in institutions4.People's views of society1.Gradual increase in patriotism over past 20 years5.People's views of nature6.People's views of the universe1.Less organized religion but more spirituality

beliefs and attitudes

A belief is a descriptive idea someone holds about something. An attitude is a person's favorable or unfavorable evaluations, feelings or tendencies toward a thing or idea. For marketers, attitudes are very hard to change; you have to gear products toward these attitudes.

Competitors

A critical marketing concept is differentiating our products from competitors to provide customers justification for buying from us. Staying on top of what competitors are up to is central to this.

Buyer's Decisions with new products

A new product is a good, service or idea that is perceived by customers as new. ●The adoption processis the mental process by which an individual passes from first learning about a new product to adoption.●Adoptionis the decision by an individual to become a regular user of the product.

Personal and psychological

Buying behavior itself is also complex, resulting from the levels of consumer involvement required in the decision and degree of differences among brands.

Characteristics affecting consumer behavior.

Cultural: culture, subculture, class. Social: group & networks, family, roles & status. Personal: age & life cycle, occupation, economics, lifestyle, personality. Psychological: Motivation, Perception, Beliefs, Attitudes

" growing inequality"

From a marketing perspective --this is my opinion --we aren't seeing growth in wealth on one end and poverty on the other, but rather an explosion of a highly competitive, knowledge-based "upper middle class" economy, with huge numbers of individuals who are well-paid, white collar workers.

Exploratory Research

Gather preliminary data to define the problem and suggest an hypothesis

individuals adopting products

Innovators: Venturesome, risk-takers2.5. Early Adopters: Opinion leaders, early/careful 13.5. Early Mainstream: Deliberate, but before others 34.0. Late Mainstream: Skeptical, only after most do 34.0 Lagging Adopters: Tradition, when it's tradition 16.0

brand perosnalities

Sincerity: Down-to-earth, honest, wholesome. Excitement: Daring, spirited, imaginative Competence:Reliable, intelligent, successful. Sophistication: Glamorous, high-class, in-the-know. Ruggedness: Tough, outdoorsy.

Generation X

Small generation, had small impact on marketing. Not surprisingly, given these experiences, they may be homeowners, family-oriented; successful, skeptical and even a little cynical in attitudes. (Due to shared exp: Came of age in a successful, conservative US (80s). Are the first high-tech generation. Also grew up when higher education became more commonplace; they are the most educated generation in history.

"Black Box"

Stimuli: 4P's, Environment. black box: Buyer's Characteristics. Buyer's decision processes. Response: Attitudes & preferences. What she or he buys. Brands

Causal research

Test hypotheses about cause and effect relationships.

Step 2: Developing the research

This is presented as a written proposal, especially when the plan is large and complex. This forces the marketer to think things through cogently and allows other managers to provide valuable feedback about the plans merits. The research plan must specify what type of data is required: primary, secondary or both. Secondary data is data that has been collected for another purpose. It already exists somewhere in some form. It can be purchased from outside suppliers. There are free commercial online databases. It can be found using Internet search engines *ADVANTAGE: Speed and Low CostISSUE: Usually limited in the information*

Economic circumstances

affect your buying decisions. Much marketing must be cognizant of these circumstances. Many firms position themselves as "the low price leader," or "expect more, pay less."And firms that market higher-end products and services are equally aware of their customers' economic situations.

Personal factors

age, job, finances, lifestyle and personality --are even stronger influences on consumer behavior. Age and life cycle stages, Occupation, Economic Circumstances, Lifestyle, Personality and Self-Concept. People change what they buy over their lifetimes. A second reason is circumstances evolve over time. Moving in together, marriage, divorce, having children, buying a home, "empty-nesting," etc., [in various order] all require different products and services

Social factors:

are perhaps a more important determinant (and indicator!) of consumer behavior because with the exception of family, we choose these groups with whom we socialize. Groups and social networks. Family. Roles and status.

Baby Boomers

are the giant generation (78 million) born between 1946 -1964. Because there are so many Boomers, they had and have a massive impact on marketing. Their size made them a massive force in US marketing, from childhood to retirement. They are also the richest generation in history. (Shared experiences: grew up after WWII, 60s civil rights, etc. 70s US Decline, Made their bones in the 80s-90s"

Customers

are the most important part of the microenvironment. There are five customer categories: consumer, business, resellers, government and international markets.

"Publics"

are various groups who have an interest in and impact on marketing efforts. They can be the financial market, media, government, interest groups, neighbors, the general public and internal publics.

Millenials "echo boomers"

born 1980 -1995 [2000?])are the largest generation (83 million).The size of this generation is a function of two things: Boomers delaying having children and the bad economy of the 1970s. Here are some Millennial observations:○Grew up in really good times (90s) followed by not-so-good times (21st Century)○Less financially secure○Most tech savvy. Marketers are targeting them in a variety of ways. Creating more experience-oriented services; smaller "stuff" for smaller spaces.

Habitual buying behavior

characterized by low consumer involvement and few perceived differences among brands. Products are often low cost and purchased frequently. Consumers make decisions quickly and with little reflection. Thus marketers are not involved in the learning process. *Often they use price cuts & sales enhancements to move products + product differentiation.*

Political Environment

environment is a double-edged sword. Marketers must be aware of both, because both can harm you. One edge are political powers themselves, federal, state and local. They affect business through massive, complex regulations. The other side are political pressures on companies that lead to "cause-related marketing."

Cultural factors:

exert a broad influence on consumer behavior, although --I believe --perhaps less than is believed. Cultureis the set of values, wants, perceptions and behaviors learned from family and other institutions. Subcultureis a group with a shared value system based on shared experience. Class is a group whose members share similar values, interests and behaviors, often defined by economic, occupational, and educational factors.

Economic

factors have a direct impact on consumer purchasing power and spending patterns. In the US, with the exception oftwo minor recessions in the early 90s and 2000s, the economy grew strongly from 1982 to 2008. Then came the Great Recession. It ended in 2009 but its effects lingered on . . . The Trump Boom? The Covid-19 Bust?

Brands

have "personalities" and consumers choose brands that match their own personality, which of course is defined by your self-concept.

Intermediaries

help the company sell its products. They are resellers, distributors, marketing agencies and financial firms.

consumer involvement

high involvement- significant differences: complex buying behavior. high involvement- few differences: dissonance- reducing buying behavior. Low involvement-Significant diff.: variety seeking buying behavior. low involvement-few differences: habitual buying behavior.

Barnacles

highly loyal but not very profitable

Cultural environment:

institutions and forces that affect society's basic values, perceptions, preferences and behaviors.Core Values are highly persistent and seldom change. Most Americans, for example, believe in individual freedom and value hard work.Secondary valuesoften flow from core values but are more subject to change.

The Buyer Decision Process

is best understood as a 5-step process, although with habitual buying behavior, Steps 2 & 3 are severely truncated and often just skipped. 1. recognition of need. 2. Information search 3. evaluation of alternatives. 4. Purchase decision 5. post- purchase behavior

Evaluation of Alternatives

is complicated and difficult for marketers to understand because:a.no two consumers do it the same way; and . . .b.no one consumer does it the same way from product to product.

learning (markets)

is defined as the change in a person's behavior arising from experience. Learning arises through the interplay of . Drives --a stimulus demanding action. Stimuli --object of the action. Cues --minor stimuli determining the action. Reinforcement. Marketers have "learned" they can build up demand by associating it with strong drives, using motivating cues supported by positive reinforcement.

Primary data:

is more challenging to collected. First, you must determine the research approachesyou will utilize. Second you must decide on your contact methods. Third you need asampling plan. Finally, you have to select your research instruments.

Technology

is perhaps the most dramatic force shaping the macro-environment. Technology itself offers new marketing opportunities. More important is how technology impacts other products and services. One only has to think about how online shopping has changed retail to understand this.

survey research

is the most widely used. It means asking people questions about their knowledge, attitudes, preferences and buying habits.2.1 Flexible but sometimes people have issues with answering correctly. They may ----not remember--not want to share information--want to please the questioner--want to appear smart

Perception

is the process by which we select, organize and interpret information to develop a meaningful picture of the world. Selective attention. Selective distortion. Selective retention

Demography

is the study of population in terms of size, ethnicity, occupation, age, family structure, etc. Changes in demography have a huge impact on marketing. *In 1980 the median age was 30. Today it's 38!* Classifying population based on generations is helpful, due to shared historical experiences, etc.

Lifestyle

may be more important than culture, class or occupation. Lifestyle is a combination of psychographic data (tastes, opinions, interests) that defines how you "act in the world." People from the same subculture, class or occupation often have very different lifestyles. Personality and SELF-CONCEPT are central to what people buy. Although linked together, they are different. Personality is, of course, the characteristics that define a human being as unique. Self-concept is each person's conception of themselves and their personality. And that's central to marketing because

Experimental research

means gathering data by matching subjects, giving them different treatments, controlling for related factors and checking for differences in group response. *3.1 Can be very expensive*

Selective retention

means we're likely to remember good points about brands we favor & forget them about brands we don't.

Family

of course, strongly influences buying decisions. Studies show it is the most important consumer buying organization in society. Most marketing is family-oriented rather than just to men or women. Lastly are roles and statusderived from various groups we belong to. People choose products appropriate to their role and status.

Information Search,

onsumers seek more information (although often this doesn't happen). Information sources are:a.Commercial --ads, websites, etc.b.Experiential (hands-on)c.Personal (family, friends, co-workers)Most Info:CommercialBest: Personal

The company's

other departments, functions and "power centers" affect marketing efforts. These include senior management, R&D, manufacturing, purchasing, customer service, human resources, even accounting.

Generation Z

people mostly born in the very late 20th and 21st centuries (you?). A recent book by Jean Twenge, entitled [tendentiously] iGen: Why Today's Super-Connected Kids Are Growing Up Less Rebellious, More Tolerant, Less Happy--and Completely Unprepared for Adulthood--and What That Means for the Rest of Usdoes a real hatchet job on this generation. I posted a blog from the Harvard Business Review by a marketing exec about selling to this generation. I will leave this one blank . . . or for you to figure it out when you're in business and you have to market to them [i.e., yourselves].

Suppliers

provide resources needed to produce goods and services. Supplier problems can severely cripple marketing efforts. Most marketers treat suppliers as "partners."

Natural

refers to the environment, and issues include pollution and resource preservation. In my opinion, our environment is relatively clean and healthy and there are few immediate problems with resource depletion. That said, there are enormous concerns about the environment that impact marketing efforts. Consumers want their companies to be "good actors" and engage in "sustainable" practices. And all marketers must be cognizant of the role of government in regulating environmental practices.

Observational research

requires observing relevant people, actions and situation.1.Growing popularity because it allows you to observe potential customers as they really behave.2.Ethnographic research grows out of anthropological and sociological methods, where a trained researcher is placed inside some group, and both interacts and observes their behavior.

Post-purchase behavior

s the stage after purchase in which consumers further act based on their level of satisfaction. It is a critical time for marketers (surprised?). If consumer expectationsdon't meet perceived performance, the customer may be disappointed. NOTE: Almost all consumers feel some sense of cognitive dissonance,discomfort caused by post-purchase conflict. Few customers actively complain; the main problem arises with future purchases.

Need recognition

starts the buying process. It can be triggered by both internal stimuli ("I'm hungry") or external ones (ads).

Groups and social networks

strongly influence and indicate consumer behavior. A group is defined simply as 2 or more people who interact to accomplish a goal. You belong to Membership Groups. On the other hand, you don't belong to a Reference Group, but they are important as points of comparison and help form attitudes and behaviors.

Dissonance-reducing buying behavior

takes place when the consumer is highly involved in the decision but there are few perceived differences among brands. Products are also often expensive, purchased infrequently, risky and highly self-expressive. Typically consumers make decisions quickly. *A marketing challenge is "buyer's remorse"* (post-purchase dissonance) as consumers second-guess buying decisions.

Complex buying behavior

takes place when the customer is highly involved in the decision and there are perceived significant differences among brands. Products are often expensive, purchased infrequently, risky & highly self-expressive. Typically consumers have much to learn about the product category. *Marketers must help buyers in this information-gathering exercise.*

Variety-seeking buying behavior

takes placewhen consumer involvement is low but perceived differences among brands is high. Products are inexpensive, decisions are quick but brand switching is common ("variety"). Market leaders in this category try to turn their product into a habitual one, dominating shelf space and doing major ad campaigns. Challengers often offer lower prices, special deals, coupons and free samples.

Microenvironment

the actors close to the company that affect its ability to capture and serve its customers: the company itself, its suppliers, various intermediaries, competitors, 'publics' and prospects and customers themselves."

Word-of-mouth influence

the effects felt by consumers of the words of friends, family, associates and others. 92% of consumers trust personal recommendations above all others. An opinion leader is a person in a reference groupwho exerts social influence due to special skills, knowledge, personality or position in society.

Selective attention

the process by which we screen out most information

Selective distortion

the tendency by which we tend to interpret information in a way to support what we alreadybelieve.

Purchase Decision

to buy the best brand after evaluation. Two factors may interfere with this step.a.Attitudes of others (people who speak up before purchase).b.Unexpected situational factors.

Adoption Process

wareness: customer becomes aware of the new product Interest: customer seeks information about it Evaluation: customer considers trying the new product to see if it makes sense Trial: customer tries it on a small scale Adoption: customer decides to make full and regular use of the product. Marketers must consider ways to move consumers through these steps in adoption.One method are sales, rebates or other incentives to reduce the cost of trying it. Also, warranties, guarantees or simple return policies also make adoption easier and faster.