Marketing 300 (Exam #2)
"data mining"
the practice of examining large databases in order to generate new information. 3. collecting information step of marketing research process
Marketing research process helps with what?
--Learning lessons for future research.
Market Segmentation --Segmentation is the process of aggregating prospective buyers into groups that--
(1) have common needs and (2) will respond similarly to the (4P's)--marketing programs
NPD Process: Commercialization (EATS-Mighty)
(Establish production (e.g., factories)) --Advertising and sales promotion (Timing of introduction) --Avoid cannibalization (Set up distribution channels and launch areas) --Regional rollout (This step is MIGHTY expensive!)
NPD Process: Idea Evaluation
(External idea testing (i.e., by customers)) (Concept testing) --Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal (Business analysis) --Specifying product features and marketing strategy --Estimating sales, costs, profit
NPD Process: Development (GM-Expensive)
(Gear up for production (engineers + marketers)) Physical and production design Prototype: a full scale model of the product (Market testing) --Test the product and marketing program in realistic marketing settings, on a limited basis, and in a defined area --It's not too late to kill a less-than-wonderful idea! (This step is expensive!)
Two Positioning Approaches
(Head-to-head positioning) Compete on similar product attributes in the same target market E.g., commodity goods such as gasoline (Differentiation positioning) Positioning your brand away from others Consumers see your brand as different
Packaging
--Packaging refers to the activities of designing and producing the container or wrapper for a product --Packaging protects and promotes the product. It can be a competitive advantage. It offers WHAT BENEFITS? --communication benefits (label with instructions, unique design to enhance brand recognition, etc.) --functional benefits (storage, convenience, protection) --perceptual benefits (creating perceptions in consumers' mind)
Product Line and Product Mix
(Product line): a set of closely related products offered by a company Ex: Procter & Gamble's hair care product line: Head & Shoulders, Pantene, Herbal Essences, Infusium 23, and etc. --Definition of product line typically follows industry conventions (Product mix): the set of all product lines and individual products that a company offers. Ex: Sara Lee has a broad product assortment including many product lines: beverages, luncheon meats, bakery, body care, air freshener, insecticides, and shoe polish.
POSITIONING THE PRODUCT w/ Perceptual Maps (ICE)
(Product positioning with perceptual maps) 1--Identify qualities/attributes for a product category 2--Collect customers' ratings of competing products or brands on these attributes 3--Estimate size of consumer segments
Shape of the PLC
(high-learning product:) significant customer education is required & there is an EXTENDED introduction period. Ex: computers (low-learning product:) sales begin immediately because little learning is required by consumer & benefits are easily understood. (fashion product:) introduce, decline, then usually return. (fad product:) rapid sales on intro and then equally rapid decline. --dies out
BRAND EQUITY
- the added value a brand name gives to a product beyond the functional benefits provided
Criteria for Effective Segmentation (HHPO)
--(Homogeneous) within segments --(Heterogeneous) between segments --Potential for increased profit --Operational Can identify them Can measure the size, purchasing power, etc. Can be reached and served Effective programs can be developed for them
Why Do Marketing Research?
---(Helps improve management "decision-making")- BY: --Focus on the present Monitoring (assessment) & --Focus on the future Scanning (opportunities) Risk assessment (evaluation)
Benefits of Segmentation (grouping) & Segmentation Benefits on Demand Curve
-------Fulfill the needs of a (homogeneous) segment better than a larger heterogeneous population Bottom-line: increase sales and/or profitability -------Mass marketer sees one demand curve for its target market -------Combiner sees one demand curve for its combined target market -------Segmenter sees one demand curve for each submarket
What does our target market currently associate with our brand? What would we like them to associate with us? (brand image)
----Positioning (not a mission statement)
Who (could) we exchange with?
----Segmentation
Who (should) we exchange with?
----Targeting
(Psychographic segmentation)
----lifestyle, personality traits, values
Classification of Consumer Products & 4 types of consumer products (CSSU)
---Categorized by consumers' shopping behavior ------Consumer Products:------- (Convenience products)--purchase easily & effortlessly (Shopping products)--worth the time & effort of comparison shopping; $$. (Specialty products)--make a special effort to find; no substitutes; $$$ (Unsought products)--don't know about or don't want to buy
2 main data collection methods
---questioning & observation--- QUESTIONING --interviews --focus group --surveys --experiments OBSERVATIONS --mechanical methods --personal methods --neuromarketing--neuroscience data
A product's Positioning (branding)
---the place that the product occupies in consumers' minds on important attributes relative to competing products. ----It is the image associated with the product in consumers' mind. (Positioning is not a mission statement Examples):--almost creates a brand stereotype --"Dreft" is the detergent for baby clothes --Tesla represents innovation and renewable energy --Marlboro is the masculine cigarette --Actual positioning vs. desired positioning --How profitable is your actual positioning for the company? --You may need to "reposition" your product Ex: Nesquick switching from child to adult milk
Positioning ---Good tool---?
--A company needs to decide where it wants to place the product in the target consumers' minds as compared to the competitors. --(Perceptual map) is a useful technique of describing product positioning and identifying opportunities.
Positioning and product management
--A successful brand manager focuses on building BRAND EQUITY - the added value a brand name gives to a product beyond the functional benefits provided BRAND POSITIONING is the cornerstone --A brand has to offer consumers real, meaningful benefits that makes it stand out from the crowd --Who are the target of this brand? --Is there something unique and valuable that you are offering to them (functional / psychological)? --What is the reason for them to believe your claim?
Warranty
--A warranty explains what the seller promises about its products - repair/replacement/refund, parts/service --Warranties are used by many companies to improve the appeal of their marketing mix --Warranties are quality signals
(Common Mistakes in Marketing Research) Summarized: -underestimate time & expenses -validity problems (poorly worded questions) -wrong type of research (correlation vs. causation) -sample not representative of target pop
--Ignore or underestimate the costs (time & expenses) of obtaining information --Wrong type of research - correlation vs. causation---expect dependent variables change because independent variables change --Sample not representative of target population - solution: random / probability sampling
Step 3: Collect info/data
--Primary data: information collected by the researcher for the project at hand -----(Observational data)--Data collected by mechanical, personal or neuromarketing methods. ~Mechanical (supermarket scanner data; household panel data) ~Personal observation ~Neuromarketing methods. -----(Questionnaire data) or (Asking People)--Data obtained by asking people about their (attitudes, awareness, intentions, & behaviors) ~Individual interview ~Mall intercept interview ~Focus group ~Online survey ~Experiments --Other (such as social network data mining, e.g., NetBase) General rule: obtain secondary data first and then collect primary data
Why Not Do Marketing Research? What would we do without it? What if it is wrong?
--Research is often "costly" and "time-consuming" --What would we do without the information? (Make an "educated" assumption) --What if our assumption is wrong? (Figure out how sensitive your analysis is to a wrong assumption)---That is the risk you are taking!
"Criteria" for Selecting Your Targets (SETC)
--Segment size --Expected growth --Threats of competition --Capability of meeting segment's needs (This analysis is the basis for selecting your "targets")
Why branding?
--The brand name carries the company's promise to consistently deliver a specific set of features and benefits to the buyer --Consumers use the brand name as a convenient summary of the product; hence don't have to evaluate the product every time
What is Marketing Research? (keywords)
--The process of defining a marketing problem and opportunity, systematically (collecting and analyzing information), and (recommending actions). or MARKETING RESEARCH -define problem & opportunity -collect & analyze info -recommend actions --Keywords: information, recommending actions
Common Mistakes in Marketing Research (continued)
--Validity problems (e.g., poorly worded questions) Do you think the US government should "allow" public speeches against democracy? ____ Yes ____ No (Results: 56% said "Yes", 44% said "No") Do you think the US government should "forbid" public speeches against democracy? ____ Yes ____ No (Results: 28% said "Yes", 72% said "No") Why are the results different when the question is asked differently? Common Mistakes - Validity problems (poorly worded questions) Why do you like Wendy's fresh meat hamburgers better than those of competitors? What is the problem? ---Already assumes wendy's burgers are better Common Mistakes - Validity problems (poorly worded questions) How often do you record TV programs for later viewing? ____ Never ____ Occasionally ____ Sometimes ____ Often What is the problem? * Common Mistakes - Validity problems (poorly worded questions) Do you think that McDonald's offer fast and courteous services? ____ Yes ____ No What is the problem? * Common Mistakes - Validity problems (poorly worded questions) On average how much breakfast cereal did each person in your household consume last week? What is the problem?
Step 1: Define problem --------Research objective ------identify possible marketing actions ---3 types of marketing research---
--What type of research to conduct 1.) Exploratory Research - used to gain ideas and insights about a (relatively vague) research problem.--(Makes VAGUE research more clear) Ex: interview consumers to get ideas to improve product. --Exploratory research generates (qualitative data) 2.) Descriptive Research - used when research questions are clearly formulated to find the (frequency that something occurs) or the (relationship between variables)--quantitative 3.) Experimental/Causal Research - used to establish (cause-and-effect relationships)--quantitative --Descriptive and experimental/causal research works with quantitative data. (Qualitative): "The front of the car looks like a face, with the headlights as eyes." (Quantitative): "What is your evaluation of the front of the vehicle?" Extremely unappealing "vs." Extremely appealing ---uses scales--on a scale of 1-10, how appealing?
Business products (B2B products or industrial products) Classified as (Components or Support Products) --Support Products: (IASIs) (Installations)-machine tools (Accessory Equipment)-computers (Supplies)--broom, paper clips (Industrial Services)-maintenance, repair
--companies purchase to produce their own products ----------(Components) --raw materials, such as grain & lumber, or assembly & parts, such as a Ford car engine or door hinges --items that become part of final product ----------(Support Products) (Installations) --major capital items --conveyor belts --machine tools (Accessory Equipment) --less expensive & shorter lives than installations --computers --calculators (Supplies) --Stationary, paper clips, brooms, Computer paper, light bulbs, lubrication oil, cleaning supplies, and office supplies etc.. (Industrial Services) --maintenance, repair & legal services --Business services refer to the services purchased by companies to assist in the operation of the firm. --They include financial, marketing research, promotional, legal, lawn care, and janitorial services.
Benefits of Segmentation, Targeting & Positioning
--helps increase profit --helps keep a balance
Step 2: Develop research plan
--identify data needed --determine how to collect data --specify constraints/restrictions
Cannibalization & Timing
--the negative impact of a company's new product on the sales performance of its existing and related products. --a situation where a new product "eats" up the sales and demand of an existing product, potentially reducing overall sales, even if sales of the new product are increasing. --consumers wait for release date of new product to make purchase (be effective with timing--new product launching)
Usage rate (80/20 rule):
--the quantity of product consumed per period or store visits per period. --Also referred to in terms of 80/20 rule. --80/20 rule: concept that 80 percent of a firm's sales are obtained from 20% of its customers. --part of Behavioral Segmentation
Product Life Cycle (PLC):
--the stages a new product goes through in the marketplace: introduction, growth, maturity & decline. --some companies can take action for a life cycle extension--saves product from dying out
New Product Development Process (ISIDC?)
1. Idea Generation: the systematic search for new product ideas 2. Screening: internally--spot good ideas and drop poor ones 3. Idea Evaluation: concept testing and business analysis 4. Development: develop the product concept into a physical product + market testing 5. Commercialization: introduce the new product into the market
Marketing Research Process: FUNCTIONS OF THE 5 STEPS DpDrpCiDfTma
1.) Define problem --set research objectives --identify possible marketing actions 2.) Develop Research Plan --specify constraints --identify data needed for marketing actions --determine how to collect data 3.) Collect information --obtain secondary data --obtain primary data --use info technology (computers) & data mining (examining large databases) 4.) Develop findings --Analyze data --Present the findings 5.) Take marketing actions --Make action recommendations --Implement action recommendations --Evaluate results
Marketing Research Process (5 steps)
1.) Define the problem 2.) Develop the Research Plan 3.) Collect relevant information 4.) Develop findings 5.) Take marketing actions
New Product Development
3000 raw ideas = 1 successful product 20,000 - 30,000 new products / year 70-80% fail in the first year
Trademark
A trademark identifies that ---a firm has legally registered its brand name--- so the firm has its exclusive use
Advantages and disadvantages of secondary data
Advantages: ---Time-saving & lower cost (usually) ---Greater level of detail available (ex. US Census Bureau data) Disadvantages: ---Can be outdated (ex. US Census every 5-10 yrs) ---May not "fit" the purpose of the current research or researcher - not project-specific
Advantages and disadvantages of primary data
Advantages: --More flexible & specific to problem. Disadvantage: --Expensive --it often takes a long time to process the information. --Research has nothing to back it up if data is skewed or incorrect (Mark Twain--"Collecting data is like collecting garbage, you've got to know what you're going to do with the stuff before you collect it")
How Can Products Be Classified?
By type of user ---Consumer products or ---Business / industrial products Some products are hard to categorize ---Computers ---Office supplies
Primary Data (Observational & Questionnaire)
Def: Facts and figures newly collected for the project (Observational data) --mechanical methods --personal methods --neuromarketing methods (Questionnaire data) --idea "generation" methods --idea "evaluation" methods (Other sources of data) --social networks --panels & experiments --"information technology" & --"data mining"
Secondary Data (internal & external data)
Definition: --Facts & figures already recorded prior to the project Internal (inside firm): financial statements, research reports, files, customer letters, sales call reports, & customer lists External (outside firm): U.S. Census reports, trade association studies & magazines, business periodicals, & internet-based reports
What is a Product?
Definition: A product is the need-satisfying offering of a firm. --tangible, service, idea, or combo Examples: A product can be..... ====a tangible good (durable goods vs. nondurable goods) ====a service ====an idea ====or some combination of these
Brand Positioning Statement
EX: For cold sufferers, maximum strength Contac offers 12 hours of non-drowsy and continuous cold relief from congestion and sinus pressure thanks to it's timed-release technology. OR For homemakers, Johnson Bathroom Products are the easy way to get a great clean shine for your tub, tile and toilet. That's because only our products contain scrubbing bubbles that cut through dirt and grime clean to the shine!
Step 3: Collect info (general rule)
General rule: ---obtain secondary data first and then collect primary data
Marketing Strategies in the Introduction Stage:
Goal: create product awareness and trial Strategy --Promotion: heavy investment to stimulate (primary demand) --Product: limited offerings --Price: high (skimming) or low (penetration) price
Marketing Strategy in the Growth Stage:
Goal: differentiate and build brand loyalty to generate repeat purchases Strategy: Adjust marketing mix to reach sales momentum ---Expand product offerings ---Expand distribution ---Advertising expenses substantial; stress points of difference to create selective demand ---Could use price competition to gain market share
Marketing Strategy in the Maturity Stage
Goal: maintain brand loyalty & extend product life Strategy: (Aggressive promotions) (Market modification) --Finding new users --Increasing use --Creating new use situation (Product modification) --Quality modifications --Functional modifications --Aesthetic modifications (appearance or style) (Even repositioning) Example: Harley Davidson--old brand maturing to new audience
Marketing Strategy in the Decline Stage Goal: stay profitable
Goal: stay profitable Strategies: --For "cash cows" - harvest the product by (reducing various costs and maximizing cash that flows in), or --For "dogs" - delete the product
NPD Process: Idea Generation
Ideas from many sources: --Customers --Competitors --Distributors, suppliers, and other collaborators --Internal sources (Best if linked directly to customer needs)
NPD Process: Screening
Internal idea testing (i.e., within the firm) Goal: reduce number of ideas to a practical few Criteria --Product uniqueness --Availability of technology and/or raw materials --Compatibility with existing products --Projective return on investment (ROI) --Etc.
3 PLC Stages Marketers focus on:
Introduction --Consumers: Innovators Uncertainty is High --Competition: Few Competitors --Product: Application Identification --Promotion: Awareness Low User Education Important --Price: Pricing Depends --Place: Selective Distribution Growth --Consumers: Early Adopters Segments Develop --Competition: Increasing Competition --Product: Increasing Differentiation --Promotion: Continue Building Awareness and Educating Users --Price: Low Price Competition --Place: Widening Distribution Maturity --Consumers: Majority Adopt --Competition: Competition Intense --Product: Service Could Become Point of Difference --Promotion: Sales Promotion Important --Price: Intense Price Competition --Place: Broad Distribution
Branding Strategies (4 Strategies)--BS4
Multi-product branding (family/corporate branding) --One name for all its products in a product class --Line extensions --Brand extensions --Co-branding Ex: TORO --toro snowblowers --toro lawn mowers --toro garden hoses --toro sprinkler systems Multibranding --Give each product (product line) a distinct name Ex: Proctor & Gamble --tide --cheer --ivory snow --bold Private branding --Wholesaler or retailer selling a product under a brand name it owns Ex: Sears --Kenmore appliances --Craftsman tools --DieHard batteries Mixed branding --A manufacturer makes products under its own name(s) and that of a reseller --Usually targeted at different segments Ex: Michelin --Michelin tires --Sears tires Epson --Epson printers --IBM printers
PRODUCT LINE & PRODUCT MIX --Example
Product Line: one category that P&G produces Ex: (Dish Washing) line Product Mix: (everything P&G produces) Example: (Selected P&G Products) --Dish Washing Dawn Joy Cascade Ivory --Body Wash & Soap Camay Ivory Noxzema Olay Old Spice Safeguard Zest --Paper Products Puffs Bounty Charmin Product Line
Effective tool to develop market segments
Product Market Grid: --a framework relating market segments of potential buyers to products offered. Ex: Wendy's develop new products and innovations for specific market segments based on a Product Market Grid
Targeting Strategies (4 strategies)
Strategy #1: (single target market approach) ----Concentrated marketing / niche strategy --Select one of the segments as the target market --Concentrated marketing --Lower cost Ex: sells only baby diapers Strategy #2: (multiple target market approach) ----Choose two or more segments and offer different marketing mixes (4Ps) to each segment --involves higher cost Ex: Ann Taylor & Ann Taylor Loft Strategy #3: (combined target market approach) ---Mass marketing (almost no longer exists), or Combine two or more segments into one target market and offer the same product to all selected segments May still require separate promotional campaigns and/or channels of distribution Advantages: lower costs, operational efficiency --"1 or more segments into 1 target market" --mass marketing --lower cost --SAME PRODUCT, DIFFERENT PACKAGING Ex: Harry Potter in 64 languages, or different detergent brands branched from the same company Strategy #4: (mass customization) Tailoring goods or services to the tastes of individual customers on a high volume scale Matching customers' needs most precisely. --(extreme case of multiple target market approach) --tailoring goods or services to the tastes of individual customers on a high volume level --matching customer needs more precisely --cost prohibitive (something difficult to obtain because of its cost) Ex: Custom homes, custom furniture, custom tailored suit, Nike shoes with your name.
TANGIBLE good & INTANGIBLE components
Tangible: (good with the right features and package) Intangible: (service, atmosphere, experience, brand name, warranty).
What is targeting (Selecting groups)?
Targeting--evaluating segments & selecting ----Evaluating segments & selecting one or more as the focus of certain marketing mix offerings.
PLC concept & curve
The PLC concept applies to a --product class (e.g., telephonic transmission), --product form (e.g., smart phones), or --brand (e.g., iPhone) Your analysis will be dramatically different depending on what level you focus on PLC Curve: --a curve representing the life cycle or profit/revenue for total industry sales in a product field.
Branding
The use of a name, phrase, design, symbol, or a combination of these, to identify a product
Segmenting Consumer Markets (GDPB)
Ways to Segment Consumer Markets (Geographic segmentation) ----region, city size, population density, climate (Demographic segmentation) ----age, gender, family size, family life cycle, income, occupation, education, ethnicity (Psychographic segmentation) ----lifestyle, personality traits, values (Behavioral segmentation) ----Where they buy, what benefits they seek (product features), user status, usage rate (80/20 rule) Marketers often use multiple variables for segmentation
What Is a Product?
When customers buy a product, they buy the total offering. --Often times it is a combination of a TANGIBLE good (with the right features and package) and INTANGIBLE components (service, atmosphere, experience, brand name, warranty).
