Exam 1 (Units 1-5)

consumer buying decision process

(1) problem/need recognition, (2) information search, (3) evaluation of alternatives, (4) purchase decision, and (5) post-purchase evaluation.

Observation

(primary data) involves watching peoples' overt behavior. The researcher has to immerse herself into the setting where her respondents are, while recording their behavior.

Voice of the Customer (VOC)

- Data that represents the needs and wants of your customers - Goal is to get the target market's wants and needs, prioritized in terms of their in relative importance and satisfaction with current alternatives. - Generally conducted at the start of any new entrepreneurial opportunity to better understand the customers' wants and needs and as the key input for the new product

Entrepreneurial Marketing

- Marketing is the Creating and retention of satisfied customers - We have to create the customer. There is no existing consumer for our product - A new concept to solve a pain in the marketplace that does not have a satisfactory solution

3 P's of Service Marketing

- Physical evidence- appearance and overall aura of where service is received - Process- the actual procedures, implementation, and flow of the activities by which the service is delivered - Productivity- the measure of an organization's ability to provide a service

external search

- When consumers have no prior knowledge or lack of recent exposure to a product, consumers seek additional information outside of their experience - leads them to seek information from personal sources such as family and friends/coworkers the consumer trusts, public sources, such as online forums, or consumer reports (assuming they are unbiased) and marketer-dominated sources, salespeople, advertising, influencers, package labeling, and websites.

Red oceans

- all the industries in existence today—the known market space, where industry boundaries are defined, and companies try to outperform their rivals to grab a greater market share of the existing market - Cutthroat competition turns the ocean bloody red. Thus, the term "red ocean."

How to retain customers?

- build a relationship with them - CLV (customer lifetime value) - email and mobile messaging works best for customer retention - and social media marketing

Surveys

- most common way of discovering primary data - a research approach to generate data by asking questions and recording their responses. - results are used to describe and analyze buying behavior

Benefit

- provides the customer with value - the outcomes or the results that users will experience by using your product—the very reason a prospective customer becomes a customer. - the real or perceived value customer experiences (resolution of problem and fulfillment of need) is where they see value.

Value Proposition

- refers to the value a company promises to deliver to customers should they choose to buy their product. - should help convince a prospective customer that the offer will add more value or better solve a problem than other similar offerings will.

Feature

- something that your product has or is, something essential and a factual statement about the product being promoted - aren't what entice buyers to buy - the means of providing the benefit to the customer, the distinctive characteristics that sets the product apart from the competition. - Example: a refrigerator with an ice maker is a feature. The benefit is you don't have make or buy your own ice.

Why Do We Target Market?

- to focus on limited resources. - entrepreneur needs to understand that their organization cannot be all things to all customers

Four attributes that can weigh into the consumer's evaluation of alternatives

1) brand, 2) features, 3) aesthetics (how does the product/package look or make me look/feel) and 4) price

Opportunity Characteristics

1) provide significant value for our target market 2) good profit potential 3) sustainable

The Entrepreneurial Marketing Process

1. *Identify* and understand our customers' needs. 2. *Develop* products, services, or experiences to meet their needs. 3. *Price* effectively 4. *Inform* customers that products exist 5. *Deliver* effective, efficiently, and conveniently 6. Ensure *satisfaction* during and after exchange 7. Build *long-term* relationships

Five-Step Marketing Research Approach

1. Define the problem 2. Develop the research plan 3. Collect relevant information 4. Develop findings 5. Take marketing actions

Research provides three outcomes for the entrepreneur to go:

1. Proceed with this concept 2. Adjust, adapt or pivot 3. Move on to another concept, because this is not feasible.

Additional Requirements for Effective Segmentation

1. Target market group of customers must have similarly proximate needs. 2. The segments must be measurable. 3. The segments must be large enough to service economically 4. There must be a way to reach the segments.

The Garter Model

1. Understand what is the global purchasing power for your industry. 2. Determine the number of potential customers or users within the immediate reach of your business's influence by applying important factors such as the company's segment focus, customer attributes, and operational capabilities. 3. To arrive at your company's total serviceable market estimate, gauge how many customers are expected to buy either as early adopters or as more mainstream adopters in your targeted market. 4. We need to assess this in the short term, because we are a start-up and need to know what portion of the market we can capture quickly.

Good segmentation answers these questions

1. What is purchased? 2. Who is purchasing? 3. Where is it purchased? 4. How is the good/service purchased? 5. How much is purchased? 6. When is it purchased? 7. *Why is the good/service purchased?* (last one most important - relates directly to customer needs)

What percentage of startups fail in the U.S.?

90%

Advantages/Disadvantages of Secondary Data

Advantages: (1) the tremendous time saving because the data have already been collected and published and (2) the relative low cost, as free or inexpensive Census reports Disadvantages: (1) the secondary data may be out of date, especially since the Census data is collected only every five or ten years and (2) definitions of categories might not quite be right for the entrepreneur's opportunity.

Composite Approach

Combining geographic, demographic, psychographic, and behavioral difficult, yet necessary, to complete if you truly want to get a good representation of your target market.

Top reason why startups fail?

Creators make products no one wants

Four possible outcomes in the post purchase stage

Delight—we are significantly pleased with the purchase decision. We cannot anticipate a better outcome than what we have experienced. Satisfaction—purchase meets expectations but does not exceed them. Buyer is content. Dissatisfaction—disappointed with the purchase outcome. Product does not meet expectations. Cognitive dissonance—doubts in the buyer's mind about whether purchasing the product was the right decision. Cognitive dissidence is most likely to arise when a person recently bought an expensive, high-involvement product that is found lacking compared to desirable features of competing options. This is when a customer may experience feelings of post purchase psychological tension or anxiety. For example, the customer might feel compelled to question whether she made the right decision.

Marketing creates a materialistic society

Marketing can attract consumers to attach to particular brands or products to make a statement or stay current with friends and/or associates. We see this occur particularly with youth. Materialistic values are presented to young people in advertisements by encouraging our persuading consistent purchasing of particular products and possession of these items can define success.

Marketing creates an artificial need

Marketing may entice people to make purchases of items that they do not need due to the attractiveness of the promotion, discussion of the features/benefits of the product, or the allure of the solution of the product.

Four/Five P's of Marketing

Product, Price, Place, Promotion, (People)

Four criteria to use for selecting the target market:

Segment size: The estimated size of the market in the segment is important to determine whether it makes sense to go after this group. We have to ensure ourselves that there are a sufficient number of customers with this migraine pain point who do not have an adequate alternative to pursue for our offering. Expected growth: We do not need to have a huge market to start. In fact, with our resources, we may want a narrowly focused target opposed to an expansive one. Competitive position: How much competition is there in the market currently or likely in the future? Typically, the less the competition, the more attractive the market. Cost of reaching the segment: Can we reach the target cost-effectively. If not, perhaps we should not pursue it.

Marketing creates unrealistic expectations

There is the appearance in some marketing efforts that the product promoted is offering miracles. These promises can create an expectation that the product cannot fulfill. Marketers must be cognizant of expectations. Marketers want anticipation for their products, but realistic anticipation.

What is the key difference in the AMA's 1985 definition of marketing vs. the AMA's 2005 definition?

They put more of a focus on value and relationships over transactions. Focus was once on customer acquisition is now dedicated to customer retention

C-PEST analysis

Tool used by organizations to discover and evaluate macroeconomic factors that can impact their business. Examines opportunities and threats. - Competition (can be immediate like Coke or Pepsi or can be remote like Coke and a candy bar) - Political/Regulatory (changes in laws, rules and public opinions can create entrepreneurial opportunities. Ex: Colorado legalized marijuana and created a market for retail established sales of legal marijuana) - Economic (changing from a regional economy to a more global one has created numerous opportunities to connect providers with new nonlocal customers) - Sociocultural (current social and cultural desires, trends and changes can create opportunities) - Technology (large changes in technology create opportunities)

Won't We Be Ignoring Customers?

We cannot be all things to all customers. A good entrepreneur recognizes that focusing on the target market and not beyond is our best path to success.

Our communication is based on the Venn Diagram of

What are the products that does better—What an ideal option would offer What our target market bends/wants—The important criteria our target market would use when selecting What our competition does not do as well—Customers' thoughts on existing brands

Personal Factors

Who we are as people has a major impact on our purchasing decisions. They include things as gender, age, and lifestyle. Marketers believe people buy products to enhance how they feel about themselves.

Segmentation

aggregating prospective buyers into groups or segments that have common needs and will respond similarly to specific marketing offers

Blue oceans

all the industries not in existence today—the unknown market space, unexplored and unblemished by competition. Like the "blue ocean," it is vast, deep, and powerful—in terms of opportunity and profitable growth.

Created opportunity

both demand and supply are created. Examples: Beanie Baby, iPod, TikTok

focus group

brings together multiple people to discuss a specific topic in a group setting facilitated by a moderator. Advantages are the interactivity of the group to draw out more conversation and debate potential among the group. Disadvantages can arise if you have a dominant personality driving the conversation or some participants being less than honest to be sociable or to receive money.

Secondary data

facts and figures that have already been recorded or accumulated prior to the project at hand Ideally, you collect secondary data before collecting primary data. In general, secondary data can be obtained more quickly and typically less expensively than primary data. Secondary data can provide answers to many of the questions we have about the opportunity. Ex: the census

Social class

groups of people that may share occupations, sources of income (not level of income), and education determine his or her social class

Reference groups

individuals or groups that influence our opinions, beliefs, attitudes, and behaviors. A consumer identifies with these reference groups and wants to join them or be like them. Marketers recognize reference groups as important because they influence how consumers interpret information and make purchasing decisions. "influencers"

Interviews

involve asking open-ended questions to converse with respondents to collect or extract data about a subject Typically, interviews are used in business-to-business (B2B) opportunities. We get the information without outside influences. Advantages: Higher response rate Adaptable, if face to face More complete answers Watch and learn from body language Disadvantages: Time consuming Expensive Access to interviewee

physical situation

involves the store's design or layout. Grocery stores typically place bread and milk products on opposite ends of the stores because people often need both types of products.

Geographic segmentation

is based upon where customers live or work (region, city, state, or neighborhood). There is probably little need for snow ski purchases or rental business in Key West, Florida

Entrepreneurs recognize that problems make _________________

opportunities

What is the First Rule of Marketing?

people don't buy products, they buy solutions to problems

Psychographic segmentation

personality characteristics, motives, opinions, interests, and lifestyles, to segment markets. based on some subjective mental or emotional attributes, aspirations, interests or needs.

3 Types of Opportunities

recognized, discovered, created

Consumer behavior

refers to the buying behavior of the individual purchaser. To find out what satisfies consumers, we must examine the impacts on why, what, where, when, and how they buy and recognizing the proper marketing mix to meet those needs.

Culture

refers to the shared beliefs, customs, rituals, behaviors, and attitudes that characterize society. Your culture is most impactful on the way in which you should live. It has a huge effect on the things you purchase.

Lifestyle Factors

refers to the way an individual stays in the society. It is really important for some consumers to wear branded clothes whereas some individuals are really not brand conscious. A consumer's lifestyle is something to do with her attitude, perception, social relations, and immediate surroundings.

Behavioral segmentation

reveals the "why" behind customer behavior. We break it down by product features or benefits and usage rate.

Demographic segmentation

segmenting the market according to race, age, religion, gender, family size, ethnicity, income, and/or education.

need

something required or essential that is lacking (you need food to survive)

want

something that's desired but may or may not be essential (you want a taco)

Ethnography

specialized observational approach in which trained observers seek to discover subtle emotional reactions as consumers encounter products in their "natural use environments" such as homes, cars, or stores. Conducting place-based research allows the researcher to interview and observe as the behavior is carried out and provides an opportunity for follow-up questions as needed. The follow-up is to understand the person observer's interpretation of their behavior.

product differentiation

strategy involves these companies using different marketing actions, such as product features and advertising, to help consumers perceive a product as being different and better than the competition. The perceived differences may involve physical features, such as size or color, or nonphysical ones, such as image or price.

Social Factors

such as culture, family, reference groups, and social class depend on the world around you and how it works. These factors have a more external approach whereas, personal factors were much more internal.

Situational Factors

temporary conditions that affect how buyers behave whether they actually buy your product, buy additional products, or buy nothing at all from you. They include things like physical factors, social factors, time factors, the reason for the buyer's purchase and the buyer's mood.

Primary Data

the new data collected specifically for this opportunity types: interviews, focus groups, observation, surveys, and conjoint studies.

Customer value

the satisfaction that the customer experiences (or expects to experience) by taking an action versus the cost of that action

Marketing Research

the systematic collection and interpretation of information to help entrepreneurial marketers solve specific problems or take advantage of marketing opportunities

Perceptual Maps

visual representations of the perceptions of potential customers about specific attributes of a brand, product, service, or idea

Marketing Mix

vital when shaping a product of brand's offer: Product, Price, Place, Promotion, People, Process, Physical Evidence, Productivity and Quality

Trendspotting

when looking for an opportunity, we need to be aware of trends; the process of identifying new trends

Recognized opportunity

when supply and demand both exist but they need to be matched up. Examples: Airbnb, Uber (shared economy)

Discovered opportunity

where either supply or demand exist but not both. Examples: new cures, software updates

Positioning

where your product will be thought of in the minds of our customers in relation to our competition The goal is to connect our position with what desired benefits are of our target market.

internal search

you may scan your memory for previous personal experiences with brands or products. What previous exposure or acceptance of a particular brand or product impacts our future decisions towards that product.