Marketing 2
Convenience
A key factor influencing the selection of a service provider.
Undifferentiated Targeting Strategy
A marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix.
types of demographic segmentation
Age Gender Income Ethnic background Family life cycle
Climate Considerations
Extreme climates and long-distance shipping necessitate sturdier packages. Packages may need a longer shelf life.
Focus Group
The objective of focus group interviews is to stimulate insightful comments through group interaction.
Sampling Procedure
The population or universe must first be defined. Then it is determined if the sample must be representative of the population
Planned Obsolescence:
The practice of modifying products so those that have already been sold become obsolete before they actually need replacement.
Diffusion
The process by which the adoption of an innovation spreads. 1. An innovation is a product perceived as new by a potential adopter. It really doesn't matter whether the product is "new to the world" or some other category of new product. 2. By understanding how consumers learn about and adopt products, marketing managers have a better chance of successfully marketing products.
Market Segmentation
The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.
Brainstorming
The process of getting a group to think of unlimited ways to vary a product or solve a problem.
Benefit Segmentation
The process of grouping customers into market segments according to the benefits they seek from the product. 1. Benefit segmentation is different from other segmentation bases because it groups potential customers on the basis of their needs and wants instead of some other characteristic. 2. Customer profiles can be developed by examining demographic information associated with people seeking certain benefits.
The New Age of Secondary Information: The Internet
The rapid development of the Internet has eliminated much of the drudgery associated with the collection of secondary data. 1. Gathering secondary data has traditionally been a tedious boring job. 2. The researcher often had to write to government agencies, trade associations, or other secondary data providers and then wait days or weeks for a reply that might never come.
Customers
Their wants and needs should be considered for new products
Employees
They sometimes know the company's products and processes better than anyone else and many firms have formal processes for employees to submit ideas
Engage in postpurchase communication
This includes follow-up calls or surveys.
Research & Development
This is done through basic research, applied research, product development, and product modifications
Level 2 relationship marketing
This level uses pricing incentives as well as building social bonds with customers. The firm keeps in touch with customers.
Social Media and Big Data
Through social media monitoring, a researcher can learn what is being said about the brand and the competition. Monitoring social media and tracking shopping behavior online are only two inputs into the new era of big data.
Machines watching phenomena
Traffic counting machines monitor traffic flow.
Global Issues in Branding
When entering a foreign market with an existing product a firm has three options for handling the brand name:
Create a strong organizational image
manage the evidence, including the physical environment, the appearance of employees, and tangible items associated with the service like the bill.
Lower-priced products
provide performance similar to competing brands at a lower price.
NAICS does...
provides a common industry classification system valuable tool for mareketers to target markets analyze Data can be used to determine... - number size and geographic dispersion firms - market portential - sales forecasts - new customer identification
evaluative criteria
quality service price
Complementary Branding
refers to products advertised or marketed together to suggest usage. - Seagram's and 7up and Cold Stone Creamery has worked with Oreo, JELL-O and Jelly Belly to produce new and unique ice cream flavors. In turn, Jelly Belly, for example, launched a Cold Stone Creamery line of jelly bean flavors.
Mental Stimulus Processing
refers to services directed at people's minds. Examples include spectator sports events, theater performances, and education.
government
thousands of federal state and local buying units. this may be the largest single market for goods and services
raw materials
unprocessd products like minerals wheat corn, fish, become part of finished products. personal selling
processed materials
used directly in manufacturing other products. sheet metals chemicals and lumber. do not retain their identity in the final products.
What are Business products?
used to manufacture other products become a part of another product helps the business run *The key is the intended use
New-to-the-world products
(or discontinuous innovations) create an entirely new market and are the smallest category of new products. Cirque De Solei
Strategies for Selecting Target Markets
- Undifferentiated Strategy - Concentrated Strategy - Multisegment Strategy
The Importance of Services
1. A service is a result of applying human or mechanical efforts to people or objects 2. Service industries accounted for 68 percent of U.S. GDP in 2012. One in five jobs.
3 Uses of the Internet by Marketing Researchers
1. Administer surveys 2. Conduct focus groups 3. Other types of marketing research
4 ways of analyzing the Data
1. After data is collected, the next step is to analyze data. The purpose of data analysis is to interpret and draw conclusions from the collected data. 2. Data is organized by one-way frequency counts, cross-tabulations, and more sophisticated statistical analysis. 3. One-way frequency tables record the responses to a question. They provide a general picture of the study's results. 4. A cross-tabulation looks at the associations between certain responses, such as association between gender and product choice.
4 Advantages of Primary Data
1. Answers a specific research question 2. Data are current 3. Source of data is known 4. Secrecy can be maintained
Effective Positioning
1. Assess the positions occupied by competing products 2. Determine the dimensions underlying these positions 3. Choose a market position where marketing efforts will have the greatest impact
2 Types of Products
1. Business Product 2. Consumer Product
3 Roles of Consumer-Generated Media in Marketing Research
1. CGM comes from various sources: blogs, message boards, review sites, podcasts, and more. 2. It is trusted more than traditional advertising. 3. It can be influenced but not controlled by marketers.
4 Ways of Preparing and Presenting the Report
1. Concise statement of the research objectives 2. Explanation of research design 3. Summary of major findings 4. Conclusion with recommendations
The Service Offering
1. Core Service: The most basic benefit the consumer is buying. 2. Supplementary Service: A group of services that support or enhance the core service.
5 Advantages of Private Brands
1. Earn higher profits on own brand 2. Less pressure to mark down price 3. Manufacturer can become a direct competitor or drop a brand/reseller 4. Ties customer to wholesaler or retailer 5. Wholesalers and retailers have no control over the intensity of distribution of manufacturers' brands
6 Advantages of Online Focus Groups
1. Ease of use 2. Better participation rates 3. Cost-effectiveness 4. Broad geographic scope 5. Accessibility 6. Honesty
Collecting the Data Field service firms provide 4 things
1. Focus group facilities 2. Mall intercept locations 3. Test product storage 4. Kitchen facilities
5 Advantages of Manufacturers' Brands
1. Heavy consumer ads by manufacturers 2. Attract new customers 3. Enhance dealer's prestige 4. Rapid delivery, carry less inventory 5. If dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealer
6 Management Uses of Marketing Research
1. Improve the quality of decision making 2. Trace problems 3. Focus on keeping existing customers 4. Understand the marketplace 5. Alert them to marketplace trends 6. Gauge the value of goods and services, and the level of customer satisfaction
Business Analysis
1. In the business analysis stage, the preliminary figures for demand, cost, sales, and profitability are calculated. 2. In an established market, the accuracy of revenue projections can be made using industry estimates of total market size. However, forecasting market share for a new, fragmented, or relatively small niche entry is a bigger challenge.
6 Forms of Survey Research
1. In-Home Interviews 2. Mall Intercept Interviews 3. Telephone Interviews 4. Mail Surveys 5. Executive Interviews 6. Focus Groups
Relationship Marketing
1. Many services involve ongoing interaction between the service organization and the customer. They can benefit from relationship marketing as a means of attracting, developing, and retaining customer relationships. 2. It is more cost effective to keep existing customers than to attract new ones. Increasing customer retention by 2 percent can have the same effect on profits as reducing costs by 10 percent. 3. Relationship marketing can be practiced at three levels:
3 Disadvantages of Secondary Data
1. May not give adequate detailed information 2. May not be on target with the research problem 3. Quality and accuracy of data may pose a problem
New Product Development Process
1. New Product Strategy 2. Idea generation 3. Idea Screening 4. Business analysis 5. Development 6. Test Marketing 7. Commercialization Finally - New Product
4 Advantages of Captive Brands
1. No evidence of store's affiliation 2. Manufactured by third party 3. Sold exclusively at the chain 4. Can ask price similar to manufacturer's brands
Observation Research
1. Observation research is the systematic process of recording the behavioral patterns of people, objects, and occurrences without questioning them. 2. A market researcher using the observation technique witnesses and records information as events occur or compiles evidence from records of past events.
2 Disadvantages of Primary Data
1. Primary data can be very expensive. 2. Disadvantages are usually offset by the advantages of primary data.
5 Advantages of Internet Surveys
1. Rapid development, Real-time reporting 2. Reduced costs 3. Personalized questions and data 4. Improved respondent participation 5. Contact with the hard-to-reach
4 Advantages of Secondary Data
1. Saves time and money if on target 2. Aids in determining direction for primary data collection 3. Pinpoints the kinds of people to approach 4. Serves as a basis of comparison for other data
3 Things to expect When Services are Assessed
1. Search quality: More often applied to goods, assessed before purchase. Services tend to exhibit fewer search qualities 2. Experience quality: Assessed after purchase. Meal in a restaurant 3. Credence quality: Assessed only with appropriate knowledge. Did the operation go well?
why market segmentation
1. Segmentation enables the identification of groups of customers with similar needs, and the analysis of the buying behavior of these groups. 2. Segmentation provides information for the specific matching of the design of marketing mixes with the characteristics of the segment. 3.Segmentation helps marketers satisfy customers wants and needs while meeting the organization's objectives.
Steps in Segmenting Markets
1. Select a market for study 2. Choose bases for segmentation 3. Select descriptors 4. Profile and analyze segments 5. Select markets 6. Design, implement, and maintain marketing mix Markets are dynamic, so it is important that companies proactively monitor their segmentation strategies over time.
Internal Marketing: Treating employees as customers and developing systems and benefits that satisfy their needs.
1. Services are performances, so the quality of a firm's employees is an important component in building long-term relationships with customers. 2. It is beneficial to the company to keep happy employees. To satisfy employees, companies have designed and instituted a wide variety of programs such as flextime, on-site day care, and concierge services. 3. A firm that makes its employees happy has a better chance of retaining customers.
3 Unique Aspects of Nonprofit Organization Marketing Strategies
1. Setting of marketing objectives 2. Selection of target markets 3. Development of marketing mixes
Alternatives to Test Marketing
1. Single-source research using scanner data 2. Simulated (laboratory) market testing (promotional materials shown and then taken to store to see what they purchase) 3. Online test marketing - Allows for a fast and cost-effective way to conduct test marketing
4 Symptoms of Overextension
1. Some products have low sales or cannibalize sales of other items 2. Resources are disproportionately allocated to slow-moving products 3. Items have become obsolete because of new product entries 4. Contracting product lines is a strategic way to deal with overextension.
Customer Relationship Management System
1. The CRM cycle is initiated by identifying customer relationships within the organization. 2. Next the company must understand the interaction each customer has with the company, building on the initial information collected and developing a useful database. 3. Based on knowledge of the customer and his/her interaction with the company, the company can then acquire and capture all relevant information about the customer. 4. Technology plays a critical part in a CRM system. Technology is used to store and integrate customer data. 5. Not all customers are equally important to a business. Consequently, the company must use data mining to determine its profitable and unprofitable customer segments. 6. Once the customer data are analyzed, they are leveraged. Data are transformed into information and disseminated throughout the organization—to the right person in the right place at the right time.
2 Global Issues in Services Marketing
1. The U.S. is the world's largest exporter of services. 2. The marketing mix must reflect each country's cultural, technological, and political environment.
3 stages of Simultaneous Product Development
1. The development process works best when all the involved areas (marketing, R&D, engineering, production, and suppliers) work together rather than sequentially. This product is known as simultaneous product development. 2. This approach allows firms to shorten the development process and reduce costs. 3. The Internet is a useful tool for implementing simultaneous product development, particularly for global efforts. Global R&D is important because large companies have become global and focus on multiple markets. Also, companies want to tap into the world's best talent.
3 Methods of Conducting Online Surveys
1. Web Survey Systems 2. Survey Design and Web Hosting Sites 3. Online Panel Providers
characteristics of a market
1They are composed of people or organizations. 2These people or organizations have wants and needs that can be satisfied by particular product categories. 3They have the ability to buy the products they seek. 4They are willing to exchange their resources, usually money or credit, for desired products. A group of people that lacks any one of these characteristics is NOT a market.
Gap Model of Service Quality
5 gaps
innovators
: The first 2.5 percent who adopt the product. Many are obsessive about trying new ideas and products.
Trademarks
A Trademark is the exclusive right to use a brand. A service mark performs the same function for services. Many parts of a brand and associated symbols qualify for trademark protection. Trademark right comes from use rather than registration. The Digital Millennium Copyright Act (DMCA) explicitly applies trademark law to the digital world. Companies that fail to protect their trademarks face the possibility that their product names will become generic. - This list includes aspirin, cellophane, thermos, monopoly, cola, and shredded wheat
Captive
A brand manufactured by a third party for exclusive retailer, without evidence of a that retailer's affiliation.
Private Brand
A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand.
Global Brand
A brand where at least a third of the earnings come from outside its home country
Web Community Research
A carefully selected group of consumers who agree to participate in an ongoing dialogue with a particular corporation. Web communities: 1. Engage customers 2. Achieve customer-derived innovations 3. Establish brand advocates 4. Offer real-time results
Scaled- Response Question
A closed-ended question designed to measure the intensity of a respondent's answer.
Product Life Cycle
A concept that provides a way to trace the stages of a product's acceptance, from its introduction (birth) to its decline (death). It can be used to analyze a brand, product form, or product category
Warranty
A confirmation of the quality or performance of a good or service.
Product Line
A group of closely-related product items.
Target Market
A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges.
Perceptual Mapping
A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers' minds.
Specialty Product
A particular item for which consumers search extensively and are reluctant to accept substitutes (Fine watches, expensive automobiles, and gourmet restaurants.)
New Product Strategy
A plan that links the new-product development process with the objectives of the marketing department, the business unit, and the corporation.
Product Differentiation
A positioning strategy that some firms use to distinguish their products from those of competitors.
80/20 Principle
A principle holding that 20 percent of all customers generate 80 percent of the demand.
Consumer Product
A product bought to satisfy an individual's personal wants
Efficient Sales and Distribution
A product line enables a full range of choices to customers, and as a result, better distribution and retail coverage.
Shopping Product
A product that requires comparison shopping, because it is usually more expensive and found in fewer stores (Homogeneous shopping products include washers, dryers, and televisions. Heterogeneous shopping products include furniture, clothing, housing, and universities.
Unsought Product
A product unknown to the potential buyer or a known product that the buyer does not actively seek (New products, insurance, burial plots, and encyclopedias.
Business Product
A product used to manufacture other goods or services, to facilitate an organization's operations, or to resell to other customers
Convenience Product
A relatively inexpensive item that merits little shopping effort (Candy, soft drinks, deodorant, aspirin, hardware, and dry cleaning.)
5 Benefits of Product Lines
Advertising Economies Package Uniformity Standardized Components Efficient Sales and Distribution Equivalent Quality
Universal Product Codes
A series of thick and thin vertical lines (bar codes), readable by computerized optical scanners, that represent numbers used to track products.
straight rebuy
A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers.
new buy
A situation requiring the purchase of a product for the first time.
modified rebuy
A situation where the purchaser wants some change in the original good or service.
Product Item
A specific version of a product that can be designated as a distinct offering among an organization's products.
Multisegment Targeting Strategy
A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each. P&G offers 18 different laundry detergents big companies do this a lot
Concentrated Targeting Strategy
A strategy used to select one segment of a market for targeting marketing efforts. Because the firm is appealing to a single segment, it can concentrate on understanding the needs, motives, and satisfactions of that segment's members and on developing and maintaining a highly specialized marketing mix. Niche One segment of a market.
Market Segment
A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.
Scanner-Based Research
A system for gathering information from a single group of respondents by continuously monitoring the advertising, promotion, and pricing they are exposed to and the things they buy. Behavior Scan InfoScan Data are collected weekly from more than 70,000 supermarkets, drugstores, and mass merchandisers.
Simultaneous Product Development
A team-oriented approach to new-product development where all relevant functional areas and outside suppliers participate in the development process.
A Concept Test
A test to evaluate a new-product idea, usually before any prototype has been created. Often successful for line extensions.
6. Focus Groups
A type of personal interviewing, characterized by seven to ten people gathered in a meeting place. The interaction provides group dynamics, with an interplay of responses yielding richer information than individual interviews.
Express Warranty
A written guarantee.
Trader Joe's—The Brand
About 80 percent of the items offered at Trader Joe's are private label. Trader Joe's offers several sub-brands within the Trader Joe's brand family, such as Trader Ming's for Chinese food and Trader Darwin's for vitamins. Trader Joe's purchases directly from the manufacturer and ships directly to its distribution centers, where many of the products are portioned and packaged.
Product Line Extension
Adding additional products to an existing product line in order to compete more broadly in the industry.
Predictive
Addressing "what if" questions (How can research be used to predict the results of a marketing decision?)
Equivalent Quality
All products in a line are perceived as having similar quality.
Product Mix
All products that an organization sells.
Buying centers
All those people in an organization who become involved in the purchase decision. Number of people involved varies with each purchase decision Buying centers do not appear on formal organization charts
Consultants
Always available to examine a business and recommend product ideas
Style Modification
An aesthetic product change (like color) rather than a quality or functional change
Below-cost pricing
An example is university tuition, with services priced below cost.
Closed-Ended Question
An interview question that asks the respondent to make a selection from a limited list of responses.
Open-Ended Question
An interview question that encourages an answer phrased in the respondent's own words.
Nonprofit Organization
An organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment. Governments Museums Theaters Schools Churches *Nonprofit organizations account for more than 20 percent of the economic activity in the United States.
Implied Warranty
An unwritten guarantee that the good or service is fit for the purpose for which it was sold.
attribute
Association of a product with an attribute, a product feature, or customer benefit.
Level 3 relationship marketing
At this level, the firms adds structural bonds to the formula. This offers value-added services that are not available by competitive firms.
Greenwashing
Attempting to give the impression of environmental friendliness whether or not it is environmentally friendly.
Product Decisions Distinctions between Business and Nonprofit Organizations
Benefit complexity - Nonprofit organizations often market complex behavior or ideas, such as the need to quit smoking. The benefits that a person receive are complex, long term, and intangible, and therefore are difficult to communicate to consumers. Weak or indirect benefit strength - direct benefits of driving 55 versus a homeless shelter Low involvement - Such as "Prevent forest fires or high involvement such as "Stop smoking"
4. Mail Surveys
Benefits are the low cost, elimination of interviews, centralized control, and anonymity for respondents. However, mail questionnaires usually produce low response rates. Consequently, the resulting sample may not represent the surveyed population. However, mail panels, consisting of a sample of households recruited to participate for a given period, yield response rates of 70 percent.
Approaches for New Product Development
Brainstorming Focus Group
Branding
Brand loyalty, a consistent preference for one brand over all others, is quite high in some product categories. Brand Name Brand Mark Brand Equity Global Brand
Business vs consumer market
Business - volume is larger - #of customers is fewer - location concentrated - distribution is more direct - more professional nature of buying - multiple buy influence - negotiations more complex - chance of leasing is greater - promotion - personal selling
price
Business buyers want to buy at low prices. However, a buyer who pressures a supplier to cut prices to the point of money loss may force shortcuts on quality. It may force the supplier to quit selling to him/her.
Optimizers
Business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before selecting one.
Satisficers
Business customers who place an order with the first familiar supplier to satisfy product and delivery requirements.
The use of the internet to facilitate the exchange of goods services and info between organization is...
Business to business electronic commerce
Functional Modification
Change in a product's dependability or durability.
Quality Modification
Change in a product's dependability or durability.
what can extend a products life cycle
Changes in a product, its use, its image, or its positioning
Repositioning
Changing consumers' perceptions of a brand in relation to competing brands.
Questionnaire Design
Clear and concise No ambiguous language Avoid leading questions Avoid two questions in one
One Brand Name Everywhere
Coca-Cola uses this strategy in 195 countries around the world. This strategy allows greater recognition of the product and easier promotional coordination from market to market.
Competitors
Competitive monitoring is important to determine if any of the competitors products can be copied
Concentrated Targeting Strategy advantages
Concentration of resources Meets narrowly defined segment Small firms can compete Strong positioning
2. Mall Intercept Interviews
Conducted in shopping malls or in a marketing research office in the mall. Surveys must be brief. It is hard to get a representative sample of the population. However, probing is possible.
4 Functions of Packaging
Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Recycling
Place (Distribution) Strategy
Convenience Number of outlets Direct or indirect distribution Location Scheduling
Types of Consumer Products
Convenience Product Shopping Product Specialty Product Unsought Product
3. Telephone Interviews
Cost less and provide one of the best samples of any traditional survey procedure. Many facilities for telephone interviews utilize computer-assisted interviewing, where information is directly input into a computer application. The federal "Do Not Call" law does not apply to survey research.
2. Reduced costs
Costs can be cut by 25 to 40 percent and results provided in half the time required for traditional telephone surveys.
Advantages of virtual shopping:
Creates an environment with a realistic level of complexity and variety. Allows quick set up and altering of tests. Low production costs. High flexibility.
Other Experts
Crowdsourcing or ideas for multiple experts in different fields
Idea Generation
Customers Employees Distributors Competitors R&D Consultants Other Experts
Services involve:
Deeds Performances Efforts
Price Strategy
Define the unit of service consumption (task completion versus time) hair cut vs. time to cut hair Determine if multiple elements are "bundled" or priced separately - pay separate for baggage or just one cost.
Buyer Characteristics
Demographic characteristics Decision style Tolerance for risk Confidence level Job responsibilities
When Should Marketing Research Be Conducted?
Depends on managers' perceptions of its quality, price, and timing When the expected value of research information exceeds the cost of generating the information
3 Rules of Marketing research
Descriptive Diagnostic Predictive
Product Failure
Despite the amount of time and money spent on developing and testing new products, a large proportion of new product introductions fail. The most important factor in successful new-product introduction is a good match between the product and market needs.
Positioning
Developing a specific marketing mix to influence potential customers' overall perception or a brand, product line, or organization in general. 1. Position is the place a product, brand, or group of products occupies in consumers' minds relative to competing offerings. 2. Positioning assumes that consumers compare products on the basis of important features. Effective positioning requires assessing the positions occupied by competing products, determining the important dimensions underlying these positions, and choosing a position in the market where the marketing efforts will have the greatest impact.
Usage-Rate Segmentation
Dividing a market by the amount of product bought or consumed.
5. Contact with the hard-to-reach
Doctors, management, and high-income professionals are among the most surveyed and the most difficult to reach. Many of these groups are well represented online.
Random Error
Error because the selected sample is an imperfect representation of the overall population.
Frame Error
Error when a sample drawn from a population differs from the target population.
Sampling Error
Error when a sample somehow does not represent the target population.
Measurement Error
Error when there is a difference between the information desired and the information provided by the process
What Is a Product?
Everything, both favorable and unfavorable, that a person receives in an exchange. Tangible Good Service Idea The product offering, the heart of an organization's marketing program, is usually the starting point in creating a marketing mix.
Experiments
Experiments are used by researchers to gather primary data.
Diagnostic
Explaining data (What was the impact on sales after a change in the package design?)
5. Product Characteristics and the Rate of Adoption
Five product characteristics can be used to predict and explain the rate of acceptance and diffusion of a new product: Complexity Compatibility Relative Advantage Observability Trialability
persuasive
Focuses on promotional theme Consumer information is secondary
3 Types of Product Modifications
Functional Modification Style Modification Quality Modification
Descriptive
Gathering and presenting factual statements (What is the historic sales trend in the industry? What are consumers' attitudes toward a product?)
bases of segmentation
Geography Demographics Psychographics Benefits Sought Usage Rate
Multisegment Targeting Strategy advantages
Greater financial success Economies of scale
informational
Helps make proper selections Lowers cognitive dissonance
8 things to expect In the Introductory Stage
High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits with slow sales increases Promotion focuses on awareness and information Communication challenge is to stimulate primary demand
price and quality
High price as a symbol of quality, or low price as an indicator of value may be used to position a product.
Multisegment Targeting Strategy Disadvantages:
Higher costs Cannibalization- am i canibalizing my other products
Lifestyle Segmentation
How time is spent - Work, camping, sporting events, opera? Importance of things around them Beliefs - Being thrifty, companies that are green. Socioeconomic characteristics - Income and education
5 Sources of Secondary Data
Internal Corporate Information Government Agencies Trade and Industry Associations Business Periodicals News Media Secondary data is data previously collected for any purpose other than the one at hand.
Company Characteristics
Important segmentation variables: Geographic location Type of company Company size Product use
Nonfinancial prices
In many nonprofit situations, consumers must absorb nonmonetary costs, such as costs of time, embarrassment costs, and effort costs.
Income Segmentation
Income level influences consumers' wants and determines their buying power. Retailers can appeal to: Low-income - Dollar Store High-income - Sax Fifth Avenue Both - Costco or Sam's Club
Compatibility
Incompatible products diffuse more slowly than compatible products.
Global Marketing Questions
Increasing globalization of markets and of competition provides a reason for multinational firms to consider new-product development from a worldwide perspective. Succeeding in some countries (such as China) often requires companies to develop products that meet the unique needs of these populations.
6 things to expect in the Growth Stage
Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Aggressive advertising of the differences between brands Wider distribution
Indirect payment
Indirect payment through taxes is common to marketers of "free" services, such as libraries, fire protection, and police protection.
Primary Data
Information collected for the first time. Used for solving the particular problem under investigation.
types of Co-branding
Ingredient Branding Cooperative Branding Complementary Branding
roles in buying centerss
Initiator: The person who suggests the purchase. Influencers/Evaluators: Help define specifications and provide information for evaluating options. Gatekeepers: Group members who regulate the flow of information, often the purchasing agent. Decider: The person with the power to choose or approve the selection. Purchaser: The person who negotiates the purchase. Users: Members of the organization who actually use the product
Five categories of adopters participate in the diffusion process:
Innovators Early Adopters Early Majority Late Majority Laggards
4. Improved respondent participation
Internet surveys take half as much time to complete as phone interviews and can be accomplished at the respondent's convenience.
5. Executive Interviews
Involves interviewing businesspeople at their offices regarding industrial products or services. This type of interviewing is expensive, due to the process of finding, qualifying, and interviewing respondents.
Global Considerations for Packaging
Labeling Aesthetics Climate Considerations
7 New-Product Success Factors
Listening to customers Producing the best product Vision of future market Getting every aspect right Strong leadership Commitment to new-product development Project-based team approach
Different Brand Names in Different Markets
Local brand names are used when translation or pronunciation problems occur, when the marketer wants the brand to appear to be a local brand, or when regulations require localization.
New Product Success Factors
Long-term commitment Company-specific approach Capitalize on experience Establish an environment
9 things to expect in the Maturity Stage
Longest stage of the life cycle Sales increase at a decreasing rate Saturated markets Annual models appear Lengthened product lines to appeal to additional markets Service and repair assume important roles Heavy promotions to consumers and dealers Marginal competitors drop out Niche marketers emerge
Buying Processes
Many business marketers find it helpful to segment customers and prospective customers on the basis of how they buy. - Satisfiers - Optimizers
Direct or indirect distribution
Many service firms use direct distribution or franchising. The newest form of direct distribution is the Internet.
Types of Samples
Probability Samples: Simple Random Sample, Stratified Sample, Cluster Sample, Systematic Sample Non-Probability Samples: Convenience Sample, Judgment Sample, Quota Sample, Snowball Sample
Psychographic Segmentation
Market segmentation on the basis of personality, motives, lifestyles, and geodemographics.
Age Segmentation
Marketers can segment markets by age using cohorts: Tweens Teens Generation Y Generation X Baby Boomers The War Generation The Great Depression Generation
Motives Segmentation
Marketers might appeal to emotional, rational, or status motives, among others.
The Role of Marketing Research
Marketing research is the process of planning, collecting, and analyzing data relevant to a marketing decision.
Family Brand
Marketing several different products under the same brand name.
The importance of market segmentation
Markets have a variety of product needs and preferences. Marketers can better define customer needs. Decision makers can define objectives and allocate resources more accurately.
Customization/Standardization
Mass Customization: A strategy that uses technology to deliver customized services on a mass basis. 1. An important issue in developing service offerings is whether to customize or standardize. 2. Customized services are more flexible but command a higher price. On the other hand, standardized services are more efficient and cost less. 3. Instead of choosing either strategy, elements of both can be incorporated into an emerging strategy called mass customization. Mass customization uses technology to deliver customized services on a mass basis, thus meeting customers' specific needs.
4 Types of Errors
Measurement Error Sampling Error Frame Error Random Error
accessibility
Members of targeted segments must be reachable with marketing mix.
Mobile Research
Mobile devices and laptops are being used for all kinds of marketing research. A few techniques that are now employed using mobile devices are: 1. Location-based surveys 2. Product scanning during the shopping process 3. Using cameras on mobile devices to upload digital images and videos
Manufacturers' Brand
The brand name of a manufacturer.
Impact of the Internet
More than 90 percent of America's marketing research companies conduct some form of online research. Online survey research has replaced computer-assisted telephone interviewing (CATI) as the most popular mode of data collection. Internet data collection is rated as having the greatest potential for further growth.
The Service Mix
Most service organizations market more than one service Designing a service strategy includes: Determine which new services to introduce Determine the target market Decide which existing services to maintain and which to eliminate
Machines watching people
Movie or videotape cameras record behavior as in the people-watching-people example above.
Observational Research
Mystery Shoppers: Researchers posing as customers who gather observational data about a store. Behavioral Targeting (BT): A form of observation marketing research that uses data mining coupled with identifying Web surfers by the IP addresses.
buying situations
New Buy Modified Rebuy Straight rebuy
Benefits of Regional Segmentation
New ways to generate sales in sluggish and competitive markets Scanner data allow assessment of best selling brands in region Regional brands appeal to local preferences Quicker reaction to competition
Nonprobability Samples
Non-probability Sample: Any sample in which little or no attempt is made to get a representative cross-section of the population. Convenience Sample: A form of nonprobability sample using respondents who are convenient or readily accessible to the researcher.
Objectives
Nonprofit organizations do not seek to make a profit for redistribution to owners or shareholders. The focus is often on generating enough funds to cover expenses.
NAICS
North American Industry Classification System
People watching phenomena
Observer stationed at an intersection counts traffic moving in various directions.
People watching people
Observers stationed in supermarkets watch consumers select frozen Mexican dinners; the purpose is to see how much comparison shopping people do at the point of purchase.
Costs of Test Marketing
Often takes one year or more Can cost over $1 million Exposes new product to competitors Competitors can "jam" testing programs with their own promotions
Global Options for Branding
One Brand Name Everywhere Adaptations & Modifications Different Brand Names in Different Markets
Marketing Implications of the Adoption Process
Opinion leaders discuss new products. Suppliers of some products, such as professional and health care services, rely almost solely on word-of-mouth communication for new business. Messages directed toward early adopters should use different appeals than messages directed toward the early and late majority, or the laggards.
Commercialization
Ordering Materials Production Inventory Buildup Distribution Shipments Sales Force Training Trade Announcements Customer Advertising
Adjustments
Over time, firms change product items, lines, and mixes to take advantage of new technical or product developments or to respond to changes in the environment.
PLC Concept
PRODUCT LIFE CYCLE does not tell managers the length of a product's life cycle or its duration at any stage. It is a tool to help marketers forecast future events and suggest appropriate strategies.
Aesthetics
Package aesthetics are important from a cultural perspective. For example, colors may have different connotations in different countries. Package size is influenced by availability of refrigeration, amount of storage space, and even the purchasing power of buyers.
Package Uniformity
Packages in the product line may have a common look but maintain their individual identities.
market
People or organizations with needs or wants and the ability and willingness to buy.
4 types of observation research
People watching people People watching an activity Machines watching people Machines watching an activity
Bases for Psychographic Segmentation
Personality Motives Lifestyle Geodemographics
3. Personalized questions and data
Personalization allows relevance to each respondent's own situation, thus speeding the response process.
competitor
Positioning against competitors is a part of any positioning strategy.
Product user:
Positioning base focuses on a personality or type of user.
Position
Positioning using emotion focuses on how the product makes customers feel.
Experiment Variables
Price Package design Shelf space Advertising theme Advertising expenditures
Pricing Decisions Characteristics Distinguishing Pricing Decisions of Nonprofit Organizations Five key characteristics distinguish the pricing decisions of nonprofit organizations from those of the profit sector:
Pricing objectives Nonfinancial prices Indirect payment Separation between payers and users Below-cost pricing
Probability Samples
Probability Sample: A sample in which every element in the population has a known statistical likelihood of being selected. Random Sample: A sample arranged so that every element of the population has an equal chance of being selected. The most desirable feature of a probability sample is that statistical rules can be used to ensure that the sample represents the population.
Benefits of Branding
Product Identification Repeat Sales New Product Sales
Costs of Multisegment Targeting Strategy
Product design costs Production costs Promotion costs Inventory costs Marketing research costs Management costs Cannibalization
product class
Product is positioned as associated with a particular category of products
Advertising Economies
Product lines provide economies of scale in advertising.
Promotion Decisions Many nonprofit organizations (such as federal organizations) are prohibited from advertising, or do not have the resources to retain marketing expertise. However, special promotion resources include:
Professional volunteers Sales promotion activities Public service advertising
1. In-Home Interviews
Provide high-quality information, but are expensive because of travel time and mileage costs for the interviewer. Not a popular survey tool in the U.S. and Europe.
Standardized Components
Reductions in manufacturing and inventory costs.
Personality Segmentation
Reflects a person's traits, attitudes, and habits. What personality buys Porsches
Geographic Segmentation
Region of the country or world Market size Market density (number of people within a unit of land) Climate
InfoScan
Retail sales, detailed consumer purchasing information (including measurement of store loyalty and total grocery basket expenditures), and promotional activity by manufacturers and retailers are monitored and evaluated for all bar-coded products. Sales-tracking service for the consumer packaged-goods industry
Substantiality
Segment must be large enough to warrant a special marketing mix.
identifiability and measurability
Segments must be identifiable and their size measurable.
Concentrated Targeting Strategy disadvantages
Segments too small, or changing Large competitors may market to niche segment
Heterogeneity
Services are less standardized and uniform than goods. Because services tend to be labor-intensive, consistency and quality control can be hard to achieve. Standardization and training help increase consistency and reliability.
Inseperability
Services are often sold, produced, and consumed at the same time. Consumers are involved in the production of the services that they buy. The quality of services depends on the quality of employees.
Perishability
Services cannot be stored, warehoused, or inventoried. One of the most important challenges in many service industries is finding ways to synchronize supply and demand.
Intangibility
Services cannot be touched, seen, tasted, heard, or felt in the same way as goods. Tangible cues are often used to communicate a service's quality and nature. Facilities are a critical tangible part of a service experience.
Use personal information sources
Someone consumers are familiar with like a celebrity or someone they admire they can relate to.
Promotion Strategy
Stress tangible cues Use personal information sources Create a strong organizational image Engage in postpurchase communication
Use or application
Stressing use or applications
Brand mark
The elements of a brand that cannot be spoken
Criteria for segmentation
Substantiality Identifiability and Measurability Accessibility Responsiveness
5 things to expect in the Decline Stage
Substitute products are adopted Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses "Organized abandonment" - which is based upon a periodic audit of all goods and services
1. Rapid development, Real-time reporting
Survey results can be tabulated and broadcast in a much shorter time frame
Brand Name
That part of a brand that can be spoken, including letters, words, and numbers
Trialability
The degree to which a product can be tried on a limited basis.
Relative Advantage
The degree to which a product is perceived as superior to existing substitutes.
Observability
The degree to which the benefits or other results of using the products can be observed by others and communicated to target customers.
Development
The development stage can last a long time and thus be very expensive. It took ten years to develop Crest toothpaste, fifteen years to develop the Polaroid Colorpack camera and the Xerox copy machine, eighteen years to develop Minute Rice, and fifty-one years to develop the television Create of a prototype Sketch a marketing strategy Decide on packaging, branding, and labeling Map out promotion, price, and distribution strategy Examine manufacturing feasibility
Family Life Cycle
The family life cycle is a series of stages determined by a combination of age, marital status, and the presence or absence of children. age, marital status, children
Laggards
The final 16 percent to adopt. By the time laggards adopt an innovation, it has probably been outmoded. Marketers typically ignore laggards, who do not seem to be motivated by promotion and personal selling.
Level 1 relationship marketing
The firm uses pricing incentives to encourage customers to continue doing business. This level of relationship marketing is the least effective because its price-based advantage is easily imitated by competitive firms.
Screening
The first filter in the product development process, which eliminates ideas that are inconsistent with the organization's new-product strategy or are inappropriate for some other reason.
Gap 3
The gap between the service quality specifications and the service that is actually provided. If gaps 1 and 2 are closed, gap 3 is due to the inability of management and employees to do what should be done. To close gap 3, employees need the skills, training, and tools to perform their jobs.
Gap 5
The gap between the service that customers receive and the service they want. This gap can be positive or negative. As the gaps shrink, service quality improves.
Gap 1
The gap between what customers want and what management thinks customers wantThis gap results from a lack of understanding or a misinterpretation of customers' needs or wants. To close gap 1, keep in touch with what customers want by doing research on customer needs and customer satisfaction.
Gap 2
The gap between what management thinks customers want and the quality specifications that management develops to provide the service.
Gap 4
The gap between what the company provides and what the customer is told it provides. This is a communication gap, caused by such things as misleading or deceptive advertising campaigns. To close gap 4, companies need to create realistic customer expectations through honest, accurate, realistic communication.
Number of outlets
The intensity of distribution should meet the target market's needs and preferences.
Introductory Stage
The introductory stage represents the full-scale launch of a new product. During the introductory stage, sales normally increase slowly. Marketing costs are high due to higher dealer margins required to obtain adequate distribution and the cost of consumer incentives to try a product.
Test Marketing
The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. (Test marketing allows management to evaluate alternative strategies and to assess how well the various aspects of the marketing mix fit together. Cities chosen for test sites should reflect market conditions in the new product's projected market area. Since no place is a "magic city," researchers should find locations where the demographics and purchasing habits mirror the overall market.)
Location
The location of a service reveals the relationship between its target market strategy and distribution strategy.
Pricing objectives
The main objective is to defray all or partial costs rather than achieve a profit.
Labeling for packaging
The major labeling concern is proper translation of ingredient, promotional, and instructional information on labels.
What Is Business Marketing
The marketing of goods and services to individuals and organizations for purposes other than personal consumption. The sale of a PC to a college or university is an example of business marketing.
Categories of New Products
The meaning of the term "new product" varies widely. The term actually has several correct definitions. There are six categories of new products:
Complexity
The more complex the product, the slower is its diffusion.
Scheduling
The most important factor for time-dependent service providers like airlines, physicians, and dentists.
Survey Research
The most popular technique for gathering primary data, in which a researcher interacts with people to obtain facts, opinions, and attitudes.
Early Adopters
The next 13.5 percent to adopt the product. They are oriented to the community and rely on group norms and values.
Late Majority
The next 34 percent to adopt. They adopt a new product because most of their friends have already adopted it.
Early Majority
The next 34 percent to adopt. They weigh the pros and cons before adopting a new product and rely on group information.
Separation between payers and users
The services of many nonprofit organizations are used by those who are relatively poor and paid for by those who are better off financially.
Ethnographic Research
The study of human behavior in its natural context; involves observation of behavior and physical setting. Ethnographic research comes from the field of anthropology, and is becoming popular in commercial marketing research. Ethnographers directly observe the population they are studying to gain richer insights into the culture and behavior of people.
Ethnic Segmentation
The three largest ethnic groups in the United States are: Hispanic Americans African Americans Asian Americans To meet the needs and wants of expanding ethnic populations, some companies make products geared toward specific ethnic groups.
Brand Equity
The value of company and brand names
Service as a Process
Two things get processed in service organization: people and objects. There are four types of service processing categories:
responsiveness
Unless segment responds to a marketing mix differently, no separate treatment is needed.
Individual Brand
Using different brand names for different products.
Distributors
Well-trained sales force routinely asks distributors about needs not being met and because they are closer to the user they may have great insight.
3 Follow up Questions to ask
Were the recommendations followed? Was sufficient decision-making information included in the report? What could have been done to make the report more useful to management?
Questions asked in the Business Analysis Stage
What is the likely demand for the product? •What impact would the new product have on total sales, profits, market share, and return on investment? • How would the introduction of a new product affect existing products? Would the new product cannibalize existing products? • Would current customers benefit from the product? • Would the product enhance the image of the company's overall product mix? • Would the new product affect current employees, such as hiring more people or reducing the size of the workforce? • What new facilities would be needed? • How might competitors respond? • What is the risk of failure? Is the company willing to take the risk?
Branding Strategies
With either a manufacturers' brand or a private brand, a decision is made among: Individual brand—different brands for different products (Bold, Cheer, Gain, Tide, Era, and Dreft) Family brand—common names for different products or a Combination of individual branding and family branding. (Jack Daniels or Campbells)
BehaviorScan
With such a measure of household purchasing, it is possible to manipulate marketing variables, such as television advertising or consumer promotions, or to introduce a new product and analyze real changes in consumer buying behavior. Research program that tracks the purchases of 3,000 households through store scanners in each research market
Gender Segmentation
Women make 85 percent of consumers goods purchases annually. Women tend to view money and wealth differently than men do. They don't seek to accumulate money, but see it as a way to care for their families, improve their lives, and find security. Thus, financial advisors need to use different strategies to appeal to women. Marketers of products such as clothing and cosmetics still segment markets by gender, and many of these marketers are going after the less-traditional male market.
Sales promotion activities
activities that make use of existing services to draw attention to the offerings of nonprofit organizations.
New product lines
allow a firm to enter an established market. TGIFridays goes into frozen foods. Your already successful now you are adding something different
Repositioned products
are targeted at new markets or market segments. Ford Mustang
Adaptations & Modifications
are used when the name cannot be pronounced or interpreted successfully in a different language.
Positioning Bases
attribute price and quality use or application product user product class competitor Emotion
business buying behavior
buying centers evaluative criteria buying situations business ethics customer service
major equipment
capital goods such as large or expensive machines
supplies
consumable items that do not become part of the final product. short lives and inexpensive. generally fall into categories of maintenance, repair or operating supplies
demand in business markets
derived - based on the demand for consumer products inelastic - a change in price will not significantly affect the demand for the product joint - multiple items are used together in final product demand for one item affects all fluctuating - demand for business products is more volatile than for consumer products
Information Processing
describes services that use technology or brainpower directed at a customer's assets. Examples include insurance, consulting, and banking.
business servies
expense items that do not become part of the final product. this includes janitorial, advertising, legal, management consulting, marketing research, and maintenance services.
component parts
finished items ready for assembly or that need very little processing. two important markets for component pars original equipment manufacturer and replacement market: tires
Geodemographic Segmentation
helps marketers develop marketing programs tailored to prospective buyers who live in small geographic regions, such as neighborhoods, or who have very specific lifestyle and demographic characteristics Segmenting potential customers into neighborhood lifestyle categories. Combines geographic, demographic, and lifestyle segmentation.
Ingredient Branding
identifies the brand of a part that makes up the product. Arm&Hammer with OxiClean
consumer product
if you purchase something to use for yourself
Additions to existing product lines
include new products that supplement a firm's established product line. New flavor of chips
service
includes prepurchase as well as postpurchase service, along with dependability of supply. Services that help sell the finished products are especially appropriate when the seller's product is an identifiable part of the end product.
roles in buying centers
initiator influencers gatekeepers decider purchaser users
an innovation
is a product perceived as new by a potential adopter.
The diffusion process
is the process by which the adoption of an innovation spreads.
Stress tangible cues
it is a concrete symbol of the service offering (mints on pillows)
accessory equipment
less expensive and shorter lived than major equipment, includes fax machines, personal computers, power tools. purchased even more by customers
strategic alliances
licensing or distribution agreements joint ventures research and development consortia partnerships business do this so they can show what they are good at, branding
relationship marketing
loyal customers are more profitable than price-sensitive customers with little brand loyalty long term relationships build competitive advantage
7 types of goods and services
major equipment accessory equipment raw materials component parts processed materials supplies business services
Improvements or revisions of existing products
may be significantly or only slightly changed. "New and improved"
Absolute product failure
occurs when a company cannot recoup its development, marketing, and production costs—the product actually loses money for the company. A relative product failure results when the product returns a profit but fails to achieve sales, profit, or market share goals.
Possession Processing
occurs when the service is directed at customers' physical possessions. Examples include lawn care, car repair, and dry cleaning.
Cooperative Branding
occurs when two brands receive equal treatment. Ramada Inn, American Express, and United Airlines
Labeling
persuasive informational
Co-branding
placing two or more brand names on a product or its package. Co-branding is a useful strategy when a combination of brand names enhances the prestige or perceived value of a product or when it benefits brand owners and users.
major categories of business customers
producers - OEMs resellers - retailers governments - federal institutions - schools/hospitals etc.
institutions
schools hospitals colleges and universities, churches, labor unions, fraternal organizations, civc clubs, foundations, and other non business organizations
measuring online success
stickiness = frequency x duration x site reach
Professional volunteers
such as donation of advertising agency time. Donated services create goodwill, personal contacts, and general awareness of the organization.
People Processing
takes place when the service is directed at a customer. Examples include health care and hairstyling
quality
technical suitability. Quality improvement should be part of every organization's marketing strategy.
Public service advertising
that is donated by a sponsor, so the public service advertiser does not pay for the time or space. (PSA)
resellers
the reseller market includes retail and wholesale businesses that by finished goods
Business to business and social media
the reviews are mixed experimenting building relationships with business customers through social media some are using SM to determin strategic topics to include in newsletters and videos
producers
very profit oriented
3 Product Failure reasons
• One common reason is that they simply do not offer any discernible benefit compared to existing products. • Another commonly cited factor in new product failures is a poor match between product features and customer desires. • Other reasons for failure include overestimation of market size, incorrect targeting or positioning, a price too high or too low, inadequate distribution, poor promotion, or simply, an inferior product.