Marketing Exam 2

The Marketing Research Process (7 steps)

1. Define the Problem. 2. Plan Design/Primary Data 3. Specify Sampling Procedure 4. Collect Data. 5. Analyze Data 6. Prepare/Present Report 7. Follow Up. As changes occur in the firm's external environment, marketing managers must decide on changes to the existing marketing mix. Virtually all firms that have adopted the marketing concept engage in some marketing research because it offers decision makers many benefits. Some companies spend millions on marketing research; others, particularly smaller firms, conduct informal, limited-scale research studies.

Undifferentiated Targeting

A marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix. An undifferentiated targeting strategy is essentially a mass-market philosophy—viewing the market as one big market and using one marketing mix. The first firm in an industry sometimes uses an undifferentiated targeting strategy. With no competition, the firm may not need to tailor marketing mixes to the preferences of market segments. Too often, an undifferentiated strategy emerges by default rather than by design, reflecting a failure to consider the advantages of a segmented approach. The result is often sterile, unimaginative product offerings that have little appeal to anyone. Advantage: Potential savings on production and marketing costs. Disadvantages: Unimaginative product offerings; Company more susceptible to competition. Marketers of commodity products, such as flour and sugar, are likely to use this strategy. Even toilet tissue manufacturers have different segments—both industrial and consumer—and adopt different marketing mixes for different segments. Additionally, small stores in small towns with no competition may offer one marketing mix and be successful. Ex .small businesses in small stores with no competition. Sugar, flour, and other commodities

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. The following bases for positioning are used: Attribute: Association of a product with an attribute, a product feature, or customer benefit. 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. Use or application: Stressing use or applications. Product user: Positioning base focuses on a personality or type of user. Product class: Product is positioned as associated with a particular category of products. Competitor: Positioning against competitors is a part of any positioning strategy. Emotion: Positioning using emotion focuses on how the product makes customers feel. One or more positioning bases is often used.

Cannibalization

A situation that occurs when sales of anew product cut into sales of a firms existing products.

Multisegment Targeting

A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each. A firm chooses to serve two or more well-defined market segments and develops a distinct marketing mix for each has a multisegment targeting strategy. Advantages: Greater financial success, economies of scale. Disadvantages: Higher costs, cannibalization Multisegment targeting offers many potential benefits to firms, including greater sales volume, higher profits, larger market share, and economies of scale in manufacturing and marketing. Yet it may also involve greater product design, production, promotion, inventory, marketing research, and management costs. Costs: product design, production, promotion, inventory, marketing research, management, cannibalization. Examples: P&G offers 18 different laundry detergents, each targeting a different segment of the market.

Concentrated Targeting

A strategy used to select one segment of a market for targeting marketing efforts. Niche: one segment of a market. With a concentrated targeting strategy, a firm selects a niche for targeting its 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. Advantages: concentration of resources, meets narrowly defined segment, small firms can compete, strong positioning. Disadvantages: Segments too small, or changing; large competitors may market to niche segment. A concentrated strategy of focusing on a narrow market is sometimes more profitable than spreading resources over several different segments. A concentrated strategy often enables small firms to compete effectively with much larger firms. However, a concentrated strategy can also be disastrous for a firm that is not successful in its narrowly defined target market. Examples: Rolex, Porsche, Orvis, Starbucks, AOL, and Enterprise Rent-A-Car.

Market Segment

All markets share several characteristics: They are composed of people or organizations These people or organizations have wants and needs that can be satisfied by particular product categories They have the ability to buy the products they seek They 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. The term market means different things to different people. We are all familiar with the supermarket, stock market, labor market, fish market, and flea market. All these types of markets share several characteristics. In sum, a market is (1) people or organizations with (2) needs or wants and with (3) the ability and (4) the willingness to buy. Within a market, a market segment is a subgroup of people or organizations with one or more characteristics that cause them to have similar product needs.

Nonmarketing-Controlled vs. Marketing

Controlled Information Source - A nonmarketing-controlled information source is a product information source that is not associated with marketers promoting a product. These information sources include personal experiences. (trying or observing a new product), personal sources (family, friends, acquaintances, and coworkers who may recommend a product or service), and public sources (such as Rotten Tomatoes, Consumer Reports, and other rating organizations that comment on products and services). A marketing-controlled information source is biased toward a specific product because it originates with marketers promoting that product. They include mass advertising (radio, newspaper, television, and magazine ads), sales promotion (contests, displays, premiums, and so forth), salespeople, product labels and packaging, and the Internet.

Demographic Segmentation

Demographic information is widely available and often related to consumer behavior and buying. Some common bases are age, gender, income, ethnic background, and family life cycle. Age Segmentation: tweens, teens, millennials, generation X, Baby boomers, the war generation, the great depression generation. Gender Segmentation: Women make 85% of consumers' goods purchases annually; 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. 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. Income Segmentation: Income level influences consumers' wants and determines their buying power; Retailers can appeal to low-income, high-income, both. Ethnic segmentation: The three largest ethnic groups in the U.S. are: Hispanic Americans (Kmart w/ Selena Gomez and Sofia Vergara: Clothing Line) African Americans (Fashion Fair Cosmetics) Asian Americans (Significant, Sophisticated, Savvy) To meet the needs and wants of expanding ethnic populations, some companies make products geared toward specific ethnic groups. In the past, ethnic groups in the United States were expected to conform to a homogenized, Anglo-centric ideal. Increasing numbers of ethnic minorities and increased buying power have changed this. Family Life Cycle: Consumption patterns among people of the same age and gender differ because they are in different stages of the family life cycle stage. The family life cycle is a series of stages determined by a combination of age, marital status, and the presence or absence of children.

Consumer Behavior

How consumers make purchase decisions and how consumers use and dispose of products. The study of consumer behavior also includes factors that influence purchase decisions and product use.

Interval vs. External Information Search

In an internal information search, the person recalls information stored in the memory. This stored information stems largely from previous experience with a product. An external information search seeks information in the outside environment. There are two basic types of external information sources: nonmarketing-controlled and marketing-controlled.

Cognitive Dissonance

Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. Consumers can reduce dissonance by: Seeking information that reinforces positive ideas about the purchase, justifying Avoiding information that contradicts the purchase decision Revoking the original decision by returning the product Marketing can minimize dissonance through effective communication with purchasers

Information Search

Internal Information Search: Process of recalling past information stored in memory External Information Search: Process of seeking information in outside environment Nonmarketing-controlled: a product information source that is not associated with advertising or promotion Marketing-controlled: a product information source that originates with marketers promoting the product Evoked Set (Consideration Set): A group of brands resulting from an information search from which a buyer can choose

Strategic Alliance

Licensing or distribution agreements; Joint ventures; Research and development consortia; Partnerships Alliances succeed with commitment and trust.

Routine Response Behavior

Little involvement in selection process; Frequently purchased low cost goods; May stick with one brand; Buy first/evaluate later; Quick decision

Market Segmentation

Market segmentation is the division of a market into meaningful, relatively similar, and identifiable segments or groups. 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 Until the 1960s, market segmentation was not used extensively. Consider Coca-Cola with its one product aimed at the entire soft drink market. Today over a dozen different products are marketed by the company to different market segments. Market segmentation plays a key role in the marketing strategy of organizations, leading to competitive advantage. The benefits are described on this slide. Criteria for Successful Segmentation: Substantiality, Identifiability and Measurability, Accessibility, Responsiveness Markets are segmented for three reasons: Segmentation enables the identification of groups of customers with similar needs, and the analysis of the buying behavior of these groups. Segmentation provides information for the specific matching of the design of marketing mixes with the characteristics of the segment. Segmentation helps marketers satisfy customers wants and needs while meeting the organization's objectives. A segmentation scheme must produce segments that meet the four basic criteria as defined above.

Psychographic Segmentation

Market segmentation on the basis of personality, motives, lifestyles, and geodemographics. Demographics provide the skeleton, but psychographics add meat to the bones. Personality reflects a person's traits, attitudes, and habits. Consider the personality types that describe segmented Porsche buyers. Motives: Carmakers might appeal to customers with status-related motives, whereas baby products appeal to emotional motives. Marketers might appeal to emotional, rational, or status motives, among others.

Usage-Rate Segmentation

Most segmentation is based on the assumption that the selected variable(s) and customers' needs are related. On the other hand, benefit segmentation groups potential customers on the basis of their needs or wants only. Segmenting by usage rate enables marketers to focus efforts on heavy users or to develop multiple marketing mixes aimed at different segments. The focus of marketing is often on the heavy-user segment, based on the 80/20 principle

The Consumer Decision-Making Process (5 steps)

Need Recognition Information Search Evaluation of Alternatives Purchase Postpurchase Behavior

Observation Research

Observation research is the systematic process of recording the behavioral patterns of people, objects, and occurrences without questioning them. A market researcher using the observation technique witnesses and records information as events occur or compiles evidence from records of past events. It relies on four types of observation: 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 ; people watching an activity- Observer stationed at an intersection counts traffic moving in various directions; machines watching people- Movie or videotape cameras record behavior as in the people-watching-people example above; machines watching an activity- Traffic counting machines monitor traffic flow. Two common forms of people-watching-people research are one-way mirror observations and mystery shoppers. Behavioral Targeting (BT) began by placing cookies on users' browsers to track which Web sites they visited and ultimately match the user with ads they would most likely investigate. Now, BT combines a consumer's online activity with psychographic and demographic profiles.

Open-ended vs. Closed-ended Questions

Open-ended question: An interview question that encourages an answer phrased in the respondent's own words. Closed-ended question: An interview question that asks the respondent to make a selection from a limited list of responses.

Evaluation of Alternatives

Pick a product attribute and then exclude all products in the set that do not have that attribute. Cutoffs are either minimum or maximum levels of an attribute that an alternative must pass to be considered. Rank the attributes under consideration in order of importance and evaluate the products based on how well each performs on the most important attributes. The evaluation is made by examining alternative advantages and disadvantages along important product attributes.

Social Influences on Consumer Buying Decisions

Reference Groups (know the different types of reference groups) - A reference group consists of all the formal and informal groups that influence the buying behavior of an individual. Direct reference groups are face to face membership groups that touch people's lives directly. A primary membership group includes all groups with which people interact regularly in an informal, face to face manner, such as family, friends, and coworkers. A secondary membership group has people that associate less consistently and more formally like clubs, professional groups and religious groups. Consumers are also influenced by many indirect, non-membership reference groups to which they don't belong. Aspirational reference groups are those that a person would like to join. Conform to norms. Nonaspirational reference groups, or dissociative groups, influence our behavior when we try to maintain distance from them. They serve as information sources and influence perceptions They affect an individual's aspiration levels Their norms either constrain or stimulate consumer behavior Opinion Leaders - The first to try new products and services out of pure curiosity; May be challenging to locate; Marketers are increasingly using social media to determine and attract opinion leaders. Family - Decision-making roles among family members tend to vary significantly, depending on the type of item purchased. Family members assume a variety of roles in the purchase process. Initiators suggest, initiate, or plant the seed for the purchase process. Influencers are members of the family whose opinions are valued. The decision maker is the family member who makes the decision to buy or not to buy. The purchaser is the one who exchanges money for the product. The consumer is the actual user.

Involvement

Routine Response Behavior, Limited Decision Making, Extensive Decision Making Goods and services in these three categories can best be described in terms of five factors: Level of consumer involvement; Length of time to make a decision; Cost of the good or service; Degree of information search; Number of alternatives considered The amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior The level of consumer involvement is perhaps the most significant determinant in classifying buying decisions Factors Determining the level of customer involvement: Previous experience, interest, perceived risk of negative consequences, and social visibility. Product involvement- a product category has high personal relevance. Situational involvement means that the circumstances of a purchase may temporarily transform a low-involvement decision into a high one. Shopping involvement represents the personal relevance of the process of shopping. Enduring involvement represents an ongoing interest in some product, such as a kitchen gadget, or activity, such as fishing. Emotional involvement represents how emotional a consumer gets during some specific consumption activity.Marketing Implications of involvement

Secondary vs Primary Data

Secondary data is data previously collected for any purpose other than the one at hand. Sources: internal corporate info, gov. agencies, trade and industry associations, business periodicals, news media. Advantages: saves time and money if on target, aids in determining direction for primary data collection, pinpoints the kinds of people to approach, serves as a basis of comparison for other data. Disadvantages: May not give adequate detailed info, may not be on target with the research problem, quality and accuracy of data may pose a problem. Primary data is info collected for the first time. It's used for solving the particular problem under investigation. Advantages: Answers specific research question, data are current, source of data is known, secrecy can be maintained. The main advantage of primary data is that they will answer a specific research question that secondary data cannot answer. Primary data are current and the source of data is known. Moreover, the information is proprietary. Disadvantages: Can be very expensive. The cost of primary data may range from a few thousand dollars for a limited survey to several million for a nationwide study. To save money, firms may cut back on the number of interviews, use Internet studies instead, or use piggyback studies by gathering data on two different projects using one questionnaire.

Business Marketing

The marketing of goods and services to individuals and organizations for purposes other than personal consumption AKA... Industrial Marketing, Business-to-Business Marketing, B-to-B Marketing, or B2B Marketing

Survey Research

The most popular technique for gathering primary data, in which a researcher interacts with people to obtain facts, opinions, and attitudes. Forms of Survey Research: In-home personal 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. 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. 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. 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. 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. 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.

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

Need Recognition

The result of an imbalance between actual and desired states (want-got gap). Want: the recognition of an unfulfilled need and a product that will satisfy it. Stimulus: any unit of input affecting one or more of the five senses (sight, smell, taste, touch, hearing). Internal stimuli are occurrences you experience, such as hunger or thirst. External stimuli are influences from an outside source, such as someone's recommendation, the color, the design of a package, a brand name mentioned by a friend, or an advertisement on television or radio.

Postpurchase Behavior

When buying products, consumers can expect certain outcomes from the purchase. How well these expectations are met determines whether the consumer is satisfied or dissatisfied with the purchase.

Purchase

Whether to buy When to buy What to buy (product type and brand) Where to buy (type of retailer, specific retailer, online or in store) How to pay Fully planned purchase - usually when a person is buying an expensive or complex item. Partially planned purchase - usually when they know the product category they want to buy but wait until they get to the store to choose a specific style or brand. Unplanned purchase is when people buy on impulse.

Graphic Segmentation

based on the region, market size, market density (number of people within a unit of land), or climate. Consumer goods companies use a regional approach to marketing for the reasons shown on this slide: 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.

Marketing Research

the process of planning, collecting, and analyzing data relevant to a marketing decision. Marketing research plays a key role in the marketing system. It provides data on the effectiveness of the marketing mix and insights for necessary changes. Marketing research is a main data source for management information systems. The role of marketing research: Descriptive: What is the historic sales trend in the industry? What are consumers' attitudes toward a product? Diagnostic: What was the impact on sales after a change in the package design? Predictive: "What if" questions, such as how can descriptive and diagnostic research be used to predict the results of a planned marketing decision? Marketing research helps managers in several ways: It improves the quality of decision making It helps managers trace problems It can help managers understand detailed and complicated relationships It helps managers serve customers accurately and efficiently

Limited Decision Making

typically occurs when a consumer has previous product experience but is unfamiliar with the current brands available. Limited decision making is also associated with lower levels of involvement (although higher than routine decisions) because consumers expend only moderate effort in searching for info or in considering various alternatives. Low levels of involvement; Low to moderate cost goods; Evaluation of a few alternative brands; Short to moderate time to decide. Before making a final decision, the consumer will likely evaluate several other brands based on their active ingredients, their promotional claims, and the consumer's prior experiences.

Extensive Decision Making

when buying an unfamiliar, expensive product or an infrequently bought item. It's the most complex type of consumer buying decision and is associated with high involvement on the part of the consumer. High levels of involvement; High cost goods; Evaluation of many brands; Long time to decide; May experience cognitive dissonance

Cultural Influences on Consumer Buying Decisions

• Culture - The set of values, norms, attitudes, and other meaningful symbols that shape human behavior and the artifacts, or products, of that behavior as they are transmitted from one generation to the next. Culture is pervasive, functional, learned, and dynamic. Components: Values, language, myths, customs, rituals, and laws. • Social Class - A group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms.

Individual Influences on Consumer Buying Decisions

• Gender - Physiological differences between men and women result in different needs, such as health and beauty products; Trends in gender marketing are influenced by the changing roles of men and women in society • Age and Family Life Cycle Stage - Consumer tastes in food, clothing, cars, furniture, and recreation are often age-related; Marketers define target markets per life cycle stages such as "young singles" and "young married with children" • Personality, Self-Concept, and Lifestyle - Personality combines psychological makeup and environmental forces; Human behavior depends largely on self-concept; Self-concept combines ideal self-image and real self-image

Psychological Influences on Consumer Buying Decisions

• Perception - The process by which people select, organize, and interpret stimuli into a meaningful and coherent picture. Marketing implications of perception: important attributes, price, brand names, quality and reliability, threshold level of perception, product or repositioning changes, foreign consumer perception, and subliminal perception. • Motivation - Marketers can analyze the major forces influencing consumers to buy or not buy products. A motive is the driving force that causes a person to take action to satisfy specific needs. Maslow's Hierarchy of needs is a popular theory about what drives people's particular needs at particular times; it arranges needs in ascending order of importance: physiological, safety, social, esteem, and self-actualization. • Learning - A process that creates changes in behavior, immediate or expected, through experience and practice. Stimulus generalization is a form of learning that occurs when one response is extended to a second stimulus like the first. Stimulus discrimination is a learned ability to differentiate among similar products. Types of Learning: Experiential - An experience changes behavior. Conceptual - Not learned through direct experience. • Beliefs and Attitudes - Belief - an organized pattern of knowledge that an individual holds as true about his or her world. Attitude - A learned tendency to respond consistently toward a given object. Changing beliefs: A marketer may want to turn a neutral, negative, or incorrect belief about a product attribute into a positive one, change the relative importance of a belief, add a new belief.