1.5 MARKETING

The Boston Consulting Group (BCG) Matrix

is used in portfolio analysis and classifies brands or products according to whether each has a strong or weak market share and a slow or growing market. Dog: products in low growth markets and with low relative market share (optimize or hold) Star: products in high growth markets with high relative market share (minimize or divest) Cash cow: products in low growth markets but with high relative market share (milk) Question mark or problem child: products in high growth markets but having low market share (products in development, new technologies, uncertain markets) If stars and cash cows are sufficiently profitable, companies can carry dogs and question marks.

Legitimate power ("I'm a Great Dane, and you're a Chihuahua")

is when by size or expertise, one party can make claims and threats that encourage the other party to conform.

Coercive power (the "bully")

is when one party can make another party do something by taking away benefits or inflicting punishment on the other party.

Referent power "I wanna be like you")

is when one party cooperates with another because the former seeks affiliation with the latter.

Information power (the "Know-it-all")

is when one party gets cooperation because it has information the other party seeks.

Reward power ("I have goodies for you")

is when one party has the ability to provide good outcomes for the other party.

One-to-one marketing

means each customer serves as his or her own segment. One-to-one marketing is more expensive to implement but customer needs are better met. Companies that have experimented with one-to-one marketing have scaled back their attempts to achieve mass customization because it is not cost effective.

External factors influencing customer behavior

opinion leaders, family, culture, social class, reference groups

Situational factors influencing customer behavior

physical environment, purpose of purchase, time constraints

Multidimensional scaling (MDS)

takes a different approach. It doesn't ask customers what's important in a hotel. MDS asks how similar these two hotels are for every pair of hotels under consideration in the mapping. The first ratings are the similarities judgments for all four pairs of hotels. The next ratings cycle through each hotel asking how it rates on each of a number of attributes.

Marketing Research Process

-Define marketing and marketing research problem. -Try to answer questions with secondary data. -Design primary data collection. -Sample (e.g., random sample, stratified sample by segment) -Technique Qualitative: interviews, focus groups, observations, ethnographies Quantitative: surveys, experiments, scanner data analysis -Instruments (e.g., questionnaire, focus group moderator guide) -Modality of administration (e.g., Web survey, mail, personal interview) -Collect data -Analyze data -Communicate results (white paper, presentation, recommendations)

Seven Popular Marketing Research Techniques

1. Cluster analysis for segmentation 2. Perceptual mapping for positioning 3. Focus groups for concept testing 4. Conjoint Analysis for testing attributes 5. Scanner data for pricing and coupon experiments and brand switching 6. Surveys for customer satisfaction 7. Network methods to identify opinion leaders in buzz marketing

Marketing Strategic Planning Process

1. Development of objectives (e.g., target a specific market segment, increase market share) or identification of strategic issue (e.g., increased competition, decrease in sales) 2. Situation analysis (e.g., Internal factors such as Strengths & Weaknesses; External factors such as Opportunities &Threats analysis) 3. Development of strategic alternatives 4. Evaluation of strategic alternatives along specific decision criteria 5. Development of a strategic plan along with tactical plans for implementation Strategic marketing activities could focus on current and/or future customers (markets) or current and/or future/new products.

dog

A brand with small share in a market that is not growing is called a

Lexicographic method

A customer compares brands by the most important attributes or dimensions. Brands that make the cut on the first dimension go into the customer's consideration set. The customer then compares the brand on the next important attribute and so forth, until only one brand is left.

star

Apple's iPod brand has a relatively large share in a growing market, and thus is best classified as a

initiator

Brian's boss is explaining the concept of buying centers in B2B marketing. His boss indicates that with complicated business purchases, it's not one person making the decision and that each purchase involves different roles. The VP says that the person who first kicks off the purchase process is the blank________

Cluster Analysis

Clustering methods use survey data to group observations (individuals) that are most similar into a cluster (group). Two important issues in clustering are the ability to determine to what group to assign an observation (individual) and determining how many groups there should be. Fewer clusters means greater heterogeneity within a cluster. Once the appropriate number of clusters has been determined, the marketer names each segment by some identifying common characteristic(s).

Marketing Metrics

Companies need to measure what matters. Marketing strategy is the link between corporate goals and operational tactics. Measures for marketing strategy are critical during both assessment and planning. Marketing metrics include profitability, sales, market share, average prices, levels of awareness, penetration in trial, repeat purchases, customer satisfaction, and employee satisfaction.

Business to Consumer (B2C)

Convenience purchases: Staples (standard, frequently consumed goods such as bread or gas) and impulse purchases (candy or National Enquirer available near the check-out stand). Shopping purchases: Going online to Citysearch.com to find a restaurant and make reservations when heading out of town. Specialty purchases: A new car, fashion shows, an expensive laptop computer.

Bases For Consumer Segmentations

Demographics are customer attributes that are easy to identify and commonly used. Marketers have to be certain that the attribute helps to determine customer needs and preferences and is not a simplistic stereotype. Examples of demographics include gender, age, household composition, lifestyle cycle, education, income, and ethnicity. Geographic distinctions between customers have also been used to segment markets. Examples include country, area of country, culture, climate, and urban vs. rural. Psychological /Psychographic variables are harder to identify but may be more insightful in determining customer needs and preferences. Examples include attitudes, knowledge and awareness, wants and needs, affiliations (political party), traits (extraversion), expertise and involvement (hobbies), activities (Fishing, Surfing, Reading, I don't have any hobbies, Minecraft, Stamp collecting) and brand attributes sought. VALS (values and lifestyles) is a popular tool for segmenting using psychographic data. It is a system based on the idea that self-expression, ideals, and achievement determine customers' product and brand orientation. Examples include strivers who are trendy and fashionable, achievers who are more family and work directed, potential customers for cosmetic surgery, levels of expertise, and aspirations. Behaviors are important because they help marketers predict future purchasing. Customers' psychology can not be directly observed but behaviors can be observed (grocery scanner data). Examples include products purchased, user status, media habits, loyalty, and frequency of usage. Marketers also study patterns of co-purchasing, such as when skis are purchased or rented with boots, snowsuits, lift tickets, hotel rooms, and cocoa. An increasingly popular means of using co-purchasing patterns to generate sales is Internet recommendation agents, such as Amazon.

Bases For B2B Segmentation

Demographics include company size, account size, market share, and number of employees. Geographic include country and sales force coverage. Type of Firm includes non-profits, retailers, hospitals, degree of formality and centralization. Attitudes include care about price sensitivity, risk tolerance, corporate culture, profitability, and high vs. low maintenance accounts. The primary distinction between segmenting businesses and consumers is that the data sources tend to be different. No scanner data are prevalent for businesses. On the other hand, the number of businesses that comprise a customer base will be far fewer than the potentially millions of consumers. In addition, there tends to be useful corporate knowledge about business customers, in part because such transactions typically rely on a sales force so a knowledgeable front line is interacting with the customer. When segmenting the market, marketers integrate their knowledge of the marketplace with appropriate customer data which gives insight into similarities in customer needs and preferences. Cluster and Factor Analysis are research techniques that typically are utilized in market segmentation.

Efficient and Effective Segmentation

Effective Segmentation utilizes appropriate data Effective Segmentation allows access to customers Effective Segmentation has profitability potential Effective Segmentation fits with corporate goals Effective Segmentation is actionable

Marketing Framework

Every marketing decision should be based on facts and information. Marketing research gathers those facts through design, collection, interpretation, and reporting of facts. Marketing information should be gathered constantly

How To Increase Profitability

Firms can increase profits by decreasing costs. Firms can also increase profits by increasing revenue. Revenue can be increased by changing price or through an increase in volume. Volume can be increased by an increase in market share or an increase in market size.

brand

For expensive purchases, blank_________, uniqueness and quality matter.

Four Classes of Goals:

Four Classes of Goals 1. Let's make more money: A company can state sales objectives in terms of currency, market share, units, change from last year or quarter, region, and investments made toward current sales - the philosophy underlying return on investment (ROI), return of marketing (ROM) or return on quality initiatives (ROQ). 2. Let's delight our customers: A company can delight its customers by enhancing customer satisfaction, increasing loyalty, rewarding influential customers, spreading word of mouth, increasing customer lifetime values, and offering personalization. Many attempts at one-to-one marketing have been cost ineffective. 3. Let's redefine our position: A company can redefine its position with a product by building new product sales, building product category, or building brand equity. Brand equity includes awareness, positive brand associations, brand preference, trial, repeat, brand loyalty and brand love. Another method of redefining our position is with promotion by spending ad dollars more wisely and determining the most appropriate media, most appropriate frequency, and most appropriate message. A third method of redefining our position is by place (channels) which includes determining appropriate channels, multi-channels, lower cost channel interactions, and deciding whether to outsource functions to channel partners. Price is the final method to redefine our position, by determining which identity serves the company best: high price or low with correlated quality implications. Tweaks in the 4Ps may change our core business. 4. Let's achieve broader social goals: Goals that go beyond marketing are human resource, finance, production and distribution manufacturing, and research and development. Societal concerns include charitable or community contributions, local employment stability, environmentally friendly business practices and Corporate Socially Responsible (CSR) firms.

Sampling

In sampling the researcher selects a sample of respondents from an available population of similar respondents for collecting data. The various types of samples are as follows: Probability sample—Implies the probability of selecting any respondent from the population into the sample is known Simple random sample—When every population element (e.g., a person) has an equal chance of being included in the sample Nonprobability sample—A sample drawn due to specific research considerations and/or the researcher's judgement (a shopping mall-intercept survey)

Roles in Big, Complicated Business Purchases

Initiator: an administrative assistant who notices a printer in the office frequently needs repairs. User: every staff member who sends a job to that printer. Influencer: the IT person who knows Brand X is cheaper. Buyer: administrator who orders equipment and supplies. Gatekeeper: accountant who controls the budget. Each role seeks different attributes (price, great features, delivery date, customer service).

which customers might like their product, and how to get the product into their hands

Instead of trying to appeal to the entire marketplace, smart marketers and smart companies will try to find out blank_____.

Differences between products and services are as follows:

Intangibility—services cannot be evaluated using sight, touch, smell and communicating the benefits is often difficult. Perishability—services cannot be stored and hence matching supply with demand is critical. Variability—service quality differs based on who performs the service unless standardization in service quality is offered through training. Inseparability— in services the production and consumption cannot be separated.

Channel Integration

Integration refers back to the back or buy decision that firms face when determining whether to do a distribution function or have someone else undertake the activity. Firms typically review the issues on a regular basis. Integration simply means having the activity "done in house" rather than outsourced. Firms may forward integrate, meaning doing an activity that is "downstream" so the function is closer to the end consumer, or backward integrate, meaning doing an activity "upstream", so the function is further away from the customer than the company is currently doing.

promotion

Intensive distribution usually goes with heavy blank_________, lower prices, and average or lower quality products

The Product Life Cycle consists of the following four distinct stages:

Introduction: An organization attempts to establish itself as a pioneer/market leader (especially if there are few competitors), & product development costs are high. Growth: Sales/Revenues & profit margins rise as consumers buy the product and competition increases, & due to shakeout poor performing firms may exit the market. Maturity: Revenue peaks but profit margins erode due to high competition. Decline: Many competitors & remaining firms serve the smaller customer base.

Types of Shopping: Customer Involvement

Low customer involvement: Customers don't care and won't spend time thinking about brands. They will typically be somewhat price sensitive. Moderate customer involvement: Some effort is expended prior to purchase to obtain good value. High customer involvement: For expensive purchases, brand, uniqueness and quality matter.

Dashboard

Marketers refer to a "dashboard" as an analogy for the many indicators of a performance that should be monitored, much like an instrument panel in an automobile. The dashboard is an indicator of a company's success. Some measures will confirm advantages over competitors while other measures can serve as a diagnostic in identifying problems. Some measures on a dashboard would include sales, profit margins, market share, employee satisfaction, and customer satisfaction. Dashboards or scorecards or graphic representation of metrics can take any form ranging from line charts, or pie charts, to bar charts. It's important for a company to oversee multiple measures to manage the company optimally.

Channel Conflicts

Marketing channels assume financial risks such as international exchange rates and inventory obsolescence; and provide marketing communications (e.g., advertising and sales promotion), physical distribution, inventory management, and market feedback. Type of channel conflicts include: Horizontal conflict is among partners at the same level. Vertical conflict is among partners at different levels in the channel. Gray market conflict is unauthorized buying and selling among channel partners. Corporate vertical marketing systems, in which all channel members are owned by/contracted to one company, provides control of conflict. Channel power/leadership allows control of conflict by domination of the channel by one partner.

over simplified sample

Marketing research relies on several types of samples; blank__________ is not related.

tactics

Marketing strategy links goals and blank_______.

Use attribute importance

Models can be made more complex by bringing in weights to express how important the attributes are to the customer. Those important weights underpin how segments of customers differ.

multidimensional scaling

Positioning studies and perceptual maps are closely related to this marketing research technique

Perceptual Mapping

Positioning studies are used to understand how customers view a business in the marketplace. Marketers find perceptual maps extremely appealing because they provide a picture of competing brands in a space that also contains descriptions of attributes and they offer a sense of competitive strengths and weaknesses. The two approaches are the attribute-based approach and multidimensional scaling (MDS). Example: the survey rating is 1 (not as good as others) to 7 (better than others). The first question is "How does our hotel rate?" Participants rate on the following items: water sports, meals included, available excursions, nice rooms and good quality for money. The second question is "How important are these qualities to you?" Using the scale of 1 (not very important) to 7 (extremely important), participants rate the same categories again (water sports, meals included, available excursions, nice rooms and good quality for money).​ Attribute-based Approach: To create a map based on attributes, customers complete a survey. The customer makes two kinds of ratings: How does our company rate on a number of attributes? And how important are each of these attributes? Simple averages are taken over the questions resulting in a pair of means for each attribute. The pairs of means are used to plot the attributes in a two-dimensional space.

attitudes, traits and brand attributes.

Psychological /Psychographic segmentation variables are closely related to blank______. A attitudes, traits and brand attributes. B gender and age C user and loyalty status D urban vs. rural

Examples Of Relevant Marketing Research

STP: Cluster analysis for segmentation Multidimensional scaling for perpetual mapping, targeting and positioning 4Ps: Conjoint for new products Scanner data for pricing Surveys to assess customer satisfaction with Internet as a distribution option Experiments to verify ad testing 5Cs: Secondary data to understand context Observational data to check on competitors Networks to study collaborators Interviews to study company's employees Surveys for customer satisfaction

Kinds Of Data

Secondary vs. Primary: Secondary data already exists (e.g., in the library, online); they're quick and cheap to obtain. Primary data requires that marketers design a study, collect and analyze data; answers can be quite precise. Exploratory, Descriptive, Causal Exploratory: Focus groups and interviews are used to formulate marketing questions. Descriptive: Surveys and scanner data are used to obtain large-scale stats. Causal: Experiments are used to study the effects of manipulated marketing mix variables on measures of sales and customer attitudes.

Why Segment?

Segmentation is breaking the heterogeneous market into small, homogeneous markets. Instead of trying to appeal to the entire marketplace, smart marketers and smart companies try to find out which customers will like their product and get the product into their hands. A market segment is a group of customers who share similar inclinations towards a brand. Segments are homogenous groups of customers.

Dsitribution

Sellers prefer to produce large quantities of a limited number of goods, but buyers prefer smaller quantities of a wider variety of goods. Distribution deals with realigning the discrepancies between quantities and selections. Breaking bulk means making goods available in smaller batches.

breaking bulk

Selling Company produces its product in batches of 100, yet its average customer only purchases ten at a time. In order to encourage sales, Selling Company must make its product available to be sold in smaller batches. This process is known as blank_______.

Types of Shopping: Business to Business (B2B)

Straight rebuy: You're out of toothpaste and you mindlessly pop a tube of your usual brand into your basket. Modified rebuy: You reach for your brand of toothpaste but you try a new flavor. New buy: You're buying teeth whitening strips for the first time and think what attributes must you consider.

speed/costs

The advantage of online surveys is _______.

Buying Process

The buying process is consistent whether the buyer is a consumer or a business. Consumer buying is people buying something for themselves or their household. A business customer is an agent buying something on behalf of an organization.

marketability

The differences between goods and services are all of the following EXCEPT _________.

developing new conflict resolution techniques

The following is one of the steps in the marketing strategic planning process EXCEPT

untapped

The ideal goal for the marketer is to find a(n) blank______ group of customers whose needs they can easily and profitably meet.

Push & Pull Strategy

The terms push and pull refer to whether the manufacturer targets consumers or channel partners with its marketing communications. Customers pull goods through the channel, while intermediaries push the goods to consumers from the manufacturer. Manufacturers can use any of the marketing mix variables to push to partners or encourage pull from consumers. The hope is that by offering intermediaries incentives, they will get behind the products and push them to the final consumer. Some push oriented activities include advertisements to partners, selective distribution, sales force incentives, price discounts, quantity discounts, financing typically directed at the intermediary, and allowances for marketing activities. Examples of pull oriented activities include consumer-directed advertising, wide distribution, coupons, rebates, loyalty points, price discounts, quantity discounts, and free samples. Some activities can be both push and pull strategies.

supply chain

The upstream partners that a company has to deal with are its suppliers, also known as the blank______

Supply Chain

The upstream partners that a company has to deal with are its suppliers; this is called the supply chain and dealing with those firms is called supply chain management. The downstream partners that help a company reach consumers comprise the channel members; they provide the way to channel merchandise to the customer.

conjoint analysis

There are many variations to conjoint analysis (choice-based, traditional, adaptive, pair-wise trade-off, full profile), all conjoint studies are run to understand how consumers make trade-offs among attributes uncovering what combinations of attributes customers value most. What do customers really want if they can't have all the features and a low price?

Breadth Strategy: Reaching Multiple Markets

This company elects to market a single product to two or more segments.

Depth Strategy: Serving One Segment Well

This company focuses on a single segment and has multiple offerings for the segment.

Tailoring Strategy: Customizing For Segments

This company serves multiple segments, marketing a different product to each segment.

Average Method

This method uses averages so one attribute can't make or break a brand. If a brand is strong on one attribute and average on another, it will still dominate a brand that was just average on all its attributes.

how should salespeople be compensated for their efforts

Two major issues make up the essence of the sales force: How many salespeople should we have, and blank_____

8- 10 customers

Typically, a focus group should include _________.

sampling

Typically, a focus group should include _________.

Focus Groups

Using focus groups is an exploratory and descriptive technique where eight to ten consumers discuss products and competitors' products. Usually three to four focus groups are conducted. Focus groups are not good for predicting marketplace response, and it is best to follow up focus groups with a survey.

Product: Will customers want what your company is prepared to produce? Price: Will customers pay what you would like to charge? Place: Where and how will customers purchase your market offering? Promotion: What can you tell your customers, or do for them, to entice them to purchase?

What are the 4 P's? What do they stand for?

Customers, Company, Context, Collaborators, Competitors

What are the 5C's?

Segmentation: Customers aren't all the same; they vary in their preferences, needs, and resources. Targeting: Attracting some of those customers makes better sense than going after others. Positioning: Communicate your benefits clearly to your intended customers.

What is STP? What do they stand for?

depth

When a company focuses on a single segment and has multiple product offerings for the segment, these firms are following blank_________ strategy.

being a leader

Which is NOT one of the four classes of goals?

profitability

Which one of the following is NOT a stage in the Product Life Cycle?

effective

_______ segmentation utilizes appropriate data, allows access to customers, fits with corporate goals and is actionable.

Marketing

________ is an exchange between a firm and its customers.

push

__________ strategies are incentives a manufacturer offers to its distribution partners such as dealers, wholesalers, retailers, and the like to sell products to the end-users.

Distribution channels

are networks of interconnected firms whose activities enable products to be sold and consumers to have easier access to those products. Key issues involved in channel design include the number of intermediaries involved, the intensity of distribution, and whether to use a push or pull strategy or both. Compensation is another key issue. Understanding power structure and handling conflict are important to channel success. Communication and trust are also critical to channel success. Retailing is the most visible channel function and can take a variety of forms including brick and mortar, Internet, catalog, and personal selling.

Internal factors influencing customer behavior

attitudes, motivations, learning, perceptions, lifestyle

Distribution channel

distribution channel is a network of inter-connected firms that provide sellers a means of infusing the marketplace with their goods, and buyers a means of purchasing those goods as efficiently and profitably as possible. Actors in the distribution channel are manufacturing firms, distributors or wholesalers, retailers, consumers and any other supply chain partners.

Perceptual mapping

is a diagrammatic technique used by asset marketers that attempts to visually display the perceptions of customers or potential customers. Typically the position of a company's product, product line, or brand is displayed relative to their competition.

Franchising

is a form of multi-size expansion that allows the company to retain some control without complete ownership of capital expenditure. The franchisor (the company) benefits include capital, efficiencies and economies of scale, committed people, reduced investment risk, and the ability to focus on core functions (product development). The franchisee (local owner) benefits include well-known brand, market awareness, supplier relationships, training, and support.

Positioning

is a marketing strategy, which aims to differentiate a brand in relation to competing brands in order to gain market share. It is the act of designing and creating the company's image and communicating the benefits of the company's products, so it gains a distinct place in the market. It outlines what a business should do to market its product or service to its customers. In positioning, the marketing department creates an image for the product based on its intended audience. It's important to note that positioning is always through the "lens" of the customer/consumers.

Transaction Cost Analysis (TCA)

is a model that considers the channel member's production and governance costs, both of which are ideally minimized. Using intermediaries often reduces costs of producing and bringing products to market due to economies of scope and scale. Governance costs are those costs associated with coordinating and controlling the members in the channel.

Niche marketing

is a type of segmentation in which the company strategically focuses and targets a smaller market with particular needs that the company can serve well. Niches fall between the one-to-one and segment strategies. Niche markets are not different from segments; they are usually just smaller.

Competitive positioning

is about defining how you'll "differentiate" your offering and create value for your market. It's about carving out a spot in the competitive landscape, putting your stake in the ground, and winning mindshare in the marketplace - being known for a certain "something."

Market position

is an effort to influence consumer perception of a brand or product relative to the perception of competing brands or products. Its objective is to occupy a clear, unique, and advantageous position in the consumer's mind.

Retailing

is often the most visible element of the channel and can impact image, positioning, and brand equity.