Midterm Flashcards
What are the microenvironment factors/ internal factors.
Company, corporate partners and competition.
Company capabilities mean
Firms should do what they’re good at. Use knowledge, technology and patents to satisfy customers needs.
Competition:
Firms need to do research about their competitors. They should know their strengths and weaknesses and competitive intelligence, in order to predict competitors likely reaction.
Corporate partners
Firms are part of alliances, for example need suppliers or unions.
What are the macroenvironmental factors/ external factors
culture
demographics(ex: generational cohorts, income, education, gender)
social/natural (how consumer values tend to shift over time)
technology (ex: artificial intelligence)
economic (inflation, interest rates, foreign currency fluctuations)
political/legal (laws that promote or inhibit our market place)
What does CDSTEP covers
Demographics, Social/Natural, Technology,
Economic, Political/Legal
What does PESTEL cover?
Political
Economic (economic growth, exchange rates)
Socio-cultural (cultural aspects, population growth rate)
Technology,
Environmental
Legal
What is marketing research
a set of techniques and principles for systematically collecting , recording, analysing and interpreting data that can aid decision makers involved in marketing goods, services and ideas.
What are the steps in the marketing research process?
- Define research problem and objectives
- design the research plan
- collect data
- analyse data and develop insights
- determine action plan
Step 1: Define research problem and objectives
What info is needed to answer specific research questions
How should that info be obtained
- design the research plan
Make sure that we’re doing what we’re supposed to do to achieve our objective.
Identify type of data needed
Determine type of research necessary to collect the data
Project objectives drive the type of data needed
3.collect data. What is secondary and primary data
Primary data is data collected to address specific research needs (focus groups, interview, surveys)
Secondary data is info that has been collected prior to the research
Step 4: Analyze Data & Develop Insights
Covert raw data into information, to help decision makers evaluate or make a decision
Step 5: Present Action Plan
Prepare the results( executive summary, body of the report, conclusions)
and then Present the results (short and to the point, recommendation, no technical jargon)
Executive summary
one page report that summarizes everything (usually CEO reads it)
Secondary data: Internal and External
External sources:
- census data, trade journals, books, articles, reports, purchased from specialized research firms
- May not be specific
Internal sources: info from the company itself, invoices, other reports created by the firm
- firms use data mining technique to decipher large amounts of data
- may not be data you need or right data
How to collect data in a qualitative research
observation in-depths interview focus groups social media projective techniques
How to collect data in quantitative research
experiments
survey
scanner
panel
When doing qualitative research you need to be dure of 3 things
Reliability: find the same thing on different groups of people
validity: results measures what they are supposed to measure
sampling: purposive sampling( when we sample, we pick the people that can give us the most information
Observation
You just watch people
Observe people through video camaras.
ethnographic researchers actually goes and get information by getting involved in the environment.
Social media
Provides valuable information that could aid their marketing research and strategy endeavors
However, is is not a statistically representative sample
In-depth interviews
Trained researchers ask questions, listen to & record answers. Then ask more qs to clarify
Focus groups
A small group of people come together for an in-depth discussion
Guided by a trained moderator
Web survey
An important component of all quantitative surveys
Cons: response rate are relatively high vs other methods
Typical response rate for online survey is 30-35%
What are the 5 steps in consumer decision process?
- need recognition
- information search
- alternative evaluation
- purchase decision
- postpurchase
Need recognition
functional needs( food, goal in mind something to accomplish that goal, ex: clean the house) Psychological gratification associated with psychological need (ex: designer handbag)
Information search:
Internal: from memory
External: something less familiar with, see the world around us.
What are 3 factors affecting consumers’ search processes? explain each
-perceived benefit vs perceived cost (is it worth the time and effort?)
-locus of control
Internal: do you believe that you have control over your life? Yes (more effort into
search)
External: less effort into search
-Actual or perceived risk
What are the 5 types of risks that we perceive?
- performance risk
- financial risk
- social risk: Afraid people will look at purchase and think we didn’t make a good decision
- physiological risk: dangerous, feel psychological harm
- psychological risk: that if you wear a sweater at school you might look unprofessional.
Alternative situation
-evaluative criteria
-determinant attributes
-retrieval set, evoked set
(think what type of your wanted product you should buy)
retrieval set definition
considered by costumers( every single brand you would remember)
Evoked set
brands from memory, brands that I would actually consider. (narrowed down form retrieval set)
Alternative evaluation: compensatory vs non-compensatory
compensatory decision-making model: when the consumer is evaluating alternatives and trades off one characteristic against another, such that good characteristics compensate for bad ones.
Non-compensatory model: when consumers choose a product or service on the basis of a subset of its characteristics, regardless of the values of its other attributes.( ex: might reject a good car only because of the price)
Decision rules: what is system 1 and system 2
System 1: we use all the time, tends to be auto-pilot (ex: brush your teeth)
System 2: thinking about it carefully, more rare, more cognitive effort.
Decision heuristics
mental shortcuts that help customers narrow down their choice
- price (ex: going to the sales section, ignoring everything else that costs more of your budget. Think things with higher prices have better quality. )
- brand (might just look for a brand that you like and ignore all others)
- product presentation ( something looks good, we are significantly more likely to purchase)
Purchase decision
Customers are ready to buy. They have made a decision but don’t always buy what they intend to buy.
What techniques to marketers use to increase conversion rate?
Have plenty of stock on hand,
Reduce abandoned carts by making it easy for customers.
Open up more check out lanes.
Post purchase
3 potential outcomes:
- customer satisfaction
- post purchase dissonance: buyer’s remorse(negative outcome, we don’t want this): harm the brand in the long term
- customer loyalty: thinking about using our CRM to manage customer loyalty
What are the factors influencing consumer buying decisions
- psychological factors
- social factors: family, reference groups, culture
- situational factors: purchase situation, shopping situation, temporal state
What are the psychological factors influencing consumer buying decision
motives attitudes perception learning lifestyle
Motives: hierarchy of needs
lower to higher:
physiological, safety, love, esteem, self-actualization
Attitude:psychological factors
Your evaluation or feeling towards an object or idea
Learned & long-lasting but they can change abruptly
Psychological factor: perception
Culture, tradition, and our overall upbringing determining our perceptual view of the world
Marketers want to understand how consumers interpret the world, and we can predict how they’re likely to react.
Psychological Factors: Learning
Affects both attitudes and perceptions
Affected by social experiences
Overtime we learn how to use products and then have a positive attitude
Social factors: reference groups (dissociative reference groups, aspiration reference groups)
Reference groups: have an influence on how we feel and behave.
Ex: people in that membership group wear the same pants, so you will eventually buy those pants too.
Dissociative Reference groups: don,t want anything to do with that group, DoN,t want to wear the same thing as that group.
Aspirational reference groups: want to be like them, so do the same things that they do (ex: influences, celebrity)
What are the 3 situation factors
- purchase: stop before buying it because of underlying psychological trait or social factor
- shopping (can influence your purchase behavior. (store atmosphere, sales people, crowding, in-store demonstration, promotion, packaging)
- temporal state: sytate of mind can influence what we are going to buy
Definition of situational factors
Factors affecting the consumer decision process; those that are specific to the purchase and shopping situation and temporal state that may override, or at least influence, psychological and social issues.
Limited problem solving
impulse buying
habitual decision marking
High involvement
greater attention
deeper processing
develop strong attitudes and purchase intentions
Low involvement
less attention
peripheral processing
generates weak attitudes and increased use of cues.
*READ book!!
What are the steps for the segmentation-targeting-position process?
- Strategy or objectives. (segmentation)
- segmentation bases (segmentation)
- evaluate segment attractiveness (targeting)
- select target market (targeting)
- Identify and develop positioning strategy (positioning)
Step 1: Establish Overall Strategy or Objectives. What does it consist of?
The segmentation strategy must then be consistent with an derived from the firm’s mission and objectives, as well as its current-situation-its strengths, weaknesses , opportunities and threats (SWOT)
Step 2: Segmentation bases consist of
table showing descriptions of the different market segments, their needs, wants and their characteristics. We want to identify groups of people who think and behave in the same way.
With this step they can distinguish the customers similarities within a segment and dissimilarities across segments.
-demographic, geographic, psychographic and behavioural.
Geographic segmentation
Divide market into separate geographic units
Countries, regions provinces, cities, neighbourhoods, climate, etc.
Demographic Segmentation
Divide market into groups based on: Gender Age Ethnic group Family lifecycle stage Household type Income
Psychographic Segmentation
How consumers describe themselves:
Self-values (Life goals, override, desires)
Self-concept (how a person views their life)
Lifestyles(how we live our lives to achieve our goals)
Describe VALS Categories
Innovators thinkers believers achievers strivers experiences makers survivors Ch, 6 look at table
Behavioural segmentation
Groups consumers based on:
-the benefits
-their usage rate
Base unit (ex: base of electric tooth brush) and the actual unit (the toothbrush)
High margin products( bc you need to buy the refills. )
- their loyalty
-the occasion (ex: clothes to work or to socialize)
Geodemographic segmentation
How consumers describe themselves using a combination of geographic, demographic, and lifestyle characteristics to segment a market.
- neighborhoods tend to have similarities.
- PSYTE clusters (service allows you to look at all the different neighborhoods in Canada)
Step 3:Evaluate segmental attractiveness
Evaluating the attractiveness of the various target segments:
- Identifiable
- Reachable
- Responsive
- substantial and profitable
Identifiable
Firms must determine who is within their market. see if each segment require a unique marketing mix.
reachable
Firms need to figure out how to communicate with consumers in order to make their product known.
Responsive
Customers must:
React positively to firm’s offering
Move toward the firm’s products/services
Substantial & Profitable
Size matters
Too small & the segment is insignificant, & will not be profitable
Growth potential equally important
Formula for segment profitability
Seg Profitability=(segment size x Segment adoption % x purchase Behaviour x Profit Margin %)-Fixed costs.
Step 4: Select Target Market
How do you choose your target market?
Based on completing a SWOT analysis
Assess the attractiveness of the opportunity
Consider the organization’s competencies
4 targeting strategies:
- mass or undifferentiated: everyone has the same exact same needs (ex: water)
- Differentiated: Offer slightly different things to these different segments
(Ex: shavers for women vs men, coke - Concentrated: of all different target segments, we only target one.
- micromarketing: Firms will offer its products to each individual customer (customized violin, house renovation)
step 5: Identify& develop positioning strategies
Hard to keep a fresh positioning every year. Keep the same message and keep consumers involved.
Want to have one single positioning and do our best shot to resonate with our consumers. There is a risk that we get it wrong.
What is positioning
mental perception that people have about a company, its products relative to competing products or brands.
What are the 5 positioning methods?
- Value( relation of price with quality)
- Product attributes (Focus on the attributes that are most important and varies by target market)
- Benefits & symbolism (benefits of the brand as well as the psychological meaning of the brand to consumers)
- Competition (Major purpose is to convince consumers that a brand is better than the market leader)
- Market leadership
Positioning by using perceptual mapping
- determine consumer’s perceptions &evaluations in relation to competitors
- Identify market’s ideal point, size.
- Identify competitors position
- Determine consumer preference
- Select the position
Repositioning
marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences.
Why do firms create new products?
Firms must innovate in order to stay in business
Also, more choices is a net benefit for costumers.
Market stauration
Without new products or services, the value of the firm declines. You want to consistently offer new products to avoid market saturation.
Diversification of risk in products
Innovation allows firms to create a broader portfolio of products.
Fashion industry relies on _____
trends &experiences short product life cycle.
Fashion cycles
What are pioneers?
New-to-the-world product that create new markets (change our lives). Change rules of competition and consumer preferences.
Ex: apple iPod
diffusion of innovation
The process by which the use of an innovation, whether a product or a service, spreads throughout a market group over time and over various categories of adopters.
First movers
Pioneers that are first to create a market or product a category.
-most new products tend to fail.
Disruptive innovations
New product introductions that are simpler, less sophisticated, and usually less expensive than existing products or services.
Who are the innovators during the adoption of Innovation?
Those buyers who want to be the first to have the new product or service. 2.5%
Wo are the early adopters in the adoption of innovation?
The second group of consumers in the diffusion of innovation model, after innovators, to use a product or service innovation; generally don’t like to take as much risk as innovators. 13.5%
Early majority
members don’t like to take much risk and therefore tend to wait until bugs are worked out. 34 percent of the population
Late majority
The last group of buyers to enter a new product market. When they do, the product has achieved its full market appointment. 34%
Laggards
Consumers who like to avoid change and rely on traditional products until they are no longer available. 16%
What are the 4 factors affecting product diffusion?
- Combability: Compatibility with your needs and culture
- Observability: visualize yourself using the product
- Complexity and trialability: if it’s too complex you’ll likely not use it
- relative advantage: If product is better than substitutes, diffusion will be faster.
The process of how firms develop new products
- Idea generation
- Concept testing
- product development
- market testing
- product launch
- evaluation of results
During idea generation what are the 5 sources of ideas?
- Internal Research & Development (firms have Scientifics who work to develop new ideas, high product development cost)
- Licensing(Firms purchase the rights to technology or ideas from other research-intensive firms)
- Brainstorming (Groups work together to generate ideas)
- Competitors products
- Customer input
During idea generation what are the 5 sources of ideas?
- Internal Research & Development (firms have Scientifics who work to develop new ideas, high product development cost)
- Licensing(Firms purchase the rights to technology or ideas from other research-intensive firms)
- Brainstorming (Groups work together to generate ideas)
- Competitors products
- Customer input
What does concept testing consists of
Concept is a brief written description of the product
Which ideas have the most potential. Get customer’s reactions. Do qualitative research. We are looking for very good responses (narrow down ideas, from 50 to 10)
prototypes of product development
Alpha testing
Beta testing
- Prototype: model of physical product
- Alpha testing: To see if the product will perform according to its design.
- Beta testing: Does what it’s supposed to do. Real consumers using the product
Difference between premarket testing and test marketing.
Pre market test: conducted before a product or service is brought to market to determine how many customers will try and then continue to use it. Ask how likely you are to buy the products( purchase intension)
Test marketing: Building it out and getting people to try it out. Find out actual purchase behaviour.
During evaluation of results, what do we consider
- satisfaction of technical requirements
- customer acceptance
- satisfaction of the firm’s financial requirements.
4 stages of the product life cycle
Introduction, growth, maturity, decline
What are the 4 ways to categorize products?
Speciality, shopping, convenience and unsought.
Categorizing products: speciality
consumer are motivated to find the best quality of the product. So they spend lot of time researching
Shopping
Won’t spend as much time. Still consider alternatives, but not that important.
Convinience
Grab whatever is there.
Unsought
Things consumers are not normally thinking of buying.
What is product of mix breadth and product line depth?
Breadth: Number of product lines
Depth: Number of products within a product line
What are the 6 values of branding?
- brands facilitate purchasing
- brands establish loyalty
- brands protect from competition
- Brands reduce marketing cost
- brands are assets
- Brands impact market value
Brand equity: awareness. What is it?
Measures how many consumers in a market are familiar with the brand and what it stands for
Brand equity: perceived value
Is consumers perceive that there is more value than cost, they will be more interested in the purchase.
brand equity: brand association
consumers make mental links in their head about the products.
What happens when we have brand loyalty
Consumers are less sensitive to price.
High level of brand loyalty insulates the firm from competition
When a store had private label or store brand, it means
The own store provides the brand
In Europe it’s popular
generic means
not branded
What is a brand dilution?
When a brand diminishes its value, usually after releasing a product that doesn’t align with the company’s original mission.
What is cobranding
two or more brands together on the same package or promotion
brand licensing
a contractual arrangement between firms, whereby one firm allows another to use its brand name
What are the 4 I’s
Inseparable, Intangible, Inconsistent, Inventory
What is the knowledge gap
Reflects the difference between customers’ expectations and the firm’s perception of those expectations.
Standards gap
Pertains to the difference between the firm’s perceptions of customers’ expectations and the service standards it sets.
Delivery gap
The difference between the firm’s service standards and the actual service it provides to customers.
Communication gap
Refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises.
