Test 2 6-11 Flashcards
What is marketing research?
- Process of defining a marketing problem & opportunity
- Systematically collecting & analyzing information & recommended actions
Challenges in doing good marketing research
- How can marketing research determine if consumers will buy a product they have never seen & never thought of before?
- How can marketing research obtain answers that people know but are reluctant to reveal?
- How can marketing research help people accurately remember and report their interests, intentions, and purchases?
The 5-step process
Step 1: Define the problem
Step 2: Develop the research plan
Step 3: Collect relevant information
Step 4: Develop Findings
Step 5: Take Marketing Actions
Step 1: Define the Problem (most important step)
Set the research objective:
- Exploratory research (provides ideas about a vague problem: interviews focus groups)
- Descriptive research (trying to find the frequency in which something occurs or the extent of a relationship between 2 factors)
- Casual research (tries to determine the extent to which the change in 1 factor changes another)
Step 1: Define the Problem (Lego example)
Lego Mindstorm EV3 (target: middle school boys)
Research objectives: Which of 2 designs to market?
- Whichever design kids could complete in less than 20 minutes
Potential marketing actions: Market design that kids complete in less than 20 minutes
- Did exploratory research (focus groups & interviews)
Step 2: Develop the research plan
- Specify constraints on the marketing research activity
- Identify the data needed for marketing actions
- Determine how to collect data
- Concepts (ideas about products/services)
- Methods (approaches that can be used to solve all or part of the problem)
Special methods vital to marketing are:
- Sampling (selecting people to ask questions)
- Statistical interference (generalizing the results from the sample to draw conclusion about the entire group)
Step 2: Develop the research plan (lego example)
Specify constraints
- Budge limitations (not cited)
- Time limitations (5 weeks)
- Restrictions on collection methods (10 teams of middle schoolers playing with 2 Mindstorm kits)
Identify data needed for marketing actions
- Identify parameters of study (stay focused): time it takes kids to build, engagement during time, students’ math skills?
Determine how to collect data
- Concepts: Developed new-product concept (LEGO group designers develop robots that uses color sensor, voice command)
- Methods: Observe behavior (more than 20 minutes? Frustrations?), ask questions (How long did it take you? Did you enjoy it? What is your favorite subject in school?)
Step 3: Collect relevant information
- Obtain secondary data (already exists)
Internal data:
- Inputs (budgets, financial statements, sales reports)
- Outputs (actual sales & communication with customers)
External Data:
-U.S. Census reports
- Obtain primary data (collected for current study)
Observational data:
- Mechanical methods (people meters, Nielsen media research)
- Personal methods (mystery shoppers, ethnographic research, kraft deli creations)
- Neuromarketing methods (technology used to measure brain activity & changes in physiological state, MRI, Campbell spoons)
Questionnaire data:
- Idea generation methods
- Idea evaluation methods (Questionnaires- likert scale, interviews, focus groups)
Other sources of data:
- Social media, panel & experiments, IT, IoT, Data mining
Step 4: Develop findings
- Analyze the data
- Present the findings (less misrepresentation)
Step 4: Develop findings (lego example)
- Which design led to fastest build? Did kids mind the extra time to build? Was all data measured objectively?
- Conclusion: Kids prefer design, present data in easily understand graphics, data is backup
Step 5: Take marketing action
- Make action recommendations
- Implement action recommendations
- Evaluate results (evaluate the decision itself & the decision process used)
Step 5: Take marketing action (Sales forecasting techniques, trend extrapolation)
Sales forecast: total sales of an offering expected to sell within a specific time period
- Judgement of decision- maker (what you know from past sales)
- Surveys of knowledgeable groups (ask sales force, buyers)
- Statistical methods (trend extrapolation- extending a pattern observed in the past data to the future, assuming what happens in the past will occur in the future) Ex. City planning
In Marketing, STP stands for:
Segmentation, Targeting, Positioning (STP)
Market Segmentation
Involves aggregating prospective buyers into groups, or segments, that:
- Have common needs
- Respond similarly to a marketing action
- Within each segments they have common needs and will respond similarly
Product Differentiation
Product differentiation:
- Strategy of using different marketing mix activities (4 P’s) to help consumers perceive a product as being different and better than competing products
Link to the organization’s marketing mix
- Identify market needs
- Benefits in terms of : product features, expense, quality, savings in time & convenience - Link needs to actions
- Take steps to segment & target markets - Execute marketing program actions
- A marketing mix in terms of: product, price, promotion, place (distribution)
Market-product grid
A framework to related the market segments of potential buyers to products offered or potential marketing actions
Ex. Pillow market (stomach, back, side sleepers)
Advantages:
- Determine target market segments to select
- Determine which product groupings to offer
When and How to Segment Markets
1 product multiple market segments
- Sports magazine, Harry Potter
Multiple products & multiple market segments
- Ford motor company (Lincoln, Aston Martin, Jaguar)
- Tiffany/ Walmart (Old Navy vs Banana Republic)
1 or mass customization (step ahead of BTO)
- Internet ordering (M&Ms)
- Build to Order (BTO): Apple iPhone
The Segmentation Tradeoff: Synergies vs. Cannibalization
Synergy: increased customer value found through performing organizational functions (marketing & manufacturing) more efficiently
- Coca-Cola Company (Sprite, Fanta, Dasani)
Cannibalization: when products “steal” from existing line
- Ann Taylor & LOFT
5 Steps in Segmenting a Market
- Group potential buyers into segments
- Group products to be sold into categories
- Develop a market product grid & estimate size of markets
- Select target markets
- Take marketing actions to reach target markets
Segmenting a market: Step 1: Grouping Buyers into segments
- Simplicity & cost-effectiveness of segmenting (how easy?)
- Potential for increased profit
- Similarity of needs within potential segments
- Difference of needs of buyers among segments
- Potential of marketing actions to reach segments
Ways to segment consumer markets (4)
- Geographic (Campbell’s nacho cheese)
- Demographic (Campbell’s single serve, 50% of US households 1 or 2 people)
- Psychographic (Lifestyle, you are where you live)
- Behavioral: Product Features, Usage rate
80/20 Rule (Pareto Principle)
- 80 % of sales comes from 20% of customers
Product Positioning
Place product occupies in consumers’ mind based on important attributes relative to competitor’s products
Product repositioning
Changing the place product occupies in consumer’s mind
- Head to head positioning: competing direct with competitors or similar attributes in same market
- Differentiation positioning: seeking a less competitive, smaller niche in which to locate a brand
Ex. Repositioning chocolate milk, mother energy, GoDaddy, JCPenny, Arm & Hammer Baking Soda, Starbucks in UK
Key to Repositioning a Product
- Identify the important attributes for a product/brand class
- Discover how target customers rate competing products/ brands with respect for these attributes
- Discover where the company’s product/ brand is on the minds of potential customers
- Respoition in the company’s product /brand in the minds of potential customers
Perceptual map
A means of displaying in 2 dimension the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands and then take marketing actions
Product
A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value
Goods: Durable and Nondurable
Have tangible attributes that a consumer 5 senses can perceive.
Nondurable goods: Consumed (food, fuel)
- Easily substitutable: remind consumers of existence
- If durability is 3 years or less
Durable goods: Lasts (Cars, phones)
- More attention to purchase decision
Services
intangible activities or benefits that an organization provides to satisfy consumers’ needs in exchange for money or something else of value
Consumer products (B2C)
Purchased by ultimate consumer
4 Types of Consumer Products:
Convenience: purchased frequently, conveniently, minimum of shopping effort
- Toothpaste
Shopping: consumer compares several alternatives (Price, quality, style)
- PC
Speciality: consumer makes special effort to seek out & buy
- Rolex, Tesla
Unsought: consumer doesn’t know about or initially want
- Life insurance, cemetery plot
Business Products (B2B)
- Purchased by organization to use themselves or sell to other organizations to resale
- Derived demand (Battery for car)
7 reason why new products fail
- Insignificance point of difference
- General Mills: Fingos (still thought of them as cereal to add milk) - Don’t satisfy customer needs
- Car market in Japan (US car markets didn’t offer right-side drive cars), LifeSaver’s Soda - No economical access
- Thirsty Dog/ Thirsty Cat (Shelf space $ too high for initial sales) - Bad timing
- Microsoft Zune player (missed market after iPod & other MP3 players) - Poor product quality
- Xbox 360, IPad 2, Window 8, Samsung Note 7 - Poor execution of 4 P’s
- Promotion (Garlic Cake)
- Placement (11 year old driving drunk news article with Red Stripes (beer) ad)
- Pricing (JC Penny increasing price) - Inconsistent with Brand Identity
7 stages of the new product process
- Strategy Development: defines the role for a new product in terms of firm’s overall objectives
- Idea Generation: Developing a pool of concepts for new products
- Screening & Evaluation: Internally & externally evaluate new products to eliminate those that warrant no further effort, don’t meet corporate objectives
- Business Analysis: Specifies features of the product
- Development: Paper into prototype
- Market Testing: Actual products to prospective customers
- Commercialization: Release the product
- Strategy Development:
defines the role for a new product in terms of firm’s overall objectives
SWOT Analysis
- Environmental Screening
- Idea Generation:
Developing a pool of concepts for new products
- Customers, suppliers, employees, Research & Development (R&D), Competitive Products,
- Smaller firms, Universities
- Crowdsourcing (involves generating insights leading to actions based on ideas from massive #s of people)
- Screening & Evaluation:
Internally & externally evaluate new products to eliminate those that warrant no further effort, don’t meet corporate objectives
- Internal Approach (firm’s employees evaluate): Customer Experience Management (within firm)
- External approach (concept tests): preliminary testing of new product ideas with consumers
- Business Analysis:
Specifies features of the product
- Resources needed to create prototype projects, financial projection (including cannibalization analyses), marketing mix (lots of # crunching)
- Development:
Paper into prototype
- Demonstrable, producible product; service delivery expectations; safety tests
- Market Testing:
Actual products to prospective customers
- Test marketing (test in representative cities)
- Simulated test markets (limited tests)
- Commercialization
- Regional rollouts, cater to early adapters, speed: time to market
- Slotting fees, penalties
Stages of Product Life Cycle (PLC)
- Introduction Stage
- Skimming & Penetration Pricing - Growth Stage
- Rapid increase in sales - Maturity State
- Slowing of total industry sales - Decline Stage
- Deletion & Harvesting
Introduction stage of product life cycle
Distribution
- Must get new channels establish
Pricing
- Skimming (price high to make up for R&D cost)
- Penetration pricing (price low for initial period)
Growth Stage of Product Life Cycle (PLC)
- Rapid increase in sales
- More competitors
- Aggressive pricing
- Brand Awareness
Maturity Stage of Product Life Cycle (PLC)
- Slowing of total industry sales
- Marginal competitors leave market
- Fewer new buyers
Marketing focus: hold market share, find new buyers, product differentiation
Deletion Stage of Product Life Cycle (PLC)
Deletion (EOL)
- Get out of market
Harvesting
- Keep producing but one’s promote
- Customer goodwill
Typical curve of SLC
Typical PLC curve goes up during growth, peaks at maturity, then decline
4 Aspects of Product Life Cycle (PLC)
-Length (varies among products, industries)
- Shape (High-learning, fashion, fad)
- Level (Class & form)
- Consumers (How consumers adapt to new products)
Length of Product Life Cycle
- Consumer products (shorter life cycle)
- Business products (longer life cycle)
Technology impacts PLC; Mass communication affects PLC
High-learning product
- Significant customer education required
- Extended introduction period
Fashion Product
Difficult to predict life cycle
- can ebb & flow
- Length of cycles: months to decades
Fad Product
Rapid introduction; rapid decline
- short life cycle
-companies must be adaptable (need balance of products)
Diffusion of innovation (How quickie consumers adopt)
- Innovators (2.5%)
- Early adopters (13.5 %)
- Early majority (34%)
- Late majority (34%)
- Laggards (16%)
Barriers to diffusion of innovation
- Usage barrier
- product not compatible with habits (Netflix, Peapod) - Value barrier
- Consumer perceives no real values in repackaged product (Uncrustables) - Risk barrier
- Psychical, economic, social
- Fear that purchase can case setback, buyer uncertain about cost/performance - Psychological barrier
- Cultural differences or image (US women adopt slowly, US men adopt slower)
Managing the pls (molding the product, mod the mkt, repos the prod
- Product manager
- Modifying the product
- Modifying the market
- repositioning the product
Modifying the product
Increases value to consumers
Ex. Pantene added vitamins to shampoo
Modifying the market
Company tries to increase consumption by finding new users and new market segments for its brands
Ex. Harley Davison, Chocolate milk, Arm & Hammer Baking soda
Reposition the product
Changing the place product occupies in consumer’s mind
Ex. St. Joseph, Quaker, Cheerios
Brand Name (Trade Name)
Word, device used to distinguish a seller’s good/services
Qualities of a good brand name:
- Suggest product benefits
- Memorable, distinctive, positive
- Fit company or brand image
- Have no legal restriction (us-to.gov, them “TM”)
- Simple & emotional
Brand personality
a set of human characteristics associated with a brand name
Brand equity
The added value that a brand name gives to a product beyond the functional benefits provided
- Created by marketing programs that forge strong, favorable, unique customer experience with brand
- Customers are willing to pay higher prices for brand equity
Branding strategies
- Multiproduct
- One name for all products in a class (GE, Sony, Microsoft) - Multibranding
- Each product has a distinct name (P&G -> Tide…) - Private branding
- Company sells under brand name of Wholesaler/ retailer; product created by 3rd party manufacturer (Sears, Walmart)
- Cost effective way to produce - Mixed branding
- Firm markets products under its own name & a reseller
Customer value brought packaging
Communications
- What’s in it/when/how to use
- Recipes
Functionality
- Storage, squeeze bottles
Perception
- Shape, color, graphic help distinguish from other brands
