MGT 103 Quiz #2 Ch.8-12 PDF

Ch.8 Marketing Research: From Customer Insight to Actions Why do Marketing Research? ​ Marketing Research: the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions ○​ Things to consider:...

Ch.8 Marketing Research: From Customer Insight to Actions Why do Marketing Research? ​ Marketing Research: the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions ○​ Things to consider: ​ How can researchers predict if consumers will buy a new product? ​ Why do consumers purchase a certain product? (consumer behavior) Determine the five-step marketing research approach that leads to marketing actions 1)​ Define the problem: a)​ Set Research objectives (measurable and specific) i)​ Exploratory research: provides ideas about a vague problem or questions (EX: interviews and focus groups) ii)​ Descriptive Research: finding the frequency at which something occurs OR the extent of a relationship between 2 factors iii)​ Causal Research: finding the extent to which the change in one factor changes another one. b)​ Identify possible Marketing Actions i)​ Measures of success: criteria or standards used in evaluating proposed solutions to the problem. 2)​ Develop the Research Plan a)​ Specific constraints i)​ Constraints: restrictions placed on potential solutions to the problem (1)​Ex: time and money available to solve the problem. b)​ Identify data needed for Marketing actions i)​ Focus on data that is effective, relevant, and focuses on the objective at hand. c)​ Determine how to collect data i)​ Concepts: ideas about products or services  (1)​New-product concept: picture or verbal description of a product or service the firm might offer for sale. (a)​Objective is to find out what people think about a new product ii)​ Methods: approaches that can be used to collect data to solve all or part of a problem (1)​Sampling: selecting a group of distributors, customers, or prospects; asking them questions; and treating their answers as typical of all those in whom they are interested (2)​Statistical inference: generalize the results from the sample to much larger groups of distributors, customers, or prospects to help decide on marketing actions Explain how marketing uses secondary data 3)​ Collect Relevant Information a)​ Data: the facts and figures related to the product i)​ Secondary data: data that have already been recorded prior to the project at hand. (1)​Internal (inside the organization) (a)​Marketing input data: effort expended to make sales (i)​ Ex: marketing budget reports, financial statements (b)​Marketing outcome data: results of the marketing efforts (i)​ Ex: actual sales and customer communications (2)​External (outside the organization) (a)​Census Bureau: data about demographics, economic reports (b)​Trade association studies (c)​Data about households, lifestyles (3)​Advantages: (a)​Obtain secondary first and then primary (b)​Tremendous time saving (c)​Low-cost (4)​Disadvantages: (a)​Secondary data may be outdated (b)​Might not have relevance to marketers Discuss the uses of observations, questionnaires, panels, experiments, and newer data collection methods ii)​ Primary data: data that are newly collected for the project (1)​Observational data: data collected by watching how people actually behave (a)​Mechanical methods: (i)​ National TV ratings collected by a “people meter” 1.​ Measures what channel and program are tuned in and who is watching. (b)​Personal Methods: (i)​ Watching consumers in person (ii)​ Mystery shoppers: researchers hired to obtained the view of actual customers (iii)​ Ethnographic research: trained observers seek to discover subtle behavioral and emotional reactions as consumer encounter products in their natural environments. (c)​Neuromarketing Methods: (i)​ Mergers technologies used to study the brain with marketing’s interest in understanding consumers. (ii)​ Can provide info on media options, advertising, packaging, labeling etc. (2)​Questionnaire data: data obtained by asking people about their attitudes, awareness, intentions, and behaviors. (a)​Idea generation methods (coming up with ideas) (i)​ Individual interview: single researcher → one respondent (ii)​ Depth interview: lengthy, free-flowing kinds of questions; understanding feelings (iii)​ Focus groups: informal sessions of 6-10 people 1.​ Asking their opinions about firm’s products and their competitors 2.​ Good for the diversification of people we are asking. (b)​Idea evaluation methods (testing an idea)  (i)​ Personal interview: enables interviewers to be flexible in asking probing questions or getting reactions to visual material. (ii)​ Online survey: can reach most audiences. 1.​ Cost is relatively minimal 2.​ Can be ineffective because people will put these emails in their junk/spam. (iii)​ Different types of questions: 1.​ Open-ended vs. close-ended 2.​ Semantic differential scale 3.​ Likert scale. (3)​Other sources: (a)​Social media (b)​Panels and experiments (i)​ Panel: a sample of consumer or stores from which researchers take a series of measurements (ii)​ Experiment: IV → DV 1.​ Think about potential confounds 2.​ Control vs. experimental groups Explain how data analytics and data mining lead to marketing actions 4)​ Develop Findings a)​ Analyze the data: SALES? b)​ Present the findings: i)​ Should be clear and understandable from the way the data is presented 5)​ Take marketing actions a)​ Make action recommendations b)​ Implement the action recommendations c)​ Evaluate the results. Ch.9 Segmentation, Targeting, and Positioning Explain what market segmentation is and when to use it ​ Market segmentation: aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action ○​ Stressing the importance of grouping similar consumers. ○​ Needs and benefits of customers must be related to specific marketing actions line offering a special promotion or creating a new product. ○​ Ex: “Zappos” which segments people who want a high selection of shoes, shop online, and have quick delivery. ​ Zappos offers just these 3 elements ○​ Market-product grid: framework to relate the market segments of potential buyers to products offered or potential marketing actions. ​ ​ When and how to segment markets? ○​ A business goes to the trouble and expense of segmenting its markets when it expected that this extra effort will increase its sales, profit, and return on investment (ROI) ○​ 3 marketing segment strategies ​ One product and multiple markets: ​ when an org. Produces only a single product or service and attempts to sell it to two or more market segments, it avoids the extra cost of developing new products or versions. ​ Ex: magazines like “vogue”; harry potter (to pretty much all ages)  ​ Multiple products and multiple markets: ​ Ex: think about FORD MOTOR COMPANY ○​ Sells sUVS, trucks, hybrids targeted to a different type of customer for each. ​ Beware of how this strategy can sometimes raise prices and reduce quality. ​ Segments of one: Mass customization ​ Each customer has unique needs and wants ​ Ex: Nike “Nike By You” service which configures shoes to a customer’s specific preferences. ○​ Synergy vs. Cannibalization ​ Organizational synergy: the increased customer value achieved through performing organizational functions such as marketing or manufacturing more efficiently ​ Customers should be better off through increased synergies ​ Cannibalization: new products or new chains simply stealing customers and sales from the older products. ○​ Product differentiation: a firm using different marketing mix actions to help consumers perceive the product as being different and better than competing products. Identify the 5 steps involved in segmenting and targeting markets 1)​ Group potential buyers into segments a)​ Criteria to use for forming segments: i)​ Simplicity and cost-effectiveness of assigning potential buyers to segments ii)​ Potential for increased profit iii)​ Similarity of needs of potential buyers within a segment iv)​ Difference of needs of buyers among segments (1)​Combine segments if they are not too different. v)​ Potential of a marketing action to reach a segment. Recognize the bases used to segment consumer and organizational markets b)​ Ways to segment consumer markets i)​ Geographic segmentation: based on where prospective customers live or work (region, city size)  ii)​ Demographic segmentation: based on gender, race, age, income, occupation etc. iii)​ Psychographic segmentation: based on some subjective mental or emotional attributes (personality), aspirations (lifestyle), or needs of prospective consumers. iv)​ Behavioral segmentation: based on some observable actions or attitudes by prospective consumers (product features/usage rate) c)​ Usage rate: the quantity consumed or patronage (store visits) during a specific period. i)​ Sometimes referred to as 80/20 rule: (1)​80% of a firm's sales are obtained from 20% of its customers d)​ Customer lifetime value (CLU): represents the financial worth of a customer to a company over the course of their relationship. i)​ Customer loyalty, usage rate etc. e)​ Using segmentation variables to create personas: i)​ Personas: character descriptions of a brand’s typical customers (1)​Personas take target market research and simplify it, adding a few fictional details, such as name and image, so that human traits and characteristics become memorable for marketers. 2)​ Group products to be sold in categories (using “wendy’s” as an example) a)​ Individual wendy’s products; i)​ Burgers, frosts, chilli-cheese fries etc. ii)​ Note that some products are targeted more towards one gender or the other; even price range as well. b)​ Groups of wendy’s products i)​ Meals: burgers and fries ii)​ Organize your products into groups just like you would with segmenting. Develop a market-product grid to identify a target market and recommend resulting marketing actions 3)​ Develop a market-product grid and estimate size of markets (using “wendy’s” as an example) a)​ Forming a marketing grid:  i)​ b)​ Estimating market size i)​ Estimating the sales of each kind of meal expected to be sold to each student and non student market segment. 4)​ Select target markets a)​ Criteria to use in selecting target segments i)​ Market size (should be relatively big) ii)​ Expected growth (even if the market size is small) iii)​ Competitive position (less competition → more attractive) iv)​ Cost of reaching segment (don’t waste time trying to advertise to a segment that is not reachable) v)​ Compatibility with organization’s objectives and resources (think about what you have and work around that) 5)​ Take marketing actions to reach target markets (using “wendy’s” as an example) a)​ Immediate wendy’s segmentation strategy i)​ Identify where and what meals to advertise to reach specific market segments. (1)​Day commuters (put ads inside public transportation) (2)​Between-meal snacks (offer 10% off during 2-4:30pm) (3)​Dinner to night commuters (bookstore signage; targeted mobile ads) Explain how marketing managers position products in the marketplace ​ Product positioning: the place a product occupies in consumer’s minds based on important attributes relative to competitive products. ○​ Head-to-head positioning: competing directly with competitors on similar product attributes in the same target market. ○​ Differentiation positioning: seeking a less-competitive, smaller market niche in which to locate a brand. ​ Writing a product positioning statement ○​ Derived from customer value proposition ○​ Requirements ​ Identifies the target market and needs satisfies ​ Identifies The product class or category in which the organization’s offering competes ​ Identifies Offering’s unique benefits or attributes provided ​ Perceptual map: displaying in two dimensions the location of products or brand sin the mind of consumer ○​ Enables managers to see how consumers perceive competing products or baranda s well as its own. ​ Product repositioning: changing the place a product occupies in a consumer’s minds relative to its competitors. Ch.10 Developing New Products and Services Recognize the various forms that pertain to products and services ​ Product: a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumer’s needs and is received in exchange for money or something else of value. ○​ Good: tangible attributes that a consumer’s 5 senses can perceive ​ nondurable : DOES NOT last very long ​ Durable: DOES last very long ○​ Service: intangible activities or benefits that an organization provides to customers. ○​ Idea: a thought that leads to a product or action Identify the ways in which consumer and business products and services can be classified ​ Classifying products (2 broad categories) ○​ Consumer products: purchased by the ultimate consumer ​ Convenience products: consumer purchase frequently, conveniently, and w/minimum shopping effort. ​ Ex: cake mix, toothpaste, hand soap ​ Shopping products: consumer compares several alternatives on criteria such as price, quality, or style ​ Ex: cameras, TV, briefcases, airline tickets ​ Specialty products: consumer makes a special effort to search out and buy ​ Ex: Rolex watches, heart surgery, cars ​ Unsought products: items that consumer does not know about or knows about, but does not initially want ​ Ex: burial insurance, thesaurus. ○​ Business Products (B2B or Industrial): products organization buy that assist in providing other products for resale. ​ Derive demand: sales of business products frequently result from the sale of consumer products. ​ Components: items that become part of the final product ​ Support products: items used to assist in producing other products and services. ​ Product classes, forms, items, mixes ○​ Product class/industry: iPad → Tablet classification/industry ​ Can exist in various forms within a class. ○​ Product item: specific product that has a unique brand, size, or price ​ Each time represents a specific stock keeping unit (SKU) ○​ Product line: group of product or service items that are closely related because they satisfy a class of needs ​ Ex: Nike produce line: shoes, clothes, bags etc. ○​ Product mix: consists of all product lines offered by an organization Explain the significance of “newness” in new products and services as it relates to the degree of consumer learning involved ​ What is a new product? ○​ Newness compared with existing products ​ Product can be considered new if it is functionally different than its existing products  ​ Organization can make new products by adding on new features to an existing product ○​ Newness form the consumer’s perspective ​ Continuous innovation: consumers don’t need to learn new behaviors ​ Ex: new toothpaste; don’t need to re-teach anything ​ Marketing strategy: Gain consumer awareness and wide distribution ​ Dynamically continuous innovation: only minor changes in behavior are required. ​ Ex: Electric Toothbrush vs. Regular Toothbrush ​ Marketing strategy: Advertise points of benefits and difference to consumers ​ Discontinuous innovation: requires new learning and consumption patterns by consumers ​ Ex: wireless router, electrical car ​ Marketing strategy: Educate consumers through product trial and personal selling. ○​ Newness from Organization’s perspective (3 levels) ​ (1) product line extension ( lowest level ) ​ An incremental improvement of an existing product line that the company already sells. ​ (2) brand extension (middle/second level) ​ Significant jump in innovation or technology ​ ​ OR ​ Involves putting an established brand name on a new product in an unfamiliar market. ​ (3) Radical invention (highest level) ​ Truly revolutionary new product that creates value for customers. ​ Why do products fail/succeed? ○​ Protocol: statement before product begins ​ Identifies a well-defined market ​ Identifies specific customer’s needs, wants, and preferences. ​ Identifies what the product will be and do to satisfy customers. Describe the factors contributing to the failure of a new product or service ​ Marketing reasons for new-product failures ○​ Insignificant points of difference  ​ Ex: Dry cereal marketed to be eaten dry → couldn’t compete with chips and popcorn industries. ○​ Incomplete market and product protocol before product development. ○​ Failure to satisfy needs on critical factors ○​ Bad Timing ○​ No economic access to buyers ○​ Poor execution of marketing mix ○​ Too little market attractiveness ○​ Poor product quality. ​ Organizational Inertia in New- Product Failures ○​ Encountering “groupthink” in task force and committee meetings ​ When a product is bad, a group-thinker will not say anything even if they know it is bad as a result of trying to be a “team player” ○​ Avoiding the “NIH problem” ​ “Not-invented here” syndrome where often large companies reject good ideas just because it came from an outside source. ​ Open innovation: consist of practices and processes that encourage the use of external as well as internal ideas. Explain the purposes of each step of the new-product development process. ​ New-product development process: the seven stages an organization goes through to identify opportunities and convert them into salable products or services. 1)​ New-product strategy development: the stage of the new-product development process that defines the role for a new product in terms of the firm’s overall objectives. a)​ Using both a SWOT and environmental scanning b)​ Can be closed or open innovation protocols (depending on the company) 2)​ Idea generation: involves developing a pool of concepts to serve as candidates for new products, building upon the previous stage’s results. a)​ Methods of idea generation: i)​ Suggestions from Employees and Friends ii)​ Customer and Supplier suggestions iii)​ Research and development Labs iv)​ Analyzing competitive products v)​ Smaller firms, universities, and inventors 3)​ Screening and Evaluation: internally and externally evaluates new-product ideas to eliminate those that warrant no further effort. a)​ Internal Approach: i)​ A firm’s employee(s) will evaluate the technical feasibility of a new-product idea. ii)​ Customer experience management (CEM): the process of managing the entire customer experience within the company. b)​ External Approach: i)​ Concept tests: external evaluations with consumers that consist of preliminary testing of a new-product idea rather than an actual finished product. 4)​ Business Analytics: specifies the features of the product or service and the marketing strategy needed to bring it to market and make financial projections. a)​ How will the new product do? Will it cannibalize? Synergize? 5)​ Development: the stage of the new-product development process that turns the idea on paper into a prototype. a)​ Results in a demonstrable, producible product that involves not only manufacturing the product efficiently but also performing laboratory and consumer test to ensure the product meets the standards established for it in the protocol 6)​ Market testing: the stage of the the new-product development process involves exposing actual products to prospective customers under realistic purchase conditions to see if they will buy a)​ Standard test market: Company develops a product and then attempts to sell it to normal distribution channels in a number of test-Market cities. b)​ Controlled test market: involves Contracting the entire test program to an outside service c)​ Simulated test market: somewhat replicates a full-scale test Market 7)​ Commercialization: the stage of the new-product development process that positions and launches a new product in full-scale production and sales Ch.11 Developing New Products and Service Explain the produce life-stye concept ​ Product life cycle: describes the stages a new product goes through in the marketplace: introduction, growth, maturity , and decline. ​ ○​ Introduction: ​ Product is introduced to intended market ​ Sales grow slowly ​ Profit is minimal ​ A lot of money is often spent on advertising and promotion. ​ Primary demand: the desire for the produce class rather than a specific brand, since there are few competitors with the same products. ​ Pricing: ​ Skimming strategy: high initial price used to help the company Recover the cost of development as well as capitalized on the price insensitivity of buyers. ​ Penetration pricing: company pricing low in order to discourage competitive entry. ○​ Growth stage: ​ Rapid increase in sales ​ Companies will start emphasizing selective demand. ​ Selective demand: the preference for a specific brand ​ Profit usually peaks in the growth stage.  ​ Repeat purchasers: people who tried the product, were satisfied, and bought again. ​ Changes in product are most likely to happen to help differentiate a company’s brand from competitors. ​ Includes updates to features. ○​ Maturity stage: ​ Slowing of totally industry sales or product class revenue ​ Sales decreasing ​ Profit decline ​ Most customers are repeated purchasers. ○​ Decline stage: ​ When sales drop ​ Often enters this stage because of environmental/social changes. ​ Deletion: dropping the product from the company’s product line. ​ Usually caused by product obsolescence and lack of product profit. ​ Harvesting: when a company retains the product BUT reduces marketing cost. ​ 3 Aspects of Lifestyle ○​ Length ​ Not really a set time it takes to get through a life cycle ​ Generally consumer products have SHORTER life cycles than business products. ○​ Shape of the curve: ​ High-learning product: significant customer education is required and there is an extended introductory period. ​ Low-learning product: little learning is required by the consumer and the benefits of purchase are readily understood. ​ Fashion product: style of times; trends; women and mens’ apparel. ​ Fad product: rapid sales on introduction and then an equally rapid decline.  ​ ○​ The product level: class and form ​ Product class: refers to the entire product category or industry, such as prerecorded music. ​ Product form: pertains to variations of a product within a class. ○​ Diffusion of innovation: product diffuses or spreads through the population. ​ Identify ways that marketing executives manage a product’s life cycle ​ Managing the product life cycle ○​ Role of a product manager:  ​ Manages the marketing efforts for a close-knit family of products or brands. ​ Marketing responsibilities include: ​ Developing and executing a marketing program for the product line described in an annual marketing plan. ​ Approving ad copy, media selection, and package design. ○​ Product modification: Altering one or more products characteristics, such as it’s quality, performance, or appearance, to increase the product’s value to Consumers and increase sales ​ Product building: sale of two or more separate products in one package ○​ Market modification: Strategies, a company tries to find new customers increase a product's use among existing customers, or create new use situations ​ Finding new customers ​ Increasing product use. ​ Creating a new situation. ○​ Product repositioning: changing the place a product occupies in a consumer’s mind relative to its competitors ​ Changing the value offered: ​ Trading up: involves adding value to the product through additional futures or higher-quality materials ​ Trading down: involves reducing a product's number of features, quality, or price ​ Reacting to a competitor’s position ​ Reaching a new market ​ Catching a rising trend. Recognize the importance of branding and alternative branding strategies ​ Branding: organization Uses a name, phrase. design. symbols. or combination of those to identify its products and distinguish them from those of competitors. ​ Brand name: any word, device, design, sound, shape, color, or combination of these used to distinguish a seller's products or services ​ Brand personality and equity: ○​ Brand personality: set of human characteristics associated with a brand name. ​ Ex: coca-cola → all american and real; pepsi → young and exciting ○​ Brand equity: the added value a brand name gives to a product beyond the functional benefits provided.  ​ Creating brand equity: ​ Brand purpose: The reason why a brand exists, the place it has in consumers lives, the solution it provides to Consumers, and the brands rule in making Society better off ○​ focuses on Brands underlying values and beliefs and its identity and meaning ​ Steps on creating brand equity: ○​ ​ Picking a good brand name relies on 6 criteria: ○​ Name should suggest product benefits ○​ Name should be memorable, distinctive, and positive ○​ Name should fit the company product or image ○​ Name should have no legal or regulatory restrictions ○​ Name should be simple and emotional ○​ Name should have favorable phonetic and semantic associations in other languages. ​ Branding strategies: ○​ Multi product branding strategy: company uses one name for all its products in a product class. ​ Sub branding: combines a corporate or family brand with a new brand to distinguish a part of its product line from others. ​ Brand extension: the practice of using a current brand name to enter a different product class. ​ Co-branding: pairing two or more strong brands to facilitate the marketing of a joint product or service for their mutual benefit. ​ BEWARE OF BRAND DILUTION ○​ Multi-branding strategy: involves giving each product a distinct name ○​ Private branding strategy: manufactures products BUT sells them under the brand name of a wholesaler or retailer. ○​ Mixed branding strategy: firm markets produce under its own name (s) and that of a reseller because the segment attracted to the reseller is different from its own markets.