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Marketing Management

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Title: Marketing Management


1
Marketing Management
  • Spring 2003

2
Some Abouts
  • About me
  • About this course
  • About the textbook
  • About the assignment
  • About class participation
  • About the exam

3
Text Structure
  • Marketing environment
  • The marketing process
  • The consumer
  • The marketing mix Product, Place, Promotion, and
    Price.

4
Marketing Today
  • A new era
  • Technology advances
  • Consumer needs and wants
  • Globalization

5
What is marketing?
6
Utility
  • Utility
  • The want-satisfying power of a good or service.
  • Form
  • Time
  • Place
  • Ownership

7
Marketing Managers Job
  • Identifying customer needs
  • Designing goods and services that meet those
    needs
  • Communicating information about those goods and
    services to prospective buyers
  • Making the goods or services available at times
    and places that meet customers needs
  • Pricing goods and services to reflect costs,
    competition, and customers ability to buy
  • Providing for the necessary service and follow-up
    ensure customer satisfaction after the purchase

8
Define Marketing
  • The process of planning and executing the
    conception, pricing, promotion, and distribution
    of ideas, goods, services, organizations, and
    events to create and maintain relationships that
    will satisfy individual and organizational
    objectives.

9
Evolution of Marketing
  • Specialization
  • Division of labor
  • Production Surplus
  • Exchange Process the origin of marketing
  • Good, Service, Donation?

10
Four Marketing Eras
  • The production era(-1925)
  • A mouse trap that kills sells itself.
  • The sales era(1925-1950s)
  • We must sell everything we make.

11
Four Marketing Eras cont.
  • The marketing era(1950s-1990s)
  • Sellers market-Buyers market
  • The marketing concept
  • Company-wide consumer orientation
  • The relationship era(1990s-)
  • Relationship marketing
  • Strategic Alliances

12
Marketing Myopia
  • Managements failure to recognize the scope of
    its business.
  • NIKEs approach
  • www.iflyswa.com

13
NFP Marketing
  • Public sector
  • Private sector
  • Difference between NFP mktg and FP mktg
  • Audience
  • Control
  • Measurement of success

14
Nontraditional Marketing
  • Person Marketing
  • efforts designed to cultivate the attention,
    interest, and preferences of a target market
    toward a person.
  • George Bush, Michael Jordan, Jacky Chan
  • Place Marketing
  • attempts to attract customers to particular
    areas.
  • Yellow Stone, Malaysia, Gui Lin

15
Nontraditional Marketing Cont.
  • Cause Marketing
  • the identification and marketing of a social
    issue, cause, or idea to selected target markets.
  • Environment, unemployment, fitness, anti-smoking
  • Event Marketing
  • marketing of sporting, cultural, and charitable
    activities to selected target markets.
  • The Olympic Games, The APEC Summit

16
Nontraditional Marketing Cont.
  • Organization Marketing
  • attempts to influence others to accept the goals
    of, receives the services of, or contribute in
    some way to an organization.
  • The Red-Cross, Canadian Tertiary Education Show

17
Marketing Strategy
  • The target market
  • the group of people toward whom a firm markets
    its goods, services, or ideas with a strategy
    designed to satisfy their specific needs and
    preferences.
  • The marketing mix The 4 Ps
  • Product, Place, Price, Promotion

18
Product Strategy
  • Element of marketing decision making involved in
    developing the right good or service for the
    firms customers, including customer service,
    package design, brand names, trademarks,
    warranties, product life cycles, positioning, and
    new-product development.

19
Pricing Strategy
  • Element of marketing decision making dealing with
    the methods of setting profitable and justifiable
    prices.

20
Distribution (Place) Strategy
  • Element of marketing decision making concerned
    with activities and marketing institutions that
    get the right good or service to the firms
    customers.

21
Promotion Strategy
  • Element of marketing decision making that
    involves appropriate blending of personal
    selling, advertising, and sales promotion to
    communicate with and seek to persuade potential
    customers.

22
The Marketing Environment
  • Competitive environment
  • Social-cultural environment
  • Technological environment
  • Economical environment
  • Political-legal environment

23
The Technology Revolution In Marketing
  • Computer networks
  • Videoconferencing
  • Online services and the Internet
  • Interactive Kiosks
  • CD-ROM Catalogs
  • PDA

24
Interactive Marketing
  • Buyer-seller communications in which the customer
    controls the amount and type of information
    received from a marketer through such channels as
    the Internet, CD-ROM disks, interactive 800
    telephone numbers, and virtual reality kiosks.

25
Internet
  • An all-purpose global network composed of some
    48,000 different networks around the globe that,
    within limits, lets anyone with access to a
    personal computer send and receive images and
    data anywhere.
  • World Wide Web An interlinked collection of
    graphically rich information source within the
    larger Internet.

26
Virtual Marketing Tools
  • Interactive Brochures
  • www.colgate.com
  • Virtual Storefronts
  • www.godiva.com
  • Information Clearinghouses
  • Customer Service Tools
  • www.fedex.com

27
Checklist for E-Marketing
  • What types of goods and services can be
    successfully marketed on the Web?
  • What characteristics make a successful Web
    presentation?
  • Dose the Web offer a secure way to process
    customer orders?
  • How will the Web affect traditional store-based
    and non-store retailing and distribution?
  • What is the best use of this technology in a
    specific firms marketing strategy?

28
  • Transaction-Based Marketing
  • Relationship Marketing
  • The development, growth, and maintenance of
    long-term, cost-effective exchange relationships
    with individual customers, suppliers, employees,
    and other partners for mutual benefit.
  • Partnerships and Strategic Alliances

29
Functions of Marketing
  • Exchange Function
  • Buying
  • Selling
  • Physical Distribution Function
  • Transporting
  • Storing

30
Functions of Marketing Cont.
  • Facilitating Function
  • Standardizing and Grading
  • Financing
  • Risk Taking
  • Securing marketing information

31
Marketing Ethics and Social Responsibilities
  • Cigarette Advertising
  • Price Cheating
  • Email Spam
  • Arthur Anderson
  • Firestone
  • Wen Zhou and Shan Tou
  • Grape Wine
  • A punch on BENZ China

32
Creating Value
  • Customer Satisfaction
  • The ability of a good or service to meet or
    exceed buyer needs and expectations
  • Quality
  • The degree of excellence or superiority of an
    organizations goods and services

33
Value
  • The customers perception of the balance between
    the quality of goods or services that a firm
    provides and their prices.
  • Value Equation VB/P
  • Providing Value-Added good or service
  • Short Message, Electric Heater
  • No-Reason Return
  • Nike

34
Customer Satisfaction
  • The cost of acquiring new customers is five times
    greater than the expense of keeping old ones.
  • 95 of dissatisfied customers each tell 11
    friends about the negative experience.
  • ACSI American Customer Satisfaction Index.
  • Harley-Davidson
  • Applebees

35
Internal Marketing
  • Management actions that help all members of an
    organization to understand and accept their
    respective roles in implementing its marketing
    strategy.
  • Intranet
  • Employee satisfaction
  • Suppliers

36
Measuring Customer Satisfaction
  • Understanding customer needs
  • Obtaining customer feedback
  • Toll-free service number, online discussion
    groups, mystery shoppers, marketing research
  • www.circuitcity.com
  • Customer Satisfaction Measurement Programs

37
Quality Movement
  • TQM
  • An effort to involve all employees in a firm to
    continually improve products and work processes
    with the goal of achieving customer satisfaction
    and world-class performance.
  • Quality Control
  • John Akers, Email Response
  • Zero Defection

38
Worldwide Quality Programs
  • The Malcolm Baldrige National Quality Award (USA)
    1978
  • Manufacturing, Services, Small Business
  • Customer expectation, CRM, Service Standard,
    quality pledge, customer complaints, satisfaction
    determination, satisfaction level, satisfaction
    comparison.
  • The ISO 9000 Standards (EU)
  • Audit, Condition

39
How Quality Improvements Benefit An Organization
External Quality Improvements
Increased Customer Satisfaction
Lower Cost
Internal Quality Improvements
Increased Market Share
Increased Productivity
Lower Price
Increased Earnings And Profits
40
TQM Management
  • Top management involvement
  • Employee involvement
  • Internal marketing, empowerment, training,
    teamwork
  • Teamwork
  • Quality Circle
  • Cross-functional team
  • Self-managed team

41
TQM Management Cont.
  • Marketing audit
  • A thorough, objective evaluation of an
    organizations marketing philosophy, goals,
    policies, tactics, practices, and results.

42
TQM Management Cont.
  • Benchmarking
  • Process in which an organization continuously
    compares and measures itself against business
    leaders anywhere in the world to learn how it
    could improve performance.
  • Critical success factors
  • Xerox, SWA,

Analyze Internal Processes
Implement Improvements
Identify Processes For Improvement
Feedback
43
TQM Management Cont.
  • Continuous Improvement
  • PDCA Cycle
  • Planning Analyze, Identify, Determine
  • Doing Implement
  • Checking Observe
  • Acting Finalize and protect
  • Reducing cycle time
  • Reducing variation
  • Eliminating waste

44
Delivering Customer Value
  • Product Strategy
  • Distribution Strategy
  • Promotional Strategy
  • Pricing Strategy

45
Environmental Management
  • An effort to attain organizational objectives by
    predicting and influencing the firms
    competitive, political-legal, economic,
    technological, and social-cultural environments.
  • Environmental Scanning
  • The process of collecting information about the
    external marketing environment in order to
    identify and interpret potential trends.

46
Competitive Environment
  • The interactive exchange in the marketplace
    influenced by actions of marketers of directly
    competitive products, marketers of products that
    can substitute for one another, and other
    marketers competing for the same consumers
    purchasing power.

47
Types of Competition
  • Direct Competition
  • Substituting Products
  • Fax, EMS, Email
  • Electric Fan, Air Conditioner
  • Electricity, Gas, or Coal?
  • VCD, DVD players vs. Theatres
  • All Organizations
  • Discretionary buying power

48
Developing A Competitive Strategy
  • Should we compete?
  • In what market?
  • How?
  • Time-Based Competition
  • A strategy of developing and distributing goods
    and services more quickly than competitors can
    achieve.
  • NICE, PG, Uni-Lever, LUX
  • Intel vs. Athlon CPU speed

49
Political-Legal Environment
  • A component of the marketing environment defined
    by laws and their interpretations that require
    firms to operate under certain competitive
    conditions and to protect consumer rights.

50
Government Regulation
  • Anti-Monopoly and Industry Deregulation
  • China Telecom, China Mobile
  • The Airline Industry
  • Consumer Protection
  • Product Liability
  • Consumer Rights Protection
  • Cyberspace

51
Other Regulatory Forces
  • Industry Organizations
  • China Green Food Development Center
  • Health Products Quality Authentication Center
  • National Advertising Association
  • Consumers Association
  • Self-Regulatory Groups
  • PETA (People For Ethical Treatment of Animals)

52
The Economic Environment
  • Forces that influence consumer buying power and
    marketing strategies, including the state of the
    business cycle, inflation, unemployment, resource
    availability, and income.

53
Inflation
  • Price Increase
  • Currency Devaluation
  • Buy now before the price goes up
  • Purchase pattern alteration
  • Purchase postpone

54
Deflation
  • Low price index
  • Over-supply
  • Ineffective demand
  • Is this the lowest price?
  • Buy more now than later
  • Purchase pattern alteration

55
Income
  • Household income growth
  • Discretionary Income
  • The amount of money that people have to spend
    after they have paid for necessities such as
    food, clothing, and housing
  • Income varies by age, region, household type, and
    profession.

56
The Technological Environment
  • The application to marketing of discoveries in
    science, inventions, and innovations.
  • Create new products
  • Servers, computers,
  • Make old products obsolete
  • VCR-?VCD player?DVD player
  • Create new marketing channels

57
Chinas Case
  • Labor-intensive or technology-intensive
  • Technology Productivity Profit
  • New Product Development
  • Multimedia Home Entertainment
  • Electric Car

58
The Social-Cultural Environment
  • The component of the marketing environment
    defined by the relationship of marketers to
    society and its culture.
  • Value Change
  • Health Care Products, Low-fat Diet,
  • Lifestyle Change
  • Tourism, Transportation, Entertainment

59
Consumerism
  • A social force within the environment designed to
    aid and protect buyers by exerting legal, moral,
    and economic pressures on businesses and
    government.
  • Consumer Rights by John. F. Kennedy in 1962
  • The right to choose freely
  • The right to be informed
  • The right to be heard
  • The right to be safe

60
Marketing Ethics
  • Marketers standards of conduct and moral values.
  • First, there is the law. It must be obeyed. But
    the law is the minimum. You must act ethically.
    IBM Employee Guidelines.

61
Ethical Dilemmas
  • Should e-marketers sell customers personal
    information?
  • Should tobacco advertising be banned completely?
  • Should firm play with packaging tricks?
  • Unnecessarily large packages, bottles with
    concave bottoms,
  • Should animals be used in product development.
    Gillettes case.
  • Should marketers maintain retail stores in
    low-income areas?

62
Ethical Dilemmas
  • Should marketers give gifts or provide
    entertainment in exchange for better deal?
  • Should advertising of alcoholic drinks be banned
    from TV?

63
Social Responsibility
  • To enhance social welfare
  • Child labor and prisoner labor
  • Wal-Mart, Kmart, JCPenney, Levi, Reebok
  • Green Marketing garbage disposal, acid rain,
    depletion of ozone layer, global warming,
    recycling

64
Marketing Planning and Forecasting
65
Marketing Planning
  • The process of anticipating future events and
    conditions and determining the courses of action
    necessary to achieve marketing objectives.
  • Strategic planning VS. Tactical planning

66
Strategic Planning
  • The process of determining an organizations
    primary objectives, allocating funds, and then
    initiating actions designed to achieve those
    objectives.
  • New product development, expansion into new
    areas, serving new markets, and applying
    technology

67
Sample Planning Process
  • Industry analysis
  • Market analysis
  • Competitive analysis
  • Internal analysis
  • Benefits and risks
  • To go or not to go?
  • Objective setting
  • Course of actions

68
Tactical Planning
  • The process of defining implementation activities
    that the firm must carry out to achieve its
    objectives.

69
Sample Planning Process
  • We will go. How?
  • Designing the marketing mix.
  • Product
  • Pricing
  • Distribution
  • Promotion
  • What if questions

70
Planning at Different MGMT Levels
MGMT Level Types of Planning Examples
Top MGMT BOD, CEO, COO Strategic Organizational objectives, long-term plans, budget
Mid MGMT SM, MRM, ADM Tactical Quarterly or semiannual plans, divisional policies
Svisory MGMT DSM, MD Operational Daily and weekly plans, unit budget, department rules
71
  • Planning is not limited to top management as
    CEOs, CFOs, or CMOs, or COOs.
  • Top managers focus on strategic planning while
    middle managers focus on creation and
    implementation of tactical plans.
  • Outsourcing of planning

72
The Marketing Planning Process
  • Defining the organizations mission
  • Determining organizational objectives
  • Assessing organizational resources and evaluating
    environmental risks and opportunities
  • Formulating a marketing strategy
  • Implementing a strategy through marketing plans

73
The Marketing Planning Process
Defining Mission
Determine Objectives
Assess resources,risks, opportunities
corporate
Formulate Strategy
Implement strategy through Operational plans
Monitoring and Adapting strategies Based on
feedback
Marketing Department
Feedback
74
Defining the Organizations Mission
  • A general, enduring statement of overall
    organizational purpose.
  • Overall goals, operational scope, general
    guidelines, values, strategies, initiatives
  • Simple and straightforward
  • www.microsoft.com,
  • www.att.com
  • www.800flowers.com

75
Determining Organizational Objectives
  • Objective specified
  • Time periods specified

76
Assessing Organizational Resources
  • Internal analysis
  • Organizational resources
  • Product capability
  • Financial resources
  • Marketing resources
  • Technology resources
  • Human resources
  • Strengths and weaknesses

77
Evaluating Environmental Risks and Opportunities
  • External analysis
  • Economic
  • Political-legal
  • Technological
  • Social-cultural
  • Competitive

78
SWOT Analysis
  • A method of studying organizational resources and
    capabilities to assess the firms strengths and
    weaknesses and scanning its external environment
    to identify opportunities and threats.

79
SWOT Analysis
  • Leverage
  • Match an internal strength with external
    opportunity
  • Problem
  • External threats attack internal weaknesses
  • Constraints
  • Opportunities missed due to internal weaknesses
  • Vulnerabilities
  • An environmental threat to its organizational
    strength

80
SWOT Analysis
81
Strategic Window
  • A limited period with an optimal fit between the
    key requirements of a market and the particular
    competencies of a firm.
  • Bill Gates
  • Acquisition of small companies with Internet
    technologies
  • Developing web-based technologies
  • Developing new products

82
Formulating a Marketing Strategy
  • A firms overall program for selecting and
    satisfying a target market.
  • The marketing Mix

83
Implementing a Strategy Through Marketing Plans
84
Tools for Marketing Planning
  • Marketing audit
  • Strategic Business Unit
  • Market share/market growth matrix
  • Market attractiveness/business strength matrix
  • Spreadsheet analysis

85
Strategic Business Units (SBUs)
  • A division within a multiproduct firm, built
    around related product groupings or business
    activities with its own managers, resources,
    objectives, competitors, and structure for
    optimal, independent planning.
  • CompaqEnterprise Computing Group, PC Products
    Group, and Consumer Products Group
  • Midea Air Conditioner, Micro-ovens
  • HONTUSANBAO PCs, Digital Products, Mobile Phones

86
Market Share/Market Growth Matrix
Relative Market Share
Low
High
Stars Generate considerable income Strategy Invest more funds for future growth Question Marks Have potential to become stars or cash cows Strategy Either invest more funds for growth or consider disinvesting
Cash Cows Generate strong cash flow Strategy Milk profits to finance growth of stars and question marks Dogs Generate little profits Strategy Consider withdrawing
Industry Growth Rate
High
Low
87
Market Attractiveness/Business Strength Matrix
  • Market attractiveness
  • Market share, growth, size and stability,
    potential profitability, extent of government
    regulation, potential environmental and social
    impacts, and competitive condition
  • Business strength
  • Financial resources, image, relative cost
    advantages, customer base, technological
    capabilities, human resources

88
Market Attractiveness/Business Strength Matrix
89
Sales Forecasting
  • An estimate of company sales for a specified
    future period.
  • New product decisions, production scheduling,
    financial planning, inventory planning and
    procurement, product distribution, and human
    resource planning

90
Sales Forecasting
  • Short-run, intermediate, and long-run sales
    forecasts.
  • Types of forecasting methods
  • Qualitative forecasting techniques
  • Quantitative forecasting techniques

91
Qualitative Forecasting Techniques
  • Jury of executive opinion
  • Delphi technique
  • Sales force composite
  • Survey of buyer intentions

92
Jury of Executive Opinion
  • A qualitative sales forecasting method that
    combines and averages the sales expectations of
    various executives.
  • Benefits comprehensive, quick, inexpensive
  • Limitations inaccurate

93
Delphi Technique
  • A qualitative sales forecasting method that
    gathers and redistributes several rounds of
    anonymous forecasts until the participants reach
    a consensus.
  • Benefits from experts, accurately predict
    long-run events,
  • Limitations time-consuming, expensive

94
Sales Force Composite
  • A qualitative sales forecasting method that
    develops sales estimates based on the combined
    estimates of the firms salespeople.
  • Benefits First-line knowledge, quick,
    inexpensive
  • Limitations Inaccurate due sales quotas

95
Survey of Buyer Intention
  • A qualitative sales forecasting method that
    samples opinions among groups of present and
    potential customers concerning their purchasing
    intentions.
  • Benefits Useful in predicting short-term and
    intermediate sales of small customer base
  • Limitations Purchase intention VS actual
    purchasetime-consuming expensive

96
Quantitative Techniques
  • Market test
  • Trend analysis
  • Exponential smoothing

97
Market Test
  • A quantitative forecasting method that introduces
    a new product price, promotional campaign, or
    other marketing variable in a relatively small
    test market location in order to assess consumer
    reactions.
  • Benefits Realistic information, actual purchase
    instead of purchase intention
  • Limitations Alerts competition time-consuming
    expensive

98
Trend Analysis
  • A quantitative sales forecasting method that
    estimates future sales through statistical
    analyses of historical sales patterns.
  • Benefits Quick, inexpensive, effective with
    stable customer demand and environment
  • Limitations Ignore environmental changes

99
Example of Trend Analysis
  • YABx
  • Y is the predicted sales or market share
  • A is the estimated sales, market share at the
    time period when x0
  • B is the average change in sales, market share
    for each specified time period
  • X is the time period over which forecasters
    project data
  • ASY/n, BSxY/Sx2

100
Exponential Smoothing
  • A quantitative forecasting technique that assigns
    weighs to historical sales data, giving the
    greatest weight to the most recent data.

101
Steps in Sales Forecasting
  • Environmental forecasting
  • Industrial sales forecasting
  • Company and products sales forecasting
  • Grass-roots forecasting or bottom-up forecasting
  • New product sales forecasting

102
Marketing Research and Decision Support System
103
Marketing Research
  • Collection and use of information for marketing
    decision making.
  • The function which links the consumer, customer,
    and public to the marketer through
    information-information used to identify and
    define marketing opportunities and problems
    generate, refine, and evaluate marketing actions
    monitor marketing performance and improve our
    understanding of marketing as a process.

104
Marketing Research
  • Charles Parlin and Campbell
  • In-House Marketing Research Departments
  • Independent Marketing Research Firms-Service
    providers
  • Cost, reliability, accuracy

105
Types of Research Suppliers
  • Syndicated services
  • An organization that regularly provides
    standardized set of data to all customers.
  • Full-Service Research Suppliers
  • An organization that contracts with clients to
    conduct complete marketing research projects.
  • Limited-Service Research Suppliers
  • A marketing research firm that specializes in a
    limited number of activities, such as conducting
    field interviews or performing data processing.

106
Marketing Research Activities
  • Scanning
  • Risk assessment
  • Monitoring

107
Scanning
  • Search for opportunities and challenges in the
    firms environment.
  • What kinds of people buy our products? Where do
    they live? How much do they earn? How many of
    them can we identify?
  • Are the markets for our products increasing or
    decreasing? Can research indicate promising
    markets that we have not reached?
  • What economic, social, political, and
    technological trends are likely to affect our
    markets? How?

108
Risk Assessment
  • Which of several product designs is most likely
    to generate the most success?
  • What price should we charge for our products? How
    will profits change under various pricing
    strategies?
  • Where and by whom should our products be sold?
  • How much should we spend on promotion? How should
    we allocate this amount among products and
    geographic areas? What type of media will most
    effectively distribute our message?
  • What costs and benefits can we expect with
    certain planned marketing strategies?

109
Monitoring
  • Discover how well past decisions are working out
    now?
  • What is our overall market share? What is our
    share in each geographic area? What is our share
    for each customer type?
  • Who are our competitors? Their strengths and
    weaknesses? How do ours compare with theirs?
  • Are customers satisfied with our products? How
    well have we served them?
  • How does the public perceive our company? What is
    our reputation with the trade?

110
Marketing Research Process
  • Defining the problem
  • Conducting exploratory research
  • Formulating a hypothesis
  • Creating a research design
  • Collecting data
  • Interpreting and presenting the research
    information

111
Problem Definition
  • Well-defined problems are half solved.
  • Symptom or problem?
  • Problem statement

112
Exploratory Research
  • Process of discussing a marketing problem with
    informed sources both within and outside the firm
    and examining information from secondary sources.
  • Using internal data-situation analysis
  • Sales records, financial statements, marketing
    cost analysis

113
Hypothesis Formulation
  • Tentative explanation for some specific event.
  • It is a statement about the relationship among
    variables that carries clear implications for
    testing this relationship.

114
Research Design
  • Series of decisions that, taken together,
    comprise a master plan for conducting marketing
    research.
  • Validity
  • Reliability
  • Respondents selection

115
Data Collection
  • Primary data
  • Data collected for the first time and
    specifically for a marketing research study.
  • Expensive, time-consuming
  • Up-to-date, right on target
  • Secondary Data
  • Previously published or compiled data.
  • Less expensive, time-saving
  • Obsolete, irrelevant
  • Primary or Secondary?
  • Cost, validity, and effectiveness

116
Interpreting and Presenting Research Information
  • Marketing research provides supporting
    information for decision makers.
  • No technical jargons
  • Management oriented instead of technical oriented
  • Clear, concise, and actionable

117
The Marketing Research Process
Perceived Information Needs
Defining the Problem
Exploratory Research
Hypothesis Formulation
Feedback on Research And Marketing
Decision Effectiveness
Research Design
Data Collection
Marketing Decision Based on Information Collected
Interpretation Presentation
118
Marketing Research Methods
  • Secondary Data Collection
  • Sampling Techniques
  • Primary Research Methods
  • Conducting International Marketing Research

119
Secondary Data Collection
  • Internal data
  • Sales records, product performance reviews, sales
    force activity reports, and marketing reports
  • External data
  • Government records, syndicated research service,
    industry publications, computer databases,

120
External Data
  • Government sources
  • Organizational sources
  • Private sources
  • Scanning technology, UPC code
  • Online resources

121
Sampling Techniques
  • The process of selecting survey respondents or
    other research participants.
  • Population
  • Total group that researchers want to study.
  • Census Collection of data on all possible
    members of a population or universe.
  • Census is expensive, time consuming

122
Sampling
  • Probability sample
  • Nonprobability sample

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Probability Samples
  • Sample that gives every member of the population
    a known chance of being selected.
  • Simple random sample
  • Stratified sample
  • Cluster sample

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Simple Random Sample
  • Basic type of probability sample in which every
    individual in the relevant universe has an equal
    opportunity of selection.

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Stratified Sample
  • Probability sample constructed to represent
    randomly selected subsamples of different groups
    within the total sample.

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Cluster Sample
  • Probability sample in which researchers select
    geographic areas or clusters, and all of them or
    chosen individuals within them become
    respondents.

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Nonprobability Samples
  • Arbitrary grouping that produces data unsuited
    for most standard statistical tests.
  • Convenience sample
  • Nonprobability sample selected from among readily
    available respondents.
  • Quota sample
  • Nonprobability sample divided to ensure
    representation of different segments or groups in
    the total sample.

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Primary Research Methods
  • Observation method
  • Survey method
  • The experimental method

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Observation Method
  • Counting
  • Watching
  • People meter
  • Videotaping
  • Virtual reality

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Survey Method
  • Interviews and Questionnaires
  • Telephone Interviews
  • Focus Groups
  • Mail Surveys
  • Fax Surveys
  • Online Surveys

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Telephone Interviews
  • Spoken instead of visual
  • Quick, inexpensive
  • Results could be biased
  • Random dialing
  • Answering machines and caller ID

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Personal Interviews
  • Face to face interaction
  • Detailed information
  • Sensitive question
  • Slow
  • Expensive
  • Mall intercepts

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Focus Groups
  • Information-gathering procedure in marketing
    research that typically brings together 8 to 12
    individuals to discuss a given subject.
  • Quick and inexpensive
  • Participants interaction
  • Moderator
  • Video taping, one-way mirror, videoconferencing

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Mail Surveys
  • Low-cost, Anonymity
  • Low response rate, slow
  • Not suitable complex questions
  • Who filled out the questionnaire?
  • Bias due to difference between respondents and
    nonrespondents

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Fax Surveys
  • Similar to mail surveys

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Online Surveys
  • Web Survey
  • Email Survey
  • Online focus group
  • Speedy, higher response rates, cost reduction,
    truthful answers
  • Probability sample?
  • Groups underrepresented on the Internet,
    ownership of computers
  • Authenticity of the respondent

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Experimental Method
  • Scientific investigation in which a researcher
    manipulates a test group(s) and compares the
    results with those of a control group that did
    not receive the experimental controls or
    manipulations.
  • Test marketing
  • Experiment group VS Control group

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How to deal with MRCs?
  • Foreign MRCs
  • State-run MRCs
  • Private MRCs

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Foreign MRCs
  • High quality research
  • Highly professional employees
  • High price
  • Customer base foreign clients

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State-Run MRCs
  • Spin off from statistical departments
  • Network and data source advantage
  • Low price
  • Low quality
  • Lack of project management skill
  • Lack of customization

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Private MRCs
  • Good quality with low price
  • Customer oriented, responsive
  • Good project management
  • Small scale
  • High employee turnover rate
  • Limited research methodologies

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How to select a good MRC?
  • Company brochure
  • Scale, number of employees, background of
    employees, equipments
  • Project process flow, pricing, client lists
  • Sample questionnaire, sample research report,
    field manual, coding, and sampling methods

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The Marketing Information System (MIS)
  • Planned, computer-based system designed to
    provide managers with a continuous flow of
    information relevant to their specific decisions
    and areas of responsibility.
  • The nerve center of business
  • Continuous, systematic, comprehensive

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Functions of MIS
  • Process Data
  • Store
  • Classify
  • Analyze
  • Retrieve
  • Produce Information
  • Focus on Marketplace
  • Support Marketing
  • Function
  • Input Data
  • Internal
  • External

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The Marketing Decision Support System (MDSS)
  • Marketing information system component that links
    a decision maker with relevant databases and
    analysis tools.
  • Computer software
  • Simulations or models
  • Business intelligence instead of raw data

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Components of and MDSS
Decision Maker
Interactive Instructions And Displays
Electronic Spreadsheets
Modeling software
Graphics
Database
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Data Mining
  • Process of searching though customer information
    files to detect patterns that guide marketing
    decision making.
  • Data Warehouse

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Marketing Segmentation, Targeting, and Positioning
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Market and Target Market
  • Market
  • People or institutions with sufficient purchasing
    power, authority, and willingness to buy.
  • Target Market
  • Specific segment of consumers most likely to
    purchase a particular product.

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Types of Markets
  • Consumer Product
  • Good or service purchased by an ultimate consumer
    for personal use.
  • Business Product
  • Good or service purchased for use either directly
    or indirectly in the production of other goods
    and services for resale.

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Market Segmentation
  • Division of the total market into smaller,
    relatively homogeneous groups.
  • Why?
  • Tooth Paste
  • Computers
  • Transportation
  • Antenna

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Criteria for Effective Segmentation
  • The market segment must present measurable
    purchasing power and size.
  • Marketers must find a way to effectively promote
    to and serve the market segment.
  • Marketers must identify segments sufficiently
    large to give them good profit potential.
  • The firm must target a number of segments that
    match its marketing capabilities.

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Segmenting Consumer Markets
  • Geographic Segmentation
  • Demographic Segmentation
  • Psychographic Segmentation
  • Product-related Segmentation

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Geographic Segmentation
  • Dividing an overall market into homogeneous
    groups on the basis of population locations.
  • Population distribution
  • Wealth distribution
  • Urbanization
  • Climate
  • Food preference
  • Terrain

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Demographic Segmentation
  • Dividing consumer groups according to
    characteristics such as sex, age, income,
    occupation, education, household size, and stage
    in the family life cycle.
  • Gender
  • Age Cohort effect
  • Education
  • Family Life Cycle
  • Income and Expenditure Patterns

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Engels Law
  • Relationship between consumer spending behavior
    and income.
  • As family income increases
  • A smaller percentage of expenditures go for food
  • The percentage spent on housing and household
    operations and clothing remains constant
  • The percentage spend on other items (such as
    recreation and education) increases.

158
Psychographic Segmentation
  • Dividing a population into homogeneous groups on
    the basis of psychological and lifestyle
    profiles.
  • Lifestyle
  • Peoples decisions about how to live their daily
    lives, including family, job, social, and
    consumer activities.
  • AIO statements Attitude, interest, opinion
  • VALS Values and Lifestyles
  • http//future.sri.com

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Product-Related Segmentation
  • Dividing a consumer population into homogeneous
    groups based on characteristics of their
    relationships to a product.
  • Product benefits
  • Usage rates The 80/20 principle
  • Brand loyalty

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Specific and Actionable
166
The Market Segmentation Process
  • Identify market segmentation process
  • Management driven-market driven
  • Develop a relevant profile for each segment
  • Forecast market potential
  • Forecast probable market share
  • David Mark Brewing Co.
  • Select specific market segments
  • Target Market Decision Analysis

167
Identify Market Segmentation Process
Develop a Relevant Profile for Each Segment
Forecast Market Potential
Analyze Competitive Forces Within Each Segment
Determining Marketing Mix To Serve Each Segment
Forecast Market Share For Each Segment
Estimate Cost-Benefit For Each Segment
Do Benefits Justify Costs?
Select Specific Market Segments
168
Targeting Strategies
  • Undifferentiated Marketing
  • Differentiated Marketing
  • Concentrated Marketing
  • Micromarketing

169
Undifferentiated Marketing
  • Marketing strategy to produce only one product
    and market it to all customers using a single
    marketing mix.

170
Differentiated Marketing
  • Marketing strategy to produce numerous products
    and promote them with different marketing mixes
    designed to satisfy smaller segments.

171
Concentrated Marketing
  • Marketing strategy that commits all of a firms
    marketing resources to serve a single market
    segment.
  • A single market VS a single product

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Micromarketing
  • Marketing strategy to target potential customers
    at basic levels such as by ZIP codes, specific
    occupation, lifestyle, or individual households.

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Selecting and Executing a Strategy
  • Criteria for selecting a strategy
  • Company resources
  • Product homogeneity
  • Stage in the product life cycle
  • Competitors strategies

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Positioning
  • Marketing strategy that emphasizes serving a
    specific market segment by achieving a certain
    position in buyers minds.
  • Distinguish products or services from those of
    competitors.
  • Attributes
  • Price/quality
  • Competitor
  • Product user
  • Product class
  • Repositioning

175
Consumer Behavior
176
  • Buyer Behavior
  • Process by which consumers and business buyers
    make purchase decisions.
  • Consumer Behavior
  • Buyer behavior of ultimate consumers.
  • The study of human responses to products,
    services, and the marketing of products and
    services.

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B f (I, P)
  • Bconsumer behavior
  • ffunction
  • Iinteractions of interpersonal influences
  • Ppersonal factors
  • Consumer behavior is a function of the
    interactions of interpersonal influences and
    personal factors.

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Interpersonal Determinants
  • Cultural influences
  • Group influences
  • Family influences

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Cultural Influences
  • Culture
  • Values, beliefs, preferences, and tastes handed
    down from one generation to the next.
  • Core values love, freedom, health care
  • Changing values
  • Mobile phones, environment-sensitive,
  • International perspective on cultural influences

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Subcultures
  • Subgroup of a culture with its own, distinct
    modes of behavior.
  • Race
  • Religion
  • Age
  • Location rural VS. urban

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Social Influences
  • Norm
  • Value, attitude, or behavior that a group deems
    appropriate for its members.
  • Uniform, car, ZT
  • Status
  • Relative prominence of any individual in a group.
  • Lambert
  • Role
  • Behavior that members of a group expect of an
    individual who holds a specific position with it.

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Social Influences
  • Reference group
  • Group with which an individual identifies
    strongly enough that it dictates a standard of
    behavior.
  • The Asch Phenomenon
  • Effect of a reference group on individual
    decision making.

183
Reference Group
  • The purchased product must be one that others can
    see and identify
  • The purchased product must be conspicuous it
    must stand out as something unusual, a brand or
    product that not everyone owns

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Reference Group
  • Types of reference groups
  • A membership group to which the person actually
    belongs
  • An aspirational group with which the person
    desires to associate
  • A dissociative group with which the individual
    does not want to be identified

185
Social Classes
  • Class rankings are determined by occupation,
    income, education, family background, and
    residence location.
  • The middle class, size and profitability
  • Looking at higher class

186
Opinion Leader
  • Trendsetter likely to purchase new products
    before others and then share the resulting
    experiences and opinions via word of mouth.
  • Knowledge and interest
  • The Internet
  • Jacqueline Kennedy Onassis

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Family Influences
  • Husband Wife
  • Automatic
  • Partners independently make equal numbers of
    decisions
  • Husband-dominant
  • The husband makes most of the decisions
  • Wife-dominant
  • The wife makes most of the decisions
  • Syncratic
  • Both partners jointly make most decsions

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Children and Teenagers
  • Advertising
  • Packaging
  • Food, beverage, toys, clothing, sports goods,
    games
  • Unpredictability, little brand loyalty

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Personal Determinants of Consumer Behavior
  • Needs and motives
  • Perceptions
  • Attitudes
  • Learning
  • Self-concept theory

190
Needs and Motives
  • Need
  • Lack of something useful an imbalance between a
    desired state and an actual state.
  • Motive
  • Inner state that directs a person toward the goal
    of satisfying a felt need.

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Maslows Hierarchy of Needs
  • Physical needs
  • Safety needs
  • Social/Belongingness needs
  • Esteem needs
  • Self-actualization needs

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Physical Needs
  • Needs at the most basic level concern essential
    requirements for survival.
  • Food, water, shelter, and clothing

193
Safety Needs
  • Security, protection from physical harm, and
    avoidance of the unexpected.
  • Insurance, security devices

194
Social/Belongingness Needs
  • The desire to be accepted by people and groups
    important to that individual.
  • Clothing, entertainment, cosmetics

195
Esteem Needs
  • The desire to feel a sense of accomplishment and
    achievement, to gain the respect of others, and
    even to exceed the performance of others.
  • Cars, jewelry, liquors, hobbies,

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Self-actualization Needs
  • The desire to realize the full potential and find
    fulfillment by fully expressing their talents and
    capabilities.
  • Education, cultural events, sports

197
Perceptions
  • Meaning that an individual creates by
    interpreting a stimulus.
  • Stimulus factors
  • Characteristics of the physical object such as
    size, color, weight, and shape
  • Individual factors
  • Unique characteristics of the individual,
    including not only sensory processes, but also
    experiences with similar inputs and basic
    motivations and expectations

198
Perceptual Screening
  • Consumers mental filtering processes through
    which all marketing messages must pass to gain
    attention.
  • How to break through consumers perceptual
    screen?
  • Humor, size, color, contrast, photos, red-tags,
    coupons, discount items, virtual reality, brand
    loyalty
  • Closure human tendency to perceive a complete
    picture from and incomplete stimulus.

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Subliminal Perception
  • Subconscious receipt of information.
  • Manipulative
  • It cannot induce purchasing except by people
    already inclined to buy.
  • Strong stimulus factors are required just to get
    a prospective customers attention
  • Only a very short message can be transmitted
  • Individuals vary greatly in their thresholds of
    consciousness.

200
Attitudes
  • A persons enduring favorable or unfavorable
    evaluation, emotional feeling, or action tendency
    toward a product. It consists of cognitive,
    affective, and behavioral components.

201
Attitude Components
  • Cognitive component
  • The individuals information and knowledge about
    an object or concept.
  • Affective component
  • Deals with feelings or emotional reactions.
  • Behavioral component
  • Involves tendencies to act in a certain manner.

202
Changing Consumer Attitudes
  • Attempt to produce consumer attitudes that will
    motivate purchase of particular product
  • Evaluate existing consumer attitudes and then
    make the product characteristics appeal to them
  • Modify the components of attitude

203
Learning
  • Learning
  • Immediate or expected change in behavior as a
    result of experience.
  • Drive
  • Strong stimulus that impels action.
  • Cue
  • Any object in the environment that determines the
    nature of a consumers response to a drive.

204
Learning
  • Response
  • Individuals reaction to a set of cues and
    drives.
  • Reinforcement
  • The reduction in drive that results from a proper
    response.
  • Shaping
  • The process of applying a series of rewards and
    reinforcements to permit more complex behavior to
    evolve over time

205
Sample Shaping Process
  • Initial trial of the product
  • Free sample package, substantial discount coupon
  • Entice the consumer to buy the product with
    little financial risk
  • Discount coupon, smaller discount coupon
  • Motivate the consumer to buy again at a moderate
    cost
  • Discount coupon, no coupon enclosed
  • Motivate the consumer to buy the item at its true
    price

206
Self-Concept Theory
  • Persons conception of himself or herself
    composed of the real self, self-image,
    looking-glass self, and ideal self.
  • Real self An objective view of the total person
  • Self-image The way an individual views himself
    or herself
  • Looking-glass self The way an individual thinks
    others see him or her
  • Ideal self The image to which the individual
    aspires.

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Involvement
  • The amount of effort and length of time devoted
    to a particular purchasing decision
  • High involvement
  • Purchases with high levels of potential social or
    economic consequences.
  • Low involvement
  • Routine purchase that pose little risk to the
    consumer.

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The Consumer Decision Process
  • Problem, opportunity recognition
  • Search
  • Alternative evaluation
  • Purchase decision
  • Purchase act
  • Postpurchase evaluation

209
Problem or Opportunity Recognition
  • Discrepancy between the existing state and
    desired state.
  • Replenish the depleted stock
  • Addition to the assortment
  • Dissatisfaction with the a present brand or
    product type
  • Changed financial status

210
Search
  • Identification of alternative means of problem
    solution.
  • High and low involvement purchases
  • Internal and external sources of information
  • Evoked set
  • Number of brands that a consumer considers buying
    before making a purchasing decision.

211
Alternative Evaluation
  • Evaluation criteria
  • Features considered in a consumers choice of
    alternatives.
  • Identify important criteria
  • Customer education
  • Induce a customer to expand his/her evoked set

212
Purchase Decision Purchase Act
  • Make the purchase decision
  • Purchase location
  • Price, assortment, store image, services, product
    category, distance, extra expenditure
  • Added value Delivery, financing

213
Postpurchase Evaluation
  • Satisfied or dissatisfied
  • Cognitive dissonance
  • Postpurchase anxiety that results from an
    imbalance among an individuals knowledge,
    beliefs, and attitudes
  • Dollar value, desirable features the rejected
    alternatives have, importance
  • Cognitive dissonance reduction

214
Consumer Problem-Solving Processes
  • Routinized response behavior
  • Limited problem solving
  • Extended problem solving
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