CE Exam #2 - Marketing

microenvironment

-outside by close

-suppliers, competitors, customers, stakeholders, general public

macroenvironment

-outside and largely uncontrollable but needs to be understood

-political, social, economic, legal, environmental, technological

marketing research

process of planning, collecting, analyzing, and using information for marketing decision-making

To inform decisions and reduce uncertainty

• increases value to consumers

• increases value to shareholders

What is the sole purpose for conducting marketing research?

benefits of marketing research

-assess market potential/select target market

-explore what product/service offerings customers want

-develop new products

-develop effective promotional strategies

-determine price points

-evaluate where consumers shop for/purchase products in category

-understood personal/external factors that influence consumer decision making

-measure existing customer satisfaction

-monitor the external environment

research objectives

-gather data - gather and present info relevant to the problem

-explain the data - explain what the data means

-provide insights and predictions - articulate what the data predicts, and how it relates to the marketing problem

primary data

data that you collect yourself

Pros of Primary Data

-can specify questions to your specific research objective

-data is current

-can explore basis of consumer decisions

Cons of Primary Data

-expensive

-time consuming

-risk of bias

• questions

• interviewer

Research Process

1. Define problem and research objectives

2. Develop research plan

3. Collect information

4. Analyze information

5. Present findings

6. Make decision

Defining the problem and research objectives (Research Process)

-requires narrowing down from macro “marketing problem” to a specific problem that can be solved with research

• what segment(s) of consumers are most likely to want to buy my product?

• what marketing communications will be resonate with the target markets?

• what product features are desirable?

-identify relevant population(s) of interest

-place the problem in an environmnental context

• what internal/external factors are influencing the situation

-KEY: Develop very specific research questions to be answered by the research

Develop the research plan (Research Process)

-exploratory research

• literature reviews, focus groups, observations, interviews

-survey research

• descriptive

• measures/questions

  • awareness, understanding, engagement, usage, attitude, intentions, etc.

-experimental research

• cause and effect

observation

-three types

• people watching people - ex: someone watching you shop

• people watching an activity - ex: Clorox ppl watching consumers clean

• machines watching people - ex: eye tracking

-direct contact with subject is avoided to reduce awareness of observation process

-observation in “natural environment” is key to ethnography (researcher understanding world from participant’s perspective)

-conditions, subject actions, demographics are noted

To reduce awareness of observation process, otherwise bias would be introduced

Why is direct contact with subject avoided in observation?

interview

-conversations between equals rather than Q&A

-flexible, dynamic

-try to establish a bond with the interviewees

-ask nondirective questions early

-learn what is important to informants before focusing on the specifics

-observe non-verbal behavior

focus group

-group (5-9 ppl) gathered together, led by a trained moderator, to discuss your product, ad, etc.

-can be done over the phone or online

-goal is that having conversation with others brings out actual feelings and thoughts

• but also might introduce biases

Pros: frees you from location constraint; gives people more freedom to disagree with the group

Cons: may lose some important data (body language, non-verbal reactions)

What are the pros and cons of conducting a focus group over the phone or online?

surveys

-each person responds to a pre-set list of questions

• one-on-one, by mail, by phone, by computer

-might ask:

• quantitative questions

• qualitative questions

survey structure

-objective

• hypothesis testing - main problem trying to be answered

-introduction

• what the survey is about

-general questions - start broad and then funnel to be more specific

• ex: how often do you go to restaurants

-key questions

• how often do you go out for lunch vs dinner?

• how likely are you to visit this restaurant for lunch?

-open-ended questions

• why?

-segment-related questions IN THE END

• gender, age, ethnicity, education, occupation

survey risks

-fatigue

• many people do not prefer long surveys

• should be short and concise enough that people are willing to do it

• should take ~5 minutes

-bias

• loaded question

• leading question

• unclear question

• improper question

loaded question

-question that forces people to answer in a certain way by making assumptions

-ex: Where do you like to party? -assumes someone likes to party

leading question

-leads the respondent to giving the answer the surveyor want

-ex: how dumb is (this politician) when it comes to foreign policy? - immediate negative connotation to the question

double-barreled question

-forcing your respondent to answer two questions at once

-ex: how happy or unhappy are you with the state of the economy? - two questions in one

absolute question

-question that usually only has the option of yes or no

-commonly includes words such as all, always, ever, every

-ex: do you always shower before bed? - most people would say no, but it backs people into a corner

Make the answers to the question on a varied scale (5-7 choices)

How can you reduce the bias of an absolute question?

unclear question

-questions that are vague or ambiguous, making it difficult to understand or answer

-ex: “how do you feel about the FTC? - unclear because vague and acronym

multiple choice question

-with multiple options, ensure only one answer is correct

-ex: how often do you shower? a) 5-6 days b) 4-5 days

True; people may drop out of a survey if they feel uncomfortable

T/F: It is good practice to include a “Prefer Not to Answer” option

True; could otherwise create bias; can also add “other” as an option

T/F: It is good practice to include a '“Include All Possible Answers” optione

experiments

-can help isolate the cause of a change in behavior

-require two main things:

• researcher controls or manipulates a variable

• researcher randomly assigns participants to different levels or versions of the manipulated variable

-avoids pitfalls of correlational research

• correlation =/ causation - just because two variables move in the same direction does not mean one caused the other to change

-two groups: control vs treatment

-look at effect of independent (treatment) variable on dependent variable

-randomization

-experimental controls

experimental control

-reference group that remains unchanged or unexposed to treatment so that scientists can compare it to the test subjects that are treated

-ex: giving treatment pill to one group, then dummy pill to another

sample (collecting the information)

-large and representative (if possible)

-type:

• probability - every member in population has an equal chance of being selected

  • introduces bias if you don’t use a probability model

  • time-consuming and expensive

• non-probability - non-equal chance of being selected

  • ex: convenience sample - staying in one place and sampling people walking by

  • faster and less expensive

Analyzing the Information

-crosstabs, descriptive statistics (means, st dev, etc.), correlations, regressions, ANOVA, ec.

True

T/F: Analysis is based on objectives as well as the type of data collected (qualitative vs quantitative)

Presenting the Findings

-start with a concise statement of the research questions you set out to answer

-explain the research design

-summarize findings in words

-explain how research is actionable

• ie: how will it be used directly to make marketing recommendations/decisions?

Make the Decision

decisions/recommendations should be based on research/data

inform decisions

The purpose of marketing research is to ______ _________.

actionable

It is extremely important to make sure that the research is __________.

product

-anything that can be offered to a market to satisfy a want or a need

-includes: physical goods, services, experiences, events, persons, etc.

-can “stand alone” or be offered in conjunction with a service

To deliver value to customers

What is the purpose of a product?

service

-often requires strategic approach

• intangible

• inseparable from service provider

• perishable

• variable…and difficult to standardize

1. Core Benefit

2. Actual Product

3. Augmented Product

What are the three product levels?

core product

-NOT the tangible physical product

-it is the BENEFIT the product provides that makes it valuable to you

actual product

-tangible, physical product

-ex: brand name, features, quality level, packaging, design

augmented product

-non-physical part of the product

-consists of lots of added value, for which you may or may not pay a premium

-ex: warranty, installation, after-sale service

product classifications

-basis of comparison

• product

• price

• place

• promotion

• brand loyalty of consumers

• purchase behavior of consumers

-type of consumer product - classification of a product based on its characteristics, intended use, and how consumers typically purchase it

• convenience

• shopping

• specialty

• unsought

convenience (product type)

-products purchased frequently with minimal effort of comparison

-ex: toothpaste

shopping (product type)

-products consumers compare based on price, quality, and features before purchasing

-ex: clothing, furnature

specialty (product type)

-products with unique characteristics or strong brand recognition that consumers make a special effort to purchase

-ex: luxury watches, luxury cars

unsought (product type)

-products consumers usually do not normally think about purchasing until a specific need arises

-ex: life insurance, thesaurus

-level of effort in shopping process

-level of involvement with product

-price

-availability of substitutes

-relative newness of the product to the market

What differentiates product type?

product mix/portfolio

collection of all products and services offered by a company

product item

-specific version of a product

-can be designated as a distinct offering among an organization’s products

product line

group of closely-related items

product mix

all products that an organization sells

True

T/F: Major brands may have many products that are within a product line that makes up their entire product mix

width

-increase/decrease in number of product lines within product mix

-number of product lines offered

-diversifies risk

-capitalizes on established reputation

-targets more consumers

-ex: adding baby care to P&G product mix

depth

-increase/decrease in the number of products within a product line

-attracts buyers with different preferences

-further market segmentation increases sales/profits

-capitalizes on economies of scale

-evens out seasonal sales patterns

-ex: more Coke flavors

product strategy decisions

-evaluate sales and profits associated with products

-evaluate products positioning relative to competition

-decide whether to build, maintain, harvest, or divest

• line extensions

• new product lines - development vs acquisition

product life cycle (PLC)

-product strategies depend on the type of product, the target market, points of differentiation, etc.

True

T/F: It is important to adjust marketing strategy based on where the product is in its life cycle

Introduction (PLC)

-create product or category awareness and encourage trial

• product awareness - ex: teaching consumers about new flavor of ice cream

• category awareness - ex: teaching consumers what ice cream is

-low sales, low (or negative) profit, basic features, skimming or penetration pricing, selective distribution, heavy promotion

skimming pricing

-set a high initial price and gradually lower it

-maximize early profits

-targets consumers who are willing to pay a price premium

-product is innovative or has limited competition

-ex: first DVD player

penetration pricing

-set a low initial price to attract customers

-quickly gain market share

-targets price-sensitive customers

-highly competitive market

-ex: new streaming service offered at low intro price

category level concerns

-ensuring consumes are taught how to use new products correctly and safety

-ex: TidePodsgrow

growth (PLC)

-maximize market share by building brand preference

-growing sales, rising profits, additional features, lower price, increased distribution, mass communication

maturity (PLC)

-maximize profit while defending market share

-sales peak, falling profit, diversify products, lower price, maximize distribution, mass communication

decline (PLC)

-reduce expenditure and milk the brand

-declining sales, declining profit, reduce product line, low price, decreased distribution, reduce to minimum level

increase; decrease

Typical PLC involves ________ in sales and profit during the intro, growth, and maturity phase, and then a _______ during the decline phase

True

T/F: Just because a product is in the decline phase, does not mean decline is inevitable

Product Expansion

-promote products to new customers/markets

-finding new uses/applications

-repositioning

-adding new features/benefits

-offering new packages/sizes

-introducing low cost options or reducing price

How can the PLC be expanded?

brand

-name, term, sign, symbol, design, or a combination of these

-intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors

product; brand

A _______ is produced in a factory, can be duplicated, can become obselete. A _____ is created through communication and consumer experience, is unique, can be timeless, and like a person

False

T/F: A strong brand is a weakness

Branding

-when is branding important?

• which products do you buy where the brand is very important?
  which products do you buy where the brand is not important at all?

brand equity

-value consumers attach to the promise of a brand

-ex: how many cars would Mercedes sell with versus without the brand name

Steps to Building Strong Brands

1. Brand positioning

2. Brand name selection

3. Brand sponsorship

4. Brand development

brand positioning

-location that a brand occupies in consumers’ mind relative to competitors

functions of brand positioning

-in order of increasing emotional connection with consumers/increasing difficulty for competitors to copy

1. Values - emotional connection

2. Benefits - security, quality, convenience, etc. (communicated to consumer as solution to needs/problems)

3. Attributes - functions, tastes, ingredients

• most basic level

• easily replicated by competitors

brand name selection

-suggests benefits and qualities

-easy to pronounce, recognize, remember

-distinctive

-extendable

-translatable

-capable of registration for legal protection

brand sponsorship

who owns and is responsible for marketing a brand

manufacturers’ brand

-brand name is owned by the company that makes the product

-ex: Heinz ketchup

private brand

-brand name is owned by a wholesaler or retailer who contracts to make the product

-Giant brand ketchup

licensing brand

-company pays for permission to use another organization’s brand name, character, or trademark

-ex: LEGO

co-branding

-two established brands collaborate on a single product

-ex: Doritos Locos Tacos (Doritos x Taco Bell)

brand development

strategies companies use to build, maintain, harvest, or divest their brand

-4 types: line extension, brand extension, multi-brand, new brand

line extension

-add to an existing line using the existing brand name

-ex: Coca-Cola —> Diet Coke, Coke Zero Sugar, Cherry Coke

brand extension

-taking an existing brand name into a new category

-ex: Dove —> Dove Soap, Dove Shampoo, Dove Deodorant

multi-brand

-companies that have several brands in the same category

-new brand name —> existing category

-ex: P&G —> Tide, Gain, Ariel

individual branding

-using different brand names for different products or product lines

-ex: P&G —> Tide, Gain, Ariel

family branding

-market several different products under the same brand name

-ex: Virgin —> Galactic, Airways

new brand name

-company launches a new brand for a new product category/market

-sometimes an existing name is too weak, or simply doesn’t extend well to a new category

ex: Toyota —> Lexus (luxury car)

Telling your audience the same things again and again

What is branding about?

creative brief

-provides a roadmap for the messaging strategy for campaign

-Goal: connect strategy to your marketing communications

-decisions here should follow from research insights

• data —> insights —> decision

Elements of the Creative Brief

-challenge

-campaign objectives

-target audience

-actionable insights

-big idea

-unique selling proposition

-reasons to believe

-positioning statement

-tone of the campaign

-central communications theme

-major media targeted

-launch date + length campaign

campaign objectives

-what do you want to achieve with this campaign?

-concise statement of the effect the campaign should have on consumers, expressed as an action

• can be focused on what the ad should make the audience think, feel, or do

  • brand awareness

  • build image

  • particular call to action

  • stimulate sales

-ex: we want ppl to download the free app and use it within 10 days to buy the speacial offer

writing objectives

-should always be clear and specific

-ex: “the purpose of this campaign is to position SmallBrand as a less expensive, equally effective alternative to BigBrand

Defining Target Audience

-one or more segments of your overall population

-go beyond age and sext to describe demographics and psychographics

• create a persona to represent the target audience

-explain how the audience currently thinks, feels, and behaves in relation to:

• the category

• the brand

target audience

-group of customers

-who the market segment is

-broad/segment-level

-demographics, psychographics, behaviors, needs

-define who the marketing is for

-should be grounded heavily in market/consumer data

persona

-representative individual within that group

-what a typical person in that segment is like

-specific/individual-level

-name photo, lifestyle, behaviors, goals, pain points, quote

-help markers visualize and empathize with the target

-can synthesize research into a realistic, memorable character