Marketing Module 2

the big picture

segmentation → targeting → (re)positioning

market segmentation

• how is a firm supposed to make sense of a huge market?

• process of dividing market into smaller groups (segments)

• groups designed to have similar wants and need

cluster analysis

firms plot their core competencies and target groups with most sale potential

targeting

• after segmentation, firms develop new products or reposition olf ones to target a specific group

• ex. Harley davidson targeting millennials

targeting approach- undifferentiated

• entire market is target market

• 1 marketing mic

• homogeneous market

• rarely used anymore

targeting approach- multiple products and multiple segments

• marketing diff products more expensive than producing just one

• justified if: serve customers needs better, doesn’t reduce quality or increase price, adds to sales

Darden restaurant group

• olive garden

• -longhorn

• ruth’s chris steakhouse

• eddie v

• bahama breeze

• capital grille

• yard house

• cheddars

• seasons

targeting approach: segments of one

• each customer has unique wants and needs

• mass customization

targeting approach: niche markets

• one product focused to meet needs of one very focused segment

segmentation bases

• demographics

• gender

• age

• ethnicity

• education

• religion

• geographic

• psychographics- personality, motives, lifestyle

• behavioristic- usage/ volume, benefits, loyalty, price sensitivity

use- related segmentation

• usage rate- heavy users, medium users

• awareness status- aware, unaware, etc

• brand loyalty- none, some, strong

VALS

• value and lifestyles survey

• helps classify customers based on psychological characteristics that are correlated w purchasing behavior, related to key demographics

sales forcast

amount of a product a company expects to sell during a specific period at a specified level of marketing activities

• scientific or arbitrary

• depends on cost, product, market characteristics, etc

time series analysis

using historical sales data to discover patterns in firm’s sales

• trend analysis- aggregate sales data from many years to determine general trends

• cycle analysis- analyzing sales for three to five years to assess consistent fluctuations

• seasonal analysis- daily, weekly, monthly sales for seasonal influence

regression analysis

predicting sales based on finding a relationship between past sales and one or more independent variables

• also requires the use of historical sales data

• useful when precise association between variables can be established and when historical data is extensive

• cannot use this method for new products

test market

making a product available to buyers in one or more test areas and measuring purchases and consumer responses

• info abt customers rather than purchase behavior

• estimating sales of new products

• time consuming + expensive

product positioning

• process of developing and maintaining a product image in the minds of consumers

• product position results from customers’ perceptions of a product’s attributes relative to those of competing products.

positioning bases

←benefit, price/quality, time of use, product user, product class, country of origin→

perceptual mapping

• done with multidimensional scaling (mds)

• position objects in a multidimensional space according to similarities and customer preferences

• ratings on both objective and percieved measures

(re)positioning

• ex: stagnant sales and an aging customer base led to Winnebago to seek younger more active customers

• fsu

• mcdonalds: family → cafe

marketing research

• process of designing, gathering, analyzing, and reporting info that may be used to understand customers and solve a marketing problem

net promoter score

• “how likely are you to recommend us to a friend?”

• (9-10)- (0-6)

• promoters-detractors

marketing research: new product design

• ex: ketchup packets

• starbucks non dairy options

marketing research: retail heat maps

• where customers are in space

• stores optimize displays

marketing research: waiting times

• increased wait times signal higher quality

• customers choose slow short lines rather than fast long lines

marketing research: new product development

• coca cola used the freestyle machine to gather market research data about which new flavors would sell well

• ex: cherry sprite

where did marketing research come from?

• 1980’s

• TQM movement (Deming and Juran)

• customer orientation

• research to find customer reaction to a product

• compare product to competitors

• find problems w a product

where is marketing research now?

• BIG data

• data sets too large r complex to be dealt with by traditional data- processing

• what customers are doing/not

text mining process

• retrieves relevant sets of data

• runs algorithms

• analytical modeks

• applies findings for application such as sentiment analyiss

• prepares data visualizations and dashboards to share results

why is MR important?

managers answers to important questions

• loyal customers

• unhappy customer tells 9-12 others, happy tells 1-5

• 14X more likely to sell to an existing customer

• cost to replace salesperson is 3x the departing employee’s salary

gives e-commerce managers answers to questions

• 82% of online consumers check multiple websites before purchasing

• amazon and ebay starting points

• 86% online consumers aren’t loyal to one brand

cluster analysis

statistical analysis technique that identifies customer segments

conjoint anlysis

statistical analysis technique that gives sensitivity info

applied research

research designed to solve a specific problem

basic research

research designed to extend knowledge of a marketing phenomena

marketing research process

1. problem definition

2. research design

3. sampling

4. data gathering

5. data analysis

6. report preparation

the problem definition

symptoms vs problems

• sales are down

• decreased foot traffic

the research design

secondary data

information collected for a purpose other than research at hand

• ACSI - american customer satisfaction index

primary data

info gathered specifically for the research objectives at hand

exploratory

describes less structures data collection methods

• focus groups

focus groups

flexible, group discussion of a product, ad, concept

• twitter went form podcasts to now from focus groups

descriptive research

describes characteristics of a population

survey research

• online

• mail

• telephone

• personal interview surveys

Qualitrics

• provider of subscription software for collecting and analyzing data for market research

causal research

• cause and effect

• experiments

• correlation vs causation

A/B testing

• experimental method used in industry where A and B are presented

• whats more appealing

• disney uses

buyer behavior

• marketing and psychology interact

• consumer motivations and why or why not aspect of purchase related decisions

• assumption of rational choice

• now, we understand irrationality is the real invisible hand that describes human decision making

price anchoring

• powerful mental shortcuts that restrict how much companies can charge for similar products

• how much would you pay for this product?

• ex: la croix

• make price sufficiently diff so it breaks anchored price (redbull vs cola)

situational influence

• halloween time- halloween things sell more

• recess sell more

• orange and black clothing

rational?

• consumers more likely to do a task for a free $3 cup of coffee than $3 bc of the word FREE

endowment effect

• people value objects they own more than the same object if they don’t own it

• explains how people over-value houses

framing

• dave thomas introduced triple burger so the double burger wouldn’t seem as big in comparison

• psychological framing

involvement and problem solving

• speak to consumers’ motivation to seek info anf expend effort on purchase

• high involvement products- careful consideration, visible to others, risky, expensive

• low involvement- less expensive, less risk

involvement

problem solving

buyer behavior: routinized/ habitual decision making

• little to no conscious effort

• how do brands help consumers?

• want cookies? oreos.

• brands help us not think

buyer behavior: limited problem solving

• requires moderate amount of time for info gatherinf

• familiar with product class, not brand

• restaurants, clothes

buyer behavior: extended problem solving

• consumer gains as much info as possible from both internal and external sources (memory + advertising)

• ex: colleges

consumer decisions

maslow’s hierarchy

information seaech

• internal vs external

• internal search: memory

• external: rate my professor

evaluatoon of alternatives

• consideration/ evoked set

• products alr in memory (retrieval set)

• and those prominent in retail environment

• ex: candy bars

product selection

• most consumers are “cognitive misers”

• mental shortcuts

• higher price + higher quality - not true

• country of origin- german cars

post-purchase

• (dis) satisfaction- emotional reaction to purchase decision

• cognitive dissonance- buyers doubts shortly after a purchase abt whether the decision was right one

generations

• generations share similar values and beliefs

• millennials buy more hot sauce, gas station food, snakes, etc

zero consumer

Mckinsey identified as a recent trend, consumers shopping across channels, little loyal, fast shipping sustainable products

• zero boundaries- diff sources of info (influencers)

• zero in the middle- no middle of market, scrimping or splurging

• zero loyalty- switching brands

• zero patience- less willing to wait

• net zero- sustainability

alibaba

• chinese equivalent of amazon

global markets

• largest companies in U.S.

• how foreign markets will react to a domestic product

global trend: inflation

• global phenomenon

• bigger than U.S. issue

culture and meaning

dialect and meaning

• coca cola meant “bite the wax tad pole” and “female horse stuffed w wax” in other languages

• coke researched 40,000 chinese characters to decide one

cultural fails

• nike and ireland

• black and tan

cultural differences

• when to eat dinner

• taking naps

• how much they work

colgate culture example

-in rural india they use ash and weed

-colgate matched that

global trade: balance of trade

• aka trade deficit

• a country’s difference between exports and imports

• U.S. has 90 billion trade deficit

• export more than import

countries with largest trade deficit

• china

• mexico

• japan

• germany

• vietnam

understanding global markets

• sociocultural forces

• economic forces

• political, legal

• ethical and social responsibility

• competitive

• technological

adaption/ standardization

modifying elements of the marketing program to accomodate specific customer requirements in individual foreign market

• auto making for uk markets

• similar to segmentation

• U.S. consumers 2x as likely to spread negative words abt bad service

• U.S. consumers 2x as likely to seek revenge online

• UK consumers just as likely to spread positivity

adaptation at mcdonalds

• change menu due to taste of foriegn markets

What is a luxury brand in China but not here?

Pizza Hut

What is a Christmas tradition in Japan?

KFC

standardization

efforts to make marketing program elements uniform in an effort to target entire countries, or even global market-lace, with a similar product/service

• not usually advisable

standardization vs. adaptation

• standardization pursued when global market segments exist, products have universal specifications

• adaptation pursued when market has unique characteristics based on language, culture, regulations, income level, etc

gray “marketing”

• legal importation of genuine products into a country by other than authorized intermediaries

• by product low price in one country, sell it to another for higher price

• ex: textbooks

Jack Ma

co founder of alibaba

amazon mechanical turk

crowdsourcing marketplace that connects you with an on-demand, scalable, human workforce to complete tasks.