Marketing Exam 2

Steps for Market Researching

Collecting → Recording → Analyzing → Interpreting = Decision Making

Marketing Research Process

Defining the objectives and research needs → Designing the Research → Collecting the Data → Analyzing Data and Developing insight → Developing and Implementing a plan of action

Step 1- Defining the objectives and research needs

What information is needed to answer specific research questions? How should that information be obtained?

Step 2- Designing the Research

Determine the type of research needed to obtain data and identify the type of data needed

Step 3- Collecting Data

Secondary Data- Collected research prior to the start of the research project, using external and internal data sources for research

Primary Data- Collected to address specific research needs (ex, surveys) and usually chooses a group of people who represent the customers of interest and generalize their opinions to the market segment

Step 4- Analyzing the Data and Developing Insights

Converting data into information that is useful in making more effective marketing decisions

Step 5- Developing and Implementing an Action Plan

Executive Summary → Body of the Report → Conclusions → Limitations → Supplements including tables, figures, and appendices

Syndicated Secondary Data- Scanner Data

Data from scanner readings of UPC labels at checkout, provided and sold by leading research firms, information helps assess what is happening in the marketplace

Observation

• Personal or video camera scrutiny

• Tracking movements electronically

• Microsoft Kinetic and Heat maps

• Best method to determine how customers interact with and use product

In-Depth and Focus Group Interviews

In-Depth:

• Trained researchers ask questions one-on-one with a customer

• Expensive and Time Consuming

Focus Group:

• Small groups of 8-12 people with a trained moderator

• Now often take place online

Survey research

The most popular type of quantitative primary data collection method which features a document that features a set of questions designed to gather information from respondents that will lead to more effective marketing decisions

Big Data

Data sets that are too large and complex to analyze with conventional data

Data Mining

A variety of statistical tools used to analyze big data to uncover previously unknown patterns or relationships among variables stored in the data warehouse

Marketing analytics

Firms can access big data that contains billions of pieces of customer information through data collecting

Marketing decisions

marketing analytics can be used to make marketing decisions

The Ethics of using customer information

Strong Ethical Orientation → Adhere to ethical practices

Core Customer Value

Actual Product → Brand Name, Quality Level, Packaging, and Design

Associated Services → Financing, Product Warranty, and Product Support

Types of Products: Consumer

Specialty, Shopping, Convenience, and Unsought

Product Mix

The complete set of all products and services offered by a firm

Product Lines

Groups of associated items that consumers tend to think to use together or think of as part of a group of similar products or services

Breadth

Number of product lines in a product mix → mainly too costly to maintain

Depth

Number of categories within a product line → may cannibalize brands

Branding

Increases awareness and provides a way to differentiate from competitors

What makes a brand???

Brand Names, URLs, Logos + Symbols, Characters, Slogans, Jingles or Sounds

Increase Breadth

Firms add new product lines to capture new or evolving markets.

Decrease Depth

When a company merges, eliminates, or sells most of its brands and keep only the top performing 70-80 brands

Value of Branding for the Customer and the Firm

Facilitate purchases → Establish Loyalty → Protect from competition and price Competition → Assets → Affects market value

Components of Brand Equity: Brand Awareness

The more aware consumers are with a brand, the higher the chances of purchase

Brand equity: Perceived Value

The relationship between a product’s benefits and its cost (ex, Target and H&M)

Brand equity: Brand Loyalty

• An important source of value for firms

• Consumers are less sensitive to price

• Consumers are less sensitive to price

• Marketing costs are much lower

• Firms are insulated from the competition

Brand Ownership

• Manufacturer or National Brands (ex, Coca Cola)

• Retailer Store Brands Aka Private Brands (ex, Costco)

Family Brands

Corporate names used across brands and product lines (ex, Kraft cheese)

Individual Brands

Products have individual identities (ex, Kraft owning Velveeta and Jello)

Brand Extension

Same brand name in different product lines

Line extension

Same brand name within the same product line

Co-Branding

• Marketing two or more brands together

• Can enhance perceptions of quality through links between brands

Brand Licensing

The NBA team (licensor) provides the right to use its brand to apparel manufacturers (licensee) in return for royalty payments

Brand Repositioning

• Change a Brand’s focus

• Can improve the brand’s fit with the target segment

• Can boost vitality of old brands

• Not without costs and risks

Packaging

• Attracting the consumer’s attention

• Enables products to stand out from their competitors

• Allows for the same product to appeal to different markets with different sizes

• A recent development is sustainable packaging

• Many label requirements stem from various laws as a communication tool

Why do firms create new products?

• Changing Customer Needs

• Market Saturation

• Managing Risks through Diversity

• Fashion Cycles

• Improving Business Relationships

Diffusion of Innovation

• The process by which the use of an innovation spreads throughout a market group overtime and across categories of adopters

Pioneers (in marketing)

Breakthroughs that establish completely new markets or radically change the competition entirely

Factors affecting Product Diffusion

• Relative Advantage

• Compatibility

• Observability

• Complexity and Trialability

The Product Development Process

• Idea Generation

• Concept Testing

• Product Development

• Market Testing

• Product Launch

• Evaluation of Results

Idea Generation

Development of Viable new products ideas

Concept Testing

Testing the new product idea among a set of potential customers

Product Development

Development of prototypes and/or products

Market Testing

Testing the actual products in a few test markets

Product Launch

Full Scale commercialization of the product

Evaluation of Results

Analysis of the Product Reception by Customers

Sources of Ideas

• Internal Research and Development

• Research and Development Consortia

• Licensing

• Brainstorming

• Outsourcing

• Competitor’s Products

• Customer Input

5 Cs of Pricing (all equal to value)

• Company Objectives

• Customers

• Costs

• Competition

• Channel Members

Company Objectives- Price Strategy Implications

• Profit Oriented

• Sales Oriented

• Competitor Oriented

• Customer Oriented

Profit Orientation

• Target Profit Pricing

• Target Return Pricing

• Maximizing Profits

Sales Orientation

Focuses on increasing sales through premium pricing and end up as more concerned with the overall market share

Competitor Orientation

Competitive Parity (similar pricing to competitors) and Status Quo Pricing (only changes prices to meet competitors’ prices)

Reminder: Value is not a direct part of this pricing strategy

Customer Orientation

Pricing Strategy based on how the firm can add value to its products and services, matching prices to customer expectation

Dynamic Pricing

Individualized pricing catered to customers

Income Effect

As people’s income increases, their spending behavior changes, shifting demands from lower priced products to higher priced products, also increasing the quantity they purchase

Substitution Effect

Consumer’s ability to substitute other products for the focal brand

The 5 Cs of Costs

• Variable Cost (vary with production volume)

• Fixed Cost (unaffected by production volume)

• Total Cost (sum of variable and fixed costs)

• Competition

Market and Target Return Pricing

• A firm might want to achieve a standard percentage markup on the costs of the product

• A target return price is then calculated based on variable costs, fixed costs, and total costs

Competition

Less Price Competition + Fewer Firms → Monopoly

More Price Competition + Fewer Firms → Oligopolistic Competition

Less Price Competition + More Firms → Monopolistic Competition

More Price Competition + More Firms → Pure Competition

Demand Curve

• Demand increases as price increases

• Demand decreases as price increases

Not all demand curves are downward sloping curves…

Price Elasticity of Demand

• Elastic (Price Sensitive)

• Inelastic (Price Insensitive)

• Consumers are less sensitive to price increases for necessities

PEd = % Changes in Quantity/ % Change in Price

Point Elasticity Formula

PED= Q2 - Q1/ Q1/ P2-P1/ P1

Channel Members

Manufacturers, wholesalers, and retailers can have different perspectives on pricing strategies

Pricing Strategy

A long-term approach to setting prices broadly in an integrative effort (across all the firm’s products) based on the 5 Cs of Pricing

Everyday low pricing (EDLP) vs High-low pricing

Although both create value for consumers in different ways, EDLP reduces consumers’ search costs and high-low provides the thrill of the chase

Penetration Pricing

Set the initial price low for the introduction of the new product or service

Price Skimming

Set a Higher price to appeal to consumers

Legal and Ethical Aspects of Pricing

• Deceptive or Illegal Price Advertising

• Predatory Pricing

• Price Discrimination

• Price Fixing

Deceptive/ Illegal Pricing

Deceptive Reference Prices, Loss-Leader Pricing, and Bait and Switch

Price Discrimination

• Not always illegal

• Different rules in the B2B and B2C markets

• Federal law does not apply to sales to end consumers