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?

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• 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

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Functions of Marketing

• Exchange Function
• Buying
• Selling
• Physical Distribution Function
• Transporting
• Storing

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Functions of Marketing Cont.

• Facilitating Function
• Standardizing and Grading
• Financing
• Risk Taking
• Securing marketing information

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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

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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

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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

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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

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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

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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

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TQM Management Cont.

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

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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.

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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

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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.

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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

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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.

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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

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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

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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.

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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?

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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

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Marketing Planning and Forecasting
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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

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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

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Tactical Planning

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

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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
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• 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

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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
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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

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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

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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

123
Probability Samples

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

124
Simple Random Sample

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

125
Stratified Sample

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

126
Cluster Sample

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

127
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.

128
Primary Research Methods

• Observation method
• Survey method
• The experimental method

129
Observation Method

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

130
Survey Method

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

131
Telephone Interviews

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

132
Personal Interviews

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

133
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

134
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

135
Fax Surveys

• Similar to mail surveys

136
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

137
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.

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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
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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

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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
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Targeting Strategies

• Undifferentiated Marketing
• Differentiated Marketing
• Concentrated Marketing
• Micromarketing

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Undifferentiated Marketing

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

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Differentiated Marketing

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

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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

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Consumer Behavior
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• 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.

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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

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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

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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

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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

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Safety Needs

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

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Social/Belongingness Needs

• The desire to be accepted by people and groups
  important to that individual.
• Clothing, entertainment, cosmetics

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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

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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

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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.

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Attitudes

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

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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.

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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

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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.

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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

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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

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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

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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

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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.

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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

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Purchase Decision Purchase Act

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

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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

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Consumer Problem-Solving Processes

• Routinized response behavior
• Limited problem solving
• Extended problem solving