Marketing 311 Study Guide Midterm 1

1. Managing customers as assets? – * Building the right relationships with the right customers involves treating customers as assets that need to be managed and maximized * Different types of customers require different relationship management strategies * Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction * 2. Marketing Mix (4 P’s) * Product, price, place and promotion—the controllable set of activities that a firm uses to respond to the wants of its target markets * Product- goods, services and ideas Price-everything the buyer gives up (time, energy, money) in exchange for the product * Place- all the activities necessary to get the product to the right customer when that customer wants it. * Supply chain management- the set of approaches and techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehou ses, stores, and other firms involved in the transaction, such as transportation companies into a seamless value chain. This allows merchandise to be produced and distributed in the right quantities, to the right place, and at the right time. * Promotion- Communicating the value of a product to its customers. * 3. Consumer decision making process- * Need Recognition- consumers recognize that they have an unsatisfied need and want to go from their needy state to a desired state. The bigger this gap is=the greater the need recognition. * Functional needs- pertains to the performance of a product or service. Psychological needs- pertain to the personal gratification consumers associate with a product or service. **shoes are needed to keep feet clean. $500 shoes satisfy a psychological need. * THE KEY TO SUCCESSFUL MARKETING: establishing a balance between these two needs that best appeals to that firm’s target market * Search For Information- second step is to search for info about various options that will satisfy the need. The length of time spent on this will relate to how much risk is involved should you hoose the wrong option. * Internal search for information- the buyer examines his own memory and knowledge about the option. * External search for information- buyer seeks information from outside himself to make a decision. Talking with friends, family, sales people, research online†¦ * Factors the affect consumer’s’ search process * Perceived Benefits vs. Perceived Costs – is it worth the time and effort? If there is high risk (buying a house) people will spend more time researching. The Locus of Control – people with internal locus control believe they have control over the outcomes of their actions. These people do more researching. People with external locus of control believe that fate and external factors control outcomes. It doesn’t matter to them how long they spend searching. * Actual or Perceived Risk- Performance, Financial and psychological risks influence how long and how much research will be done. * Performance Risk - risk of getting a bad (poorly performing) product. Financial Risk- risk with money outlay. Warranties reduce that risk * Psychological risks- how people feel if a product does not convey the right image * Type of Product or Service- specialty, shopping, and convenience products * Specialty goods and services- people have a strong preference and will expend time looking for the best supplier (prius vs other hybrid†¦) * Shopping goods and services- going from store to store looking for a product (perfume, shoes†¦. * Convenience goods and services- things that do not require research and are often purchases without very much thought (bread, soap†¦) * Evaluation of Alternatives- sifting through the available choices they have gathered info on and evaluating the option available to them. Universal sets- all possible choices available to them for that product * Retrieval sets- brands or stores that can be easily remembered and always come to mind * Evoked set- alternative brands and stores that a customer states they would consider when making a choice(companies want to be here to increase likelihood of purchase and reduce searching in other areas). This is the group that the choice has been narrowed down to by specific criteria. * Evaluative criteria- a set of important attributes about a particular product. ( looking for a tv†¦picture quality, rightness, reputation, technical support†¦) * Determinant attributes- product or service features that are important to the buyer and where competing brands may differ. * Consumer decision rules- the set of rules and criteria that consumers use consciously or subconsciously to quickly and efficiently select from alternatives. * Compensatory- assumes that the consumer trades off one characteristic for another. * Non compensatory- when consumers choose a product or service on the basis of a characteristic regardless of the value of its other characteristics. Decision heuristics- mental shortcuts that help a consumer narrow down choices. Price, brand, product presentation * Purchase and Consumption- buying a product and â€Å"putting it to the test† * Ritual consumption- pattern of behaviors tied to life events that affect what and how we consume. Symbolic meaning and vary my importance and culture. * Post Purchase- marketers are interested in this because it involves actual customers rather than potential customers. Satisfied customers become repeat customers. Customer satisfaction- build realistic expectations, demonstrate correct product use, stand behind the product with money back and warranty guarantees and encourage customer feedback * Post purchase dissonance- the uncomfortable feeling produced by inconsistency between beliefs and behaviors, buyer’s remorse * Customer loyalty- marketers attempt to solidify a loyal relationship with their customers * Undesirable consumer behavior- negative word of mouth * 4. Maslow's hierarchy? Maslow’s Hierarchy of N eeds * Physiological- basic biological necessities of life – food, shelter drink and rest. In most developed countries these needs are generally met, but in less fortunate countries they’re not. * Safety needs- protection and physical well being (airbags, alarms, vitamins†¦) * Love needs- relate to our interactions with others * Esteem needs- satisfy their inner desires, (yoga, meditation†¦) * Self actualization – occurs when you feel completely satisfied with your life and how you live. You don’t care what others think. * 5. BCG matrix? – Boston Consulting Group Matrix * Provides a framework for allocating resources among different units. Things are explained as being in one of four areas of a grid: * Cash cow- a unit that has a large market share in a mature, slow growing industry. Cash cows don’t require much more investment * Star- a business unit that has a large market share in a industry that is rapidly growing. They produce a lot of cash and require a lot of investment to keep up their competitive advantage * Question mark (Problem Child)- unit that has a small market share in a quickly growing market. They require a lot of resources and their potential is relatively unknown * Dog- a unit that has a small share of the market in a mature stable industry. Does not require investment. But could this money be used in a better unit? 6. Marketing strategy options- Marketing strategy- identifies a firms target market(s), a related marketing mix—their four P’s, the basis upon which the firm plans to build a sustainable competitive advantage * Sustainable competitive advantage- an advantage over the competition that is not easily copied and thus can be maintained over a long period of time. * Customer excellence- achieved when a firm develops a value based strategy for retaining loyal customers and provides outstanding customer service * ? Having a strong brand, unique merchandise and great customer service solidify this. Operational excellence- through efficient operations, excellent supply chain management, strong relationships with their suppliers and excellent human resource management to yield productive employees. * Product excellence- involves a focus on achieving high quality products; effective branding and positioning is key. * THE MARKETING PLAN * Define the business mission * Conduct a situation Analysis(Strengths, Weaknesses, Opportunities and Threats Analysis) * Identifying and Evaluating Opportunities using segmentation, targeting and positioning * Implement Marketing Mix and Allocate Resources Evaluate Performance Using Marketing Metrics * GROWTH STRATEGIES * Market Penetration- employs the existing marketing mix and focuses the firm’s efforts on existing customers. * May include: attracting new customers to the firm’s existing market, encouraging current customers to patronize the firm more often, * Requires efforts such as increase d advertising and additional sale and promotions, intensified distribution efforts in geographic areas where the product or service is already sold. Market Development Strategy- employs the existing marketing offering to reach new market segments whether domestic or international * International expansion is riskier because firms must deal with differences in culture, government regulations, supply chains and language. * Product Development Strategy- offers a new product of service to a firm’s current market. * Diversification strategy- introduces a new product or service to a market segment that currently is not served * Diversification opportunities may be either related or unrelated. When related the current target market and or marketing mix shares something in common with the new opportunity * Unrelated diversification lacks any common elements with the present business, so they do not capitalize on the cores strengths associated with markets or products. They are very risky. 7. Different types of Marketing Research options and their pros and cons? * Market Research Process * 1) Define the problem * 2) Develop the research plan * 3) Collect data * 4) Develop findings 5) Take Actions based on your findings * Sources of Data * Primary Research- original data collected by researchers themselves * Quantitative research is data analysis based on archival data, panel data or questionnaires from a large group of respondents * Qualitative research (e. g. ethnographic research) provides a holistic view of a research problem by integrating a larger number of variables, but asking only a few respondents * Secondary research- data collected and nalyzed by someone else * Ex ploratory Research- attempts to begin to understand the phenomenon of interest; also provides initial information wen the problem lacks any clear definition * Conclusive Research- provides the information needed to confirm preliminary insights which managers can use to pursue appropriate courses of action * Observation- exploratory research method that entails examining the purchase and consumption behaviors through personal or video camera scrutiny. In-Depth interview- exploratory research technique in which trained researchers as questions, listen to and record the answers and pose additional questions to clarify or expand on a particular issue. * Survey- a systematic means of collecting information from people that generally uses a questionnaire * Unstructured questions- open ended questions that allow respondents to answer in their own words * Structured questions- close-ended questions that proved respondents with specific answers to evaluate. How to evaluate the data- * Who co llected the data? * Would there be any reason to purposely misrepresent the facts? * For what purpose was the data collected? * How / when was the data collected? * Are the data internally consistent and logical in the light of known data sources or market factors? * Is the instrument available? 8. Coke Case? – After 99 years of Coca-Cola, executives decided to abandon their formula and start over. In the 1970’s people began preferring Pepsi to Coke during taste test groups. Coke conducted their own tests and found the same results. Looking to regain the market share, they decided to change their formula. Perception of this idea varied widely during focus group interviews. Secret tests of different coke formulas in cities across the country showed that 55% of people preferred the â€Å" New Coke. † Executives conducted a press conference to release this information. News spread quickly, and soon complaints came pouring in when people were aware. After this release only 30% of people preferred the new Coke. This is said to be the â€Å"Marketing Blunder of the Decade† 9. John Quelch's ideas on the â€Å"New Normal† (under lecture 3 or lecture 4? > slides)? * â€Å"New Normal† types of consumers Slam-on-the-brakes (sudden loss of income) Pained-but-patient(see light at the end, hope) Live-for-today(have job, party like 1999 Comfortably-well-offs(willing to postpone for now) * â€Å"New Normal† types of purchase Essentials (switch from organic to non-organic or switch brands). Treats (minimize quantity or frequency of purchases (e. g. , Haagen Daz). Post-ponables (e. g. , big ticket items like washers, TVs, remodeling, dental work, plastic surgery) Expendables (e. g. , multiple vacations per year, private schools, eating out, going out to movies) 10. Segmentation, target market, repositioning? * Types of Segmentation- * Niche Marketing * Focusing on meeting the needs of one specific target market * Often the best strategy for small companies in a large market * Can be risky if the niche is not large enough to be profitable * Differentiated Marketing Using several different marketing mixes to target several different target markets * Allows companies to target a larger number of customers * Can lead to higher market share overall * Can be difficult to maintain cost efficiencies with multiple marketing mixes * Individual Marketing * Customizing the marketing mix to meet individual needs * Ideal because marketers are meeting the needs of individual customers * Requires very detailed information on customers * Can be difficult/expen sive to implement Demographic Segmentation * Gender * Age * Race/Ethnicity * Income Level * Occupation * Education Level * Household size or composition * Psychographic Segmentation- * Based on social class, lifestyles, personality and beliefs * Often generalized from activities, interests and opinions * Can be difficult to categorize consumers but categorizations are likely to be more accurate than simple demographic segmentation * Criteria for good segmenting- * Consumers within a segment are homogeneous. * Consumers between segments are heterogeneous. The segment is profitable. * The segment is reachable. * Criteria for evaluating Segment Attractiveness * Size of the segment * Expected cost to reach the segment * Expected growth of the segment * Competition (ie: 5 forces framework) * Company objectives and resources (e. g. , synergies with other product lines or brands) * Targeting is evaluating each market segment’s attractiveness and selecting one or more segments to ent er. To do this, two steps are involved * Developing measures of segment attractiveness * Selecting the target market Positioning- * Goal: Show consumers that your brand can offer them more value than the competition can. * Positioning by competitors: Hertz- We’re #2, so we try harder * Positioning by attribute: Sendodyne- The toothpaste for sensitive teeth * Positioning by use or application: Nyquil- The nighttime, sniffling, sneezing, coughing, aching, stuffy head, fever so you can rest medicine * Positioning by user: Pepsi- The Choice of the new generation * Positioning by product class: Taco Bell- Think outside the bun * 11. Reliability and Validity * Reliability – is the consistency of your measurement, or the degree to which an instrument measures the same way each time it is used under the same condition with the same subjects. In short, it is an estimate of the repeatability of your measurement. * Is an instrument reliable? * Test / Retest – in this appro ach you have the same subjects take the same survey multiple times. The idea behind test / retest is that subjects should get the same scores on test 1 and test two. * Internal consistency – in this approach you group similar questions together and measure how highly correlated they are with one another – Cronbach’s alpha is a measure of correlation used in this method * Validity – is more difficult to define than reliability but basically validity is a measure of how close we are to the truth when we conduct marketing research. Two examples: * Construct validity – are we really measuring what we think we’re measuring? e. g. , satisfaction, brand loyalty * External validity – will our results apply to other settings and contexts or are they limited to the subjects / contexts that we chose for our study? – e. g. , student subjects * * * * * *