Chapter 1 – Marketing In a Changing World What is marketing – Creating customer value and stratification are at the very heart of modern marketing thinking and practice. Market Defined – Markets always focus at satisfying customers needs – Marketing: A social and managerial process by which individuals and groups obtain what they need and want through creating exchanging products and value with others. – Needs: States of felt deprivation – Wants: Are the form taken by human needs as they are shaped by culture and individual personality. Wants are described in terms of objects that will satisfy needs.
– Demands: Human wants that are backed by buying power – Products: Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need it. It includes physical objects, services, persons, places, organizations, and ideas. – Marketing myopia Sellers may suffer from Marketing myopia they are so taken with their products that they focus only on existing wants and lose sight f underlying customer needs. They forget that a physical product is only a tool to solve a consumer problem. Value, Satisfaction, and quantity – Customer Value: The difference between the values the customer gains from owning and using a product and the cost of obtain the product. – Customer Satisfaction: The extent to which a products perceived performance matches a buyers expectations.
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– If the products performance falls short of the customers expectations, the buyer is dissatisfied. If the performance matches expectation, the buyer is satisfied. If performance excesses expeditions, the buyer is delighted. Outstanding marketing companies go out of their way to keep their customers satisfied. Total quantity management (TQM): Programs designed to constantly improve the quantity of products, services and marketing processes. Exchange, Transactions, and Relationship – Exchange: The act of obtaining a desired object from someone by offering something in return.
– Transaction: A trade between two parties that involves at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement. – Relationship Marketing: The process by creating, maintaining, and enhancing strong, value, -laden relationships with customers and other stakeholders. – A market network consists of the company and all of its surrounding stakeholder: customers, employees, suppliers, distributions, retailers, advertising, agencies, and others with whom it has built mutually profitable business relationships. Market – Market: The set of all actual and potential buyers of a product or service. – Figure 1-2 (13) Marketing – Marketing means managing markets to bring about exchanges for the purpose of satisfying human needs and wants.
Marketing Management – Marketing Management: The analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives. – De-marketing: Marketing to reduce demand temporarily or permantely-the aim is not to destroy demand, but only to reduce or shift it. Building profitable customer relationship – A company demand comes from two groups: 1. New customers and 2.
Repeat customers. – It costs five times as much to attract new customers as it does to keep an existing customers satisfied. Marketing Management Philosophies – There are five alternatives concepts under which organizations conduct their marketing activities: the product, selling, marketing, and societal marketing concept. – Production Concept: The philosophy that consumers will favour products that are available and highly affordable and that management should therefore focus on improving production and distribution efficiency. – Product Concept: The philosophy that consumers will favour producers that offer the most quality, performance, and innovative features. – Selling Concepts: The idea that consumers will not buy enough of the organizations products unless the organization undertakes a large-scale selling and promotion effort.
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– Marketing Concept: The marketing management philosophy that holds the achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do. The Internet – Internet: A vast and burgeoning global web of computer networks with no central management or ownership. Chapter 2- Strategic Planning the Marketing Process Strategic Planning – The annual plan is a short-run marketing plan that describes the current marketing situation, the company objectives, and the marketing strategy for the year, the action program, budgets, and controls. – The long-run plan describes the major factors and forces affecting the organization during the next several years, it includes the long-term objectives, the major marketing strategies that will be used to attain them, and the resources required.
– Strategic Planning: The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities. – At the corporate level, the company first defines its overall purpose and mission. This mission then is turned into detailed supporting objectivities that guide the whole company. Next, headquarters decides what portfolio of business and products is best for the company and how much support to give each one. In turn, each business and product unit must develop detailed marketing and other departmental plans that support the company wide plan. Defining the company mission – Mission Statement: A statement of the organizations purpose-what it wants to accomplish in the larger environment.
– Mission should be realistic, specific, fit the market environment, motivating Designing the Business Portfolio – Business Portfolio: The collection of business and products that comprise the company. – The best business portfolio is the one that best fits the companys strengths and weakness to opportunities in the environment. The company must (1) analyse the current business portfolio and decide which business should receive more, less, or no investment, and (2) develop growth strategies for adding new products or business to the portfolio. Analysing the current business portfolio – Portfolio Analysis: A tool by which management identifies and evaluates the various businesses that makes up the company.
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– Strategic business Unit (SBU): A unit of the company that has a separate mission and objectives and that can be planned independently from other company business. An SBU can be a company division, a product line within a division, or sometimes a single product or brand. – Managements first step is to identify the key businesses making up the company. The next step in business portfolio analysis calls for management to assess the attractiveness of its various SBUs and decide how much support each deserves. The Boston Consulting Approach – Growth-share matrix: A portfolio-planning method that evaluates a companys strategic business units (SBU) in terms of their market growth rate and relative market share. SBUs are classified as stars, cash cows, question marks, or dogs.
– Four types of SBUs can be distinguished: 1. Star: High-growth, high share business or products that often require heavy investment to finance their rapid growth. 2. Cash Cow: Low-growth, high share business or products; established and successful units that generate cash that the company uses to pay its bills and support other business units that need investment. 3.
Question Mark: Low-share business units in high-growth markets that require a lot of cash in order to hold their share or become stars. 4. Dogs: Low-growth, low share business and products that generate enough cash to maintain themselves but do not promise to be large sources of cash. – Figure 2-2 (45) Growth Share matrix The General Electric Approach – It uses a matrix with two dimensions-one representing industry attractiveness (the vertical axis) and one representing company strength in the industry (the horizontal axis).
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The best businesses are those located in highly attractive industries where the company has high business strength. Problems with Matrix Approaches – They can be difficult, time consuming, and costly to implement. Management may find it difficult to define to define SBUs and measure market share and growth. – These approaches focus on classifying current businesses but provide little advise for future planning.
Developing Growth Strategies – Product / market expansion grid: A portfolio-planning tool for identify company growth opportunities through market penetration, market development, or diversification. – Market Penetration: A strategy for company growth by increasing sales of current products to current market segments without changing the product in anyway. – Market development: A strategy for company growth by identifying and developing new market segments for current company products. – Product development: A strategy for company growth by offering modified or new products to current market segments. – Diversification: A strategy for company growth by starting up or acquiring businesses outside the companys current products and markets.
Marketing Role in Strategic Planning – Marketing looks at consumer needs and the companys ability to satisfy them; these same factors guide the company mission and objectives. – Marketing plays a key role in the companys strategic planning; Marketing provides a guiding philosophy-the marketing concept-which suggests company strategy should revolve around serving the needs of important consumer groups. Marketing provides input to strategic planners by helping to identify attractive market opportunities and by assessing the firms potential to take advantage of them. Within individual business units, marketing designs strategies – For reaching the units objective. Conflict between Departments – Operations focuses on suppliers and production; finance is concerned with stockholders and sound investments; marketing emphasizes consumers and products, pricing, promotion, and distribution. The Marketing process – Marketing Process: The process of (1) analysing marketing opportunities; (2) selecting targets market (3) developing the marketing mix and (4) managing the marketing effort.
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– Market Segmentation: Dividing the market into distinct groups of buyers with different needs, characteristics, or behaviour who might require separate products or making mixes. – Market Segment: A group of consumers who respond in a similar way to given set of marketing stimuli. Market Targeting – Market targeting: The process of evaluating each market segments attractiveness and selecting one or more segments to enter. Marketing Position – Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.
Marketing Strategies for Competitive Advantage – The company must formally or informally monitor the completive environment to answer these and other important questions: Who are our competitors What are their objectives and strategies What are their strengths and weakness And how will they react to different completive strategies we might use Developing the Marketing Mix – Marketing Mix: The set of controllable tactical marketing tools-product, price, place and promotion-that the firm blends to produce the response it wants in the target market. – Product means the goods and services – Price is the amount of money customers have to pay to obtain the product. – Place includes company activities that make the product available to target consumers. – Promotion means activities that communicate the merits of the products and persuade target customers. Managing the Marketing Effort – Four management functions-analysis, planning, implementation and control. – Marketing Analysis The Company must analyse its markets and making environment to identify attractive opportunities and avoid environmental threats.
It must analyses company strengths and weaknesses, as well as current and possible marketing actions, to determine which opportunities it can best pursue. Marketing analysis needs information and other input to each of the other marketing management functions. – Marketing Planning It involves deciding on marketing strategies that will help the company attain its overall strategic objectives. A detailed marketing plan is needed for each business, product or brand.
– Product or brand plan (Contents of Marketing Plan) p. 58 – Product or brand plan includes: Executive summary that quickly overviews major assessment goals, and recommendation. The main section of the plan presents a detailed analysis of the current marketing situation, and of potential threats and opportunities. It next states major objectives for the brand and outlines the specific of a marketing strategy for achieving them.
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– Marketing Strategy: The marketing logic by which the business unit hopes to achieve its marketing objectives. It consists of specific strategies for target markets, positioning, the marketing mix, and marketing expenditure levels. – In the marketing strategy level the planner explains how each strategy responds to threats, opportunities, and critical issues outlines earlier in the plan. – Additional Sections of the marketing plan lay out action program for implementing the marketing strategy, along with the details of a supporting marketing budget. – The last section the controls that will be used to monitor progress and take corrective action. Marketing Implementation – Marketing Implementation: The process that turns marketing strategies and plans into marketing actions to accomplish strategic marketing objectives.
– Implementation involves day-to-day, month-to-month activities that effectively put the marketing plan to work. Marketing Department Organization – Marketing manager is responsible for developing long range and annual plans for the sales and profits in their market. This systems main advantage is that the company is organized around the needs of specific customer segments, Marketing Control – Marketing Control: The process of measuring and evaluating the results of market strategies and plans, and taking corrective action to ensure that marketing objectifies are attained. – Marketing first sets specific marketing goals. It then measures its performance in the market place and evaluates the causes of any difference between expected and actual performance. Finally management takes corrective action to close the gaps between its goals and its performance, this may require changing the action programs or even changing the goals.
– Operating Controls Involves checking ongoing performance against the annual plan and taking corrective action when necessary. Its purpose is to ensure that the company achieves the sales, profits, and other goals set out in its annual plan. It also involves determining the profitability of different products, territories, market and channels. – Strategic Control Involves considering whether the companys basic strategies are well matched to its opportunities.
– The Marketing Audit: Is a comprehensive, systematic, independent, and periodic examination of a companys environment, objectives, strategies, and activities to determine problem areas and opportunities and to recommend a plan of action to improve the companys marketing performance. – The Marketing Audit Questions (64) The Marketing Environment – The company must carefully analyse its environment so that t can avoid the threats and take advantage of its opportunities. Chapter 3 The Global Marketing Environment – Marketing Environment: The factors and forces outside marketing direct control that affect marketing managements ability to develop and maintain successful transactions with target customers. – Marketers have two special aptitudes. They have discipline methods marketing intelligence and marketing research-for collecting information about marketing environment. They also normally spend more time in the customer and competitor environment.
By conducting systematic environmental scanning, marketers can revise and adapt marketing strategies to meet new challenges and opportunities in the marketplace. – Microenvironment: The forces close to the company that affects its ability to serve its customers-the company, suppliers, marketing channel firm, customer market, competitors, and publics. – Microenvironment: The larger societal forces that affect the whole microenvironment demographic, economic, natural, technological, political, and cultural forces. Suppliers – They provide the resources needed by the company to produce its goods and services. Marketing managers must be aware of supply availability supply shortage or delays, labour strikes, and other events that can cost sales in the short run and damage customer satisfaction in the long run. Marketing Intermediaries – Marketing Intermediaries: Firms that help the company to promote, sell, and distribute its goods to final buyers, they include resellers, physical distribution firms, marketing services agencies, and financial intermediaries.
– Reseller are distribution channel forms that help the company find customers or make sales to them. – Physical Distribution Firms help the company to stock and move goods from their points or origin to their destination. Working with warehouse and transportation firms, a company must determine the best way to store and ship goods, balancing such factors as cost, delivery, speed and safety. – Marketing Services agencies are marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right market.
– Financial Intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods. Customer – The company needs to study its customer market closely. – 5 Types of customer market: 1. Consumer Market: consist of individuals and households that buy goods and services for personal consumption. 2. Business Market: buy goods and services for further processing or for use in their production process 3.
Reseller Market: buys goods and services and resells it to make a profit. 4. Government Market: are composed of government agencies that buy goods and services in order to produce public services or transfer the goods and services to others who need them. 5. International Market: Consists of buyers in other countries, including consumers, producers, resellers and governments. Competitors Publics – Publics: Any group that has an actual or potential interest in or impact on an organizations ability to achieve its objectivities.
– Seven types of publics (see page 79 & 80): 1. Financial publics 2. Media publics 3. Government publics 4. Citizen-action publics 5.
Local publics 6. General publics 7. Internal publics The Companys Microenvironment Demographic Environment – Demography: The study of human population in terms of size, density, location, age, sex, race, occupation, and other statistics. Changing Age Structure of the Canadian Population – Baby Boom: The major increase in the annual birth rate following WWII and lasting until the early 1960 s. The baby boomers, now moving into middle age, are a prime target for marketer. The Changing family (87) Geographic Shifts in population (87) A better educated and more white-collar population (89) Increasing Diversity (89) Economics Environment – Economic Environment: Factors that affect consumer buying power and spending patterns.
– Subsistence economies- they consume most of their own agricultural and industrial output. – Industrial economies which constitute rich markets for many different kinds of goods. Chang in Income – Marketers pay attention to income distribution as well as average income. Changing Consumer Spending Patterns – Engels Law: Difference noted over a century ago by Earns t Engel in how people shift their spending across food, housing, transportation, health care, and other goods and services categories as family income rises. Natural Environment – Natural Environment: Natural resources that are needed as inputs by marketers or that are affected by marketing activities. Technological Environment – Technological Environment: Forces that create new technological, creating new product and market opportunities.
Political Environment – Political Environment: Consists of laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Legislation Regulation Business – Canada has many laws covering issues such as competition, fair trade practices, environment protection, product safety, truth in advertising packaging and labelling, price, and other important areas. – North American Free Trade agreement (NAFTA) replaced the Free Trade Agreement (FTA) in August 1992. It governs free trade among Canada, United States, and Mexico.
NAFTA is a historic document since it is the first trade agreement between two developed nation and a developing country. – Business legislation has been enacted for various reasons. The first is to protect companies from each other. The second purpose of the government regulation is to protect consumers from unfair business practices. The third purpose of the government regulation is to protect the interests of society against unrestrained business behaviour. Cultural Environment – Cultural Environment: Institutions and other forces that affect societys basic value, perception, preference, and behaviour.
– The following cultural characteristics can affect marketing decision-making: Persistence of cultural Values – Core beliefs and values are passed by parents to children and are reinforced by schools, churches, business and government. – Secondary Beliefs and value are more open to change. Believing in marriage is a core belief; believing that people should get married early in life is a secondary belief. Shifts in Secondary Cultural Values – The major cultural values of a society are expressed in peoples views of themselves and others, as well as in their views of organizations, society, nature and the universe. Peoples Views of themselves – People use products, brands, and services as a means of self-expression, and they buy products and service that match their views of themselves. Peoples View of others – This suggests a bright future for the products and services that serve basic needs rather that those relaying on glitz and hype.
It also suggests a greater demand for social support products and services that improve direct communication between people, such as health clubs and family vacations. Peoples View of Organizations – They need to review their advertising communications to ensure that their messages are honest. They also need to review their various activities to make sure that they are perceived to be good corporate citizens. Peoples View of society – Patriots nationalist, pro country – Reformers who want to change it – Malcontent who want to leave it Peoples View of Nature Peoples View of the universe – People vary in their beliefs about the origin of the universe and their place in it. – 1980 s people measured success in terms of career achievements, wealth, and worldly possessions.
– 1990 s success was measured with achievements such as a happy family life and service to ones community replacing money as the measure if worth. Responding to the Marketing environment – Many companies view the marketing environment as an uncontrollable element to which they must adapt. They accept the market place and do not change it. They analyse the environmental forces and design strategies that will help the company avoids the threats and take advantage of the opportunities the environment. – Environmental management perspective: A management perspective in which the firm takes aggressive actions to affect the publics and forces in its marketing environment rather than simply watching and reacting to it. Chapter 4- Marketing Research and Information System The Marketing Information System – Marketing Information System (MIS): People, equipment, and procedure to gather, sort, analyse, evaluate, and distribute needed, timely, and accurate information to marketing decision-makers.
– First, it interact with these managers to assess information needs. Next, it develops needed information from internal company records, marketing intelligence activities, and marketing research. Information analysis processes the information to make it more useful. Finally the MIS distributes information to managers in the right form at the right time to help them make better marketing decision.
Assessing Information Needs – Managers do not always need all the information they ask for, they may not ask for all they really need. The MIS cannot always supply all the information managers request. Developing Information Internal Data – Internal database: Information gathered from sources within the company that can be evaluate marketing performance and to detect marketing problems and opportunities. – Information in the database can come from many sources. The accounting department prepares financial statements and keeps detailed records of sales, costs, and cash flow. Manufacturing reports on production schedules, shipments, and inventories.
The sales force reports on reseller reactions and competitor activities. The marketing department maintains a database of customer demographics, psychographics, and buying behaviour. The customer service department provides information on customer satisfaction or service problems. Marketing Intelligence – Marketing Intelligence: The systematic collection and analysis of publicity available information about competitors and development in the marketing department. – Marketing Intelligence can be gathered from many source; can be collected from the companys own personnel-executives, engineer and scientists, purchasing agents, and the sales force. – For a fee companies can subscribe to online database or information search services.
Marketing Research – Marketing Research: The systematic design, collection, analysis, and reporting of data and finding relevant to a specific marketing situation facing an organization. Information Analysis – Information gathered by the companys marketing intelligence and marketing research systems often require more analysis, and sometimes managers may need help applying the information to their marketing problems and decisions. This may include advanced statistical analysis to learn more about both the relationships within a set of data and their statistical reliability. Distribution Information – The information gathered through marketing intelligence and marketing research must be distributed to the right marketing managers at the right time.
– With recent advances in computers, software, and telecommunication, most companies are decentralizing their marketing information systems. In many companies, marketing managers have direct access to the information network through personal computers and other means. – Such systems offer exciting prospects. They allow the managers to get the information they need directly and quickly and to tailor it to their unique needs. The Marketing Research Process Defining the problems and research objectives Developing the research plan and collecting information Implementing the research plan-collecting and analysing the data Interpretation and reporting the findings – Marketing managers and researcher must work closely to define the problem carefully and they must agree on the research objectives. – Managers must know enough about marketing research to help in planning and interpreting research results.
If they know little about marketing research they may obtain wrong information. – Experience marketing researchers who understand the managers problem also should be involved at this stage. The researcher must be able to help the manager define the problem and suggest ways that research can help the manager make better decisions. – Defining the problem and research objectives is often the hardest step in the research process. – After the problem has been defined carefully, the manager and researcher must set research objectives.
Can 1-3 types of objectives. Exploratory research, descriptive research and casual research. – Exploratory Research: Marketing research to gather preliminary information that will help to better define problems and suggest hypotheses. – Descriptive Research: Marketing research to better describe marketing problems, situations, or markets, such as the market potential for a product or the demographics and attitudes of customers. – Casual Research: Marketing research to test hypothesis about cause-and effect relationship. Developing the research plan – Determining the information needed, developing a plan for gathering it efficiently, and presenting the plan to marketing management.
Gathering Secondary Information – To meet the managers information needs, the researcher can gather secondary data, primary data, or both. – Secondary data: Information that already exists somewhere, having been collected for another purpose before. – Primary data: Information collected for the specific purpose at hand. – Researchers usually start be gathering secondary data.
– Commercial data source companies can buy reports from outside suppliers. – Table 4-2 (page 125) Sources of Secondary data – Online database and Internet data sources Marketing research can conduct their own search of secondary data sources. A resent survey of marketing researchers found that 81 percent uses such online services for conducting research. – Online database: A compilation of marketing information that can be accessed online. Advantages and Disadvantages of Secondary Data – Secondary data can usually be obtained more quickly and at a lower cost than primary data. – A study to collect primary information might take weeks or months to complete and cost thousands of dollars.
Secondary sources sometimes provide data that an individual company cannot collect on its own-information that either is not directly available or would be too expensive to collect. – Secondary data can also present problems. The needed information may not exist-researcher can rarely obtain all the data they need for secondary sources. – The researcher must evaluate secondary information carefully to ensure that it is relevant (fits research project needs), accurate (reliably collected and reported), current (up-to-date enough for current decisions), and impartial (objectively collected and reported) Planning Primary Data Collection – Primary data to assure that it will be relevant, accurate, current, and unbiased. Research Approaches – Observational research: The gathering of primary data by observing relevant people, actions, and situation.
– Observational research can be used to obtain information that people unwilling or unable to provide. Some things can not be observed such as feelings, attitudes, and motives, or private behaviour. – Table 4-3 Planning Primary Data Collections (127) – Checkout scanners in retail stores record consumer purchases in detail. Consumer products companies and retailers use scanner information to assess and improve product sales and store performances. – Single Source data systems: Electronic monitoring systems that link consumers exposure to television advertising and promotion (measured using television meters) with what they buy in stores (measured using store checkout scanners) – Survey Research: The gathering of primary data by asking people questions about their knowledge attitudes, preference, and buying behaviour. – Sometimes people are unable to answer survey questions because they cannot remember or have never thought about what they do and why.
Or people may be unwilling to respond to unknown interviewers or talk about things they consider private. Respondents might answer survey questions when they do not know the answer in order to appear smarter or more informed. – Experimental research: The gathering of primary data by selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking differences in-group responses. Contact Methods – Information can be collected by mail, telephone, or personal interview. – Table 4-4 Strengths and Weaknesses of three Contacts Methods (131) – Personal Interviewing takes two forms- individual and group interviewing. Individual interviewing involves talking with people in their homes or offices, on the street, or in shopping malls.
Such interviewing is flexible. – Group Interviewing consists of 6-10 people gather for a few hours with a trained moderator to discuss a product, service or organization. – Focus group interviewing: personal interviewing that consist of inviting six to 10 people to gather for a few hours with a trained interviewer to discuss a product, service, or organization. The interviewer focuses the group discussion on important issues. The comments are recorded through written notes. – Focus group interviewing has become one of the major marketing research tools for gathering insight into consumer thoughts and feelings.
However, focus group studies usually use small sample sizes to keep time and costs down, and it may be hard to generalize from the results. – Computer Interviewing in which respondents sit down at a computer, read questions from a screen, and type their own answer into the computer. Sampling Plans – Marketing researchers usually draw conclusions about large groups of consumers by studying a small sample of the total consumer population. A sample is a segment of the population selected to represent the population as a whole. – Designing the sample requires 3 decisions: 1. Who is to be surveyed (what the sampling unit) 2.
How many people should be surveyed (Whats the sample size) 3. How should the people in the sample be chosen (what sampling procedure) – Using probability samples each population member has a known chance of being included in the sample and researchers can calculate confidence limits for sampling errors. But when probability sampling costs too much or takes too much time, marketing researchers often take non-probability samples, even though their sampling error cannot be measured. Research Instruments – In collecting primary data, marketing researchers have a choice of 2 main research instruments the questionnaire and the mechanical devices. – The questionnaire is by far the most common device. Questionnaires must be developed carefully and testes before they can used on a large scale.
When developing a questionnaire the market researchers must first decide what to ask. – Closed-end questions include all possible answers, and subjects make choices among them. – Opened-end questions Questions allowing respondent to answer in their own words. – Researcher should also use care in wording and ordering questions. They should use simple direct, unbiased wording. – Table 4-7 Types of Questions (136) Presenting the Research plan – The proposal should cover the management problems addressed and the research objectives, the information to be obtained, the sources of secondary information or methods for collecting primary data, and the way the results will help management decision-making.
It should also include, research cost, a written research plan, and they should all agree on why and how the research will be conducted. Implementing the Research plan – This involves collecting, processing, and analysing the information. Data collection can be carried out by the companys marketing research staff or by outside firm. The data collection phase of the marketing research process is generally the most expensive and the most subject to error. Interpreting and reporting the findings – The research must now interpret the finding, draw conclusions, and report them to management. The researcher should not try to overwhelm managers with numbers and fancy statistical techniques.
Rather, the researcher should present important finding that are useful in the major decisions faced by management. In many cases findings can be interpreted in different ways, and discussions between researchers and managers will help identify the best interpretations. – Interpretations are an important phase of the marketing process. The best research is meaningless if the manager blindly accepts wrong interpretations from the research. Managers may have biased interpretations-they tend to accept research results that show what they expected and to reject those that they did not expect or hope for. Other Marketing Research Considerations Marketing research in small business and non-profit organizations – Managers of small business and non-profit organization can obtain good marketing information simply by observing things around them.
– Managers can conduct informal survey using small convenience samples. – Managers can also conduct their own sample experiments. – Small organizations can obtain most of the secondary data available to large businesses. Many associations, local media, chambers of commerce, and government agencies provide special help to small organizations. International Marketing research – International marketing research can pose some unique challenges, For example they ma find it difficult simply to develop good samples. – Difference in culture from country to country cause additional problems for international researchers.
Languages is the most obvious culprit. – Responses then must be translated back into the original language for analysis and interpretations. This adds to research costs and increase in the risk of error. – Transplantation a questionnaire from one language to another is anything but easy. Many idioms, phrase, and statements mean different things in different cultures. – Consumers in different countries also vary in their attitudes towards marketing research.
Chapter 5 Consumer Markets and Consumer Buyer Behaviour – Consumers buying behaviour: The buying behaviour of final consumers-individuals and households who buy goods and services for personal consumption. – All of these final consumers combined comprise the consumer market. – Consumer Market: All the individuals and households who buy or acquire goods and services for potential consumption. Model of Consumer Behaviour – The central questions for marketers are: How do consumers respond to various marketing efforts the company might use. Characteristics affecting consumer behaviour – Consumer purchases are influence strongly by cultural, social, personal, and psychological characterises. Cultural Factors – Culture: The set of basic values, perception, wants and behaviours learned by a member of a society from family and other important institutions.
– Culture is the most basic cause of a persons wants and behaviour. Human behaviour is largely learned. Growing up in a society, a child learns basic values, perceptions, wants, and behaviours from the family and other important institutions. – International marketers must understand the culture in each international market and adapt their marketing strategies accordingly. SUBCULTURE – Subculture: A group of people with shared value system based on common life experience and situations. – Subculture includes nationalities, religions, racial groups, and geographic regions.
(1) Native Canadians (2) Canadas Ethnic Consumers (3) Mature Consumers (4) Internet Users – Internet Users Internet users are powerful and in control. The consumer s one who choose to access a web site and marketers must adjust to the idea that the Net is a means of two-way communication between a consumer and a vendor, not the one-way street that media advertising represents, IN other words, Theyre not just listening to what the corporation wants to sell them, theyre choosing the information that appeals to them. SOCIAL CLASS – Social classes are societys relatively permanent and order division whose members share similar values, interest, and behaviours. – Social Class: Relatively permanent and ordered division in a society whose members share similar values, interests, and behaviours.
– Social class is not determined by a single form, such as income, but measured as a combination of occupation, income, education, wealth and other variables. – Table 5-2 Characterises of Seven Major North American Social Classes (page 162) – People can move to a higher social class or drop into a lower one. Social factors GROUPS – Groups: Two or more people whom interact to accomplish individual or mutual goals. – Groups that have a direct influence and to which a person belongs are called Membership groups – Primary Groups With whom there is regular but informal interaction such as friends, family, neighbours, and co-workers.
– Secondary Groups, which are more formal and that, has less regular interactions. These include organizations, such as religious groups, professional associations, and trade unions. – Reference Groups serve as a direct (face-to-face) or indirect points of comparison or reference informing a persons attitudes or behaviour. People often are influence be reference groups to which they do not belong. – Opinion Leaders: People within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert, influence on others. – Opinion Leaders are found at all level of society, and one person may be an opinion leader in certain products areas and an opinion follower in others.
Marketers try to identify opinion leaders for their products and direct marketing effort towards them. FAMILY – Family members can strongly influence buyers behaviours. The family is the most important consumer buying organization in society. – In Canada and the United States, the wife is traditionally has been the main purchasing agent for the family, especially in the area of food, households, products, and clothing. – In the case of expensive products and services, husbands and wives more often make joint decisions. ROLES AND STATUS – A person belongs to many groups-family, clubs, and organizations.
The persons position in each group can be defined in terms of both roles and status. A role consists of the activities that people are expected to perform according to the persons around them. Each role carries a status reflecting the general esteem given to it by the society. Personal Factors AGE AND LIFE CYCLE STAGE – Taste in foods, clothes, furniture, and recreation are often age-related. – Table 5-3 Life Cycle Stages (page 165) OCCUPATION – A persons occupation affects the goods and services that he or she buys.
ECONOMIC SITUATION – A persons economic situation will affect product choice. Marketers of income sensitive goods watch trends in personal income, saving, and interest rates. If economic indicators point to a rescission, marketers can take steps to redesign, reposition, and reprice their products. LIFESTYLE – Lifestyle: A persons pattern of living as expressed in his or her activities, interests, and opinion. – Lifestyle is a persons pattern of living as expressed in his or her psychographics. It involves measuring consumers major AIO dimensions activities (work, hobbies, shopping, sports, social events), interests (food, fashions, family, recreation), and opinions (about themselves, social issues, business products).
Lifestyles capture something more than the persons social class or personality; it profiles a persons whole pattern of acting and interacting in the world. – Psychographics: The technique of measuring lifestyles and developing lifestyle classification; it involves measuring the major AIO dimension (activities, interest, opinions) – VALS; Classifies people according to how they spend their time and money. It divides consumers into eight groups on two major dimensions. – Self Orientation Group includes principle-oriented consumers who buy based on their views on the world.
Status Orientated buyers who base their purchase on the actions and opinions of others. Action-oriented buyers who are driven by their desire for activity, variety, and risk-taking. Consumers within each orientation are further classified into those with abundant resources and those with minimal resources. PERSONALITY AND SELF CONCEPT – Personality: A persons distinguished psychological characteristics that led to relatively consistent and lasting response to his or her own environment.
Psychological Factors – A persons buying choices are further influenced by four major psychological factors: motivations, perception, learning, and beliefs and attitudes. MOTIVATION – Biological, arising from state of tension such as hunger, thirst, or discomfort. – Psychological, arising from the need for recognition, esteem, or belonging. Most of these needs will not be strong enough to motivate the person to act at any given them. – Motive: A need that is sufficiency pressing to drive the person to seek satisfaction of the need. – Psychologists have developed theories of human motivation.
Sigmund Freud and Abraham Maslow – Freud theory of motivation: Freud assumes that people are largely unconscious about the real psychological forces shaping their behaviour. – Abraham Maslow sought to explain why people are driven by particular needs at particular times. In order of importance, they are psychological needs, safety needs, social needs, esteem needs, and self-actualization needs. A person tries to satisfy the most important first. When that need is satisfied, it will stop being a motivator and the person will then try to satisfy the nest most important need. PERCEPTION – A motivated person is ready to act.
How the person is influence by his or her perception of the situation. – Perception: Is the process by which people select, organize and interpret information to form a meaningful picture of the world. – People can form different perceptions of the same stimulus because of three perceptual processes: selective attention, selective distortion, and selective retention. Selective Attention The tendency for people to screen out most of the information to which they are exposed- means that marketers must work especially hard to attract the consumers attention. Their message will be lost on most people who are not in the market for the product. Moreover, even people who are in the market may not notice the message unless it stands out from the surrounding sea of other ads.
Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe. Selective distortion means that marketers must try to understand consumers perspectives and how these will affect interpretations of advertising and sales information. People will also forget what they learned they tend to retain information that supports their attitudes and beliefs. Because of Selective retention advertisers try to frame messages in ways that are consistent with peoples existing beliefs.
Example Jen is likely to remember goods points made about the Harley and to forget good points made about competing motorcycles. LEARNING – Learning occurs through the interplay of drives, stimuli, cues, responses and reinforcement. – Learning: Changes in an individuals behaviour arising from experience. – A drive is a strong internal stimulus that calls for action.
Her drive becomes and motive when it is directed toward a particular stimulus object. – A cue are minor stimuli that determine when, where, and how the person response. BELIEFS AND ATTITUTEDS – Beliefs: A descriptive thought that a person holds about something. – This belief may be based on real knowledge, opinion, or faith and may or may not carry an emotional charge. – Attitudes: A persons consistently favourable or unfavourable evaluations, feeling, and tendencies towards an object or idea.
– Attitudes put people into a frame of mind of liking or disliking things, of moving towards or away from them. Attitudes are difficult to change. A persons attitudes fit into a pattern, and to change one attitude may require difficult adjustments in many others. Thus, company should usually try to fit its products into an existing attitudes rather than attempt to change attitudes. Consumer Buying Roles – People might play any of several roles in buying decision: – Initiator The person who first suggests or thinks of the idea of buying a particular product or service. – Influencer A person whose views or advice influences the buying decision – Decider The person who ultimately makes a buying decision or any part of it- whether to buy, what to buy, how to buy, and where to buy – Buyer The person who makes the actual purchase.
– User The person who consumes or uses a product or service. Complex Buying Behaviour – Complex Buying Behaviour: Consumers buying behaviour in situations characterized by high consumer involvement in a purchase and significant perceived difference among brands. – Marketers need to differentiate their brands feature, perhaps by describing the brands benefits using print media with long copy. They must motivate store salespeople and the buyers acquaintances to influence the final brand choice. Dissonance- Reducing Buying Behaviour – Dissonance- reducing buying behaviour: Consumer buying behaviour in situations characterized by high involvement but few perceived differences among brands. – Dissonance-reducing buying behaviour occurs when consumers are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands.
– After the purchase, consumers might experience post-purchase dissonance (after sales discomfort) when they notice certain disadvantages of the purchase carpet brand or hear favourable things about brands not purchased. Habitual Buying Behaviour – Habitual Buying Behaviour: Consumer buying behaviour in characterized by low consumer involvement and few significant perceived brand differences. – Consumers have little involvement in this product category-they simply go to the store and reach for a brand. Example; salt.
If they keep reaching for the same brand, it is out of habit rather than strong brand loyalty. – Consumers do not form strong attitudes towards a brand; they select the brand because it is familiar. Variety-Seeking Buying Behaviour – Variety-seeking buying behaviour: Consumer buying behaviour in situations characterized by low consumer involvement but significant perceived brand differences. Brand switching occurs for the sake of variety rather than due to dissatisfaction. The Buyer Decision Process – The stages that buyer pass through to reach a buying decision. There are 5 stages Need recognition Information Search Evaluation of alternatives Purchase decision Post-purchase behaviour – Consumers often skip or reverse some of these stages.
Stage (1) Need Recognition – Need Recognition: The first stage of the buyer decision process in which the consumer recognizes a problem or need. – When the buyer recognizing a problem or need. The buyer actual senses a difference between his or her actual state and some desired stat. The need can be triggered by internal stimuli. Stage (2) Information Search – Information Search: The stage of the buyer decision process in which the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into active information search. – An aroused customer may or may not search or more information.
If the consumers drive is strong and a satisfying product is near at hand, the consumer is likely to buy it. If not, the consumer may store the need in memory or undertake an information search related to the need. – Heightened attention Consumer becomes more receptive to information about the product. Consumer pays attention to ads. – Active information search in which consumer looks for reading materials, surfs the net, phone friends, and gather information in other ways.
– Consumers can obtain information from any of these sources: (-) Personal Sources: family, friends, neighbours, acquaintances (-) Commercial sources: advertising, salespeople, dealers, packaging, and displays (-) Public source: mass media, consumer-rating organizations (-) Experiential sources: handling, examining, using the product. Stage (3) Evaluation of alternatives – Alternative evaluation: The stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set. Alternative evaluation-that is, how the consumer processes information to arrive at brand choice. – Brand image: The set of beliefs that consumers hold about a particular brand. – In some cases, the consumer use careful calculations and logical thinking. At other times, the same consumers do little or no evaluating; instead they buy on impulse and relay on intuition.
Stage (4) Purchase Decision – Purchase decision: The stage of the buyer decision process in which the consumer actually buys the product. – Consumers purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. 1. Attitudes of others Jennifer’s friends ride Honda motorcycles, chances of her buying a Harley will be reduced.
2. Unexpected situation factors The consumer may form a purchase intention based on factors such as expected income, expected price, and expected product benefits. However, unexpected events may change the purchase intention. Stage (5) Post-purchase behaviour – Post-purchase behaviour: The stage of the buyer decision process in which consumers take further action after purchase based on their satisfaction dissatisfaction. – What determines whether the buyer is satisfied or dissatisfied with purchase The answer lies in the relationship between the consumers expectation and the product perceived performance. If the product falls short of expectation, the consumer is satisfied; if it exceeds expectations, the consumer is delighted.
– Cognitive dissonance: Buyer discomfort caused by post-purchase conflict. (181) However every purchase involves compromise. Thus consumers feel at least some post-purchase dissonance for every purchase. – Why is it important to satisfy the customer Companies sales come from two places new customers and retained customers. It usually costs more to attract new customers than to retain current ones, and the best way to retain current customers is to keep them satisfied. The buyer decision process for new products – New Product: A good, service, or idea that a perceived by some potential customer as new.
– How consumers learn about products for the first time and make decisions on whether to adapt them. – Adoption Process: The mental process through which an individual passes from first hearing about an innovation to final adoption. Stages in the adoption process – Awareness The customer becomes aware of the new product, but lacks information about it. – Interest The customer seeks information about the new product.
– Evaluation The customer considers whether trying the new product makes sense. – Trial The customer tries the new product on a small scale to improve his or her estimate of its value. Individual differences in innovations (The 5-adopter groups) Innovators are venturesome they try new ideas at some risk. Early adopters are guided by respect-they are opinion leaders in their communities and adopt new ideas early but carefully. The early deliberate-although they rarely are leaders, they adopt new ideas before the average person.
The late majority are sceptical-they adapt an innovation only after most people have tried it. Finally laggards are tradition bound-they re suspicious of changes and adopt the innovation only when it has become something of a tradition itself. Influence of product characteristics on rate of adoption – Five characteristics are especially important in influencing an innovations rate of adoption 1. Relative advantage the degree to which innovation appears superior to existing products. 2. Compatibility The degree to which the innovation fits the value and experience of potential consumers.
3. Complexity The degree to which the innovation is difficult to understand or use. 4. Divisibility The degree to which the innovation may be tried on a limited basis. 5. Communicability The degree to which the results of using the innovation can be observed or described to others.
Chapter 6 Business Markets and Business Buyer Behaviour – Business Markets: All the organizations that buy goods and services to use in the production of other products and services that are sold, rented, or supplied to others. It also includes retailing and wholesaling firms that acquire goods for the purpose of reselling or renting them to others at a profit. – Business Buying Behaviour: The decision-making process by which business buyers establish the need for purchase products and services and identify, evaluate, and choose among alternative brands and suppliers. business market Characteristics of Business Markets – Table 6-1 Characteristics of Business Market (200) Market Structure and Demand – The business market typically deals with far fewer but larger buyers than he consumer marketer does. – Business markets are also more geographically concentrated. – Derived demand: Business demand that ultimately comes from (derives from) the demand for consumer goods.
– Many business markets have inelastic demand; that is, total demand for many business products is not affected much by price changes, especially in the short run. – Business markets have more fluctuating demand. The demand for many business goods and services tend to change more-and more quickly then the demand for consumer goods and services does. Nature of buying Unit – Compared with consumer purchases, a business purchase usually involves more buyers and a more professional purchasing effort. Types of Decision and Decision Process A model of Business Buyer beh a.