340 Mkt Fall 2006 EXAM 2 REVIEW Please make sure you cover these topics when reviewing for Exam 2. Additional issues discussed in class will also covered in the exam. MARKETING RESEARCH (Chapter 8) Understanding the MR process 1. Define the problem 2. Develop the research plan 3. Collect relevant information by specifying 4. Develop findings 5. Take marketing actions Sampling issues probability vs nonprobability sampling Probability is using a precise rule set to select the sample, so all have an equal chance to get selected. Nonprobability is the use of arbitrary judgments such as the 50 students closest to the college. Many are excluded. Primary vs secondary data, observation data Primary data is newly collected for the project. Secondary data have already been recorded before the project takes place. Observation data is obtained by actually watching how people behave, such as Nielsen's TV research. Ethnographic research Trying to discover subtle emotional reactions as consumers encounter products in their "natural use environment" such as home, car, hotel, etc. Survey methodologies individual, mall intercept, etc Individual is one on one, focus groups have 6 to 10 past/present/future customers that discuss opinions, mall intercept meets people in the mall for convenience, Nature, use, and purpose of focus group method Asks opinions, how they use products, what they want to see changed. Often in rooms with one way mirrors so researchers can view reactions. Peer support Questions and questionnaire development open-ended vs closed-ended questions Open-ended allows respondents to express opinions, ideas or behaviours in their own words without being forced to choose among alternatives. Captures the voice of the respondent. Close-ended are fixed alternatives, a selection of predetermined choices. Scaling methods Likert, Semantic differential, etc Likert indicates the extent to which one agrees or disagrees to the question. Semantic has adjectives on both ends, user picks a space inbetween.
Panels, experimental design, test market, etc Panels are samples of consumers from which a series of measurements are taken. Experiments involve manipulating factors under tightly controlled conditions to test cause and effect. Test markets are where products are offered on a limited basis to a defined area to determine likely effectiveness. Online sources of information in secondary data research Data mining information from databases. Distinguish data from information(distilled facts and figures, leads to marketing actions) SEGMENTATION, TARGETING, POSITIONING (Chapter 9) Definitions of segmentation, targeting, positioning Segmentation is grouping relatively homogenous groups of people with similar buying decisions. Targeting is picking the markets you want to sell to. Positioning is placing your products in such a way that the target market desires it over the competition. Product differentiation Using different marketing mix activities to make the consumer feel like a firm's product is better than competing products. One-product many segments Instead of developing new products for each segment, this method reduces costs by selling the same product to different segments using different promotions. Mass customization Tailoring goods to the individual on a high volume scale. Bases of segmentation region, demographic, psychographic, etc. i.e. personalities, values, city size, gender, age, race, income The 80/20 rule 80% of the sales are obtained from 20 % of the customers Positioning strategies, re-positioning Positioning refers to the place an offering occupies in a consumers mind on important attributes relative to competitive products. Repositioning is CHANGING the place that an offering occupies in a consumer's mind. Two types: Head to Head (Avis vs. Hertz for car rentals) or differentiation (McD's healthy sandwiches vs. Burger King's normal fatty ones) Perceptual mapping
A means of graphing the location of products in the mind of consumers to enable a manager to see how consumers perceive competing brands, then take actions. PRODUCT ISSUES (Chapters 10, 11, 12) Product classification Consumer goods are purchased by the ultimate consumer, business goods are products that assist in providing products for resale. Product item, breadth, depth, mix Item is specific (to brand/size/price), breadth is what each product can do, depth is how many products offered, mix is number of lines offered by a company Shopping goods, specialty goods, convenience goods Shopping is consumer comparing several alternatives, specialty is ones that consumer makes special effort to go out and buy(luxury), convenience items is that are purchased frequently. Innovation types of innovations Continuous requires no new learning by consumers, dynamically continuous disrupts normal routine but does not require total new learning, discontinuous requires new learning and consumption patterns. Why do new products fail? Insignificant point of difference, incomplete market and product definition, too little market attractiveness, poor execution of the marketing mix, poor product quality or sensitivity to customer needs, bad timing, no economical access to buyers. The new product process idea formation, screening, etc The stages a firm goes through to identify business opportunities and convert them to a salable good or service. Includes strategy development, idea formation, screening and evaluation, business analysis, development, market testing, commercialization. Slotting fees/allowances Slotting fees are payments by manufacturers to receive shelf space. The PLC characteristics of each stage, and managerial implications Introduction slow sales, minimal profit. Growth rapid increases in sale, many competitors join. Maturity slowing of total industry sales, trying to hold market share. Decline sales and profits begin to drop, normally from technology increases. Primary and secondary demand
Primary demand is for the product class rather than the specific brand. Secondary demand is a preference for a brand. Penetration vs skimming pricing at product introduction Penetration is low price to prevent competition from wanting to enter market. Skimming is high cost to get the most profit right away. Diffusion of innovation applications of the concept A product spreading through its population. Innovators, early adopters, early majority, late majority, laggards. Use of trials and free samples to encourage usage and purchase Creating customer awareness and stimulating use. Barriers to diffusion Usage(not compatible), value barriers (no incentive to change), risk barriers (physical/econ/social), and psychological barriers(cultural/image). Product and market modification Product mod is altering a products characteristic to increase sales. Market mod is trying to find new customers, increase use among existing customers, or create new use situations. Brands, branding strategies Names/symbols that identify a product. Create positive awareness, establish products meaning, elicit proper consumer response to product. Multiple product branding vs multibranding approaches Multiproduct is using one name for all its products (i.e. GE, Sony). Multibranding is giving each product a different name (i.e. P&G) How services are different from products Services are intangible activities provided to consumres. Characteristics of services Intangibility, Inconsistency, Inseparability, Inventory Dimensions of service quality Reliability, tangibles, responsiveness, assurance, empathy PRICING ISSUES (Chapter 13, 14) Price vs value Price is money exchange for product or service. Value is the perceived benefits
Price quality relationship Higher price is higher quality in consumer's mind Price setting process ID objectives and constraints, estimate demand and revenue, determine cost/volume/profit relationships, select appropriate price level, set list or quoted price, make special adjustments to price Pricing objectives Involves specifying the role of price in an organizations marketing and strategic plans. Types of costs Cost of producing and marketing, changing prices Price elasticity of demand Percentage change in quantitiy demanded relative to a percentage change in price. Marginal revenue, marginal costs Change in revenue/costs that results from producing and marketing one additional unit of a product. Break-even analysis, break-even point Analyzes total revenue and total cost to determine profitability. BEP is the quantity at which total revenue and total cost are equal. Price fixing, bundle pricing, target pricing Bundle is offering 2 or more products in a single package price(airfare and car rental), target is setting price according to what the customer would pay then work back to figure what to charge wholesaler. Cost-oriented approaches to pricing Standard markup(fixed %), cost plus ( cost + %, or cost + X), experience curve (based on learning curve). Competition based methods of pricing Customary (standard prices), above/At/Below market prices, loss leader (deliberate sale below customary price to attract attention). Customary pricing, loss leader pricing Price wars and the competitive effects of pricing Successive price cutting by competitors to increase or maintain market share, competition creates lesser prices.