The Art and Science of Satisfying Customers07/02/2013 14:55:00

Chapter 1 Marketing o Production and marketing of good and service together create Utility Utility: want satisfying power of good or service Form: conversion of raw materials and components into finished goods and services ( iPod, gold in jewellery) Time: availability of goods and services when consumers want them (dental appointment, Canada post Xpresspost Place: availability of good and services at convenient location (bank in grocery store,) Ownership (Possession): ability to transfer title to goods or services from marketer to buyer (retail sales) o Organization must create utility and customers to survive o Activities marketers perform to create customers Identifying customer needs Designing products to meet those needs Communicating information Making the product available at time and place that meet customers needs Pricing the merchandise and services to reflect costs, competition and customers ability to buy Providing the necessary and follow-up to ensure customer satisfaction after the purchase o Definition of Marketing An organizational function and a set of processes for: Creating, communicating, and delivering value to customers Managing customer relationships in ways that benefit the organization and its stakeholders It assumes that the organization begins by identifying and analyzing who its potential customers are and what they need

o Todays Global Marketplace Factors that have extended economic views Increase in international trade agreements Growth of electronic business Interdependence of the worlds economies Companies seek the most efficient manufacturing sites and most lucrative markets worldwide. Companies are tailoring their marketing efforts to the needs and preferences of local markets. Canada is a attractive market for foreign competitors Size proximity to the US High standard of loving that Canadian consumers enjoy US has made more investment in Canada Four Eras in the history of marketing o The Exchange process: activity in which two or more parties give something of value to each other to satisfy perceived needs o The People often exchange money for intangible service and goods (education, clothes, ) Production Era Stressing efficiency in producing a quality product, with the attitude toward marketing that a good product will sell itself Characterized by lack of production and high consumer demand Building a new product is no guarantee of success

Inventing an excellent new product is not enough because it must also fill a perceived marketplace need. o The Sales Era Sales orientation: Believe that consumers will resist purchasing nonessential item with the attitude toward marketing that only creative advertising and personal selling can over come consumers resistance and persuade them to buy

 creative advertising and selling will overcome consumers resistance and persuade them to buy o The Marketing Era and the Emergence of the Marketing Concept Change from sellers market to buyers market Sellers market: market in which there are more buyers for fewer goods and services Buyers market: market in which there are more goods and services than people willing to buy them Strong buyers market created the need for consumer orientation Consumer orientation: business philosophy incorporating the marketing concept that emphasizes first determining unmet consumer needs and then designing a system for satisfying them Marketing concept: Company-wide consumer orientation with the objective of achieving long-run success Companies that implement market-driven strategies are better able to understand their customers experiences, buying habits, and needs. Find a need of consumer and then fill it Relationship Era Development and maintenance of long-term, costeffective relationship with individual customers, suppliers, employers and other partners for mutual

o The

benefit Long term relationship with customers and other partners lead to success o Convert Needs to Wants Consumers acquire goods and services on a continuing basis to fill certain needs. Effective marketing convert needs to wants

A need for a pair of pants can convert to a desire for jeans, may ABs jeans To convert needs into wants, marketers: Focus on the benefits of goods and services Require skill Should listen to consumer needs Avoiding Marketing Myopia o Marketing Myopia: Managements failure to recognize the scope of its business (focus too much in their product and forget their customer) o Focusing on customer need satisfaction can control myopia Extending the traditional boundaries of marketing o Marketing in not-for-profit organization Operate in both the public and private sector Adopt marketing strategies to meet service objectives Communicate their messages by appearing in advertisements relating to their goals Form alliances with for-profit firms to promote each others causes o Characteristics of Not-for-profit marketing Focus is to generate revenue to support their causes and not on the bottom line Bottom line: reference to overall company profitability market tangible goods and services (feeding children, helping single mom,) Markets to have more audiences Serve multiple publics Often possess some degree of monopoly power in a given geographic region Service users have less control over the firms future o Nontraditional Marketing Person Marketing Marketing efforts designed to cultivate the attention, interest and preference of a target

market toward a person (typically a political candidate or celebrity) An extension of person marketing involves celebrity endorsements, in which well-known athletes, entertainers, and experts or authority figures promote products for companies or social causes for not-for-profit organizations Place Marketing Marketing efforts to attract people and organizations to a particular geographic are Cities, provinces, regions, and countries publicize their tourist attractions to lure vacation travellers. They also promote themselves as good locations for businesses. Cause Marketing Identification and marketing of a social issue, cause, or idea to selected target markets Many profit-seeking firms link their products to social causes Strong support among customers and employees for cause-related marketing Staples: school supply Event Marketing Marketing of sporting, cultural and charitable activities to selected target markets Commercials during Super Bowl Organization Marketing Marketing by mutual-benefit organizations,

service organizations and government organizations intended to influence others to accept their goals, receive their services or contribute to them in some way Used to raise funds by selling licensed merchandise From transaction-based marketing to Relationship Marketing o Transaction-based marketing:

Buyer and seller exchanges characterized by limited communications and little or no ongoing relationships between the parties o Relationship marketing: Gives a company new opportunities to gain a competitive edge by moving customers up a loyalty ladder Consumer are become more and more sophisticated need to develop new techniques to establish and build trusting relationships with consumers New customer Regular Purchaser Loyal Supporter Advocate o Using interactive and social marketing to build relationships Mobile marketing: marketing messages transmitted via wireless technology Interactive marketing: buyer and seller communications on which the customer controls the amount and type of information received from a marketer through such channels as the Internet and virtual reality kiosks (Facebook, Twitter,) Social marketing: the use of online social medias as a communications channel for marketing messages Top online activity raise sale, introduce new things, get attention,. Buzz marketing: word-of-mouth messages that bridge the gap between a company and its products o Developing partnerships and strategic alliances Relationship marketing extends to business-to-business relationships with suppliers, distributors, and other partners. Strategic alliances: partnerships in which two or more companies combine resources and capital to create competitive advantages in a new market Not-for-profit organizations often make use of strategic alliances to raise awareness and funds for their causes or to achieve their goals.

Form of alliances Product development partnerships Vertical alliances Cost functions of marketing o Marketing is responsible for the performance of eight universal functions Buying: ensuring product offerings are available in sufficient quantities to meet customer demands Selling: using advertising personal selling and sales promotion to match product to customer needs Exchange function Transporting: moving products from their point of production to locations convenient for purchasers Storing: warehousing products until needed for sale Physical distribution function Standardizing and grading: ensuring product offerings meet quality and quantity controls of size, weight, and other variables Financing: Providing credit for channel members

(wholesaler, retailers) and consumers Securing marketing information: Collecting information about consumers, competitors and channel members for use in making marketing decisions Four marketing function Ethics and Social Responsibility: Doing well by doing good o Ethics: moral standards of behavior expected by society o Social responsibility: marketing philosophies policies, procedures and actions that have the enhancement of societys welfare as a primary objective o Sustainable product: product that can be produced, used, and disposed of with minimal impact on the environment

Strategic Planning in Contemporary Marketing

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Chapter 2 Marketing Planning: The Basis for Strategy and Tactics o Planning strategy is a critical part of the job o Planning: process of anticipating future events and conditions and of determining the best way to achieve organizational goals Define its object planning (identifying objectives, determine the action) --> Create a blueprint for marketers, executives, production staff and everyone else in the organization to follow for achieving organizational objectives o Marketing Planning: Implementing planning activities devoted to achieving marketing objectives Many planning activities take place over the Internet with virtual conferences An important trend in marketing planning focus on relationship marketing. (long term, cost effective relationship between customers and supplier) o Strategy Planning and Tactical planning Strategic Planning - Deter mining organizations primary objectives - Adopting courses of action that will achieve these objectives - Addresses long-term actions Tactical Planning o Guides the implementation of activities specified in the strategic plan o Addresses shorterterm and near future activities

o Planning at different organizational levels Management Level Top Board of Types of planning Example

Strategic Organizatio

Manageme nt

directors - CEO - COO - Division vice president - General sales manager - Business unit manager Director of marketing research Tactical

n- wide objectives; fundamenta l strategies, long term plans, Quarterly, semi-annual plans, divisional budgets, divisional policies and procedures Operatin g Daily and weekly plans, unit budgets, department rules and procedures

Middle Manageme nt

Supervisor y Manageme nt

- District sales manager - Supervisor

Steps in the marketing Planning Process o Corporate Level Define the Mission of the Organization Mission: essential purpose that differentiates one company from others Determine Organization Objectives Assessing organizational resources and evaluate environmental risks and opportunities Finding organizations strengths, weakness, opportunities, effect form internal and external environment Finding resources: production, marketing, finance, technology, employees o Business Unit Level

Formulate Strategy Marketing Strategy: Selecting and satisfying target consumers through the marketing mix elements Implement Strategy through Operating Plans Monitor and Adapt Strategies when Necessary based on Feedback Successful Strategies: Tools and Techniques o Posters Five forces Model Threat of New Entrants Can be new firms or diversifying entrants bring new capacity, gain market share, substantial resources and capabilities Price will be lower reduce profitability Incumbents must create barriers to entry Economies of scale: The cost of product decrease when the number of product increase Capital requirement The threat of new entrants is reduced when the level of required capital increases (Airline industry, mining industry) Switching cost: The cost of changing from on supplier to another from buyer perspective. The threat of new entrants increases when the switching cost decrease Access to Distribution Channels o The threat of new entrants decreases when the accessibility to distribution channels decreases Cost Disadvantages Independent of Scale o Incumbent have advantages such as governmental policies, legal

protection create the barriers for new entrants Bargaining Power of Suppliers Supplier have a power over incumbents by demanding higher prices or threatening to reduce quality products directly impact on profitability and incumbents performance 2 factors: (how important, how many number) When the raw materials suppliers provide are important (critical) to incumbents in an industry, the supplier can demand higher prices When the number of supplier is low, they can demand for higher prices o Ex: computer industry: Dell, IBM, HP. -> only Intel and AMD provide computer processor chips Bargaining Power of Buyers Buyer have a power over incumbents by demanding lower prices, better quality, or playing incumbents against on another 4 factor Switching cost: when switching cost between incumbents low, buyer can easily switch to others Undifferentiated product allows buyers to find another choices from other incumbents Importance of products to buyers: when incumbents product are important to buyers, buyers have less power The number of incumbents relative to the number of Buyers: When the number of supplier is high, buyer have more power to choose their option

Threat of Substitutes (Movie theatres and DVD; CDs vs Mp3) Rivalry Among Existing Firms Undifferentiated products and low switching costs encourage more intense rivalry Many similar producers tend to compete more fiercely High exit barriers increase competitive rivalry: high fixed costs, specialized assets and sunk costs, escalating commitment, social pressures

o First Mover and Second Mover Strategy First move strategy Theory advocating that the company that is first to offer a product in a market place will be the long-term market winner Risks: companies that follow can learn from mistakes by first movers IBM, Apple, Ford, MySpace Second Mover Strategy Theory that advocates observing closely the innovations of first movers and then introducing new products that improve on the original offering to gain advantage in the market place Facebook follow MySpace o Swot Analysis Analysis that helps planners compare internal organizational strengths and weakness with external opportunities and threat o The Strength + Opportunities = Leverage Weak + Threat = Problem Strategic Window Limited period during which the key requirements of a market and the particular competencies of a firm best fit together Requires a thorough analysis of

Current and projected external environmental conditions Current and projected internal company capabilities How, whether, and when the firm can reconcile environmental conditions and company capabilities Element of a Marketing Strategy o The Target Marketing Group of people to whom a firm decides to direct its marketing efforts and ultimately its goods and services o Marketing Mix Variables Marketing Mix: blending of the four strategy elements: product, distribution, promotion, and pricing, to fit the needs and preferences of a specific target market Product Strategy Deciding what goods or services the firm should offer to a group of consumers Customer service Package design Brand names, trademarks, patents, and warranties Lifecycle of a product Product positioning New-product development Distribution Strategy Consumers find their products in the proper quantities at the right times and places. Involves modes of transportation, warehousing, inventory control, order processing, and selection of marketing channels. Technology has opened new channels of distribution in many industries Promotion Strategy

Communication link between sellers and buyers. Function of informing, persuading and influencing a consumers purchase decision Firms may communicate messages: Directly through salespeople. Indirectly through advertisements and promotions. Many companies use integrated marketing communications (IMC). Pricing Strategy

Methods of setting profitable and justifiable prices Subject to regulation and public scrutiny A good pricing strategy: Creates value for customers. Builds and strengthens customer relationships with a firm and its products. o The Marketing Environment Five external dimensions that affect the marketing mix variables: Competitive Political-legal Economic Technological Social-cultural Technology continually changes the marketing environment. Rule of three The three strongest, most efficient companies dominate 70 and 90 percent of a market

Running shoes: Nike, Addidas, Reebok Methods for marketing Planning o Business portfolio analysis An evaluation of a companys products and divisions to determine the strongest and weakest Strategic business units: Key business units within diversified firms

 BCG

Each has its own managers, resources, objectives, and competitors. Each pursues its own distinct mission and develops its own marketing plans. Help focus attention of company managers May need to be redefined as market conditions dictate analysis A market share/ market growth matric that plots market share against market growth potential ( Developed by the Boston Consulting Group)

Star Generate considerable income Strategy: invest more funds for future growth Question marls Have potential to become stars or cash cows Strategy: Either invest more funds for growth or consider disinvesting Dogs Generate little profit Strategy: Consider with drawing

Cash Cows Generate strong cash flow Strategy: milk profits to finance growth of stars and question marks

Strategic Growth opportunity Matric o An analysis of potential growth opportunities based on existing or new customers and existing or new products Market Penetration Strategy that a company uses when it attempts to build market share by selling existing products to existing customer Market Product Occurs when a company develops new products that it hopes it sell to existing customers

Market Development Occurs when a company tries to attract new customers for its existing products, sometimes by geography expansion, but often by simply targeting new segments of customers o

Market Diversification Sell new product to new market most risky

The Marketing Environment, Ethics and Social Responsibility

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Chapter 3 Environment Scanning and Environment Management o Five forces in marketing external Competitive Political-legal Economic Technological Social-cultural o Environment Scanning Process of collecting information about to external marketing environment to identify and interpret potential trends Goal: analyze the information and decide whether these trends represent significant opportunities or pose major threats to the company Trends may represent significant opportunities or threats to the company o Environment Management Attainment of organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social-cultural environments o Strategy Alliance: Partnership in which two or more companies combine resources and capital to create competitive advantages in a new market Member together share risks and profits Common in international marketing, where partnerships with local firms provide regional expertise for a company expanding its operations abroad Alliances are considered essential in a country such as China, where laws require foreign firms doing business there to work with local companies. The Competitive Environment o Interactive process that occurs in the marketplace among:

Marketers of directly competitive products Marketers of products that can be substituted for one another Marketers competing for the consumers purchasing power o Marketing decisions by individual firms influence: Consumer responses in the marketplace Marketing strategies of competitors o Few organizations have monopoly positions Monopoly Market structure in which a single seller dominates trade in a good or service for which buyers can find no close substitutes Some pharmaceutical firms have temporary monopolies provided by patents on drugs when the patent expires, competitors can flood the market with generic versions of the drugs Oligopoly Few number of sellers in an industry with high start-up costs that keep out new competitors

o Types of Competition Direct Among marketers of similar products Ex: Bell, Roger, Fido in phones services Indirect Involves products that are easily substituted Ex: In fast food industry, pizza compete with chicken, hamburger, Competition among all firms that compete for consumers purchases All firms compete for a limited number of dollars that consumers can or will spend. Example: A customer who has a toonie and wants a treat may have to choose between a Tim Hortons coffee and a chocolate bar. o Developing a Competitive strategy

Competitive Strategy: methods through which a firm deals with its competitive environment Answer 3 question Should we compete ? Depends on firms resources, objectives, and expected profit potential In what markets should we compete? Allocate firms limited resources (sales personnel, advertising budgets,, product development capability) to the areas of greatest opportunity How should we compete? Requires marketers to make product, promotion, distribution, and pricing decisions that maximize competitive advantage Firm can compete on a variety of bases, including product quality, price and customer service

Time-based Competition Strategy of developing and distributing goods and services more quickly than competitors The flexibility and responsiveness of time-based competitors enable them to improve product quality, reduce costs, and expand product satisfy new market improve customer satisfaction. In rapidly changing marketsparticularly those

that involve technologytime-based competition is critical to a firms success. The political-legal environment o Consists of laws and their interpretations that require firms to operate under competitive conditions and to protect consumer rights o Ignorance or non-compliance can result in fines, negative publicity, and civil damage suits

o Regulations enacted at the federal, provincial, and municipal levels affect marketing practices, and decision making (designing, labelling, packaging, distributing, advertising, and promoting goods and services) o Government Regulation Competition Act: Comprehensive legislation administered by Industry Canada and designed to help both consumers and businesses by promoting a healthy competitive environment Laws roughly categorized in three marketing areas: Pricing: price fixing, price discrimination, double ticketing , Promotion: misleading advertising, referral selling Distribution: deal, exclusive deal, pyramid selling Focus on protection of buyers and sellers with respect to direct sales contracts, Commonly referred to as Consumer Protection Act or Direct Sellers Act Government Regulatory Agencies Canadian Radio-television and Telecommunications Commission (CRTC) regulates and supervises all aspects of the Canadian broadcasting system National Energy Board regulates the construction and operation of interprovincial and international pipelines and power lines Other Regulatory Forces Part of legal enviroment Consumer interest organizations; e.g., People for the Ethical Treatment of Animals Other groups attempt to advance the rights of minorities, senior citizens, and other causes e.g., Mothers Against Drunk Driving

Self-regulatory groups set guidelines for responsible business conduct e.g., Advertising Standards Canada The economic environment o Gross domestic product (GDP) Sum of all goods and services produced by a nation in a year o Economic environment Factors that influence consumer buying power and marketing strategies including stage of the business cycle, inflation, unemployment, income, and resource availability o State in the Business Cycle Pattern of stages in the level of economic activity Prosperity Consumer spending is brisk; growth in services sector Recession Consumers focus on basic, fundamental products Depression Consumer spending sinks to its lowest level Recovery Consumer purchasing power increases o The Global Economic Crisis Business cycles take a severe turn and affect consumers and businesses across the globe. Marketers must re-evaluate their strategies and concentrate on their most promising products. o Inflation and Deflation Inflation Rising prices caused by some combination of excess consumer demand and increases in the costs of one or more factors of production (cost of raw materials, component parts, human resources) Devalues money by reducing the products it can buy through persistent price increases Deflation Falling price products are more affordable Can cause

 A free-fall in business profits. Lower returns on most investments. Widespread job layoffs o Unemployment Proportion of people in the economy actively seeking work that do not have job Affect the ways consumer behave Rises during recession and declines during recovery and prosperity job are created consumer confidence rises consumer spending increases o Income Influences consumer buying power important Marketers focus on discretionary income the amount of money people have to spend after buying necessities (food, clothing, housing) o Resources Availability Resources are not unlimited Shortages can result from lack of raw materials, component parts, energy, or labour Demarketing Reducing consumer demand for a good or service to a level that the firm can supply E.g. : oil company or utility companies Challenges facing marketers: Allocating limited supplies Deciding whether to spread limited supplies over all customers or limit purchases by some customers

o The International Economic Environment Marketers must monitor the economic environment of other nations Global political changes affect international marketplace Changes in foreign currency rates compared with the Canadian dollar also affect marketing decisions. The technology environment

o Application of knowledge based on discoveries in science, inventions, and innovations to marketing o Technology leads to New products. Improvements in existing products. Better customer service. Reduced prices. o Sources of technology : Industry Educational institutions Not-for-profit institutions Federal government: military o Applying Technology Marketers monitor new technology to gain a competitive edge and to enhance customer service. VoIP Voice over Internet Protocol Alternative to traditional telecommunications services Special software transmits phone conversations over the Internet rather than through telephone lines Cost saving (Skype) Internet Protocol Multimedia Subsystem (IPMS) will offer new opportunities to marketers. The Social-Cultural Environment o Component of the marketing environment consisting of the relationship between among the marketer and society and its culture o Marketers must be sensitive to demographic shifts and changing values. o Increasing importance of cultural diversity o Consumerism Social force within the environment that aids and protects the consumer by exerting legal, moral, and economic pressures on business and government Consumer rights The right to choose freely:

The right to be informed: consumer should be provided with enough education and product information to enable them to be responsible buyers The right to be heard: able to express their displeasure to appropriate parties The right to be safe

o E.g. : In India, Coca-Cola was blamed for creating water shortages and pollution. Adidas was focused on for using kangaroo leather in its sports shoes. Ethical Issues in Marketing o Marketing ethics Marketers standards of conduct and moral values o Ensuring ethical practices means promising customer and business partner not to sacrifice quality and fair ness for profit o Ethic in Marketing Research Consumers are concerned about privacy. Proliferation of databases Selling of address lists Ease with which consumer information can be gathered Several agencies offer assistance to Internet consumers. Canada has a National Do-Not-Call List to help prevent unwanted telemarketing o Ethic in Product Strategy Product quality, planned obsolescence, brand similarity, and packaging raise ethical issues. Examples: Larger packages are more noticeable on the shelf. Bottles with concave bottoms appear to have more liquid in them than they do. o Ethic in Distribution

What is the appropriate degree of control over the distribution channel? Relationship between manufactures and franchise dealers Should a company distribute its products in marginally profitable outlets that have no alternative source of supply? marketers response to serve unsatisfied market segments even if the profit potential is slight

o Ethics in Promotion Truth in advertising is foundation Marketing to children under scrutiny Another issue involves firms paying universities for the use of their logo, team name, or mascot to advertise products and services to students o Ethic in Pricing Most regulated aspect of a firms marketing activities Credit card companies, payday loan companies, and health clubs often walk a fine line between being ethical and unethical. Social Responsibility in Marketing o Social responsibility: Marketing philosophies, policies, procedures and actions that have the enhancement of societys o Four step pyramid of Corporate Social Responibility Marketings Responsibilities

o Corporate responsibility covers the entire framework of society. o Marketers must consider: The global effects of their decisions. The long-term effects of their decisions. The well-being of future generations. o Entire communities can benefit through socially responsible investing. Marketing and Ecology o Ecology Relationship between organisms and their natural environments Environmental issues influence all areas of marketing decision making. o Green marketing Production, promotion, and reclamation of environmentally sensitive products

Customer Behaviour
Day 4

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Interpersonal Determinants of Consumer Behaviour o Consumer Behaviour: process through which buyers make purchase decision o the interpersonal determinants of consumer behaviour: cultural, social, and family influences. o Cultural Influences Culture: value, belief, preferences and tastes handed down from one generation to the next Marketers need to understand its role in consumer decision making Monitor trends in cultural values recognize change in these value Core Value in Canadian Culture Some Cultural values may change, but core values do not Core value are underlying motivation to move society forward, are shaped by the people one grow up with Four core Canadian Value A unique balance between individualism and collectivism An attitude of tolerance and acceptance A heightened appreciation for a quality of life An essentially peaceful predisposition Micro cultures Smaller groups within a society that have their own distinct characteristics and modes of

behavior Largest groups in Canada include: Quebecois consumers Chinese Canadian consumers South-Asian Consumers o Social Influences

Every person belongs to group both formal and informal. The interactions of these groups affect our purchasing decisions. Groups establish norms of behaviour. Differences in status and roles within the group also influence behavior Theory of psychologist S. E. Asch that individuals conform to majority rule, even if that majority rule goes against their beliefs Reference Group People or institutions whose opinions are valued and to whom a person looks for guidance in his or her own behaviour, values and conduct, such as family, friends or celebrities Strong influences requires two condition Purchased product must be seen and identifiable Purchased product must be conspicuous, something that not everybody owns

Children as especially vulnerable to the influence of references group ( wants things on TV, Internet,) Social Class Six classes: upper-upper, lower-upper, uppermiddle, lower-middle, working class, lower class. Class are determined by occupation, income, education, family background, residence location (income not always a primary determinant ) Opinions leaders Trendsetters who purchase new products before others in a group and then influence others in their purchases buy before others and then share their experiences and opinions through word of mouth

Individuals tend to act as opinion leaders for specific goods or services based on their knowledge of and interest in those products o Family Influences The most important determinant of consumer behaviour because of the close, continuing interactions among family members Family structure is changing over the last century due to: A declining birth rate Role An increase in the number of childless couples Higher divorce and separation rates Children staying at home longer of Each Spouse in a Household Autonomic role: partners independently make equal numbers of decisions Husband-dominant role: husband usually makes certain purchase decisions

Wife-dominant role: Wife making most of the buying decision Syncratic role: both partners jointly make decisions Children and Teenagers in Family Purchases Children and teenagers represent a huge market. They influence what their parents buy, from cereal to cars.

Personal determinants of consumer behaviour o Need and motivate Need: Imbalance between a consumers actual and desired states. Motive: Inner state that directs a person toward the goal of satisfying a need Maslows Hierarchy of Need

Physiological Needs: most basic level of requirement to survival (food, water, clothing,) Safety Needs: second level, include financial or lifestyle security, protection from physical harm buy insurance, retirement plant, Social/ Belongingness Needs: third level, the desire to be accepted by people and groups joint organization and buy goods or services that make them feel part of a group Esteem Needs: desire for a sense of

accomplishment and achievement, gain respect of others Self-actualization Needs: desire to realize their full potential and to find fulfilment by expressing thei unique talents and capabilities o Perception Meaning that a person attributes to incoming stimuli gathered through the five senses A persons perceptions of a good or event results from the interaction of two factors Stimulus factor: size, colour, weight, shape Individual factors: unique characteristics of the individual, including not only sensory processes but also experiences with similar inputs and basic motivations and expectations Perceptual Screens Mental filter or block through which all inputs must pass to be noticed Doubling the size of an ad, using certain colours or graphics, developing unique package Word of mouth one of the most effective Attitudes A persons: enduring favourable or unfavourable evaluations, emotions, or action tendencies toward some object or idea

Attitude Components Cognitive: information and knowledge about an object or concept Affective: deal with feeling or emotional reactions Behavioural: tendencies to act in a certain manner Changing Consumer Attitudes Marketers have two choices for appealing to consumer attitudes o Attempt to produce consumer attitudes that will motivate purchase of a particular product. o Evaluate existing consumer attitudes and then make the product features appeal to them. Modifying the Components of Attitude Attitudes frequently change in response to inconsistencies among the three components. o Attitudes change when new information changes the cognitive or affective components of an attitude, such as when benefits are given or misconceptions are corrected. o Attitudes change when buyers are engaged in new behaviour that gets them to try a product. o Attitudes change when new technologies encourage consumers to change their attitudes Providing evidence of product benefits and correcting misconceptions. Engaging buyers in new behavior

o Learning

Knowledge or skill that is acquired as a result of experience, which changes consumer behaviour Learning process: Drive: strong stimulus that impels action ( fear, pride, greed,..) Cue: object and signal in the environment that determines the nature of the consumers response to drive Response: individuals reaction to a set of cues and drives Reinforcement: the reduction in drive that results from a proper response Applying Learning Theory to Marketing Decisions Shaping: process of applying a series of rewards and reinforcements to permit more complex behavior to evolve over time Both promotional strategy and the product itself play a role in the shaping process The first step is getting consumers to try a product, possibly using a cue such as a sample or coupon. The second step is to entice the consumer to buy the product with little financial risk. The third step is to motivate the person to buy the item again at a moderate cost, with the only reinforcement being satisfactory performance. Finally, the consumer decides whether to

buy the item at its true price without a discount. o Self-Concept Theory A Persons multifaceted picture of himself or herself Four components that influence purchasing decisions: 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 person aspires In purchasing goods and services, people are likely to choose products that move them closer to their ideal self-images The consumer Decision Process o High-involvement purchase decision: buying decisions that evokes high levels of potential social or economic consequences o Low-involvement purchase decision: Routine purchase that poses little risk to the consumer, either socially or economically Consumers invest more time and effort in highinvolvement decisions, but they go through the steps for low-involvement decisions o Problem or Opportunity Recognition During the first stage in the decision process, the consumer becomes aware of a significant discrepancy between the existing situation and a desired situation. Marketers help prospective buyers identify and recognize potential problems or needs in the form of advertising, promotion, or personal sales assistance. o Search During the second step, the consumer gathers information about attaining a desired state of affairs The search identifies alternative ways to solve the problem using either internal sources (mentally reviewing or recalling past experience) or external sources (gathering opinions and information). The search identifies alternative brands to consider. The number of alternatives that a consumer actually considers is called the evoked set.

In some searches the consumer knows the brands that merit further consideration; in others, external searches bring together this new information. The number of brands in the evoked set depends on the situation and the person. Some marketers have set up online shopping sites where consumers can compare products o Evaluation of Alternatives The third step is to evaluate the evoked set of options Consumer evaluates the evoked set of options, and as the search progresses, consumer accepts, distorts, or rejects information as it is received Evaluative criteria: features that a consumer considers in choosing among alternatives Common criteria include price, brand name, and country of origin, and can vary with the consumers age, income, social class, and culture. Marketers attempt to influence the outcome in three ways:

By educating consumers about attributes that they view as important in evaluating certain goods. By identifying which evaluative criteria are important to an individual and showing why a specific brand fulfills those criteria. By inducing a customer to expand the evoked set to include the product being marketed. o Purchase Decision and purchase Act The fourth and fifth steps involve the eventual purchase decision and the act of making the purchase. By this time, each alternative in the evoked set has been weighed, based on the individuals own evaluative criteria, and the alternatives have been narrowed down to one.

Marketers help smooth the purchase by offering benefits such as warranties, financing, or free delivery, as well as online purchasing options. o Post Purchase Evaluation The purchase act produces one of two results. The buyer feels satisfaction, usually if the purchase meets or exceeds expectation. The buyer feels anxiety or dissatisfaction with the purchase. Cognitive dissonance: imbalance among knowledge beliefs, and attitudes that occurs after an action or decision is taken such as a purchase increase in three cases: When the dollar value of the purchase increases When the rejected alternatives have desirable features When the purchase decision has a major effect on the buyer Marketers may help reduce cognitive dissonance by providing information that supports the chosen item. The consumer may decide to change products and vow to purchase the rejected item next time. o Classifying Consumer Problem-Solving Processes Marketers recognize three categories of problem-solving behaviour: Routinized response behavior: Rapid consumer problem solving in which no new information is considered, the consumer has already set evaluative criteria and identified available option Limited problem solving Situation I which the consumer invest some small amount of time and energy in searching for and evaluating alternatives

Extended problem solving Situation that involves lengthy external searches and long deliberation; results when brand are difficult to categorize or evaluate

Marketing Segmentation, Targeting and Positioning

Day 4

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Market: Group of people with sufficient purchasing power, authority and willingness to buy Target Market: Group of people to whom a firm decides to direct its marketing efforts and ultimately its goods and services Types of markets o Consumer products Products bought by ultimate consumers for personal use o Business products Goods and services purchased for use either directly or indirectly in the production of other goods and services for resale The Role of Market Segmentation o Market Segmentation: division of the total market into smaller relatively homogeneous group Criteria for effective segmentation The segment must have measurable size and purchasing power. Marketers must find a way to effectively promote and serve the market segment. Segment must be sufficiently large to offer good profit potential. Firm must aim for segments that match its marketing capabilities. Segmenting consumer market o Four common bases for segmenting consumer markets: Geographic segmentation Demographic segmentation Psychographic segmentation Product-related segmentation Geographic Segmentation o Division of an overall market into homogeneous group based on their locations o Its one of the oldest forms of market segmentation. o Some geographic factors to consider: Population size and distribution

Worldwide populationnations with largest populations, concentration of population, greatest metropolitan areas Global economic variablesnations that share similar population and product-use patterns are often grouped together rather than treating each nation as an independent segment Job growth and household incomeregions with similar growth or the same income range Population migration patternsgrowing or shifting areas due to movement of Canadians (transfer, changed job

status or job loss, family proximity, etc.) Urban vs. suburbanshifts between downtown shopping and suburban malls o Government Classification Census Metropolitan area (CMA): geographic are surrounding an urban core with a population of at least 100,000 Census Agglomeration (CA): Geographic are with a population over 10,000 o Using Geographic segmentation Marketers focus on core regions, those from which they draw 40 to 80 percent of sales. Other factors: residence location type within a certain geographic area (urban, suburban, rural), regional preferences or needs, climate, distinctions within a geographic area o Geographic information Systems (GISs) A geographic information system (GIS) assembles, stores, manipulates, and displays data by location. It simplifies the job of analyzing marketing information by relating data to location. The result is a geographic map overlaid with digital data about consumers in a particular area. Demographic Segmentation o Division of an overall market into homogenous groups based on variables such as gender, age, income, occupation,

education, sexual orientation, household size, and stage in the family life cycle; also called socioeconomic segmentation o Segmenting by gender Help define the markets for certain products Tricky nowadays: man wear earrings and use skin-care while women purchase power tools o Segmenting by Age School-aged children: those who are younger and have great influence over family purchases Tween and Teens: This group influences purchases of food, clothing and technology. Generation X: the group born between 1966 and 1981 more concern about the natural environment and social issue Baby boomers: those born 1947-1965, are a huge group, influenced by early television, the Vietnam War, focus on careers, tending to value health and quality of life. Senior: those over age 65, tend to have high discretionary incomes and rates of home ownership, are healthier, living longer, are more active, and often have more money to spend than previous generations. The Cohort Effect: The Video Game Generation Cohort effect: tendency of members of a generation to be influenced and bound together by events occurring during their key formative year age 17 to 22 In order to reach them, marketers need to

understand basic characteristics of various age groups as they respond to life defining events. Segmenting by Ethic Group Friend and English Chinese Canadian South Asian Canadian Black Canadian Other Ethnic Group

o Segmenting by family life cycle stages Family life cycle The process of family formation and dissolution This segmentation approach focuses on life stage, rather than age, as the primary determinant of many consumer purchases. Needs and wants vary among people who are single, newly married, young parents, empty nesters, or retired. o Segmenting by household type Todays households are widely diverse regarding relationships among members, marital status or lack of it, children or no children, same-sex households both with or without children, and people living alone. o Segmenting by income and expenditure patterns Income is a common basis for segmentation, since the term market refers to people with purchasing power Marketers often target geographic areas known for the high incomes of their residents. Engels law When household income increases The percentage of expenditures for food drop the percentage spent on housing, household operations, and clothing remains constant. the percentage spent on other itemssuch as education and recreationincreases

help marketers target markets at all income levels o Demographic Segmentation Abroad Demographic data abroad can be more difficult to get than in Canada. Government census data may include different information than Canadian census. Psychographic Segmentation

o Division of a population into groups that have similar psychological characteristics, attitudes, value and life styles o Psychographic profiles are created through extensive surveys that ask consumers to agree or disagree with a collection of AIO statements (items on lifestyle surveys that describe various activities, interest, and opinions of respondents) o VALS (Value and lifestyle) A psychographic segmentation system developed 25 years ago and today owned and managed by SRI Consulting Business Intelligence (SRIC-BI) Based on concepts of resources and motivation o Psychographic segmentation of global markets Six psychographic consumer segments that exist in 35 countries: Strivers: the largest segment, value professional and material goals (most common in developed Asia and Russia; more male than female). Devouta: value duty and tradition (most common in Africa, the Middle East, and developing Asia; more female than male). Altruists: Altruists emphasize social issues and societal well-being Intimates: value family and personal relationships (most common in North America and Western Europe, equally male and female). Fun seekers: focus on personal enjoyment and pleasurable experiences (most common in developed Asia, more male than female).

Creatives: seek education, technology, and knowledge o Using Psychographic Segmentation Help marketers quantify aspects of consumers personalities and lifestyles to create goods and services for a target market Product-related segmentation

o Division of a population into homogeneous groups based on their relationships to the product. o Segmenting by benefit Sought Focuses on the benefits people expect from using the product. o Segmenting by usage Rates focuses on the amounts of a product that people buy and use 80/20 principle: 80% of a products revenue come from 20 percent of its total customers Markets are often divided into heavy-user, moderateuser, and light-user and nonusers segments. o Segmenting by Brand Loyalty focuses on how strongly and how loyal consumers feel toward a product. Grouping customers according to the strength of their product loyalty. o Using Multiple Segmentation Bases Flexibility helps marketers increase their accuracy in reaching the right markets. Goal is getting to know potential customers better and satisfying their needs with appropriate goods and services The Market Segmentation Process o two methods: A management-driven segmentation A market-driven method segmentation o Develop a relevant profile for each segment Identifying promising segments, then understanding the customers in each one o Forecast market potential. Using market segmentation and market opportunity analysis to produce a forecast of market potential within each segment o Forecast probable market share. Analyzing competitors positions in targeted segments

o Select specific market segments. Using the accumulated analysis and forecasts to weigh the potential for reaching company goals and to justify committing resources to developing one or more segments Strategies for Reaching Target Markets o Undifferentiated marketing Focuses on producing a single product and marketing it to all customers; also called mass marketing o Differentiated Marketing Focus on producing several products and pricing, promoting and distributing them with different marketing mixes designed to satisfy smaller segments o Concentrated Marketing Focusing marketing effort on satisfying a single market segment; also called niche marketing o Micromarketing Targeting potential customers at very narrow, basic level, such as by postal code, specific occupation or life style o Selecting and Executing a Strategy Basic determinants of marketing strategy: Company resources: a firm with limited resources may have to choose a concentrated strategy Product homogeneity: a firm selling items perceived by consumers as relatively homogeneous may benefit from an undifferentiated strategy Stage in the product lifestyle: a firm whose product changes over time may shift from undifferentiated to narrower strategies Competitors strategies: a firm whose product changes over time may shift from undifferentiated to narrower strategies Positioning

Placing a product at a certain point or location within a market in the minds of prospective buyers. Positioning a product may be based on the following categories: Attributes, Price/quality, Competitors, Application, Product user, Product class Reasons for positioning a product: To emphasize a products unique advantages

To differentiate it from competitors options Positioning Map: a tool that graphically illustrates consumers perceptions of competing products within an industry by presenting two characteristics (such as price and quality) to show differing views of a product, service, or retailer. Repositioning changing the position a product holds in the minds of prospective buyers relative to the positions of competing products. Changes in the competitive environment may force marketers to reposition their products.

Serve Global Markets

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07/02/2013 14:55:00

Global Trade o Exporting: the marketing of domestically produced goods and services abroad. o Importing: the purchasing of foreign goods and services. The important of Global marketing o It expands markets and builds employment. o It makes production and distribution economies possible. o It allows companies to explore growth opportunities in other nations. o It lessens their dependence on domestic economic conditions at home. o It can help them meet customer demand, reduce costs, and get information on potential markets worldwide. o Service export Canada measures imports and exports of services under three categories: travel, transportation and commercial services A large part of service exports come from travel and tourism Foreign visitors purchasing Canadian produced goods and services are a tourism exports. o Benefit of going global Reason: Additional revenues New insights into consumer behaviour Alternative distribution strategies Advance notice of new products Exposure to new products, approaches, promotions, or marketing techniques A major key to success is a firms ability to adapt its products to local preferences and cultures. Marketers need to understand both similarities and differences in strategies for global and domestic marketing. o The International Marketing Environment

International Economic Environment National factors: A nations size, per-capita income, and stage of economic development determine its prospects as a host for international business expansion Nations with low per-capita income may be poor markets for expensive machinery but good ones for agricultural tools Infrastructure: important when looking at a foreign market, is a nations underlying foundation for modern life (transportation, communications, banking, utilities, and public services). Exchange rate: can complicate international marketing. Exchange rate: the price of one nations currency in term of another nations currency Fluctuations in rates make a nations

currency more or less valuable, compared to that of other nations. less developed nations have soft currencies, meaning they cannot be readily converted into hard currencies such as the euro, British pound, International Social-Cultural Environment Before entering a market, firms need to study all aspects of a nations culture, including language, education, religious attitudes, and social values. Language plays an important role in international marketing International Technological Environment Internet technologies connect large and small firms to world markets.

More than any innovation since the phone, the Internet has made it possible for both large and small firms to be connected to the entire world. transcends political, economic, and cultural barriers. allow existing businesses to add new channels. help developing nations compete with industrialized ones. Technology presents some challenges for global

marketers (genetic reengineering) International political-legal environment Political risk assessment (PRA): Unit within a firm that evaluate the political risks of the marketplaces in which they operate as well as proposed new marketplaces International Laws International Law involves treaties, agreements, and certification standards. Political risk of the marketplaces (PRA) unit within a firm that evaluate the political risk of the market in which they operate as well as proposed new marketplaces ISO (International Organization for Standardization certification): internationally recognized standards that ensure a companys goods and services meet established quality levels and that

ensure its operations minimize harm to the environment Canada law Canadian legal environment includes trade regulations, tax laws, and import/export requirements Government agencies involved in administering laws regarding international

trade include Agriculture and Agri-Food Canada; Department of Foreign Affairs and International Trade Legal requirement of host nation can affect foreign trade, so firms follow local laws in certain nations while upholding principles found in Canadian law. Trade barriers Tariff: tax on imported products Revenue tariff: taxes design to raise funds for the importing government. Protective tariffs: higher, designed to raise the retail price of an imported product to match that of a similar domestic product Other trade barriers Import quota Embargo: A complete ban on the import of a product Subsidy: governments financially back a certain domestic product. Exchange control: regulates foreign trade through a central bank

Dumping Selling a product in a foreign market for less than what it commands in the domestic market. Multinational Economic Integration o Free trade area: Allows participating nations to agree to the free trade of goods among themselves, abolishing tariffs and trade restrictions. o Customer Union: Establishes a free-trade area plus a uniform tariff with non-member nations. o Common market: Extends a customs union by seeking to reconcile all government regulations affecting trade Not everyone is happy about free trade, especially those who are concerned about jobs being outsourced

to low-wage nations, factories being relocated overseas, and resulting pay cuts or potential job losses. innovation and productivity tend to grow quickly with free trade, and many firms view outsourcing as a collaboration and a way to offer superior service o GATT and the World Trade Organization General Agreement on Tariffs and Trade (GATT): a trade accord that has reduced worldwide tariffs and has existed for over six decades. Other results of this latest GATT conference: Reduced farm subsidies Increased protection for patents, copyrights, and trademarks. Included professional services under international trading rules Phased-out import quotas on textiles and clothing World Trade Organization (WTO): Organization that replaces GATT, overseeing GATT agreements, making

binding decisions in mediating disputes and reducing trade barriers o NAFTA North America free trade area Accord removing trades barriers among Canada, Mexico and the United States o The Free Trade Area of the Americas ( FTAA) Proposed free trade area stretching the length of the entire Western Hemisphere and designed to extend free trade benefits to additional nations in North, Central and South America o The European Union (EU) Customs union that is moving in the direction of an economic union by adopting a common currency, removing trade restrictions, and permitting free flow of goods and workers throughout the member nations. Includes 491 million people in 27 countries

Goals of the EU: To remove all barriers to free trade among its members To standardize currencies and business regulations To streamline laws and simplify transactions To strengthen its position in the world as a political and economic power Going Global o Globalization now affects almost every industry and every individual in the world, at least in some way. o Reasons for going global globalization of customers and competitors new customers in emerging markets reduced trade barriers advances in technology enhanced customer responsiveness Strategy for Entering International Markets o Importing and Exporting Import: bring in foreign goods to sell domestically or use as component parts Importing decisions must consider local demand, taking the following into account: Ability of a supplier to maintain quality levels Flexibility in filling orders that vary considerably Response time in filling orders Total costs (including import fees, packaging, and transportation) compared to costs of domestic suppliers. Exporting: marketing products to customers in other countries, alternatives: First-time exporters can reach foreign customers through several alternatives:

An export-trading company (ETC), which buys domestic products and resells them abroad An export-management company (EMC), which offers first-time exporters expertise in locating foreign buyers, doing paperwork, and meeting local requirements An offset agreement, which teams a small firm as a subcontractor to a major international corporation

o Contractual Agreements Franchising: an agreement in which a wholesaler or retailer (franchisee) agrees to meet the operating requirements of a manufacturer or other franchiser. The franchisee gets the right to sell the products and use the franchisers name as well as its marketing and management services Reduce risk by offering a proven concept Foreign licensing: an agreement that grants foreign marketers the right to distribute a firms merchandise or use its trademarks, patents, or processes in a certain geographic area. advantage: access to a local partners marketing information and distribution channels, protection from legal barriers, no capital outlay, quick entry into a foreign market, and access to markets that are closed to imports or direct investments. Subcontracting: an agreement that allows the production of goods and services by local companies. Using local subcontractors can prevent mistakes involving local culture and regulations, can avoid import duties, and can lower costs o International Direct Investment Direct investment in foreign firms, production facilities, or marketing facilities.

Requires high levels of involvement and can come with high risk, but may offer firms a competitive advantage. Forms of direct investment: Acquisition of an existing firm in target country Setting up of an independent division Formation of joint ventures From multinational Corporation to Global Marketer o Multinational Corporation: a firm with significant operations and marketing activities outside its home country. o Multinationals have grown to reflect the interdependence of world economies, the growth of international competition, and the globalization of world markets. o There is evidence that nations around the world are pushing forward with superior technology, strong services, and wellmade products. Developing an international marketing strategy o Global marketing strategy: Standard marketing mix with minimal modification in all foreign markets Brings the advantage of economies of scale to production and marketing activities Effectively market some products to segments in nations that share cultures and languages Approach works well for products with universal appeal, delivering messages to millions worldwide effective for luxury products that target upscale consumers around the world. o Multi-domestic marketing strategy: application of market segmentation to foreign markets by tailoring the firms marketing mix to match specific target market in each nation This strategy allows marketers to standardize some elements while customizing others o International product and promotion strategies o Same product Product Adaption New product

Same promotion

Straight extension One-product, one-message to create universal recognition (Coca-Cola) Promotion adaptation focus on customizing message about the item

Product Adaption focus on customizing features of the item

Different Promotion

Dual adaptation customize both product and promotion

Product invention take advantage of unique opportunity in a foreign market to create a new item

o o International Distribution Strategy Distribution is a vital aspect of overseas marketing, requiring proper channels and involving physical distribution problems. The distribution decision involves two steps: Choosing a method for entering a foreign market Determining how to distribute the product within the foreign market through that entry channel o Pricing Strategy Pricing can affect the success of an overall marketing strategy in foreign segments, and pricing decisions may be constrained by competitive, economic, political, and legal factors. Competitive, economic, political, and legal factors can limit pricing decisions. Adaptation to local markets. o Countertrade Form of exporting whereby goods and services are bartered rather than sold for cash Way to control balance-of-trade problems

Less developed nations often impose countertrade requirements when they lack the foreign currency to attain the products they need or want. Canada as Target for International Marketers o Foreign marketers regard Canada as an inviting target. High level of discretionary income. Relative political and economic stability. Favourable attitude toward foreign investment. o Who invests in Canada? The best-known industries that have established Canada production facilities are auto manufacturers. (Honda, for example) Companies in the natural resource sector are attractive for foreign investment.

Marketing Research
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The marketing research function o Marketing research: process of collecting and using information for marketing decision making Development of the marketing research function o Research is central to understanding effective customer satisfaction and customer relationship programs. o find out more about consumers, clearly central to effective customer satisfaction and long-term relationships. o Computer technology has significantly advanced market Who o o o research. conducts marketing research? The size and organizational form of the marketing research function are usually tied to the firms structure. Firms organize research units by product lines, brands, geographic areas, or the type of research needed. Many organizations depend on independent marketing research firms due to several factors: Cost is often the reason for using an external firm.

Information collected is often more reliable and accurate than what could be gathered in-house. Technical assistance and expertise not available within the contracting firm can be provided. Results may be more objective and unbiased since an outside firm has less tendency to set up a study just to validate a favoured theory or certain opinion. Types of research firm o Syndicated services: organization that provides standardized data to all customer Full-service research suppliers: marketing research organization that contracts with clients to conduct complete marketing research projects providing qualitative and quantitative data from field studies, face-to-face and phone interviews, online surveys, as well as public opinion polls,

o Limited-service research suppliers: marketing research firm that specializes in a limited number of research activities, such as conducting field interviews or performing data processing o Customer Satisfaction Measurement Program Focus on tracking the satisfaction level of a clients current customers. Also analyze partial or complete dissatisfaction to identify problem areas that need attention The marketing research process o Defined the problem A well-defined problem is half solved because it permits the researcher to focus on securing the exact information needed for the solution. Avoid confusing symptoms with the problem itself. To identify the problem itself, marketers need to look for the underlying causes of the symptom. To do this, a starting point might be to evaluate the firms target market and marketing mix element. o Conduct Exploratory research Exploratory research: process of discussing a marketing problem with informed sources both within a outside the firm and examining information from secondary sources Speaking with employees as well as evaluating company records, sales and profit analyses, and competitive data. Exploratory interviews with informed persons outside the firm are referred to as informal investigation Using internal data Sale analysis: in-depth evaluation of a firms sales

compares actual and expected sales based on forecasts, often using sales quotas to look at expected and actual results. one of the least expensive and most important sources of marketing information. Accounting data provides information about financial issues. compare current and previous years against industry benchmarks Marketing cost: evaluation of expenses for tasks

such as selling, warehousing, advertising, and delivery to determine profitability o Formulate a hypothesis A tentative explanation for some specific event. Sets the stage for in-depth research by clarifying what researchers need to test. about the relationship among variables that carries clear implications for testing this relationship. o Create a research design A master plan or model for conducting research Must ensure it will measure what researchers intend to measure o Collect data Secondary data Previously published information Advantage: less expensive to gather. less time to locate and use the data. Limitation Published data can quickly become obsolete. Data collected for an unrelated purpose may not be completely relevant to the marketers specific needs. Primary data Information collected specifically for the investigation at hand

results in richer, more detailed information than secondary data. Many marketing studies use both types. o Interpret and present research information Present in a format that allows managers to make effective judgments Researchers and end users must collaborate to ensure effectiveness of research. Reports must be clear and concise. Marketing research method o Secondary data collection Two types: Internal data includes sales records and activity reports, product performance reviews, sales force activity reports and marketing cost reports. External data comes from government records, syndicated research services, and industry publications. Government data : the nations most important source of marketing data and Census data represents the most frequently used government statistics. Private Data: Many organizations offer data through their own channels : Business and trade associations often offer data through their publications Online sources of secondary data o Sapling Technique Sampling: process of selecting survey respondents or research participation Population (universe): total group that researchers want to study Probability sample: sample that gives every member of the population a chance of being selective Types of probability samples: Simple random sample: population have equal opportunities of selection

Stratified sample: randomly selected subsamples of different groups are represented in the total sample provide efficient, representative Cluster sample: researchers select a sample of subgroups from which they draw respondents Non-probability sample: sample that involves personal judgments somewhere in the selection Types of nonprobability samples:

Convenience sample: selected from among readily available respondents Quota sample: sample that divided to maintain the proportion of certain characteristics among different segments or groups as is seen in the population as a whole o Primary Research method Observation Method Researchers view the overt actions of the subjects studied, trying to understand how consumers behave in certain situations Example: traffic counts, Nielson television ratings Interpretative research Ethnographic Studies observational method developed by social anthropologists to explain behavior that operates below conscious thought. It provides insights into consumer behaviour and the ways in which consumers interact with brands. Its conducted by observing customers in their natural setting, then interpreting their behaviour based on social and cultural characteristics of that setting used domestically to look at consumer behavior in a foreign country, where

language, ideals, values, and expectations are subject to different influences. Focuses on understanding the meaning of a product or the consumption experience in a consumers life. Survey and Interview Method o Telephone interviews: quick and inexpensive method for obtaining a small quantity of relatively impersonal information. o Personal interviews: the interviewer can establish rapport and explain confusing or vague questions time-consuming and expensive. o Focus groups: brings together individuals in one location to discuss a subject for an hour or two with a moderator to stimulate conversation and encourage interaction. o Mail surveys: a cost-effective alternative, providing anonymity that may encourage respondents to give candid answers o Online surveys and other Internet-based

methods Experimental Method o Controlled experiment: scientific investigation in which a researcher manipulates a test group and compares the results with those of a control group that did not receive the experimental manipulation o Test marketing follow periods of information gathering or focus groups, so it would be the first stage at which a product performs in a real-life environment. Disadvantages: expensive and labour-intensive operation. Some products arent suited to test marketing Competitors quickly learn about the new product and can develop competitive strategies. Conducting International Marketing Research o Follow same basic steps as for domestic marketing research

o Researchers must be aware of cultural and legal environments. o May have to adapt research methods to local conditions o Challenges of conducting international marketing research: Language issues Cultural issues Business environment Computer Technology in Marketing Research o Marketing Information System (MIS) A planned, computer-based system designed to provide decision makers with a continuous flow of information relevant to their areas of responsibility Marketers are able to store the data for later use, classify and analyze that data, and retrieve it easily when needed o Marketing Decision Support System (MDSS) Marketing information system component that links a decision maker with relevant databases and analysis tools helps users quickly obtain and apply information as a foundation for decision making. Allows managers to connect such diverse changes. Major characteristics: it is interactive, investigative, flexible, and accessible. While the MIS provides raw data, the MDSS develops that data into useful information. o Data Mining Process of searching through customer databases to detect pattern that guide marketing decision making Focuses on identifying relationships that are not obvious to marketers Create customer profiles, pinpoint reasons for customer loyalty (or lack of loyalty), analyze the potential returns on price and promotion changes, and forecast sales. Business Intelligence

Process of gathering information and analyzing it to improve business strategy, tactics, and daily operations. Competitive Intelligence Focuses on finding information about competitors using published sources, interviews, observations by salespeople and suppliers in the industry, and other sources Marketers use the results to make better decisions that strengthen their own competitive

advantage. Sales Forecasting o An estimate of a firms revenue for a specified future period o Forecasts play major roles in new-product development, production scheduling, financial planning, inventory planning and procurement, distribution, and human resource planning. o Types of sales forecasting methods Qualitative Forecasts: techniques that rely on subjective data rather than exact historical data Jury of executive opinion: assets the sales expectations of various executives Delphi technique: solicits opinions from several people, but also gathers thoughts from experts outside the firm, such as academic researchers. Sales force composite: develops forecasts based on the belief that organization members closest to the marketplace offer the best insights concerning short-term future sales.

Survey of buyer intentions: gathers input from various sources to determine the purchasing intentions of a representative group of present and potential customers. Quantitative Forecasting Techniques: techniques that rely on statistical computations. Test markets

Trend analysis: develops sales forecasts by analyzing the historical relationship between sales and time Exponential smoothing: sophisticated version of trend analysis, weighing each years sales data and giving greater weight to results from most recent years. Each method has benefits and limitations; most firms rely on a combination of the two.