MARK Exam 2 Study Guide
MARK Exam 2 Study Guide MARK 3001
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This 40 page Study Guide was uploaded by Kyla Brinkley on Tuesday October 6, 2015. The Study Guide belongs to MARK 3001 at University of Georgia taught by Kimberly Grantham in Summer 2015. Since its upload, it has received 367 views. For similar materials see Principles of Marketing in Marketing at University of Georgia.
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Date Created: 10/06/15
Kyla Brinkley MARK 3001 Notes Fall 2015 EXAM 2 STUDY GUIDE I Chapter 10 Marketing Research a Marketing research a prerequisite of successful decision making A set of techniques and principles for systematically collecting recording analyzing and interpreting data that can aid decision makers involved in marketing goods services or ideas Successful marketers know when research will help their decision making and take the steps to get the info they need Marketing research provides crucial link between firms and their environments enabling them to be customer oriented Useful for i Corporate ii Retail iii Nonprofit iv Government organizations The Marketing Research Process i Will the research be useful ii ls top management committed to the project iii Should project be small or large iv plan entire project in advance v Step 1 Defining Objectives amp Research Needs 1 Researchexpensive time consuming 2 Marketers must clearly define objective 3 Assess value of project through comparison of benefits and costs vi Step 2 Designing the Research 1 Identify type of data needed amp research necessary to collect it 2 People aren t always totally truthful in surveys a So researchers observe customers Step 3 Data Collection Process 1 Secondary data pieces of information that have already been collected from other sources and usually are readily available a Includes externalinternal data sources vii 2 Primary data data collected to address specific research needs a Ex focus groups indepth interviews surveys 3 Sample group of customers who represent the customers of interest viii Step 4 Analyzing Data amp Developing Insights 1 Researchers analyze and make use of collected data raw numbers or facts 2 When data is interpreted becomes information organized analyzed interpreted data that offer value to marketers ix Step 5 Action Plan and Implementation 1 Prepare results to present them to decision makers who undertake appropriate marketing strategies 2 Marketing research presentation includes a Executive summary b Body of report c Conclusions d Limitations e Supplemental tables figures appendixes f Secondary Data i Comes from free or cheap external sources 1 Census data 2 Info from trade associations 3 Reports in magazines a Consumer reports ii Useful for politicians iii Inexpensive External Secondary Data 1 Quick access low cost 2 Don t meet researcher s needs 3 May not be relevanttimely 4 Easy access doesn t mean trustworthy iv Syndicated External Secondary Data 1 Syndicated data available for a fee from commercial research firms like Information Resources Inc lRl National Purchase Diary Panel and ACNielsen 2 Useful for consumer packaged goods firms that sell to wholesalers because it s hard for them to gather data directly from the retailers that sell their products to consumers 3 Scanner data type of syndicated external data used in quantitative research Obtained from scanner readers of UPC codes at checkout counters a Grocery stores b Data acquired by big marketing research firms like ACNielsen 4 Panel data information collected from a group of consumers a Over time b Records of what they ve purchased secondary data and responses to surveys primary data 5 Panel amp scanner data provide firms with a comprehensive picture of what consumers are buying a Difference is how the data is aggregated i Scanner research focuses on weekly consumption of a product ii Panel research focuses on weekly consumption by a person or household v Internal Secondary Data 1 Useful customer info purchase history 2 Data warehouses large computer files that store millions amp billions of individual data 3 Data mining the use of a variety of statistical analysis tools to uncover previously unknown patterns in the data stored in databases or relationships among variables a Helps retailers place products identify customers b Helps firms group clients c ldentify when customers unhappy 4 Churn the of consumers who stop using a product or service divided by the avg of consumers of that product a Helps company focus on what it does best 5 the purpose of converting data to information is to describe explain predict ampor evaluate a particular situation 6 Firms use secondary data to assess the profitability of their customers by determining the customer lifetime value CLV g Primary Data Collection Techniques i Depending on the nature of the research problem the primary data collection method can employ a qualitative or quantitative research method ii Qualitative research informal research methods including observation following social media sites in depth interviews focus groups and projective techniques 1 Open ended responses iii After qualitative research firms do quantitative research structured responses that can be statistically tested to confirm insights and hypotheses generated via qualitative research or secondary data 1 Confirms insights made via qualitative research iv Observation 1 Observation an exploratory research method that entails examining purchase and consumption behaviors through personal or video camera scrutiny 2 Can be brief watching teens shop in mail for 2 hrs or extensive researcher living with family to observe product use 3 Best method to determine how consumers might use a product 4 Should people be informed that they are being watched v Social Media 1 Data source for marketers 2 Cross reference social media commentary with consumers past purchases 3 Blogs a Unaffiliated with the companies that produce the items that they review b No reason to hold back from negative commentary 0quot vi 1 2 3 4 5 vii Focu 1 Reviews Online communities for companies a People with same issues and concerns Companies adding heads of social media to management teams Learn about customer perceptions and resolve complaints Sentiment mining data gathered by evaluating customer comments posted through social media sites like Facebook Twitter a Consumer comments b Data analyzed c Qualitative data d Some companies join the online convo social engagement lnDepth Interviews lndepth interview an exploratory research technique in which trained researchers ask questions listen to and record the answers and then pose additional questions to clarity or expand on a particular issue Provide insights to help managers understand industry Establish historical context Communicate people s feelings about product at individual level Expensive and time consuming 3 Group Interviews Focus group interviews a research technique in which a small group of persons usually 812 comes together for an intensive discussion about a particular topic with the conversation guided by a trained moderator using an unstructured method of inquky Predetermined general outline of topics of interest Record interaction to analyze later Some feature in ads a Ex dominos Innovative ideas stemming from marketing research aren t limited to new products 6 a Used to improve old Online technology big benefit a No travel necessary b Saves costs c Broader range of people d No video though lose body language info viii Survey Research 1 Survey a systematic means of collecting information from people that generally uses a questionnaire Questionnaire a form that features a set of questions designed to gather information from respondents and thereby accomplish the researcher s objectives questions can be either unstructured or structured a Unstructured questions open ended questions that allow respondents to answer in their own words b Structured questions closed ended questions for which a discrete set of response alternatives or specific answers is provided for respondents to evaluate ix Developing a Questionnaire is Part Art and Part Science P PP JNT gt193 Carefully designed questions Can t be misleading Must address 1 issue at a time Worded in comfortable vocabulary Sequence a General questions b Specific questions c Demographic questions Professional clear layout Marketing surveys conducted online or offline a Online offer researchers chance to develop database quickly b Offline provides more direct approach Web surveys quantitative a Tight deadlines b Small budgets c High response rates d Fast results e Simple reports with graphics and charts easily made f Surveymonkey x Panel and ScannerBased Research 1 Can be secondary or primary 2 Panel for primary data xi Experimental Research 1 experimental research experiment a type of conclusive and quantitative research that systematically manipulates one or more variables to determine which variables have a causal effect on another variable xii Advantages and Disadvantages of Primary and Secondary Research 1 Secondary research a Advantages i Saves time in collecting data because they are readily available ii Free or inexpensive except for syndicated data b Disadvantages i May not be precisely relevant to information needs ii lnfo may not be timely iii Sources may not be original so usefulness is an issue iv Methodologies for collecting data may not be appropriate v Data sources may be biased 2 Primary research a Advantages i Specific to the immediate data needs and topic at hand ii Offers behavioral insights generally not available from secondary research b Disadvantages i Costly ii Time consuming iii Requires more s0phisticated training amp experience to design study and collect data h Emerging Technology amp the Ethics of Using Consumer Information VI vii FOR REVIEW Strong ethical orientation must be an integral part of the firms marketing strategy amp decision making American Marketing Association guidelines for research 1 Prohibits selling or fundraising under the guise of conducting research 2 Supports maintaining research integrity by avoiding misrepresentation or the omission of pertinent research data 3 Encourages the fair treatment of clients amp suppliers Marketing research should only be used to produced unbiased factual information Threats to consumers personal info grows with technology advances 1 Mannequins with hidden cameras 2 Abusing access to data is wrong 3 Security breaches abused data 4 Consumers want control over the info collected about them Firms notify customers that their info is safe Social media neuromarketing facial recognition software don t have many laws yet 1 Targeting specific ads when recognizing customers Biometric data digital scanning of the physiological or behavioral characteristics of individuals as a means of identification 1 Facial characteristics 2 lris scans 3 Fingerprints 4 Ex Facebook facial detection for tagging collects biometric data The Marketing Research Process 1 Defining the objectives and research needs 2 Designing the research 3 Data collection process 4 Analyzing data and developing insights 5 Action plan and implementation Qualitative Research 1 Observation 2 lndepth interviews 3 Focus groups 4 Social media 5 Data collection research Quantitative Research Experiments Survey Scanner Panel Data collection research U PSDNT Chapter 11 Product Branding and Packaging Decisions a A product is anything that is of value to a consumer and can be offered through a voluntary marketing exchange b Complexity amp Types of Products i Complexity of Products 1 Core customer value the basic problem solving benefits that consumers are seeking 2 Actual product the physical attributes of a product including brand name featuresdesign quality level packaging 3 Associated services augmented product non physical attributes of the product including product warranties financing product support and after sale service a Amount varies with type of product ii Types of Products 1 Affects marketing mix 4Ps product price place promotion 2 Consumer products products amp services used by people for personal use 3 Specialty Productsservices productsservices toward which customer shows a strong preference and for which they will expend considerable effort to search for best suppliers a Enthusiasts 4 Shopping productsservices those for which consumers will spend time comparing alternatives a Ex apparel fragrances appliances 5 Convenience productsservices those for which the consumer isn t willing to spend any effort to evaluate prior to purchase 6 Unsought Productsservices products or services consumers either don t normally think about buying or do not know about a Require lots of marketing effortforms of promotion b Newtotheworld products introduced c Product Mix amp Product Line Decisions vi vii viii Product mix product assortment the complete set of all products offered by a firm Mix consists of product lines groups of associated items such as those consumers use together or think of as part of a group of similar products A firm s product mix breadth is the number of product lines offered by a firm variety 1 Ex Kellogg s cereal pastriessnacks cookiescrackers naturalorganicfrozen items Product line depth the number of categories within a product line 1 Ex types of Kellogg s breakfast snacks nutrigrain special k pop tarts Adding unlimited numbers of new products can have bad consequences Too much breadthcostly to maintain Too many brands can weaken firm s reputation Increase Depth 1 Address changing consumer preferences 2 Preempt competitors while boosting sales Decrease Depth 1 Delete products within a product line to realign firm s resources 2 Decision never taken lightly 3 Prune product lines to eliminate unprofitable items x Decrease Breadth 1 Delete entire product lines to address changing market conditions or meet internal strategic priorities xi Increase Breadth 1 Add new product lines to capture newevolving markets 2 Increase sales 3 Complement an existing product line d Branding i Company lives or dies based on brand awareness i Consumers can t buy product they don t know exists i i Branding allows firm to differentiate from competitors iv Customers choose one brand over another because of associations they evoke v Value of Branding for the Customer 1 Brands add value to merchandise and services for consumers and sellers 2 Brands Facilitate Services a Easily recognized b Quality level c Familiar attributes d Help consumers make quick decisions 3 Brand Establish Loyalty a Consumers trust certain brands b Wont switch if they trust brand 4 Brands Protect from Competition and Price Competition a Strong brands are somewhat protected from competition from other firmsprice competition b More established c Loyal customers d Higher perceived quality allows command of a premium price 5 Brands are Assets a For firms brands are assets that can be legally protected thru trademarks amp copy rights b Brand names can t be used directly or indirectly by others 6 Brands Affect Market Value a Wellknown brands have direct impact on firm s bottom line b Value of company is overall monetary worth comprising vast number of assets vi Brand Equity for the Owner 1 Brand equity the set of assets amp liabilities linked to a brand that add to or subtract from the value provided by the product or service 2 Brands are assets a firm can build manage amp harness over time in increase revenueprofitability 3 Responsible marketing expenditures result in greater brand recognition awareness perceived value customer loyalty a Enhance brand s overall equity 4 Brand Awareness measures how many consumers in a market are familiar with the brand and what it stands for and have an opinion about a More aware easier decision making process improving chance of purchase b Familiarity matters most for products bought without much thought ex soap gum i But also for products rarelynever bought before ii Brand makes it seen as valuable c Brand elements Brand name it Logo iii Symbol iv Character v Packaging vi Slogan d Some brands have such predominance become name for entire generic product category i Ex Kleenex BandAids Rollerblades ii Must protect brand names can lose trademark status 5 Perceived Value the relationship between a product s or service s benefits and its cost a Compared to competition b If cheaper brand is seen as same quality as premium brand it has high perceived value 6 Brand associations the mental link that consumers make between a brand and its key product attributes can involve a logo slogan or famous personality a Advertisingpromotional efforts 7 Brand Loyalty occurs when a consumer buys the same brand s product or service repeatedly over time rather than buying from multiple suppliers within the same category a Rewards for customer loyalty b Loyal customers are valuable to firms c Marketing cost of reaching loyal customers is lower don t need persuasion to be attracted d Loyal customers tend to praise products positive word of mouth e Brand loyalty insulates firm from competition e Branding Strategies i Brand Ownership strategies 1 Manufacture brands National brands brands owned amp managed by the manufacturer a Able to choose appropriate market segmentspositioning b Build brandbrand equity 2 Retailerstore brands private label brands products developed amp marketed by a retailer and only available from that retailer a Popular recently b Manufacturers more willing to develop private label merchandise and use it to establish distinctive identity ii Naming Brands amp Product Lines 1 More the products vary in their usage or performance the more likely it is that the firm should use individual brands 2 Family brand a firm s own corporate name used to brand its product lines and products a Individual brands benefit from overall brand awareness associated with the family name 3 Individual brand the use of individual brand names for each of a firm s products a Ex Keebler cookies within Kellogg s iii Brand and Line Extensions 1 Brand extension the use of the same brand name for new products being introduced to the same or new markets a Increase in breadth 2 Line extension the use of the same brand name within the same product line Represents an increase in a product line s depth a Already well established b Perceptions already made c Complementary products 3 Brand dilution occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold a Ex Cheetos lip balm Iifesavers soda 4 To prevent negative consequences of brand extensions a Evaluate fit within product categories b Evaluate customer perceptions c Refrain from extending brand name to too many products d Firms should consider whether brand extension would be distanced from the core brand iv CoBranding the practice of marketing 2 or more brands together on the same package or promotion 1 Can enhance consumer s perceptions of product quality by signaling unobservable product quality through links between quality brands 2 Ex pizza hut and taco bell in one store space 3 Appeal to diverse market segments 4 Creates risks if consumer profiles too different v Brand Licensing a contractual agreement between firms whereby one firm allows another to use its brand name logo symbols or characters in exchange for a negotiated fee 1 Firm that provides right licensor 2 Firm that obtains right licensee 3 Common for toys accessories apparel entertainment products video games 4 Use of characters from other media a Disney products b Star wars c NBA NFL 5 Effective form of attracting visibility 6 Risks dilution of brand equity through overexposure vi Brand repositioning rebranding a strategy in which marketers change a brand s focus to target new markets or realign the brand s core emphasis with changing market preferences 1 Can improve brand s fit with target segment or boost vitality of old brands 2 Costs and risks a Expensive b Changes to brand s image 3 Sometimes necessary f Packaging i Primary package the packaging the consumer uses like a toothpaste tube from which he or she typically seeks convenience in terms of storage use amp consumption ii Secondary package the wrapper or exterior carton that contains the primary package and provides the UPC label used by retail scanners can contain additional product information that may not be available on the primary package 1 The box the toothpaste comes in 2 Add consumer value iii Attracts customers attention iv Promotional tool v Allows same product to appeal to diff markets of diff sizes vi Changedupdated to reposition 1 Product looks new to customers 2 Some make product look more ecofriendly vii viii FOR REVIEW Sometimes backfires 1 Tropicana juice carton changes people angry 2 Tropicana misjudged its customer loyalty Wrap rage 1 Products difficult to open makes customers mad 2 Convenient packaging important Helps suppliers save 1 Packaged goods secretly have less product consumers don t notice 2 Sell them for same price making Product Labeling 1 Labels provide info for consumer 2 Safety precautions 3 Labels are closely monitored 4 Ingredients 5 Allergy concerns for food Types of Products 1 Specialty 2 Shopping 3 Convenience 4 Unsought lll Chapter 12 Developing New Products a Exhilarating something never seen before b Why Do Firms Create New Products I ii iii iv VI Provide value to firms and customers Usually not TOTALLY new just improvedrepositioned Better than before Innovation the process by which ideas are transformed into new products amp services that will help firms grow 1 Without innovation firms have 2 choices continue to market current products to current customers or take same product to another market with similar customers 3 of new products actually succeed Firms use innovation because of long term benefits vii Changing Customer Needs 1 Createdeliver value more effectively 2 Customers not bored 3 Identify problemsdevelop products to help research viii Market Saturation 1 The longer a product exists in the marketplace the more likely it is that the market will become saturated 2 Without new products value of firm declines 3 Niche markets a General mills gluten free products ix Managing Risk Through Diversity 1 Through innovation firms create a broader portfolio of products a Diversify risk b Enhance firm value 2 Firms with multiple products better withstand external shocks a Changes in consumer preferences b Intensive competitive activity c Keebler varied cookies x Fashion Cycles 1 Apparel books software a Rely on trends b Short product life cycles c Beat the video game clothes out of style no reason to buy more books if no new titles xi Improving Business Relationships 1 Sometimes new products improve relationships w suppliers 2 Stock products better c Diffusion of Innovation the process by which the use of an innovation whether a product or a service spreads throughout a market group over time and over various categories of adopters i helps marketers understand rate at which consumers are likely to adopt a new product or service ii identify potential marketspredict potential sales vi vii pioneers breakthroughs new product introductions that establish a completely new market or radically change both the rules of competition amp consumer preferences in a market 1 iPod first movers product pioneers that are the first to create a market or product category making them readily recognizable to consumers amp thus establishing a commanding amp early market share lead 1 can command a greater market share over a longer time period than later entrants can 2 establish market alone pave way for followers 3 pioneer product is usually less sophisticatedpriced higher most new products are failures 1 failure to assess the market properly with product testing 2 targeting wrong segment 3 poor positioning 4 overextend abilities of the brand Innovators those buyers who want to be the first to have the new product or service 1 Enjoy taking risks 2 Knowledgeable 3 The person who camped out in front of the store for a new product 4 Talking to experts well informed 5 Represent 25 of the market for new products 6 Crucial to new product success help product gain market acceptance 7 Positive word of mouth Early Adopters the second group of consumers in the diffusion of innovation model after innovators to use a product or service innovation generally don t like to take as much risk as innovators but instead wait and purchase the product after careful review 1 Probably went to see a new movie a week or two after it opened 2 Enjoy novelty 3 Opinion leaders viii xi 4 135 of buyers in market 5 Spreads word 6 If this group is small number of people who adopt product will be small Early Majority a group of consumers that represents approx 34 of the population members don t like to take much risk amp therefore tend to wait until bugs are worked out of a particular product or service few new products amp services can be profitable until this large group buys them 1 lfthis group isn t big enough the product will probably fail 2 Rents the new movie when it comes out on DVD a Little risk reviews are in and costs are lower 3 By the time they enter the market the amount of competitors has reached peak many options available to them Late Majority last group of buyers to enter a new product market when they do the product has achieved its full market potential 1 Wait until they can rent the movie or watch it on Netflix 2 Sales have leveled off or are in decline 3 34 of the market Laggards consumers who like to avoid change amp rely on traditional products until they re no longer available 1 16 of the market 2 May never adopt a new product 3 Will probably watch that new movie when it s not new and it s on regular TV 2 years later Using the Diffusion of Innovation Theory 1 Firms can predict which types of customers will buy their new product or service immediately after its introduction and later as it s more accepted by the market 2 Different products diffuse at different rates 3 Marketers must understand diffusion curve for each new product 4 Relative Advantage a If a product is perceived to be better than substitutes the diffusion will be fast 5 Compatibility a Diffusion process may be faster or slower depending on various consumer features b International cultural differences 6 Observability a When products easily observed benefits or uses are easily communicated to others b Enhances diffusion process 7 Complexity amp trialability a Products that are less complex are easy to try b Diffuse faster amp lead to greaterfaster adoption than those that aren t as easy to try d How Firms Develop New Products ldea Generation 1 pop To generate ideas for new products firm can use internal research and development RampD efforts collaborate with other firms license technology brainstorm research competitors and conduct consumer research Firms that want to be pioneers rely on RampD lnternal Research amp Development a Many firms have own RampD departments b Want products to be profitable enough to make costs of RampD worthwhile c Firms hope that the few successful products they have will cover losses from other new products RampD Consortia a Consortia groups of other firmsinstitutions to explore new ideasobtain solutions for developing new products b In many cases consortia includes pharmaceuticalhigh tech members Licensing a Firms buy the rights to use the technology or ideas from other researchintensive firms through a licensing agreement b Saves high costs of inhouse RampD 6 Brainstorming a Firms often engage in brainstorming sessions where group works together to generate ideas b No idea can be immediately accepted or rejected c Moderator may channel participants attention to specific product featuresattributes performance expectations or packaging d Vote on best ideas at end of meeting 7 Outsourcing a Firm turns to an outside firm to help generate new products 8 Competitor s Products a Reverse engineering involves taking apart a competitor s product analyzing it and creating an improved product that does not infringe on the competitor s patents if any exist i copycat products ii widespread 9 Consumer lnput a Listening to the customer in BZB amp BZC markets is essential for successful idea generation b BZB products i Few customers i Firms can follow product use closely iii Focus groupsinterviewssurveys iv Joint effort increase probability that customer will buy product c BZC products i Observing customer behavior to determine need for new product ii Monitor feedback in online communities 1 Twitter 2 Yelp iii Lead users innovative product users who modify existing products according to their own ideas to suit their specific needs 1 Studying lead users helps the firm understand general market trends that might be just on the horizon ii Concept Testing 1 Concepts brief written descriptions of a product or service its technology working principles and forms and what customer needs it would satisfy 2 Concept testing the process in which a concept statement that describes a product or service is presented to potential buyers or users to obtain their reactions a Reactions allow developers to estimate sales value make changes to enhance sales value determine if idea is worth more development b Helps firm avoid costs of unnecessary development c Uses research techniques 3 Ask respondent s purchase intentions if product were made available a Does it satisfy a need other products aren t meeting b Frequency of purchase c Why they would buy it d When they would buy it iii Product Development 1 Product development product design entails a process of balancing various engineering manufacturing marketing amp economic considerations to develop a product s form amp features or a service s features 2 Engineering team develops prototype the first physical form or service description of a new product still in rough or tentative form that has the same properties as a new product but is produced through different manufacturing processes sometimes even crafted individually 3 Alpha testing an attempt by the firm to determine whether a product will perform according to its design amp whether it satisfies the need for which it was intended occurs in the firm s RampD department a Many people are concerned when alpha testing involves tests on animals esp pharmaceuticalscosmetics 4 Beta testing having potential consumers examine a product prototype in a realuse setting to determine its functionality performance potential problems amp other issues specific to its use iv Market Testing 1 Premarket test conducted before a product or service is brought to market to determine how many customers will try and then continue to use it a According to small group of potential customers b Ex Nielsen BASES test c determine effectiveness of advertising 2 Test marketing introduces a new product or service to a limited geographical area usually a few cities prior to a national launch a Strong predictor of product success because firm can study actual purchase behavior i More reliable than simulated test b Includes all elements of marketing mix c Costs more and takes longer than premarket tests i Advantage to competitors who can launch a similar or better product without test marketing d Can estimate demand for entire market v Product Launch 1 If testing returns with positive results launch product to entire market 2 Expensive 3 Coordinate marketing mix 4 Failed product launches can make it hard for product and even firm to recover Confirms target marketdecides positioning Promotion a Trade promotions advertising to wholesalers or retailers to get them to purchase new 039quot b products often through special pricing incen ves i Combine introductory price promotions special events amp personal selling Introductory price promotions shortterm price discounts designed to encourage trial c Trade show major events attended by d 7 Place a 509193 8 Pric buyers who choose to be exposed to products and services offered by potential suppliers in an industry i Fashion weeks Promoting in advance Manufacturer coordinates delivery amp storage of new products with retailers Where it should be stored How much should be stored How it should be packaged How to place price stickers Merch maintenance a Setting prices is a supply chainwide decision b Manufacturer s suggested retail price MSRP the price that manufacturers suggest retailers use to sell their merchandise Better to start with high MSRP then lower it over time Slotting allowance fees firms pay to retailers to get new products into stores or to gain more or better shelf space for their products 9 Timing a Timing of launch is important depending on product b GPG rated movies are released in summer when kids out of school vi Evaluation of Results 1 Post launch review 2 Determine if it was a success or failure 3 Determine changes needed 4 Panel data 5 Estimate market demand to adjust marketing mix 6 Some products never make it past introduction 7 phase Measure of success a Satisfaction of technical requirements b Customer acceptance c Satisfaction of financial requirements e The Product Life Cycle defines the stages that new products move through as they enter get established in and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning i Stages of life cycle reflect market trends 1 Ex healthy lifestyle Introduction stage stage of the product life cycle when innovators start buying the product P PWNT Usually starts with single firm Innovators try it lnitial losses to firm due to high startup costs Low levels of revenue as product takes off If product is successful may start to see profit at end of this stage Growth stage stage of the product life cycle when the product gains acceptance demand and sales increase and competitors emerge in the product category 1 2 3 4 5 Growing of product adopters Growth in industry sales Increase in competitorsproduct versions Firm attempts to reach new consumers by studying preferences Firms that haven t established stronghold in the market may decide to exit industry shakeout Maturity stage state of the product life cycle when industry sales reach their peak so firms try to rejuvenate their products by adding new features or repositioning them 1 2 3 4 Some products ex home appliances stay in this stage for a long time Adoption by late majority lntense competition Marketing costs increase vi vii FOR REVIEW Price competition price lowering Towards end almost all potential customers have already adopted product 7 Entry into New Markets or Market Segments a Market is saturated b Firms attempt to enter new geographical markets i International markets 8 Development of New Products a Firms continually introduce new products with improved features b Find new users for existing products c Able to maintaingrow market shares Decline state of the product life cycle when sales decline and the product eventually exits the market 1 Firms position themselves for niche segment of diehard consumers or those with special needs 2 Or exit the market 3 Laggards finally try product 4 Ex vinyl LP records The Shape of the Product Life Cycle Curve 1 Bell shaped with regard to sales amp profits IN THEORY 2 IN REALITY each productservice category has own shape 3 Products that are adopted early in the product life cycle move faster across the stages Strategies Based on Product Life Cycle Some Caveats 1 Product life cycle concept provides starting point for managers to think about the strategy they want to implement during each stage 2 Must be used with care 3 Don t know exactly what stage product is in 4 New research important 0391 Diffusion of Innovation Model 1 Innovators 2 Early adopters 3 early majority 4 late majority 5 Iaggards The Product Develooment Process 1 idea generation a development of viable new product amp ideas 2 concept testing a testing the new product idea among a set of potential customers 3 product development a development of prototypes andor the product 4 market testing a testing the actual products in a few test markets 5 product launch a fullscale commercialization of the product 6 evaluation of results a analysis of the performance of the new product and making appropriate modifications Product Life Cvcle Stages introduction growth maturity decHne P9053 IV Chapter 15 Supply Chain and Channel Management a Marketing channel management AKA supply chain management Refers to a set of approaches amp techniques firms employ to efficiently amp effectively integrate their suppliers b The Importance of Marketing ChannelSupply Chain Management i Unless firms can secure the placement of products in appropriate outlets in sufficient quantities exactly when customers want them they re likely to fail ii Wholesalers those firms engaged in buying taking title to often storing amp physically handling goods in large quantities then reselling the goods usually in smaller quantities to retailers or industrial or business users iii Marketing Channels Add Value 1 Each participant in the channel adds value iv Marketing Channel Management Affects Other Aspects of Marketing 1 Distribution center a facility for the receipt storage and redistribution of goods to company stores or customers may be operated by retailers manufacturers or distribution specialists 2 Advertisingpromotion must be coordinated with depts that control inventorytransportation c Designing Marketing Channels i When firm starts out can t choose who it buys from or seHsto ii Direct Marketing Channel the manufacturer sells directly to the buyer 1 Seller can be an individual 2 Common goals sustain relationship iii Indirect marketing channel when one or more intermediaries work with manufacturers to provide goods amp services to customers 1 Can have 1 or multiple intermediaries 2 Wholesalers more common when company doesn t buy in sufficient quantities to make it cost effective for manufacturer to deal directly with them and in less developed economies d Making Information Flow Through Marketing Channels i Flow 1 Customer to Store 1 Universal product code UPC the black amp white bar code found on most merchandise 2 Has 13 digit code that shows manufacturer description packaging info promotions ii Flow 2 Store to Buyer 1 Point of sale terminal records purchase info amp sends it to buyer electronically iii Flow 3 Buyer to Manufacturer 1 Purchase info is aggregated by retailer as a whole creating order for new merchandise iv Flow 4 Store to Manufacturer 1 In some situations sales transaction data are sent directly from the store to the manufacturer and they decide when to ship more merchandise to distribution centersstores 2 Other situations ordering process done automatically bypassing buyers v Flow 5 Store to Distribution Center 1 Store communicate with distribution center to coordinate deliveries amp check inventory status 2 When store inventory drops to certain level more products are shipped to the store vi Flow 6 Manufacturer to Distribution Center amp Buyer 1 When manufacturer ships products to distribution center it sends advanced shipping notice an electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment vii Data Warehouse 1 Purchase data collected at the point of sale goes into a huge database data warehouse 2 CEO uses it to look at how company is doing in general 3 Electronic data interchange EDI the computer to computer exchange of business documents from a retailer to a vendor and back a Let s vendors transmit info about i Inventory status ii Vendor promotions iii Cost changes iv Purchase order info v Order status info vi Retail price info vii Transportation routings b Also facilitates communication 4 Vendormanaged inventory VMI an approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailer s inventory levels in each of its stores a Better match retail demand to supply b Reduce vendorretailor costs i Don t have to place orders anymoremonitor viii Push vs Pull Marketing Channels 1 Push marketing strategy designed to increase demand by motivating sellers wholesalers distributors or salespeople to highlight the product rather than the products of competitors amp thereby push the product onto consumers a Specified quantities shipped pushed to distribution centers at predetermined times b Manufacturer works with wholesalersretailers to get products on shelf by providing incen ves 2 Pull marketing strategy designed to get consumers to pull the product into the supply chain by demanding it a Amount of merchandise sent to store is determined based on sales date captured by PCS terminals Marketing campaigns to attract customers Less likely to be overstocked or out of stocked Increases inventory turnover More responsive to changes in customer demand More costly Some retailers don t have flexibility Inefficient if merch doesn t have steady predictable demand e Making Merchandise Flow Through Marketing Channels i Deciding where merch will go ii Distribution Centers vs Direct Store Delivery 1 Ultimate decision usually up to the retailer 2 Depends on what type of merch 3 Advantages to using distribution center a More accurate sales forecasts are possible b Enable retailer to carry les merchandise in individual stores c Easier to avoid running out of stock or overstocking d Retail store space is more expensive than distribution center amp distribution centers can prepare products for sale better 919 D39CQTquot 4 Distribution centers aren t necessary if retailer only has a few outlets and if outlets are in metropolitan areas 5 Direct store delivery also better for perishable goods like food or for items that manufacturer wants to be the first to sell fads iii The Distribution Center 1 Management of Inbound Transportation a Buyersplanners involved in coordinating physical flow of merch to stores b Planners employees responsible for the financial planning amp analysis of merch amp its allocation to stores Truck must arrive at certain time Some retailers believe they can lower net merch cost amp better control merch flow if they negotiate directly with delivery companies 2 Receiving amp Checking Using UPC a Receiving the process of recording the receipt of merch as it arrives at a distribution center or store b Checking is the process of going through goods upon receipt to make sure they arrived undamaged and are the right things c Use of EDI ASN UPC RFlD facilitate process d Radio frequency identification RFID tags tiny computer chips that automatically transmit to a special scanner all the info about a container s contents or individual products i More info than UPC code ii Tracking device 3 Stores amp CrossDocking a After merch is received amp checked it is either stored or cross docked b Cross docked merch ready for sale is placed on conveyor system that routes it from unloading dock where it was received to loading dock for truck going to store 4 Getting Merchandise FloorReady Q9 a Floor ready merchandise is ready to go on sales floor b Ticketing marking placing garments on hangers Some items ship ready to sell Ticketing amp marking creating price and identification labels amp placing them on the merchandise i More efficient to do this at distribution centers instead of stores ii Expensive time consuming 5 Preparing to Ship Merchandise to a Store a At start of day computer system generates list of items to be shipped to each store that day b Pick ticket a document or display on a screen in a forklift truck indicating how much of each item to get from specific storage areas 6 Shipping Merchandise to Stores a Complex b Distribution centers run 50100 outbound truck routes in 1 day c Sophisticated routingscheduling computer systems iv Inventory Management through JustinTime Inventory Systems 1 Marketing channel management solves distribution problems faced by firms 2 Mistakes lengthened time to get merch to customersmade process more expensive 3 Justintime JIT inventory systems inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems the firm gets the merchandise just in time for it to be used in the manufacture of another product in the case of parts or components or for sale when the customer wants it in the case of consumer goods also known as quick response QR systems in retailing a Developed by Toyota in 1950s and popular with stores like Zara amp Forever 21 Q9 b Reduced lead time amount of time between recognizing order needs to be placed ad arrival or merch at the store Increased product availability Lower inventory investment 19 FOR REVIEW Direct channel manufacturergtcustomer Direct channel 1 intermediary manufacturergtretailergtconsumer Direct channel 2 intermediaries manufacturergtwholesalerretailergtcustomer Push marketing manufacturergtwholesalergtconsumer Pull marketing consumergtwholesalerretailergtmanufacturer The Distribution Center 1 Coordinating inbound transportation 2 Receiving checking storing crossdocking 3 Getting merch floorready 4 Coordinating outbound transportation Class Notes to supplement powerpointsincluded video amp speaker notes V Marketing Research a companies have to collect data to know about their customers b researchers use qualitative data to gain insight into quantitative data c primary data addressing the issue at hand i many times secondary data is collected as a precursor to primary data d companies also have the ability to purchase information external secondarysyndicated data i ACNeilsen Symphony Rl e lnternal secondary data i Ex using Kroger Plus card gives Kroger data about our shopping patterns etc 1 Builds a fuller picture the more the card is swiped ii Charles Duhigg video Target gathered data to know if shoppers were pregnant sent them coupons of baby merch 1 Even started hiding the baby ads among other adscoupons to make them look random 2 Greatly increased sales iii Data mining sifting through data f Social media research buzz created by new products g Data collection how much is too much i 2011 technology watching how we shop ii Tracking mobile devices by measuring wifi usage Euclid iii Online and offline purchases are connected h Observation research i Eye tracking viewing products through consumer s eye fixations what did the focus on i Quantitative research i Closedended questions ii Sample people have a known chance iii Surveys are most popular j Qualitative research i Unstructured ii Gives insight into type of structured questions to ask in later surveys k Ordering of questions i Harder questions last demographicpersonal info I Probability sample i Helps generalize everyone ii Systematic random sample ex every 4th person iii Random sample random number generation Everyone has a known equal chance iv Stratified random sample ex every 4th male m Nonprobability sample i Convenience sample limits in generalizing results to universe Ex first 50 people to walk into a mall n Action plan amp implementation during research process i Ex Dominos used focus groups and was honest and accepting of terrible pizza reviews VI Product Took action and made change a Breadth product mix b Depth product line Combination of research amp advertising c Branding vi vii viii What does the company want the public to think when they see symbols logos images etc without seeing the product A brand goes beyond simply a brand name 39 39 Companies must protect their brands Brand history in advertising 1 Ex amex Advertising selling history of product Using old ads to promote loyalty success Deliver on promise from the beginning Withstood test of time Foundation for consumer tust Heritage nostalgia Brand associations 1 Celebrity endorsement a Ex pepsi amp beyonce b Associate brand w person s image c Bridge between image amp product Lovemark or brand love 1 Parody CFA song 2 Devotion to brand Brand ownership 1 Selling against the brand pricing strategy against store brands 2 Generic brands Brand extension 1 Starbucks a First global branding campaign b Meet me at starbucks c Attempt to unify starbucks fams based on what happens in starbucks d Didn t focus on product e Based on experience 2 State farm eece a Extending brand name b More offerings 3 Too far a Burger king flame grilled fragrance b L ix Cobranding two brands represented in same light 1 Bene scarves partner w Walmart amp pantene 2 Support edu of girls x Brand repositioning 1 Hard for public to update attitudes xi Fuctions of packaging 1 Usage 2 Need to do more research before changing design Tropicana 3 People loved iconic image 4 Packaging matters Diffusion of innovation i Innovators venturesome ii Early adopters opinion leaders iii Early majority deliberate iv Late majority only try products after they see it s worth it skepticism v Laggards often ignored New product introductions i Recycled organic clothes 1 Marketed as sexy organic stylish 2 Next big thing Outsourcing use ad agencies Product development i Alpha testing internal employees testing before public ii Beta testing opt in google glass External Market testing try to be aware of what competition could get wind of Premarket tests using info from beta testing but product no longer a prototype Product launch i Steve jobs ipad 2 intro ii New product launch iii Changing technology iv Next generation of product k New product failures i Bell beefer taco bell i Mcdonalds spaghetti ii Cosmo yogurt iv Lifesavers soda v Colgate dinner entrees l Lanham Act brand names protected m Product life cycle concept i most products follow similar pattern of growth amp decline ii referred to as product life cycle iii length varies but pattern shape is similar iv descriptive not predictive v best used for product categories not brands vi products spend most of their time in the maturity stage this is the goal vii decline stage 1 every 3 years companies should ask if we didn t do this already would we launch this product now 2 If answer is no begin organized abandonment viii Nontraditional PLCs 1 Fads movies books songs 2 Trends little longer lasting than fads Fashion Organic food Maybe Key is to anticipate develop product before trend begins 3 Niche markets a short growth period b lasting maturity c small target market d little competition e ex scrapbooking skateboarding unique 4 seasonal markets a high growth period b drops as seasons change c key is to anticipate drop off VII supply chain amp channel management a everything that takes place behind the scenes impacts the marketing mix b designing marketing channels helps determine the best structure to get products to consumers c levels of distribution intensity i intensive convenience goods Many intermediaries ii Selective shopping amp some specialty goods Several intermediaries iii Exlcusive specialty goods and industrial equipment One intermediary d push supply chain is the more traditional supply chain but more and more companies are evolving into a combination of push and pull e logistics physical moving of merch i distribution center important to logistics 1 interworkings 2 synchronized f supply chain management is moving the right items to the right customer at the right time by the most efficient means walmart g Logistics i lnpound transportation 1 Who pays for what Part of negotiation 2 Expense for movement of goods 3 Bigger retailers have more flexibility ii Cross docking 1 Stopping point from truck to truck everything doesn t stay in distribution center h Shipping merchandise to stores i check supplier portion of Walmart website to see requirements they have for suppliers ii E9corporatewalmartcomglobal responsibilitvethicalsourcinqstandardsfor suppliers i Cannibalization i New product cuts into sales of old product ii Aim at new segment hit old segment 1 Ex mcdonald s all day breakfast 2 Risk compromise sales of burgers 3 Ex got milk Campaign goes foodie UPS v FedEx Points of pride UPS Louisville ky 9th largest airline Worldport Older than fedex Spare pilotsplanes Next gen lands planes closer together to save time Advanced tech Optimize right turns over left to save time Health care products dry ice freeze boxes specially made for some clients FedEx 0 Nashville tn Superhub FedEx is a verb Overnight 6 sided barcode scanner Scanner glove Talladega Motor Speedwav notes 918 0 74 of fans from out of state come o 7 platforms 0 Youth Product relevance Gen Y Digital amp social media Multicultural 0 Driver star power NASCAR starts with Daytona 500 in Feb CSR give back chase across America 84 million users 6 million viewers o More than NBA MLB 0 Covered by 0 Fox 24 billion 8 yr extension 0 NBC 82 billion 10 yr deal 0 NASCAR ranks 1 among major US sports when it comes to loyalty O O O O 1 sport in sponsorship participation by fortune 500 companies Biggest fastest track Talladega 100000 cameras program Social media 2nol largest in following o Snapchat story 0 Twitter Pricing renewal customers Media relations Variety of jobs available drivers corporate PR marketing Event experience important 0 Camping cantmiss opportunities Concerts The big one on the blvd party 25 college student tickets cheap Military Kidsfamily affordable 000000 The exam is 50 MC questions and there will be more weight on research product branding than supply chain management Good luck
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