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MAR 255 Exam 2 Study Guide MARKET RESEARCH KEY CONCEPTS 1 Reasons for and uses of market research a Market Research the process by which information about the market is generated analyzed and interpreted for use in marketing decision making 39 Customer characteristics and needs Why where how and when they buy What media they pay attention to The decision making process Who39s involved in the decision process Emerging market trends 5lt23955 2 Three roles of market research descriptive diagnostic predictive and the types of questions answered by each a Descriptive gathering facts about the present state or history of the market i Historic sales trends Consumer attitudes towards brand x b Diagnostic Casual Gathering facts to explain why something happened in the market i What was the impact of our changed packaging on sales Why did sales plummet when we started our new ad campaign c Predictive gathering facts to predict what might happen in the future in the market i How well will our planned new product do in the market What new features are customers looking for 3 Primary research and primary data vs secondary research and secondary data give several examples and characteristics of each a Primary research data gathered specifically to answer the question at hand by fielding a market study internally or through a Market Research vendor i Lab experiments taste tests eye movement studies neuromarketing ii Market experiments simulated stores IRI and AC Nielson studies iii Observational research mystery shoppers customer observation ethnography iv Survey research telephone mail interviews mall intercepts exec interviews v Focus groups vi Panel studies b Secondary research data gathered previously for another market study or for other reasons and is often data designed for sale i Government data on the market ii Trade association data iii Purchased data data books industry stats computer based databases iv Web based or library searches search engines academic directories commercial portals professional directories 5 v vi vii viii Newsgroups Special interest groups Blogs and chatrooms TwitterPinterest Qualitative research vs quantitative research give several examples and characteristics of each a Qualitative research usually involves personal interaction with individuals to understand their thoughts feelings and attitudes regarding a product price or ad b Qualitative studies are generally smaller in scale easier to plan faster results less expensive less diagnostic and may not be completely representative I ii iii iv v Oneonone interviews Focus groups Smallscale customer opinionattitude surveys Ethnography observational studies Mystery shopper studies c Quantitative Research usually involves systematic procedures designed to obtain and analyze data from large scale market samples Often employs econometricmathematical modeling d Larger in scale more complex to plan longer to get results more expensive more diagnostic better statistical reliability I ii iii iv Survey studies Panel studies Experiments test markets Nielson and IRI studies Mathematical modeling econometric modeling conjoint analysis scanner data analysis 1 Scanner data Behavior Scan and Info Scan 2 Conjoint analysis Method of unobtrusively determining relative attribute importance weights based on ratings of hypothetical profiles of possible products presented as bundles of attributes and often used in new product development or redesign Steps in the Market Research process a Research design sampling method data collection data analysis interpretation I ii iii iv v vi vii Identify the question and define research objective Plan the research design Specify the sampling procedure Collect the data Analyze and interpret the data Prepare and present the report Follow up b The role of Market Research vendors in this process Market research vendors come into play such as Nielson Qualtrics IRI etc 6 Survey Terminology a Universe or total population the group of persons from which study participants will be chosen b Subject a person selected to participate the market research study c sample and sample size the group of subjects selected to participate in the study d Probability sample every person in the population has a known statistical likeliehood of being selected i Simple random sample equal chance of selection ii Stratified sample population divided into mutually exclusive groups like gender or age then random samples drawn from each group iii Cluster sample population divided into mutually exclusive groups like geographic area then a random sample of these clusters is selected iv Systematic sample generate a list of all possible subjects then select from the list using a systematic rule like skipping every 10quot person e Nonprobability sample no attempt made to select representative crosssection of the population i Convenience sample select from the easiest population members to access ii Judgment sample researchers uses own personal judgment iii Quota sample find a preset number of subjects in predetermined categories iv Snowball sample additional respondents selected on the basis of referrals from previous respondents 7 Types of research error descriptions and examples of each a Measurement error difference between the info the researcher desires and the info actually provided by the measurement process i demand effect in questionnaire design or focus group questions ii poorly disciplined group dynamics lead to group think b Sampling error sample used does not well represent the target market i Nonresponse error c Frame error frame from which the sample is chosen does not reflect the target market i Using the phone book to randomly call respondents d Random error how accurately the chosen sample39s true average reflects the overall population s true average value i Smaller the sample size higher the risk of random error ii reversion to the mean and the law of large numbers 8 Focus Group issues a The demand effect and demand artifact b Numerical measures in qualitative research verbal transcript coding gathering preference information on ratings scales or Likert scales Compaq case 9 Questionnaire Design a What is a good questionnaire from both the researcher and subject39s perspectives i Subject short less than 15 minutes logical respectful relevant ii Researcher gets completed screens for qualified subjects supports need analysis questions are clear no misinterpretations gives subject all chances to submit right answer precise enough to be useful b How do you set up a questionnaire to get the best and most complete responses i Precisely define the information sought ii Determine what type of questionnaire to use iii Write a draft examine iv Pretest and edit v Specify procedures for use c Need screeners core content difficult content and closers at the end d Avoid unanswerable questions invading privacy inevitably invite demand effects 10 Future Market research new methods for instantaneous gathering of customer information a Eye tracking in store tracking online tracking ethnographic studies virtual online store environments neuromarketing etc b Issues obtrusiveness naturalistic behavior and ethical questions about privacy FUTURE OF MARKET RESEARCH KEY CONCEPTS 1 Future Market research new methods for instantaneous gathering of customer information a Eye tracking in store tracking online tracking b Ethnographic observational studies mystery shoppers c Virtual online store environments d Neuromarketing Customer Relationship Management CRM and data mining a Decision support systems are i Flexible can sort regroup recalculate data in multiple ways and are geared to reveal trends and support simulations and what if questions Data base mining using Pivot Tables in Excel a Setting up rows and columns and value fields using a spreadsheet as the database b Manipulating data to answer marketing questions about sales and purchase behavior for different market segments c Using the slicer function in Pivot Tables Brand Switching Matrices a What is brand switching i consumers who choose to switch to a new brand b How does it relate to variety seeking behavior To brand loyalty To habitual buying behavior i Variety seeking behavior consumer wants to try something new ii Brand loyalty what does it take for a consumer to try something else iii Habitual buying lowcost items little decision making time c How can we use the Pivot table functions in Excel to build a brand switching matrix d How can you use a brand switching matrix to i Determining who are your most important competitors ii Determine market share iii Determine what market share shifts might happen in the future PRODUCT LINE MANAGEMENT AND BRANDING KEY CONCEPTS 1 The Enhanced Product concept a Essential benefit the fundamental need met by the product b Core product how the essential benefit is delivered to meet expectations c Enhanced product extends the core product with features that exceed customer expectations 2 Categories of products a Utilitarian mortgage insurance policy low involvement gum motor oil and ego intensive products sports car jewelry b Convenience products a relatively inexpensive item that merits little shopping e on c shopping products a product that requires comparison shopping because it is usually more expensive and found in fewer stores d specialty products a unique item for which consumers are willing to search extensively and are reluctant to accept substitutes e unsought products a product consumers do not actively seek out and often would rather not have to purchase at all f Goods vs services products vs what someone can provide for you g durables vs nondurables i Durables have a longer life often spanning years and are generally more expensive ii Nondurables usually consumed in a few uses and in general cost less than durables h Business vs consumer products i Business durables office equipment telephones computers ii Business nondurables office supplies staples folders iii Consumer durables cookware televisions furniture iv Consumer nondurables shampoo soap paper items 3 Product Line Management a Product mix breadth and product lines depth b c d i Product lines increases sales by serving multiple market segments ii Capitalizes on economies of scale Benefits to the firm for arranging the product mix in product lines i Advertising economies package uniformity standardized components enhanced sales and more efficient distribution equivalent quality ii Wide product mix advantages 1 Risk management spread risk over several product families 2 Makes the most of established company reputation 3 Leverages fixed costs expertise amp relationships over product types Product modifications line extension and contraction Flagship brands flanker brands and fighting brands 4 Brands and Branding a b Brands as cultures heuristics and sets or networks of cognitive associations 4 components of brand value i experiential value reputation value relationship value symbolic value difference between brand name brand mark brand image and brand equity i brand name can be spoken including letters words and numbers ii brand mark the elements of a brand that cannot be spoken logo design iii brand equity the value of company39s brand names 2 accepted ways of calculating brand equity brand image as an investment in customer value brand equity as return on that investment manufacturer brands nationally advertised brands vs private label brands i manufacturer brand the brand name of a manufacturer often called a national brand ii private label brands a brand name owned by a wholesaler or a retailer also known as a store brand such as sears or wegmans house of brands vs branded house strategies i House of brands ex PampG and their different major brands and then each different product under the brand ii Branded house ex BMW all car variations and then modification on each car benefits and potential dangers of brand stretching and brand extensions i target market modifications new users new usage occasions ii product modifications brand extensions product line extensions iii The Good 1 Brand name aids the extension 2 Brand extension enhances the parent brand name iv The Bad 1 Brand name fails to help the extension 2 Brand name is damaged 3 New brand name opportunity is foregone and new product fails i marketing actions that develop or drain brand equity PRODUCT DEVELOPMENT KEY CONCEPTS 1 Why new products are important how firms use new products as a strategic tool 2 Stimuli for product development falling revenues andor profits over the product life cycle 3 Reasons for new product success or failure product related process related Poor concept lack of uniqueness need Poor brandingdisconnect in mental associations Poor technology Poor use of research data Poor execution in development or commercialization Inadequate company capabilities Management biases in decisionmaking i Confirmatory bias ii Escalating commitment iii Group think 9quotquot P90quot 4 The weird rules of creativity a Recruit mavericks and misfits with seemingly irrelevant skills i Experts in some unrelated topic area b Create an environment where creativity can flourish i Not focused on money or profit ii Keep creative away from administrators c Get people discussingeven arguingabout ideas d Reward successes and failures punish inaction e Back projects that have the most dedicated persuasive committed crazies 5 Functional Silos view of the product development process a Product development needs isolated creativity and experts in a field working on it 6 Cross functional teams a A team oriented approach to newproduct development in which all relevant functional areas participate in the developmental process i Sometimes called a high performance or heavyweight team ii When located away from firm HQ sometimes called a tiger team or skunk works team 7 The new product development funnel concept screening product concepts Stages and Gates model 8 The Stages and Gates model of product development a Names of each stage and what happens in each i Idea generation evaluate customer needs and technological possibilities ii Concept evaluation iii Business analysis iv Development of prototype v Test market vi Manufacturing ramp up v Launch b What happens at a gate in the NPD process and issues to be addressed 39 G is this an idea we should pursue before concept evaluation G2 is the opportunity well defined before business analysis G3 can the product deliver financially before prototype development G4 Do we have a good viable prototype before test market G5 Is the product commercially viable before commercialization G6 are we ready to launch and support before launch 5lt23955 9 Aggregate Project Planning Matrix a Breakthrough platform derivative and support type projects i Breakthrough is top left between new category and radically new ii Platform is new benefits and next generation iii Derivative is improvement on existing benefit and incremental change iv Support type is variant or existing product maintenance and no change b Required technology change vs impact on the market on a graph c Balanced project portfolio vs too aggressive or too conservative i Overly risky portfolio 1 Too leveraged into large difficult projects 2 Too focused on future 3 Not enough support for current products ii Overly conservative portfolio 1 Too many resources on small support projects 2 Too focused on present 3 Not forward thinking nothing really new or differentiating in the pipeline iii Balanced portfolio 1 Good mix of present and future focused projects 2 Good deployment of resources 3 Not too many projects that chokes productivity d How is this an example of a portfolio model How is it like an individual investing in stock i Use the graph to help diversify portfolio like diversifying in stocks to reduce risk and make more money 10 Product Generation Maps Product line architecture maps and how they are used a Visual representation of the planned rollout of new products over several years b Used as a timeline for a company to see when all products will be released 11 New Product adoption and diffusion a Charting product diffusion through the target market b Innovators early adopters early majority late majority Iaggards c The Chasm the point between getting early adopters to get your product and getting early majority to buy your product If you cross the chasm you re into the majority of the market and will likely be successful d Tipping point point between early majority and late majority adopting the product i Ideas a behavior and messages and products sometimes behave like outbreaks of an infectious disease They are social cognitive epidemics ii The level at which the momentum for change becomes unstoppable 1 inflection point in a growth curve the moment when critical mass is achieved e Everett Roger s 5 factors impacting rate of product adoption i Relative advantage microwave vs conventional oven ii Compatibility high tech in traditional cultures iii Complexity DVD recorders iv Trial ability new toothpaste vs new computer v Observibility fashion items and cars vs personal health care items 12 First and Second mover advantages in developing new markets a First mover advantages i Create temporary monopoly 1 Can define customer preferences 2 Can lock up distribution channels 3 Can build reputation as market leader and innovator 4 Can establish industry standards ii Build a temporary war chest funding for 1 Line extensions 2 Advertising campaigns 3 Couponing and promotions 4 Research and development b However 47 of market pioneers fail because i Fail to create a mass market ii First generation product glitches expensive limited apps iii Developing new markets is expensive iv Later entrants learn from pioneers about how the market works v Pioneers are vulnerable to be copied c Second Mover fast follower advantages i Ability to research and copy first mover product attributes ii Ability to learn from first mover mistakes in commercialization 1 Product form 2 Positioning 3 Advertising iii Can target a more promising market iv Allow the first mover to bear the cost of developing the market 1 Let the pioneer educate the market 2 Then arrive with better solution PLACE DISTRIBUTION KEY CONCEPTS 1 Interdependency of channel members reasons for overlapping but non convergent goals inevitability of conflict 2 Types of channel intermediaries retailer wholesaler agents brokers and their basic func ons a Retailer channel intermediary that sells mainly to consumers b Wholesaler buys goods from producers They take title store resell and ship goods to other businesses c Agent or broker wholesaling intermediary who facilitates the sale of a product by representing a channel member 3 How and why the functions channel intermediaries perform create value a Selling activities i Personal selling customer education handling questions assessing needs gathering market intelligence b Logistics i Order processing warehousing breaking bulk shipping building assortment c Service and Support i Training tech support returns and exchanges spare parts maintenance d Financing and terms i Quantity discounts credit leasing options insurance if required taking title 4 Basic categories of channel functions facilitating transactional and logistical a Logistical functions storing breaking bulk and sorting physically distributingtransport b Facilitating functions POS display infoampeducation store promotions c Transactional functions financing and arranging credit price settingnegotiating 5 The Iron Law of Marketing and what it means a You can eliminate channel intermediaries but not the functions they perform unless the customer agrees to fewer services i However those functions can be made more efficient with new technologies of transportation communication and information management ii Such advances can mean changes in who in the channel can perform each function most efficiently 6 How and why insertion of a channel intermediary can make a distribution network more efficient Types of consumer distribution channels direct retailer wholesaler agentbroker Muti channe distribution systems and why they are more likely to foster channel conflict How firms go about deciding how to structure their distribution systems a Reasons why a firm might decide to forward integrate or not S 9 l 10 11 12 13 14 15 16 b Factors that affect decisions on how intensive or selective distribution should be Intensive vs selective vs exclusive distribution a For which types of products each is generally appropriate b Overall objective of each c Intensive distribution try to have the product available in every outlet possible i Mass market selling convenience goods ii Many intermediaries d Selective distribution screening dealers to include only a few in any single area i Work with selected intermediaries shopping goods ii Several intermediaries e Exclusive distribution establish only one or a few dealers in a given market or area i Work with one intermediary specialty goods ii One intermediary How choice of channel strategy is related to product life cycle and pricing strategy a Impact on channel margins channel relationships and channel conflict b Manufacturer39s distribution strategy i Early in product life cycle low volume high per unit margin premium pricing selective distribution profits skimming strategy ii Late in product life cycle high volume low per unit margin intensive distribution profits market penetration strategy Disintermediation a Removing intermediaries from a distribution channel b Effects on channel relationships c Reasons why or why not disintermediation occurs in a channel structure d Sometimes channel members can potentially make distribution more efficient i Contact efficiency ii Transaction economies of distribution How different types of new technology sometimes have dramatic effects and change channel structures in an industry Why an industry39s or a firm s distribution system is the most difficult of the Marketing Mix elements to change Channel Structure follows efficiency can be a source of competitive advantage Choice of Channels and distribution intensity should match a stage in the product life cycle b pricing strategy premium vs discount c physical requirements of the product break bulk set up etc d target market shopping preferences 17 Managing Channels often involves Channel Conflict and Channel Power a What are the types of channel power Can you give examples of each 18 Channel conflict a Definition a clash of goals and methods between distribution channel members b conditions which make channel conflict more likely i a multichannel distribution structure ii when a manufacturer attempts to switch from a single to multiple channel approach from just retail stores to retail internet iii when changing from selective to intensive distribution when trying to grow revenues by increasing number of retail stores c how and why the evolution of an industry and product life cycle may impact the Hke hood d how intra brand comparison can cause channel conflict and erode channel margins e difference between horizontal and vertical channel conflict i horizontal usually between wholesalers or retailers usually over exclusive territories or squabbling over who should get to serve the same customer base ii vertical between vertical layers of the channel usually between retailers or distributers and manufacturer often over equal treatment or market share sometimes driven by factory direct cutting out the middleman f ways firms can reduce conflict among their channel members i distributors assigned exclusive territories or market segments 1 based on geography size of customer customer industry ii product modifications 1 customize for retailer different features packaging model s or warranties 2 bundlepackage with other goods different for each retailer 19 Channel power a factors that impact who hold channel power manufacturer or intermediary i push vs pull approach ii brand vs store loyalty iii manufacturer concentration vs concentration of distributors or retailers iv degree of product differentiation v contractual obligations vi customer access and customer informationknowledge vii rewards vs coercion vs relationship building 20 Sources of channel power a Reward power exists when one channel member rewards another for performing in accordance with its wishes b coercive power is the capacity to punish a channel member that does not perform satisfactorily c legitimate power is based on legal contractual relationships or on perceptions of another party39s demands or expectations being justified d referent power exists when a form can communicate that its goals are congruent with those of a channel member It exists when there is a shared belief of partnership e expert power occurs when one firm is perceived as being especially knowledgeable about the market place
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