Marketing Research & Product Strategy

6 Marketing Research & Product Strategy PowerPoint Presentation by Ian Anderson, Algonquin College Chapter 6 Copyright © 2010 by Nelson Education Lt...
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6 Marketing Research & Product Strategy

PowerPoint Presentation by Ian Anderson, Algonquin College Chapter 6

Copyright © 2010 by Nelson Education Ltd.

Looking Ahead After studying this chapter, you should be able to: 1. Describe small business marketing. 2. Discuss the nature of the marketing research process. 3. Explain the term market and methods of forecasting sales. 4. Identify the components of a formal marketing plan. 5. Define customer relationship management (CRM) and explain its importance to a small firm. 6. Discuss the significance of providing extraordinary customer service.

Chapter 6

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Looking Ahead After studying this chapter, you should be able to: 7. Illustrate how technology, such as the Internet, can improve customer relationships. 8. Identify the key characteristics of consumer behaviour. 9. Explain product strategy and related concepts. 10. Describe the components of a firm’s total product offering.

Chapter 6

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What is Small Business Marketing? • Marketing  Activities directing the flow of goods and services from producer to consumer or user.

• Small business marketing consists of those business activities that relate directly to:  Identifying a target market  Determining target market potential  Preparing, communicating, and delivering a bundle of satisfaction to the target market Chapter 6

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Essential Marketing Activities • Market Analysis An evaluation process that encompasses market segmentation, marketing research, and sales forecasting

• Marketing Mix The combination of product, pricing, promotion, and distribution activities. Chapter 6

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Marketing Philosophies Make a Difference • Consumer-Oriented  All marketing efforts begin and end with the customer; focus is on the consumer’s needs— this philosophy is the most consistent with long-term success of the firm  Production-Oriented  Emphasizes development of the product and production efficiencies over other activities • Sales-Oriented  Favours product sales over production efficiencies and customer preferences Chapter 6

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Market Opportunity Assessment • • • •

Industry analysis Competitive Analysis Market segmentation Customer market research: – primary & secondary

• Estimating the opportunity based on a sales forecast Chapter 6

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Creation of the Marketing Mix • A Market Opportunity Assessment leads to the creation of: • The marketing mix – – – – Chapter 6

Product strategy Pricing strategy Promotion strategy Distribution strategy Copyright © 2010 by Nelson Education Ltd.

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The Nature of Marketing Research • Steps In the Marketing Research Process 1. Identifying the informational need Why do we need to know this?

2. Searching for secondary data Who has researched this topic already?

3. Collecting primary data Who do we ask and what do we ask them?

4. Interpreting the data Got the information, now what does it mean? Chapter 6

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…continued 6-9

The Nature of Marketing Research • Marketing Research  The gathering, processing, reporting, and interpreting of market information

• Secondary Data  Market information that has been previously compiled by others  May be internal or external

• Primary Data  New market information that is gathered by the firm conducting the research Chapter 6

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Methods for Collecting Primary Data • Observational Methods

• Questioning Methods

In person Video

Surveys

• Focus Groups • Test Marketing

Chapter 6

• Mail, Email, Web • Telephone

Personal interviews Experiments

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Ingredients of a Market

Ingredient 1 Customers: People or businesses

Ingredient 2 Purchasing power: Money/credit

Ingredient 3 Unsatisfied needs

Chapter 6

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Estimating Market Potential • The Sales Forecast  A prediction of how much (in units and/or dollars) of a product or service will be purchased within a market during a specified period of time  Must be based on specific target market segments  An essential component of a business plan that: • Assesses the new venture’s feasibility. • Assists in planning for product scheduling, setting inventory levels, and personnel decisions Chapter 6

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Segmentation Variables • Divide total market into segments • Benefit variables Benefits consumers look for in products/services

• Geographic variables Location, size, composition, etc.

• Demographic variables Age, sex, education, income, occupation, etc.

• Psychographic variables How people think and behave (i.e. lifestyle trends) Chapter 6

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Dimensions of Forecasting Difficulty

Figure 6-3 Chapter 6

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The Forecasting Process: Two Dimensions of Forecasting • The Starting Point Breakdown (top down) Buildup process (bottom up) • Calculate market size • Calculate potential market share – Production or retail capacity – Competitive data

• Develop sales forecast • Adjust to reflect competitive advantage Chapter 6

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The Formal Marketing Plan • Market Analysis  Customer profile • A description of potential customers in a target market  Sales forecasts • ―most likely,‖ ―pessimistic,‖ and ―optimistic‖ • The Competition  Identify industry leader(s)  Clarify industry key success factors (competitive factors)  Research individual competitors (strengths, weaknesses)  Analyze potential for success (Porter’s Five Forces) …continued Chapter 6

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The Marketing Plan • Marketing Strategy Total product/service plan • Decisions affecting the total product

Distribution plan • Decisions regarding product delivery to customers

Pricing plan • Setting an acceptable value on the product

Promotional plan • Communicating information to the target market Chapter 6

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Customer Relationship Management (CRM) • CRM is a company-wide business strategy designed to optimize profitability and customer satisfaction by focusing on highly defined and precise customer groups • Modern CRM focuses on: – Customers instead of products – Changes in company processes, systems and culture – All channels and media involved in the marketing effort

Chapter 6

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Customer Relationship Management (CRM) • CRM programs focus on keeping existing customers happy • Economic benefits of CRM: – – – – –

Chapter 6

Acquisition costs for new customers are huge Long-time customers spend more money than new ones Happy customers refer their friends and colleagues Order-processing costs are higher for new customers Old customers will pay more for products

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Successful CRM Program

Exhibit 6-6 Chapter 6

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Components of Customer Satisfaction 1. The most basic elements of the product/service that customers expect all competitors to deliver. 2. General support services, such as customer assistance. 3. A recovery process for counteracting bad experiences. 4. Extraordinary services that excel in meeting customers’ preferences and make the product or service seem customized. Chapter 6

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Ways to Provide Extraordinary Service • Naming Names  Greet customers by name.

• Custom Care  Know what your customers’ want.

• Keeping in Touch  Communicate frequently with your customers.

• Boo-Boo Research  Ask lost customers why they went elsewhere. Chapter 6

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Evaluating Customer Service • Customer service problems are the main source of customer complaints. • Popular approaches to creating customer service strategies:  Providing an exceptional experience  Respond promptly to customers’ requests and concerns  Listen to customers and respond accordingly  Stand behind products/services  Treat customers as family members and stay in their hearts and minds Chapter 6

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Using Technology to Support CRM • CRM software programs are designed to help companies gather all customer contact information into a single data management program – – – – Chapter 6

Interpersonal contact Emails, letters, faxes Phone calls Internet communication – FAQ, live chats Copyright © 2010 by Nelson Education Ltd.

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Simplified Model of Consumer Behaviour

Chapter 6

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Exhibit 6-8 6-26

Stage 1 in Consumer Decision Making • Problem Recognition The current state or a change in current state is not the ideal state of affairs due to: • • • • • • Chapter 6

Change in financial status Change in household characteristics Normal depletion of a resource Product or service performance Past decisions Availability of products Copyright © 2010 by Nelson Education Ltd.

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Stage 2 in Consumer Decision Making • Information Search and Evaluation Evaluation criteria • The features of a product or service that customers use to compare brands.

Evoked set • A group of brands that a customer is both aware of and willing to consider as a solution to a purchase problem. Chapter 6

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Stages 3 & 4 in Consumer Decision Making • Purchase decision Deciding how and where to make the purchase decision: • Store versus nonstore (catalogue, TV, and the Internet)

• Post-purchase evaluation Cognitive dissonance • The anxiety that occurs when a customer has second thoughts immediately following a purchase. Chapter 6

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Post-Purchase Activities of Consumers Post-Purchase Dissonance

Negative Evaluation “Doesn't work well."

"Did I buy the right one?"

Purchase

Usage

"This is the one I want."

"I found another use for…”

Product Disposal "Can I trade this in?"

Consumer Complaints "I'm calling the store."

No Repurchase

Repurchase

Positive Evaluation “It works great."

Exhibit 6-9 Chapter 6

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Psychological Factors Needs • Physiological, social, psychological, and spiritual. • Consumers’ needs are rarely completely satisfied. • A service or product can satisfy more than one need.

Perceptions • The individual processes that give meaning to the stimuli confronting consumers. • Perceptual categorization – grouping things together – Brand loyalty (a perceptual barrier) makes it difficult for competing brands to reach the loyal consumer. …continued Chapter 6

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Psychological Factors Motivations • Goal-directed forces that organize and give direction to the tension caused by unsatisfied needs. • Provide the behavioural impetus for consumers to act to fulfill a need. • Marketing is motivation and does not create needs.

Attitudes • An enduring opinion based on knowledge, feeling, and behavioural tendency. …continued Chapter 6

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Sociological Factors  Culture • Behavioural pattern and values that characterize a group of consumers in a target market.

 Social class • Societal divisions that have different levels of social prestige.

 Reference groups • Groups that an individual allows to influence his or her behaviour.

 Opinion leaders • A group leader who plays a key communications role. Chapter 6

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Product Strategy • Product Strategy  The way the product component of the marketing mix is used to achieve a firm’s objectives.  Product item • The lowest common denominator in the product mix—the individual item

 Product line • The sum of the related individual product items

 Product mix consistency • The similarity of product lines in a product mix Chapter 6

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Service Marketing versus Goods Marketing Characteristics

Tangibility Production/ Consumption

Standardization Perishability

Pure Services Marketing

Pure Goods Marketing

Intangible

Tangible

goods

goods

Occur at the same time

Less

Hybrid Services/ Goods Marketing

Occur at different times More

standardization

standardization

Greater

Less

perishability

perishability Exhibit 6-11

Chapter 6

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Product Strategy Product strategy alternatives:

Growth tactics: Chapter 6

• One product / one market • One product /multiple markets • Modified product / one market • Modified product / multiple markets • Multiple products / one market • Multiple products / multiple markets

• Convincing nonusers to become customers • Persuading current customers to use more • Alerting customers to new uses for the product

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Business Analysis Product’s relationship to existing line Costs of Development and Introduction Available Personnel and Facilities Competition and Market acceptance Chapter 6

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Building the Total Product Offering • Branding  A verbal and/or symbolic means of identifying a product.

• Rules for Naming a Product:  Select a name that is easy to pronounce and remember.  Choose a descriptive name.  Use a name that can have legal protection.  Select a name with promotional properties.  Select a name that can be used on several product lines of a similar nature. Chapter 6

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Protecting a Product Offering • Trademark An identifying feature used to distinguish a manufacturer’s product

• Service Mark A legal term indicating the exclusive right to use a brand to identify a service.

Chapter 6

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Vinnie’s Villa™ 6-39

Packaging, Labelling, and Warranties • Packaging  Colour, design, and protection for the product.

• Labelling  Shows the brand and informs the consumer.

• Warranties  A promise that the product will perform at a certain level or meet certain standards. • Implied and written warranties • Policy considerations: Cost, service capability, competitive practices, customer perceptions, legal implications Chapter 6

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Business Marketing • Shorter distribution channels • Greater emphasis on personal selling – Buyer-seller relationship is closer

• Greater reliance on promotion such as tradeshows • Greater Web integration with key business clients

Chapter 6

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