Marketing Management-Module (2/5)

8/4/2019 Marketing Management-Module (2/5)

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Module 2: Developing Insightabout Marketing Problems and

Consumer Behavior

Chapter-4: Conducting Marketing

Research and Forecasting Demand

Chapter 5: Creating Customer Value,Satisfaction and Loyalty

Chapter 6: Analyzing Consumer

Markets Chapter 7: Analyzing Business Markets

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-1


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ConductingMarketing Research and

Forecasting Demand

Marketing Management, 13thed

4


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Chapter Questions

What constitutes good marketingresearch?

What are good metrics for measuring

marketing productivity?

How can marketers assess their returnon investment of marketingexpenditures?

How can companies more accuratelymeasure and forecast demand?


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What is Marketing Research?

Marketing research is the systematicdesign, collection, analysis, and reportingof data and findings relevant to a specific

marketing situation facing the company.


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Types of Marketing Research Firms

Syndicated service Custom Specialty-line


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The Marketing Research Process

Define the problem Develop research plan Collect information Analyze information

Present findings Make decision


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Step 1: Define the Problem

Define the problem Specify decision alternatives State research objectives


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Step 2: Develop the Research Plan

Data sources Research approach Research instruments Sampling plan

Contact methods


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Data Source

Secondary Data Primary Data



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Research Approaches

Observation Focus group Survey

Experimentation-small testing before full

scale implementation


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Research Instruments

Questionnaires Qualitative Measures Technological Devices


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Questionnaire

It consists of set of questionspresented to respondents.

Questions can beo Close-endedo Open-ended



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Questionnaire Dos and Donts

Ensure questions arefree of bias

Make questions simple Make questions specific Avoid jargon Avoid sophisticated

words Avoid ambiguous words

Avoid negatives Avoid hypotheticals Avoid words that could

be misheard Use response bands Allow for other in fixed

response questions


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Question Types - Dichotomous

A question with two possible answers.

In arranging this trip, did you contactAmerican Airlines?

Yes No


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Question Types Multiple Choice

With whom are you traveling on this trip?No one

Spouse Spouse and children Children only Business associates/friends/relatives An organized tour group


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Question Types Likert Scale

Indicate your level of agreement with the followingstatement: Small airlines generally give betterservice than large ones.

Strongly disagree

Disagree Neither agree nor disagree Agree Strongly agree


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Question Types Semantic Differential

American AirlinesLarge ....SmallExperienced..InexperiencedModern...Old-fashioned


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Question Types Importance Scale

Airline food service is _____ to me.Extremely important

Very important Somewhat important

Not very important Not at all important


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Question Types Rating Scale

American Airlines food service is _____.Excellent

Very good Good

Fair Poor

Q ti T


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Question TypesIntention to Buy Scale

How likely are you to purchase tickets onAmerican Airlines if in-flight Internet access wereavailable?

Definitely buy Probably buy Not sure Probably not buy Definitely not buy

Q estion T pes


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Question TypesCompletely Unstructured

What is your opinion of American Airlines?

Question Types


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Question TypesWord Association

What is the first word that comes to your mind whenyou hear the following?Airline ________________________American _____________________Travel ________________________

Question Types


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Question TypesSentence Completion

When I choose an airline, the most importantconsideration in my decision is:

______________________________________________________________________________________________________________________________________________________________________________________________

__________________________________________________.

Question Types


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Question TypesStory Completion

I flew American a few days ago. I noticed that theexterior and interior of the plane had very brightcolors. This aroused in me the following thoughtsand feelings. Now complete the story.

________________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________


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Question TypesPicture (Empty Balloons)


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Qualitative Measures

Word association Visualization Brand personification Laddering


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Technological Devices

Galvanometers Eye cameras Audiometers GPS


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Sampling Plan

Sampling unit: Who is to be surveyed? Sample size: How many people should be

surveyed? Sampling procedure: How should the

respondents be chosen?


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Table 4.2 Types of Samples

Probability Samples Simple random Stratified random Cluster

Nonprobability Samples Convenience Judgment Quota


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Contact Methods

Mail questionnaire Telephone interview Personal interview Online interview


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Pros and Cons of Online Research

Advantages Inexpensive Fast Accuracy of data,

even for sensitivequestions

Disadvantages Small samples Technological

problems

What is a


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at s aMarketing Decision Support System

(MDSS)?

A marketing decision support systemis a coordinated collection of data,systems, tools, and techniques with

supporting hardware and software bywhich an organization gathers andinterprets relevant information from

business and environment and turns itinto a basis for marketing action.

Barriers Limiting the Use of


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Barriers Limiting the Use ofMarketing Research

A narrow conception of the research Uneven caliber of researchers Poor framing of the problem Late and occasionally erroneous

findings

Table 4 3 Characteristics of


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Table 4.3 Characteristics ofGood Marketing Research

Scientific method Multiple methods Value and cost of information Ethical use of information


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What are Marketing Metrics?

Marketing metrics are the set ofmeasures that helps marketers quantify,

compare, and interpret marketing

performance.


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Table 4.4 Marketing Metrics

External

Awareness Market share Relative price Number of complaints Customer satisfaction Distribution Total number of

customers Loyalty

Internal

Awareness of goals Commitment to goals Active support Resource adequacy Staffing levels Desire to learn Willingness to change Freedom to fail Autonomy


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What is Marketing-Mix Modeling?

Marketing-mix models analyze datafrom a variety of sources, such as retailerscanner data, company shipment data,

pricing, media, and promotion spendingdata, to understand more precisely theeffects of specific marketing activities.


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Marketing Dashboards

A customer-performance scorecardrecords how well the company is doing yearafter year on customer-based measures.

A stakeholder-performance scorecard

tracks the satisfaction of variousconstituencies who have a critical interest inand impact on the companys performanceincluding employees, suppliers, banks,

distributors, retailers, and stockholders.

Table 4 5 Sample Customer Performance


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Table 4.5 Sample Customer-PerformanceScorecard Measures

% of new customers to average # % of lost customers to average # % of win-back customers to average # % of customers in various levels of satisfaction % of customers who would repurchase % of target market members with brand recall % of customers who say brand is most

preferred

The Measures of Market Demand


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The Measures of Market Demand

Potential market: the set of consumers who

profess a sufficient level of interest in amarket offer.

Available market: The set of consumers whohave interest, income, and access to a

particular offer. Target market: the part of the qualified

available market the company decides topursue.

Penetrated market: the set of consumers whoare buying the company's product.


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Vocabulary for Demand Measurement

Market demand Market forecast Market potential Company demand Company sales forecast Company sales potential

E ti ti F t D d


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Estimating Future Demand

Survey of Buyers Intentions Composite of Sales Force Opinions Expert Opinion Past-Sales Analysis Market-Test Method


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Creating Customer Value,Satisfaction,

and Loyalty

5

Marketing ManagementA South Asian Perspective, 13thed

Ch t Q ti


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Copyright 2009 Dorling Kindersley (India) Pvt. Ltd. 5-44

Chapter Questions

What are customer value, satisfaction, andloyalty, and how can companies deliverthem?

What is the lifetime value of customers? How can companies cultivate strong

customer relationships? How can companies both attract and retain

customers? What is database marketing?

HDFC Offers an Assortment of


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C O e s a sso t e t oServices to Satisfy its Customers

Figure 5 1 Organizational Charts


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Figure 5.1 Organizational Charts

What is Customer Perceived Value?


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What is Customer Perceived Value?

Customer perceived value is thedifference between the prospective

customers evaluation of all the benefits

and all the costs of an offering and theperceived alternatives.

Figure 5.2 Determinants of


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gCustomer Perceived Value

Image benefit Psychological cost

Personal benefit Energy cost

Services benefit Time cost

Product benefit Monetary cost

Total customer benefit Total customer cost

Steps in a Customer Value Analysis


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Steps in a Customer Value Analysis

Identify major attributes and benefitsthat customers value

Assess the qualitative importance ofdifferent attributes and benefits

Assess the companys andcompetitors performances on thedifferent customer values against rated

importance Examine ratings of specific segments Monitor customer values over time

What is Loyalty?


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What is Loyalty?

Loyalty is a deeply held commitment tore-buy or re-patronize a preferred productor service in the future despite situational

influences and marketing efforts havingthe potential to cause switching behavior.

The Value Proposition


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The Value Proposition

The whole cluster ofbenefits the

company promisesto deliver.

Measuring Satisfaction


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Measuring Satisfaction

Periodic Surveys

Customer Loss Rate

Mystery Shoppers

Monitor CompetitivePerformance

What is Quality?


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What is Quality?

Quality is the totality of features andcharacteristics of a product orservice that bear on its

ability to satisfystated or implied needs.

Maximizing Customer Lifetime Value


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Maximizing Customer Lifetime Value

CustomerProfitability

Figure 5.4 Customer-Product


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Profitability Analysis

Figure 3-8: Allocating marketing investmentdi l


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according to customer value

Estimating Lifetime Value


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Estimating Lifetime Value

CLV: The net present value of thestream of future profits expected overthe customers lifetime purchases.

Annual customer revenue: Rs.500 Average number of loyal years: 20 Company profit margin: 10% Customer lifetime value: Rs.1000

What is Customer RelationshipM t?


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Management?

CRM is the process of carefullymanaging detailed information aboutindividual customers and all customer

touchpoints to maximize customerloyalty.

Framework for CRM


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Framework for CRM

Identify prospects and customers

Differentiate customers by needs

and value to company

Interact to improve knowledge

Customize for each customer

CRM Strategies


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C St ateg es

Reduce the rate of defection

Increase longevity

Enhance share of wallet

Terminate low-profit

customers

Focus more effort on high-profit customers

Customer Retention


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Acquisition of customers can cost five timesmore than retaining current customers.

The average company loses 10% of itscustomers each year.

A 5% reduction to the customer defection ratecan increase profits by 25% to 85%.

The customer profit rate increases over thelife of a retained customer.

Figure 5.5 The CustomerDevelopment Process


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Development Process

Prospects

Potential

Disqualified

First-timecustomers

Repeatcustomers Clients Members

PartnersEx-customers

Database Key Concepts


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y p

Customerdatabase

Databasemarketing Mailing list

Businessdatabase

Data warehouse

Data mining

Using the Database


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g

To identify prospects

To target offers

To deepen loyalty

To reactivate customers

To avoid mistakes

Dont Build a Database When


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The product is a once-in-a-lifetimepurchase

Customers do not show loyalty The unit sale is very small

The cost of gathering information is too

high

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AnalyzingConsumer Markets

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Chapter Questions


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How do consumer characteristicsinfluence buying behavior?

What major psychological processes

influence consumer responses to themarketing program? How do consumers make purchasing

decisions? How do marketers analyze consumer

decision making?

What InfluencesConsumer Behavior?


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Consumer Behavior?

Cultural Factors

Social Factors

Personal Factors

What is Culture?


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Culture is the fundamental determinantof a persons wants and behaviors

acquired through socialization processes

with family and other key institutions.

Subcultures


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Nationalities

Religions

Racial groups

Geographic regions

Social Classes


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Upper uppersLower uppersUpper middles

Middle class

Working classUpper lowersLower lowers

Characteristics of Social Classes


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Within a class, people tend to behavealike

Social class conveys perceptions of

inferior or superior position

Class may be indicated by a cluster ofvariables (occupation, income, wealth)

Class designation is mobile over time

Social Factors


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Referencegroups

Socialroles Statuses

Family

Reference Groups


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Membership groups

Primary groups

Secondary groups

Aspirational groups

Dissociative groups

Provogue uses teenage icons as brandambassadors and a youth targeted


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website to connect to its customers

Roles and Status


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What degree of status isassociated with variousoccupational roles?

Personal Factors


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Age

Values

Life cyclestage

Occupation

Personality

Self-concept

Wealth

Lifestyle

The Family Life Cycle


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Brand Personality


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Sincerity

Excitement

Competence

Sophistication

Ruggedness

Lifestyle Influences


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Multi-tasking

Time-starved

Money-constrained

Table 6.2 LOHAS (Lifestyles of Healthand Sustainability) Market Segments


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Sustainable Economy Healthy Lifestyles Ecological Lifestyles Alternative Health Care Personal Development

Figure 6.1Model of Consumer Behavior


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Key Psychological Processes


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Motivation

MemoryLearning

Perception

Motivation


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FreudsTheory

Behavioris guided by

subconscious

motivations

MaslowsHierarchyof NeedsBehavior

is driven by

the lowest,unmet need

HerzbergsTwo-Factor

TheoryBehavior isguided by

motivatingand hygienefactors

Maslows Hierarchy of Needs


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Herzbergs Two-Factor Theory


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Perception


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Selective Attention

Subliminal Perception

Selective Retention

Selective Distortion

Figure 6.3 State Farm Mental Map


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Figure 6.4 Consumer Buying Process


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Problem Recognition

Information Search

Evaluation

Purchase Decision

PostpurchaseBehavior

Problem Recognition


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Sources of Information


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Personal

ExperientialPublic

Commercial

Figure 6.5 Successive Sets Involved inConsumer Decision Making


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Table 6.8 Sales and ProductLife Cycle


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Figure 6.6 Stages between Evaluationof Alternatives and Purchase


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Non-Compensatory Models of Choice


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Conjunctive Lexicographic Elimination-by-aspects

Perceived Risk


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Functional

Physical

Financial

Social

Psychological

Time

Figure 6.7 How Customers Use andDispose of Products


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Rural Consumer Behaviour


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Rural consumers are more brand loyal Restrictions on consumption Collective consumption behaviour: for

family rather than individual Seasonality of consumption based on

seasonality of agriculturalproduction/income

Specific patterns in the five-stagebuying decision process

Other Theories ofConsumer Decision Making


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Involvement Elaboration

Likelihood Model Low-involvementmarketing

strategies Variety-seeking

buying behavior

Decision Heuristics Availability Representativeness Anchoring andadjustment

Mental Accounting


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Consumers tend tooSegregate gainso Integrate losseso Integrate smaller losses with larger gainsoSegregate small gains from large losses

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AnalyzingBusiness Markets


Chapter Questions


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What is the business market, and howdoes it differ from the consumermarket?

What buying situations doorganizational buyers face?

Who participates in the business-to-business buying process?

Chapter Questions


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How do business buyers make theirdecisions? How can companies build strong

relationships with business customers? How do institutional buyers and

government agencies do their buying?

What is Organizational Buying?


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Organizational buying refers to thedecision-making process by whichformal organizations establish the needfor purchased products and services,

and identify, evaluate, and chooseamong alternative brands and suppliers.

Top Business Marketing Challenges


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Expand understanding of customer needs

Compete globally as China and India reshapemarkets

Master analytical tools and improve

quantitative skills

Reinstate innovation as an engine of growth Create new organizational models and

linkages

Characteristics of Business Markets


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Fewer, larger buyers

Close supplier-customerrelationships

Professionalpurchasing Many buying

influences

Multiple sales calls

Derived demand Inelastic demand Fluctuating demand Geographicallyconcentrated buyers Direct purchasing

Buying Situation


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Straight rebuy

Modified rebuy

New task

Systems Buying and Selling


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Turnkey solutiondesired;

bids solicited

Primecontractors

Second-tiercontractors

Systemsubcomponents

assembled

The Buying Center

Initiators


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Initiators

Users

Influencers

Deciders

Approvers

Buyers

Gatekeepers

Of Concern to Business Marketers


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Who are the major decisionparticipants? What decisions do they influence? What is their level of influence? What evaluation criteria do they use?

Sales Strategies


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Small Sellers

Large Sellers

Key BuyingInfluencers

MultilevelIn-depthSelling

Stages in the Buying Process:Buyphases


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Problem recognition

General need description Product specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance review

Table 7.2 Buygrid Framework


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Methods of e-Procurement


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Websites organized using vertical hubs

Websites organized using functionalhubs

Direct extranet links to major suppliers Buying alliances Company buying sites

Table 7.3 Vendor Analysis


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Handling Price-Oriented Customers


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Limit quantity purchased

Allow no refunds

Make no adjustments

Provide no services

Methods for ResearchingCustomer Value


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Internal engineeringassessment

Field value-in-useassessment

Focus-group valueassessment

Direct surveyquestions

Conjoint analysis Benchmarks Compositional

approach Importance ratings

Order Routine Specification


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Stocklesspurchase plans

Vendor-managedinventoryContinuousreplenishment

Establishing Corporate Trustand Credibility


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Expertise

LikeabilityTrustworthiness

Figure 7.1 Trust Dimensions


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Transparent

Product/ServiceQuality

Incentive

Partnering

CooperatingDesign

ProductComparison

Supply Chain

PervasiveAdvocacy

Factors AffectingBuyer-Supplier Relationships


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Availability ofalternatives

Supply marketdynamism

Complexity ofsupply

Importance ofsupply

Categories of Buyer-SellerRelationships


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Basic buying andselling

Bare bones Contractual

transaction Customer supply

Cooperativesystems

Collaborative Mutually adaptive Customer is king

What is Opportunism?

O


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Opportunism is some form ofcheating or undersupply relative to animplicit or explicit contract.

Marketing of Farm Output fromRural Areas

C F i P i


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Contract Farming Pepsi Procuring from Cooperatives Amul Use ICT for procurement ITC


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End of Module

Marketing Management-Module (2/5)

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