Marketing exam 2

consumer behavior

The study of individuals, groups, or organizations and the processes they use to select, secure, use and dispose of products, services, experiences or ideas to satisfy needs, and the impacts that these processes have on the consumer and society

what is the Traditional Perspectives on Consumer Decision Making?

Previous focus on cognition and rationality • Modern focus incorporates emotion into reasoning process

what is system 1 of what goes on inside someones brain when buying something?

• System - is an automatic, nonconscious way of thinking, making decision based on very little information.

what is system 2 of what goes on inside someones brain when buying something?

System - is an effortful, slow, and controlled way of thinking, allocate attention to effortful mental activities.

what are the brain systems influenced by? and which is more influential?

focused on external factors and system 1 is more influential

B2C- business to consumer

marketing products to the end user

B2B - business to business

marketing to organizations that use products to make something else that is then sold to others

step one of the decision making process is?

problem recognition- Gap between current situation and desired end state - Marketing can influence by “pointing out” there is a gap

what is step 2 of the decision making process?

information search- Criteria for evaluating solutions • Alternative solutions • How well does each solution perform? – Evoked/consideration set: products a person will evaluate as options

step three of the decision making process is?

alternative evaluation- Evaluative criteria: what you consider important about a product – Marketing influences our evaluations by emphasizing benefits

step four of the decision making process is?

outlet selection and purchase

step five of the decision making process is?

post purchase processes- Critical because affects if they buy again • Recommendations and online reviews • Cognitive dissonance – New information contradicts beliefs – Buyer’s remorse • Marketers can try to make consumers feel better about their purchases with follow-up, warranties, customer service, etc.

what affects consumer decision making?

• Cultural and social • Individual • Psychological • Situational

culture influence

Broad set of knowledge, beliefs, laws, morals, customs, capabilities and habits acquired as members of society

social influence

Social Network • Set of ties between us –Can impact beliefs, health, success, happiness • Three big social factors: family, reference groups, opinion leaders

family:

• Family biggest influence on choices as consumers – Decision to attend CU – Where to go during spring break • Family Life Cycle, and where a consumer is in the life cycle, has big impact on consumer behavior

reference groups

Group of people to whom we compare ourselves – Membership: group we belong to • Blue Jays – Aspirational: we want to be like • Athletes, mentors, those we admire – Dissociative: we do not want to be like • Negative associations, i.e. home security ads and insurance

opinion leaders: (situational)

Exert influence on others because they are considered knowledgeable (we listen to them) –Celebrities –Leaders in business, politics –Bloggers

psychological influences

Underlying mechanisms that influence consumer behavior – Perception – Motivation – Attitudes – Learning

mallows hierarchy of needs (psychological)

was that people seek to meet their basic needs before fulfilling higher-level needs

attitudes

Beliefs, feelings, tendencies toward objects, groups, events or symbols • “I like or don’t like it” • Marketers try to influence with humor, warm fuzzies/feel goods, persuasion, music

learning

Changes in behavior due to experiences • Marketers can try to influence learning through consistency and repetition

situational influences include:

time & involvement, - Time can affect what consumers buy and what they pay – Time: I only want to go to one store – Time: I need a quick dinner, even if it’s more expensive • Involvement: personal, financial, social significance of the decision; can change by consumer and situation

marketing research - 4 P's

customer insight effect of price change on demand sales forecast advertisement effectiveness sales tracking

where does marketing data come from?

internal company data, competitive intelligence, or external

internal company data

Includes sales records, customer support records, accounting and finance information, sales force reports, and operation and supply chain management information.

competitive intelligence

Systematic gathering of data about strategies of direct and indirect competitors about new product development and marketing mix • Gathering of data about strategies that direct and indirect competitors are pursuing – Conferences, trade shows, social media, suppliers, distributors, retailers, customers, websites – Government agencies – Research companies • Be ethical

external:

social media/ online reviews

step 1 of the marketing research process is:

Define the Problem • Specify research objectives. • Define consumer population of interest. • Identify relevant contextual factors.

step 2 of the marketing research process is:

Develop a Research Plan

exploratory research:

Discover new insights to help companies better understand and define the research problem

descriptive research

Describes the characteristics of the population or phenomenon studied ( who, what, when, where and how)

casual research

Identify cause-and-effect relationships among variables.

reliability

consistency of a measure (whether the results can be reproduced under the same conditions).

validity

the accuracy of a measure (whether the results really do represent what they are supposed to measure).

step 3 of the marketing research process is:

collect data (primary or secondary, snowball, sampling, quota)

primary data

Primary data- (qualitative vs quantitative)

secondary data

Secondary data • Typically free and readily accessible • Internal and external sources • U.S. Census Bureau, U.S. Securities and Exchange Commission • Trade association, regulatory agencies, online database • Social media

qualitative

• Focus groups: small amount of people, interact with each other, discuss a particular topics • Depth interview: one on one, open-end questions about perception to products or brands

quantitative

Quantitative methods • Survey-based research • Experiments ( lab experiment and Field experiment)

simple random sampling

• In simple random sampling (SRS), each element in the population has a known and equal probability of selection. • Each possible sample of a given size (n) has a known and equal probability of being the sample actually selected. • This implies that every element is selected independently of every other element.

quota sampling

Quota sampling may be viewed as two-stage restricted judgmental sampling. – The first stage consists of developing control categories, or quotas, of population elements.

snowball sampling

In snowball sampling, 1) an initial group of respondents is selected, usually at random. 2) After being interviewed, these respondents are asked to identify others who belong to the target population of interest. 3) Subsequent respondents are selected based on the referrals.

step 4 of marketing research process is:

Analyze the Data • Analyzing qualitative data • Results difficult to measure objectively. • Sample sizes can be small. • Poor interpretation. • Analyzing quantitative data • Can be done quickly. • Low cost. • Uncertainty about how well sample represents population.

step 5 of marketing research process is:

Present Results and Take Action • Present formal, written report to decision makers along with an oral report. • Communicate any limitations with research. • Data Visualization • Clarity, visual appeal, and meaning. • Infographics.

marketing research:

the systematic and objective • identification, • collection, • analysis, • dissemination, and • use of information, for the purpose of improving decision making related to the • identification and • solution of problems and opportunities in marketing.

problem identification research

Research undertaken to help identify problems which are not necessarily apparent on the surface and yet exist or are likely to arise in the future. Examples: market potential, market share, image, market characteristics, sales analysis, forecasting, and trends research.

problem solving research

Research undertaken to help solve specific marketing problems. Examples: segmentation, product, pricing, promotion, and distribution research. segmentation research product research pricing research promotion research distribution research

social media blog:

All social media share certain common characteristics that make them very relevant as a domain for conducting marketing research. • Social media are marked by user-generated content. • Users are able to rate, rank, comment on, review and respond to the new world of media.

mobile

Using mobile devices, including surveys, data collection, online focus groups

neuromarketing

Uses neuroscience to better understand consumer responses to marketing stimuli – Brain imaging – Eye tracking • Heat maps: colored regions on an image that show higher levels of attention – Facial coding: categorization of facial expressions to reveal emotional response while processing content

new product:

Technically, it’s a product new to a company in any way – New-to-the-market – New-category entries – Product-line extensions – Revamped products

New-to-the-Market

Inventions never seen before that create a new market – Disruptive technology: shakes up or establishes new industry • Requires strong R&D, marketing • Time-consuming, expensive • High risk

New-Category Entries

Products new to a company, not new to the market • Less risky than new-to-the-market

Product-Line Extensions

Product line: group of related products marketed by a company • Recognized brand • Customer loyalty • Manufacturing process established • Marketed alongside existing products • Lower risk than first two types of new products

Revamped Products

• New packaging, different features and updated designs and functions – “New and improved” • Recognizable brand • Customer loyalty • Manufacturing process established • Marketed alongside existing products • Lower risk than first two types of new products

NPD- New product development:

process of conceiving, testing and launching a new product in the marketplace

NPD stage 1

Direction company will take when it develops a new product • Align to marketing strategy • Guidelines • General characteristics • Target markets • Financial estimates • International plans

NPD stage 2

idea generation:Product concept lists • Open innovation: gather external and internal ideas • Internal generation – 3M Post-it Notes • External generation – Outsource: buy ideas from a third-party – Competitors: auto industry – Consumers: Lay’s new flavor contest (cloud/crowdsourcing) Stage 2: Idea Generation

NPD stage 3

idea screening: Evaluate ideas to determine fit • Need accurate data, not “gut feeling” – Blackberry clickable screen • Idea screening: – Concept test: ask consumers for reactions to rough product ideas – Product safety – ROI hurdle – Will the product sell? – Can it be developed and marketed within time and budget constraints? – Can we produce it?

NPD stage 4

business analysis: Process of analyzing new product to determine profitability • Goes beyond ROI • Profitability = revenue (price x number sold) – costs to make product • Estimates for new products to determine profitability – Costs – Estimated sales price (marketing research!) – Demand (marketing research!)

NPD stage 5

product development : Company determines product can be produced/offered in a way that meets customer needs and generates profits • Long and expensive stage • Prototype (goods): mock-up of the good to be sure it will be safe, can be produced and at a low enough cost • Services: training protocols, identify equipment needs, determine staffing – Example: new insurance plan from Mutual of Omaha would need sales training, new staff to manage

NPD stage 6

test marketing: • New product introduced in final form to limited market • Test all four P’s, fine tune marketing plan • Risks: – Expensive (not as expensive as a failed new product) – Time-consuming – Competition may be alerted to new product • Other options: – Simulated: mock shopping experience, advertisements of product – Online test marketing: sell samples that are not available in stores

NPD stage 7

product launch: Completing all final preparations for making fully tested product available to market • Most expensive stage! – Purchasing raw materials – Hiring & training employees – Building inventory – Adding capacity to produce at manufacturing facilities – Placing goods in warehouses to prepare for orders – Internal systems, customer service

product adoption

Happens when consumers purchase and use a new product

diffusion

process by which product is adopted and spreads across various types of adopters

innovators

immediately at launch

early adopters

soon after introduction, not as fast as innovators

early majority

gather more information, spend more time deciding to purchase

late majority

rely on others for information, buy something because others already have

laggards

do not like change, loyal until something no longer available (or until it stops working)

NPD stage

The seven stages of product development make up stage one of the Product Life Cycle (before it’s “born”)

introduction stage

After launch • Innovators begin to purchase • Sales slow • Profits low due to high cost to develop and market • First to market = capture sales early • Length of stage depends on – Competitive advantage – Amount of resources put into promotion – Effort to educate market • Example: Covid “pills,” new PokeMon video game

growth stage

• Early adopters & early majority • Sales, profits and competition increase • Increased promotion vs competition • Building distribution • Brand loyalty, repeat purchases • Example: 3D Printers, iPhone 14

maturity stage

• Late majority and repeat buyers • Focus on profitability and keeping market share • Sales level off • Competition increases • Marketing costs increase • Company offers more versions • Longest stage of PLC • Example: M&M’s

decline stage

Sales and profits decrease • Price cuts • Cut costs • No work put into improving or changing product • Discontinuations • Example: Pay phones, Desktop computers