Principles of Marketing Kerin Chapter 1,2,3,5,8 (TEST# 1)

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Definition of Marketing, and what are its two main goals (Chapter 1)
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Marketing is the activity for creating, communicating, delivering and exchanging offerings that benefit its customers, the organization, its stakeholders and society at large. Goals: 1. Discover needs and wants of prospective customers 2. Satisfy them
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What are the 4 key things needed for marketing to occur? (Chapter 1)
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1. Two or more parties with unsatisfied needs 2. Desire and ability to satisfy those needs 3. A way for parties to communicate 4. Something to exchange
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Target market (Chapter 1)
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One or more specific groups of potential consumers toward which an organization directs its marketing program
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Name the 4 Controllable Marketing Mix Factors (Chapter 1)
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1. Product: good/service/idea to satisfy consumer’s needs 2. Price: what is exchanged for the product 3. Promotion: a way to communicate b/w seller and buyer 4. Place: a way to get product to consumer
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What are some uncontrollable, Environmental forces? (Chapter 1)
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Social, economic, technological, competitive, regulatory
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Customer Value (Chapter 1)
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The unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price; usually given through best price, best product or best service
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Relationship marketing (Chapter 1)
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Links organization to its individual customers, suppliers, employees, and other partners for mutual long-term benefit; involves personal, ongoing relationship, and begins before and continues after sale
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Marketing concept (Chapter 1)
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Organization should 1. Strive to satisfy the needs of consumers while 2. also trying to achieve organization’s goals
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Market Orientation (Chapter 1)
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Involves: 1. Continuously collecting info about customers’ needs 2. Sharing this info across departments 3. Using it to create customer value
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Customer Relationship Management (CRM) (Chapter 1)
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The process of identifying prospective buyers, understanding them intimately, and developing favorable long-term perceptions of the organization and its offerings so that buyers will choose them in the marketplace
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Societal Marketing Concept (Chapter 1)
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View that organizations should satisfy the needs of consumers in a way that provides for society’s well-being
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Ultimate consumers vs. Organizational buyers (Chapter 1)
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Ultimate consumers = people who use products and services for a household Organizational buyers = manufacturers, wholesalers, retailers, govt agencies that buy products and services for their own use or for resale
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What is Utility, and what are the four types? (Chapter 1)
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Utility = benefits or customer value received by users of product 1. Form – production of product or service 2. Place – having the offering where needed 3. Time – having the offering when needed 4. Possession – value of making product easy to purchase
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Organization Definition (Chapter 2)
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A legal entity of people who have a common mission or goal
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Business firm definition (Chapter 2)
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A privately owned organization that serves customers to earn profit so it can survive
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Consolidation Strategies (Chapter 2)
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Aims to better the company’s PRODUCTIVITY. -Harvesting: (Retain Product and Markets) Not investing too much in ads. Ex. Nabisco Animal Crackers. -Retrenchment: Offer the same product line but retreat to strongest markets. (Eliminate markets/Retain Products) -Pruning: Continue serving the same market, but not all segments within a market. (Eliminate Products/Retain Markets) -Divestment: Sell of a part of a business or product line that doesn’t fit well in main company. (Eliminate Markets/Eliminate Products)
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Objectives/Goals of an organization (Chapter 2)
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(Interchangeable Terms) A targeted level of performance set in advance of actual work. Ex. Market Share, Quality, etc.
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Growth Strategies (Chapter 2)
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Trying to better the companies REVENUE. -Market Penetration: increase sales of our product in existing markets -Market Development: Sell existing products to new market. -Product Development: New product to existing market. -Diversification: New products in new markets.
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Explain Corporate Structure (3 key levels) (Chapter 2)
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1. Corporate level – top management directs overall strategy for whole firm 2. Strategic Business Unit – sub-division that markets a set of related offerings to clearly defined group of customers 3. Functional level – teams or departments within SBU, eg. marketing, finance, risk, HR, IT, etc.
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Marketing Myopia (Chapter 2)
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Only focusing on the business service or product, companies are defined by one of their products not by their overall service.
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Mission Statement (Chapter 2)
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A statement of organization’s function in society that often identifies its customers, markets, products and technologies; should be clear, concise, meaningful, inspirational and long term
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Organizational Culture (Chapter 2)
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The set of values, ideas, attitudes and norms of behavior that is learned and shared among members of an organization
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Market share (Chapter 2)
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The ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself
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Marketing metric (Chapter 2)
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Measure of the quantitative value or trend of a marketing activity or result
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Marketing plan (Chapter 2)
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A road map for the marketing activities of an organization for a specified future time period (generally 1-5 years)
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Planning Phase: Step 1 – Situation Analysis (Chapter 2)
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Situation Analysis: taking stock of where firm or product has been recently, where it is now, and where it is headed in terms of organization’s plans and external forces Three C’s -Company: *Competencies: what the company does well. * Competitive Advantage: Unique strength of our company in relation to our competitors. Ex. McDonalds. -Competition (Current Vrs. Potential) -Customer (Understanding them and their wants and needs)
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Planning Phase: Step 1 – SWOT analysis (Chapter 2)
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Strengths and Weaknesses (Internal), Opportunities and Threats (External) – Need to ID trends in industry, analyze competition, assess organization itself, research present/prospective customers
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Planning Phase: Step 2 – Market-Product Focus and Goal Setting – what does this stage involve? (Chapter 2)
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-Market segmentation (see chapter 9) – Deciding which products will be directed toward which customers
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Planning Phase: Step 3 – Marketing Program (Chapter 2)
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Developing Marketing program’s marketing mix (4 Ps) and budget
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Implementation Phase: Carrying out the marketing plan (4 parts) (Chapter 2)
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1. Obtain resources 2. Design the marketing organization 3. Develop planning schedules 4. Actually execute marketing program designed in planning phase
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Evaluation Phase: Part 1 – Comparing results of marketing program to plans (Chapter 2)
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– Planning gap – diff b/w projection of path to reach goal and projection of path of results of plan already in place – purpose of marketing program is to fill that gap -Goal is to compare actual results to goals set; often hard to accurately make long-term predictions in industries where technology is rapidly changing
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Evaluation Phase: Part 2 – Acting on deviations (Chapter 2)
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-Exploit a positive deviation (eg. product development, aka. penetrating new market) -Correct a negative deviation (eg. reduce prices)
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Environmental Scanning (Chapter 3)
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Process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends; 5 main sources: Social, economic, technological, competitive and regulatory
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Social Forces (Chapter 3)
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Include demographic characteristics of population and its values
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Changing Age Demorgaphics (Chapter 3)
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Describing a population according to selected characteristics such as age, gender, ethnicity, income and occupation – Rise in people over 65 in the US. – Generation Z (1990-2010) Need Brand authenticity, well designed packaging, Brand Engagement, Crowdsourcing.
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Fad vrs. Trend (Chapter 3)
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– Fad: Make your money and run! Only lasts a little bit of time. (Ex. Pet Rocks) – Trend: Lasts an average of 10 Years or more.
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Cultural Trends (Faith Popcorn) (Chapter 3)
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– Cocooning (Want to stay at home and be safe) – Clanning (People that like what I like) – Fantasy Adventure (Thrill without the risk) – Pleasure Revenge (Invest in things that are not good for us once in a while. Ex. Diet all week, eat a candy bar on saturday) – Egonomics (Seeking Personalization/ Customization) – Vigilante Customer (Let our voices be heard. Reviews, Complot, etc) – Clockless Day (The day doesn’t at 8pm, need for flexibility, Midnight to 5am, McDonalds)
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Tech Trends – 2014 (Chapter 3)
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– Smart home tech explosion – Privacy Backlash – Promising Advances in nano tech – Cloud Wars
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Consumer Income (3 types) (Chapter 3)
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-Gross income – total amount of money made in one year by a person, household or family unit -Disposable Income – money a consumer has left after paying taxes, to use for necessities like food, housing, clothes and transportation -Discretionary Income – money that remains after paying for taxes and necessities
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Barriers to entry (Chapter 3)
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Business practices that make it difficult for new firms to enter the market. Need to know them, to see what prevents competition from coming in. – High Advertising Dollars – High Capital Expenditures – Distribution Access (Ex. Airport Gates) – Switching Cost (Switching from producing one to another) – Product Identity
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Social Class (Chapter 3)
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Single traditional Status goods have lost morst of their meaning, because they are no longer exclusive. Change from Horizontal desire (What our neighbor has) to Vertical desire (What celebrities have) – New badge of high-end consumption’s Lifestyle – Consumption of personal services or exclusive experiences. -Status Skills
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Trademarks & FTC (Chapter 3)
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Federal Trade Commission (FTC) Regulates the market (Cease and Desist/ Corrective Ads) Trademark: protecting the name of a brand -â„¢ are adjectives not nouns -â„¢ Should not be pluralized -â„¢ are never verbs – â„¢ shouldn’t be used in the possessive form Non-traditional trademarks: -Color (Tiffany’s) -Shape (Coke) -Sound (NBC)
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Consumer Behavior (Chapter 5)
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The actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions
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Purchase decision process: (Chapter 5)
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Step 1: Problem recognition Step 2: Information search, seeking value Step 3: Alternative Evaluation, assessing value Step 4: Purchase decision Step 5: Post-purchase behavior
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What are some types of information searches done in stage 2? (Chapter 5)
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-Internal search (based on memory, past experiences with products or brands) -External search – gathering internal information from personal sources, public sources, marketer-dominated sources
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Stage 3: Alternative Evaluation: what are Evaluative Criteria? (Chapter 5)
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-Objective attributes of a brand (eg. display/ Numbers/ Facts /Figures) -Subjective attributes (eg. prestige/ Appeal/ things that are important to me) Both used to compare different products or brands.
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Stage 3: Alternative Evaluation: what is the Consideration Set? (Chapter 5)
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The group of brands that you would consider among all the brands of which you are aware in the product class.
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Stage 4: Purchase Decision: Perceived Risk (Chapter 5)
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The anxiety felt because the consumer cannot anticipate the outcomes of a purchase but believes there may be negative consequences; influences how extensive the information search stage is.
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Stage 5: Post-purchase behavior: what is Cognitive Dissonance? (Chapter 5)
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The feeling of post-purchase psychological tension or anxiety, often alleviated by seeking information to confirm you made the right choice by asking friends or doing research online. (Anxiety)
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Stage 5: Post- Purchase Behaviours: Buyers Remorse (Chapter 5)
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Regret form purchasing our product. “I don’t want what I bought anymore”. (Regret)
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Personality (Chapter 5)
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A person’s consistent behaviors or responses to recurring situations
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Self Concept (Chapter 5)
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The way people see themselves and the way they believe others see them; marketers are aware that people have an actual self-concept and an ideal self-concept
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Perception: definition and the different types of Perception Filters (Selective perception, exposure, comprehension, retention, and subliminal perception) (Chapter 5)
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Perception – the process by which an individual selects, organizes and interprets information to create a meaningful picture of the world. – Selective perception – filtering of exposure, comprehension and retention. Perception Filters: – Selective exposure – paying attention only to messages that are consistent with their attitudes/beliefs. (We choose to see what we want to see) – Selective comprehension – interpreting information so that it is consistent with your attitudes/beliefs. (Ex. Noisy Blenders/Vacuums validate our beliefs that they are working) – Selective retention – don’t remember all info you hear/see/read even minutes after exposure (Marketing tries to make us remember Ex. Geiko’s Gecko.
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Behavioral Learning (Chapter 5)
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Developing automatic responses to a situation built up through repeated exposure to it – Drive – need that leads to action (Hunger) – Cue – stimulus or symbol (McDonalds Arches) – Response – action taken to satisfy drive (Do to drive thru) – Reinforcement – reward (Not hungry anymore) The stronger the reward the more likely a habit will form. (Habit formation leads to Brand Loyalty)
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Brand Loyalty (Chapter 5)
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A favorable attitude toward and consistent purchase of a single brand over time. – Relates to habit formation – Reduces Risk – Saves Time
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Consumer Involvement and Problem Solving vrs. Knowledge. (Chapter 5)
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– Routine Problem Solving (High Knowledge | Low Involvement) Ex. Milk – Limited Problem Solving (Mid Knowledge | Mid Involvement) Ex. Small Appliances – Extended Problem Solving (Low Knowledge | High Involvement) Ex. Stocks and Bonds
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Marketing Strategies in Relation to Involvement (Chapter 5)
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High Involvement: We risk a lot by making a wrong decision. (Ex. Listerine) – Informational Ads – Personal Selling (Doctors) Low Involvement: The decision we make is not going to affect us very much. – Maintain Product Quality – Avoid Stock-outs (We could loose a client that would buy the competition if we are out of stock) – Reduce Cognitive Dissonance w/ memorable and creative ads.
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Marketing Research (Chapter 8)
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The process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions
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5 Step Marketing Research Approach
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Step 1: Define the Problem Step 2: Develop the Research Plan Step 3: Collect Relevant Data Step 4: Develop Findings Step 5: Take Marketing Actions
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3 Main types of market research (Chapter 8)
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1. Exploratory research – provides ideas about a relatively vague problem, eg. interviews 2. Descriptive research – trying to find the frequency that something occurs or extent of a relationship b/w 2 factors, eg. collecting data about # of households purchasing product 3. Causal research – most sophisticated, tries to determine extent to which change in one factor changes another, eg. observing time kids spend playing with each toy
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Measures of Success (Chapter 8)
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Criteria or standards used in evaluating proposed solutions to the problem, eg. children spending more time playing with old toy (measure of success) –> continue with old design, not new (marketing action)
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Step 2: Develop the research plan – what are 3 key parts in this phase? (Chapter 8)
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1. Specify constraints on research 2. Identify data needed for marketing actions 3. Determine how to collect data
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Constraints (Chapter 8)
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Restrictions placed on potential solutions to a problem, eg. limits on time and money available to solve problem
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Methods (Chapter 8)
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Approaches that can be used to collect data to solve a problem; key methods = sampling and statistical inference
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Primary vs. Secondary Data (Chapter 8)
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– Primary data – facts and figures newly collected for the project – Secondary data – facts and figures that have already been recorded before the project at hand
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Secondary Data – internal vs. external (Chapter 8)
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– Internal = from company past research; marketing input data= related to sales efforts, and marketing outcome data = related to results of the marketing efforts – External = used to ID characteristics and trends of ultimate consumer, eg. from US Census Bureau
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Advantages and disadvantages of secondary data (Chapter 8)
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Advantages: low cost, time savings, high level of detail available, we can gather it on our own. Disadvantages: may be out of date, definitions or categories might not be right (eg. wrong age groupings), or may not be specific enough, competitors have access to the same data.
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Primary data – observational data – definition and 4 key methods. Qualitative Research. (Chapter 8)
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Facts and figures obtained by watching, either mechanically or in person, how people actually behave. – Nielsen Data (TV ratings) – Mystery Shopper – Ethnographic research (trained observers look for subtle behavioral and emotional reactions as consumers encounter products in their home) – Neuromarketing – Cool Hunters (Trend Spotters)
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Primary data – Questionnaire data (Chapter 8)
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Facts and figures obtained by asking people about their attitudes, awareness, intentions and behaviors Types include: individual interviews, depth interviews, focus groups, panels, , online surveys, telephone surveys, mall intercept interviews
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Primary data – other sources (6) (Chapter 8)
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-Social media listening -Panels – sample of consumers or stores from which researchers take a series of measurements over time -Experiments – obtaining data by manipulating factors under tightly controlled conditions to test for cause and effect -Information technology – operating computer networks that can store and process data -Sensitivity Analysis – asking “what if” questions to determine how possible changes in product or brand drivers can affect sales -Data mining – extracting information from databases to find statistical links b/w purchasing patterns and marketing actions
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Problems with research Questions (Chapter 8)
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– Leading Question – Ambiguous Question – Unanswerable Question – Two questions in one – Non-exhaustive Question – Non-Mutually Exclusive Answers
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Direct Forecast (Chapter 8)
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When decision-maker makes judgments and estimates without any intervening steps
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Types of Open-Ended Questions (Chapter 8)
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– Completely Unstructured (What is your opinion on Delta airlines?) – Word Association (What comes to mind when you hear Delta?) – Sentence Completion (Fill in a word in a sentence)
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Types of Fixed-Alternative Questions – Close Ended (Chapter 8)
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– Dichotomous ( 2 answers normally yes/no) – Multiple Choice (3+ answers) – Likert Scale (Amount of Agreement/Disagreement) – Intention to Buy scale (Describes intention to buy) – Semantic Differential (Bipolar Scale, Direction and Intensity of Feeling) Ex. Love _ _ _ _ _ Hate

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