mkt350 kotler chapter 2.ppt

8/14/2019 mkt350 kotler chapter 2.ppt

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MARKETING MANAGEMENT12thedition

Kotler Keller

CONDUCTING MARKETING

RESEARCH

Chapter 3


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Organizational Environment

Includes all elements existing outsidethe boundary of the organization that

have the potential to affect theorganization


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Two Layers of theExternal Environment

Task environment General environment


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OrganizationalEnvironment

Management

Employees Culture

Internal

Environment

Suppliers

Competitors

Customers

LaborMarket

Technological

General Environment

Task Environment


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3-5

Information

Information related to:

1) macro trends2) micro effects

particular to their business

environment is constantly presenting newopportunities and threats.

Marketers should continue monitoring andadapting to that environment.


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3-6

Responsibility

falls to the company's marketers.

trend trackers and opportunity seekers.


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3-7

Evidence (s)

Marketers also have extensive informationabout how consumption patterns vary across

countries. the Swiss consume the most chocolate,

the Greeks eat the most cheese,

the Irish drink the most tea, and the Austrians smoke the most cigarettes


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3-8

Why Information?

Companies with superior information enjoy a

competitive advantage. The company can :

1) choose its markets better,

2) develop better offerings, and3) execute better marketing planning


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3-9

Paths and Channels

Every firm must organize and distribute acontinuous flow of information to its marketing

managers. Companies study their managers' information

needs and design marketing informationsystems (MIS) to meet these needs.


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3-10

consists of:

people,

equipment, and

procedures to gather, sort,

analyze,

evaluate, and distribute needed, timely, and accurate

information to marketing decision makers.

MIS


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MIS has three components1. internal records system, which includes

information on the order-to-payment cycle and salesreporting systems;

2. marketing intelligence system, a set of procedures

and sources used by managers to obtain everydayinformation about pertinent developments in themarketing environment

3. marketing research systemthat allows for the

systematic design, collection, analysis, and reportingof data and findings relevant to a specific marketingsituation.


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3-12

MIS Probes for Information

What decisions do you regularly make?

What information do you need to make thesedecisions?

What information do you regularly get? What special studies do you periodically

request?

What information would you want that you arenot getting now?

What are the four most helpful improvementsthat could be made in the present marketing

information system?


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3-13

Internal Records

Marketing managers rely on internal reports on:1.orders,2.sales,

3.prices,4.costs,5. inventory levels,6.receivables,7.Payables8.By analyzing this information, they can spot

important opportunities and problems.


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3-14

Internal Records

1. Order-to-Payment Cycle2. Sales Information System

3. Databases, Warehousing, Data mining

4. Marketing Intelligence System


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3-15

Order-to-Payment Cycle

1.Customers and sales representatives fax ore-mail their orders.

2.Computerized warehouses quickly fill theseorders.

3.The billing department sends out invoices asquickly as possible.

using the Internet and extranets to improvethe speed, accuracy, and efficiency of theorder-to-payment cycle.


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3-16

Internal Records

Sales Information System

Marketing managers need timely and accurate reports on current sales.

Wal-Martknows the sales of each product by store and total each evening.

enables it to transmit nightly orders to suppliers for new shipments ofreplacement stock.

Wal-Mart shares its sales data with its larger suppliers such as P&G andexpects P&G to re-supply Wal-Mart stores in a timely manner.

Wal-Mart has entrusted P&G with the management of its inventory.Outsourcing

I t l R d


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3-17

Databases, Data Warehousing,

and Data Mining

companies organize their information in

databases:1.customer databases,2.product databases,

3.salesperson databasesOrganizations combine data from the

different databases.

Internal Records


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customer database

customer database will contain every customer's:

1. name,

2. address,3. past transactions,

4. demographics and

5. psychographics (activities, interests, andopinions) in some instances.


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The PIZZA HUT Case

Pizza Hut claims to have:the largest fast-food customer data warehouse in the

world,

with 40 million U.S. householdsor between 40 and 50percent of the U.S. market.The millions of customer records are gleaned from point-of-

sale transactions at its restaurants.Pizza Hut can slice and dice data by:

favorite toppings, date of last order, or by whether youorder a salad with your pepperoni pizza.Using its dataWarehouse Miner, Pizza Hut has not only been able topurge expensive duplicates from its direct-mailcampaigns, but can also target its marketing to find

the best coupon offers for each household andpredict the success of campaigns


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3-20

The Marketing Intelligence

System

is a set of procedures and sources managersuse to obtain everyday information aboutdevelopments in the marketing environment.


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Sources of Information

Marketing managers collect marketingintelligence by:

1. reading books,2. newspapers, and trade publications;

3. talking to customers, suppliers, and

distributors; and4. meeting with other company managers.


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3-22

Steps to Improve Marketing Intelligence

Train and motivate sales force

Motivate channel members to share intelligence

Network externally

Utilize customer advisory panel

Utilize government data resources

Purchase information

Collect customer feedback online


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Analyzing the Macroenvironment

unmet needs and trends (affordable housing)

Within the rapidly changing global picture, thefirm must monitor six major forces:demographic, economic, social-cultural,

natural, technological, and political-legal.


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3-24

Needs and Trends

Fad

Trend

Mega-trend

is a direction or sequence of events

"unpredictable, short-lived, and without social,economic, and political significance

large social, economic, political and technologicalchanges [that] are slow to form, and once in place,

they influence us for some timebetweenseven and ten years, or longer.


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3-25

10 Megatrends Shaping theConsumer Landscape

Aging boomers

Delayed retirement

Changing nature ofwork

Greater educationalattainment

Labor shortages

Increased immigration

Rising Hispanic

influence Shifting birth trends

Widening geographicdifferences

Changing agestructure


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3-26

Environmental Forces

opportunities and threats

Demographic

Economic

Socio-Cultural

Natural

Technological

Political-Legal


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3-27

Population and Demographics

Size

Growth rate

Age distribution Ethnic mix

Educational

levels

Householdpatterns

Regionalcharacteristics

Movement


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3-28

Economic Environment

$Purchasing Power$Income Distribution$Savings Rate$Debt$Credit Availability


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3-29

Types of Industrial Structures

Industrial economies

Industrializing economies

Raw-material exporting economies

Subsistence economies


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3-30

Social-Cultural Environment

Views of themselves

Views of others

Views of organizations

Views of society

Views of nature

Views of the universe


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3-31

Natural Environment

Shortage of raw materials

Increased energy costs

Anti-pollution pressures

Governmental protections


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3-32

Technological Environment

Pace of change

Opportunities for innovation

Varying R&D budgets

Increased regulation of change


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Melting Pot VS Salad Bowl

According to the 2000 census:the U.S. population of 276.2million was 72% white.

African Americans constituted 13%, and Latinos 11%.The Latino population had been growing fast, with the largest

subgroups of Mexican (5.4 percent), Puerto Rican (1.1

percent), and Cuban (0.4 percent) descent.Asian Americans constituted 3.8 percent of the U.S. population,

with the Chinese as the largest group, followed by theFilipinos, Japanese, Asian Indians, and Koreans, in that order.

Latino and Asian American consumers are concentrated in the

far western and southern parts of the country, although somedispersal is taking place.

Moreover, there were nearly 25 million people living in the UnitedStatesmore than 9 percent of the populationwho wereborn in another country.


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Megatrend

the increase in the percentage of Hispanicsin the total population, represents a major

shift in the nation's center of gravity.Hispanics made up half of all new workersin the past decade and will bump up to 25

percent of workers in two generations.


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In addition to monitoring a changing marketingenvironment, marketers also need to develop specificknowledge about their particular markets.Good marketers want information to help theminterpret past performance as well as plan futureactivities.Marketers need timely, accurate, and actionableinformation on consumers, competition, and their

brands.They need to make the best possible tactical

decisions in the short run and strategic decisions in thelong run.Discovering a consumer insight and understanding itsmarketing implications can often lead to a successful

product launch or spur the growth of a brand.


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T-Louis-based Build-A-Bear Workshop has cleverly capitalized on the "kiddie-craft" trend in children's toys as well as the trend for interactive

entertainment retailing. Instead of making pottery orplay jewelry,

the chain, with more than 160 stores in the United States, the United Kingdom,Japan, Denmark, and Korea, allows kids (and adults too) to design their ownteddy bears and other stuffed animals, compete with clothing, shoes, andaccessories.

The chain boasts an average of over $500 per square foot in annual revenue,double the U.S. mall average, ten percent of sales in 2003 came fromhosting nearly 100,000 parties at a cost to customers of approximately $250for two hours, which includes a stuffed animal for each child.

Build-A-Bear has created a database on 9 million kids and their households byinviting customers to register their bears:

Build-A-Bear


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By includ ing a barcode inside the bear, the

company can reun i te the owner wi th the

bear if i t gets los t.

The database al lows Bui ld-A -Bear to contact

customers by surface and e-mai l wi th g i ft

cert if icates, promot ions , and partyreminders.

Build-A-Bear


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Marketing Research Definition

marketing research is systematic design,collection, analysis, and reporting of data andfindings relevant to a specific marketing

situation facing the company.

market survey product-preference test

sales forecast by region advertising evaluation

Marketers request

Marketing research is now about a $16.5 billionindustry


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Who Is Responsible for Marketing

ResearchMost large companies have their own marketing

research departments.

At much smaller companies, marketing research isoften carried out by everyone in the company

Business Organizations normally budget marketingresearch at 1 to 2 percentof company sales


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Marketing research & firms

Marketing research firms fall into three categories:

Type Examples

Syndicated-service research firms Gather & sell

Custom marketing research firms hired to carry out

Specialty-line marketing research firms (specialized in services) sells fieldinterviewing services to other firms.


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The Marketing Research Process

six steps asshown in

this Figure


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Case Study: American Airlines (AA)American Airlines (AA) is constantly looking for new ways to serve its passengers; it was one of the

first companies to install phone handsets.

Now it is reviewing many new ideas, especially to cater to its first-class passengers on very longflights, many of whom are businesspeople whose high-priced tickets pay most of the freight.

Among these ideas are:(1) to supply an Internet connection with limited access to Web pages and e-mail messaging;

(2) (2) to offer 24 channels of satellite cable TV; and(3) (3) to offer a 50-CD audio system that lets each passenger create a customized play list ofmusic and movies to enjoy during the flight.

The marketing research manager was assigned to investigate how first-class passengers wouldrate these services and how much extra they would be willing to pay if a charge was made. Hewas asked to focus specifically on the Internet connection. One estimate says that airlinesmight realize revenues of $70 billion over the next decade from in-flight Internet access, if

enough first-class passengers would be willing to pay $25 for it. AA could thus recover its costsin a reasonable time. Making the connection available would cost the airline $90,000 perplane.6

FIG. 4.1 I The Marketing Research Process


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Case Study: American Airlines (AA)

The marketing research manager was assigned to investigate1) how first-class passengers would rate these services and2) how much extra they would be willing to pay if a charge

was made.

He was asked to focus specifically on the Internetconnection.

One estimate says that airlines might realize revenues of $70billion over the next decade.

if enough first-class passengers would be willing to pay $25for it.AA could thus recover its costs in a reasonable time.

Making the connection available would cost the airline

$90,000 per plane.


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Defining the Problem

Will offering an in-flight Internet servicecreate enough incremental preference andprofit for American Airlines to justify its

cost against other possible investmentsAmerican might make?"


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Research Objectives

Research objectives: What types of first-class passengers would respond

most to using an in-flight Internet service?

How many first-class passengers are likely to use the

Internet service at different price levels? How many extra first-class passengers might choose

American because of this new service?

How much long-term goodwill will this service add toAmerican Airlines' image?

How important is Internet service to first-classpassengers relative to providing other services such as apower plug, or enhanced entertainment?


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Developing Research Plan

Designing a research plan calls for decisionson the data sources, researchapproaches, research instruments,sampling plan, and contact methods


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Data sources

Data sources:Primary data can becollected in five main ways:

Observation,

Focus groups,

Surveys,

behavioral data, Customers leave traces oftheir purchasing behavior in store scanning

data, catalog purchases, and customerdatabases.

Experiments.


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Behavioral Data

Customers leave traces of their purchasingbehavior in store scanning data, catalog

purchases, and customer databases.


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Survey Research

Companies undertake surveys to learnabout people's knowledge, beliefs,

preferences, and satisfaction, and tomeasure these magnitudes in the generalpopulation.


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Focus Group

is a gathering of six to ten people who arecarefully selected based on certain

demographic, psychographic, or otherconsiderations and brought together todiscuss at length various topics of interest.


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Experimental Research

The most scientifically valid. The purpose of experimentalresearch is to capture cause-and-effect relationships byeliminating competing explanations of the observedfindings.

Experiments call for selecting matched groups ofsubjects, subjecting them to different treatments,controlling extraneous variables, and checking whetherobserved response differences are statisticallysignificant.


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three main research instruments incollecting primary data:

1) questionnaires,

2) qualitative measures, and

3) mechanical devices.

RESEARCH INSTRUMENTS


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Qualitative research

QR techniques are relatively unstructuredmeasurement approaches that permit a

range of possible responses, and they area creative means of ascertainingconsumer perceptions that may otherwise

be difficult to uncover.


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Shadowing

observing people using products, shopping, going tohospitals, taking the train, using their cell phones. Behavior mappingphotographing people within a space, such as a

hospital waiting room, over two or three days. Consumer journeykeeping track of all the interactions a consumer

has with a product, service, or space.

Camera journalsasking consumers to keep visual diaries of theiractivities and impressions relating to a product.

Extreme user interviewstalking to people who really knoworknow nothingabout a product or service and evaluating theirexperience using it.

Storeytellingprompting people to tell personal stories about their

consumer experiences. Unfocus groupsinterviewing a diverse group of people: To explore

ideas

seven techniques


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SAMPLING PLAN

SAMPLING PLANAfter deciding on the researchapproach and instruments, the marketingresearcher must design a sampling plan.

1. Sampling unit: Who is to be surveyed?

2. Sample size: How many people should besurveyed?

3. Sampling procedure: How should therespondents be chosen?7o


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Simple random sample: Every member of thepopulation has an equal chance of selection.

Stratified random sample: The population is dividedinto mutually exclusive groups (such as age groups), and randomsamples are drawn from each group.

Cluster (area) sample: The population is divided intomutually exclusive groups (such as city blocks), and the researcher

draws a sample of the groups to interview.

A. Probability Sample


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B. Non-probability Sample

Convenience sample: The researcher selects themost accessible population members.

Judgment sample: The researcher selectspopulation members who are good prospects foraccurate information.

Quota sample: The researcher finds and interviews

a prescribed number of people in each of severalcategories.


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CONTACT METHODS

Once the sampling plan has been determined, the marketingresearcher must decide how the subject should be contacted:

1)mail,

2) telephone,

3)personal, or

online interview.


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Step 3: Collect the Information

Getting the right respondents is critical. In the case of surveys, four major problems arise.

1) Some respondents will not be at home and mustbe contacted again or replaced.

2) Other respondents will refuse to cooperate.

3) Others will give biased or dishonest answers.Finally,

4) some interviewers will be biased or dishonest.


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Step 5: Present the Findings

As the last step, the researcher presents thefindings. The researcher should present

findings that are relevant to the majormarketing decisions facing management.


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The main survey findings for the

American Airlines case show that:The chief reasons for using in-flight Internet

service are to pass the time surfing, and

to send and receive messages fromcolleagues and family. The chargewould be put on passengers' charge

accounts and paid by theircompanies.


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The main survey findings for the

American Airlines case show that:About 5 first-class passengers out of every 10 would use the Internetservice during a flight at $25;

about 6 would use it at $15. Thus, a charge of $15 would produce lessrevenue ($90 = 6 x $15) than $25 ($125 = 5 X $25).

By charging $25, AA would collect $125 per flight.

Assuming that the same flight takes place 365 days a year, AAwould annually collect $45,625.

Since the investment is $90,000, it will take approximately two

years before American Airlines breaks even.


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Step 6: Make the Decision

The last step is decision-making processEvaluating the decision made

The decision process itself Two questions should be asked:

1) Was the decision made(analyst do not

make decisions)2) Was a decision right


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