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BMGT 411: Week #3
Kottler: Chapter 3 - Collecting Information and Forecasting DemandChapter 4 - Creating Long Term Loyal RelationshipsWood:Chapter 2 - Analyzing the current situation
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Kottler Chapter 3: Collecting Information and Forecasting Demand
2
BMGT 411: Chapter 3
• Marketing Information System: Consists of people, equipment, and procedures to gather, sort, analyze, evaluate and distribute needed, timely information to marketing decision makers
• Internal Company Records: CRM Systems are an effective system for marketers
• Marketing Intelligence: Competitive and Industry Analysis
• Marketing Research: Primary and Secondary
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American Eagle Outfitters
Types of Internal Sales Tools
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BMGT 411: Chapter 3• Examples of Internal Sales Tools at American Eagle Outfitters
• Raw Sales Data
• Cost per Transaction or Basket Size
• Conversion
• Repeat Visits
• STS Sales
• Seasonal Sales
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Marketing Research
def: Systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation
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The Marketing Research Process
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BMGT 411: Chapter 3• Step #1: Justify the need for marketing research. If there is no need, kill the project
here.
• How will this marketing research help you improve sales?
• How will the marketing research help solve a problem?
• How will the marketing research identify a target market?
Four Considerations
1. Potential usefulness of the results
2. Management attitudes towards marketing research
3. Resources available for implementation
4. Costs vs. benefits8
BMGT 411: Chapter 3• Step #2: Define the problem and research objectives
• Problem and objectives should be very clear
• Problem or objectives should help define what type of research is needed
Types of Research
1. Exploratory: To investigate a general problem and possible solutions
2. Descriptive: Very specific to help forecast demand or likeness
3. Causal: To test a cause and effect relationship when adding variables
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BMGT 411: Chapter 3• Step #3: Identify data needs
• What type of information are you looking for
• Scrutinize the research purpose
• List the types of data that will fulfill this purpose
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BMGT 411: Chapter 3• Step #4: Identify data sources. If the data can be acquired using existing
secondary research, you may be able to skip to step #9
• Primary Data
• Data obtained directly from consumer to fulfill a specific purpose
• More expensive approach
• Secondary Data
• Data that are readily available from other sources
• Internal or external
• Often less expensive to use11
BMGT 411: Chapter 3• Step #5: Choose an appropriate research design and data collection method
Research Proposal
• Serves as a blueprint for the execution of the product
• Explains
• Purpose and scope of the project
• The specific design of the project
• Sample design
• Data collection procedures
• The data analysis plan
• The project timetable
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BMGT 411: Chapter 3• Step #5: Main Types of Marketing Research Approaches
Quantitative:
• Survey Research
• Behavioral Data
• Experimental research
Qualitative:
• Observation
• Focus Groups13
BMGT 411: Chapter 3• Step #6: Design the Research Instrument of Form
1. Questionnaires: Most common due to flexibility
2. Qualitative Measures: Unstructured and often revealing
3. Technological Devices: Often measures body’s reactions to applied stimulation
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BMGT 411: Chapter 3• Step #7: Identify the sample
1. Sampling Unit: Whom should we survey?
2. Sample Size: How many people should we survey?
3. Sampling Procedure: How should respondents be chosen?
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BMGT 411: Chapter 3• Step #8: Collect the Data
• In Person: Very expensive and time consuming
• Phone: Still popular, assisted by computers
• Mail: Dying form of collection
• Online: Popular and inexpensive (www.surveymonkey.com)
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BMGT 411: Chapter 3• Step #9: Analyze and Interpret the Data
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BMGT 411: Chapter 3• Step #10: Present Research Findings and
Recommendations
• Often the Most important part of the process
• Should be visual and easy to understand
• Recommendations should tie back to research objective
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Visual Marketing Research
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Forecasting Measures of Market Demand
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Forecasting:The art of estimating future demand by anticipating what buyers are likely to do under a given set of conditions.
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BMGT 411: Chapter 3• Potential Market: Set of consumers with a sufficient level of interest in a market
offer
• Available Market: Set of consumers who have interest, income, and access to a particular offer
• Target Market: The part of the available market the company decides to pursue
• Penetrated Market: The set of consumers who are buying the companies product
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BMGT 411: Chapter 3• Methods to Grow Sales:
1.Attract more buyers from the target market
2. Lower qualifications for potential buyers
3. Expand it’s market by adding stores, lowering price, or repositioning itself to attract more buyers
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BMGT 411: Chapter 3• Total Market Demand Equation:
Q = n x q x p
Q = total market demandn = number of buyers in the marketq = quantity purchased by an average buyer per year
p = price of an average unit
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BMGT 411: Chapter 3• US Car Total Market Potential
Q = n x q x p
Q = total market demandn = 20,000,000
q = 1
p = $25,000
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BMGT 411: Chapter 3• US Car Total Market Potential
Q = 20,000,000 x 1 x 25,000
Q = 500,000,000
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Ford’s Goal: 25% $125,000,000 Forecast
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BMGT 411: Chapter 3
• Key Variables in Forecasting:
• Demographics
• Population Growth
• Population Age Mix
• Diversity
• Education
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BMGT 411: Chapter 3
• Key Variables in Forecasting:
• Economics
• Consumer Psychology (Groupon Effect)
• Income Distribution
• Income, Savings, Debt, Credit
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BMGT 411: Chapter 3• Key Variables in Forecasting:
• Sociocultural
• Views of ourselves: Today, many gen y’ers are showing behaviors similar to the greatest generation (Saving, etc)
• Views of others
• Views of organizations
• Views of Society
• Views of nature
• Views of the universe
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TechnologyIncreased innovation makes forecasting difficult, and changes quickly compared to the past
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BMGT 411Chapter 4: Creating Long Term Loyalty Relationships
32
Apple33
Kohl’s34
Walmart35
Zappos.com36
Building Customer Value and Satisfaction
• Customer perceived value (CPV)—the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
37
Determinants of Customer Perceived Value (CPV)
• Total customer value
• Product value
• Services value
• Personnel value
• Image value
• Total customer cost
• Monetary cost
• Time cost
• Energy cost
• Psychic cost
38
Loyalty
• A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior
• What product are you loyal to?
• Why?
39
New Balance 99040
Satisfaction
• A person’s feelings of pleasure or disappointment that result from comparing a product’s perceived performance (or outcome) to expectations.
• What products or services exceed your expectations?
• What would you do if a product or service did not meet your expectations?
41
Wegmans42
Product and Service Quality
• Quality (or grade) is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
43
Marketers’ Roles in Delivering Quality
• Correctly identifying customers’ needs and requirements
• Communicate customer expectations properly to product designers
• Be sure orders are filled correctly and on time
• Provide customers with proper instructions, training, and technical assistance
• Stay in touch with customers after the sale
• Gather customer ideas for improvements and convey them to the appropriate departments
• Who do you feel is managing quality performance good today?
44
@comcastcares45
Customer Profitability
• A profitable customer is one that over time yields a revenue stream that exceeds by an acceptable amount the company’s cost stream for attracting, selling, and servicing that customer.
46
Goal is to Maintain Profitable Customers Shift Low Profit Customers Into Higher Profit Products Over Time
47
Customer Profitability Analysis (CPA)
• Best conducted with an accounting technique called Activity-Based Costing (ABC).
• Estimate all revenue coming from the customer, less all costs that go into serving that customer.
48
Customer Lifetime Value (CLV)
• Describes the net present value of the stream of future profits expected over the customer’s lifetime purchases.
49
CLV Equations50
CLV Importance
• Example: Grocery Store
• Average Yearly Spend: $5,200 (a)
• Average LifeSpan: 30 Years (t)
• Using the simple equation, what is the average Customer Life Time Value of a Grocery Store Customer?
• CLV = (a x t)
• 15,000 Customers in this segment
• Segment CLV = $2,340,000,00051
Cultivating Customer Relationships
• Customer relationship management (CRM) is the process of carefully managing detailed information about individual customers and all customer “touch points” to maximize customer loyalty.
52
CRM Best Practices
• Identify Prospects and Customers: Don’t go after everyone. Build and mine a customer database with information from all channels and customer touch points
• Differentiate customers in terms of (1) their needs and (2) their value to the company: Defend aggressively your most valuable customers, while trying to grow relationships with less profitable customers
• Interact with individual customers to improve your knowledge about their individual needs and to build stronger relationships
• Customize products, services, and marketing messages to each customer
• Who do you feel is doing this well for you?
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Traditional Marketing Funnel
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Traditional Marketing Funnel
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Customer Database and Database Marketing
• Customer database—an organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for marketing purposes.
• Database marketing—the process of building, maintaining, and using customer databases and other databases to make contact, facilitate transactions, and build customer relationships.
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Data Warehouse and Datamining
• Data warehouse—organized data where marketers can capture, query, and analyze it to draw inferences about an individual customer’s needs and responses.
• Datamining—statisticians extract useful information about individuals, trends, and segments from the mass of data.
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Database Uses
• Identify the best prospects
• Match a specific offer with a specific customer as a way to sell, cross-sell, and up-sell
• Deepen customer loyalty by remembering preferences and offering relevant incentives and information
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Downside of Database Marketing and CRM
• Large investment
• Difficulty in getting everyone to be customer oriented
• Not all customers want an ongoing relationship
• Assumptions behind CRM may not always hold true
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Wigle Whiskey
• What kind of ideas do you have to increase long term loyalty?
• How should Wigle use the CLV equation?
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BMGT 411: Week #3
Wood: Chapter 2: Analyzing the Current Situation
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http://www.youtube.com/watch?v=STuR40eiss4
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Environmental Scanning and Analysis
Involves the analysis of :
Internal Factors,
External Factors, and
Competitive Factors.
2-263
The Macro- and Microenvironments To formulate a flexible and practical marketing plan, one needs to
properly track and differentiate between macroenvironmental and microenvironmental factors: Macroenvironmental factors are broad forces that impact overall marketing strategy
and performance. Microenvironmental factors more directly influence marketing strategies and activities.
Macroenvironmental factors: political-legal, economic, social-cultural, technological, and ecological forces.
Microenvironmental factors: customers, competitors, channel members, partners, suppliers, and employees.
2-364
SWOT Analysis SWOT stands for:
Strengths Weaknesses Opportunities Threats
A common way of organizing what you have learned from the environmental scanning process.
Should be conducted for both your own firm and for key competitors.
2-465
Internal Factors
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Internal Analysis: Resources
Human
Financial
Informational
Supply
2-767
Internal Analysis: OfferingsExamining what the firm is currently offering in the way of
goods and services:
Affirm the role of each line and item.
Consider how the offerings contribute to relationships with distributors and customers.
Assess fit with mission and resources.
2-868
Internal Analysis: Previous Results Includes:
Sales (dollars and units) Profitability Other financial results
Helpful to look for trends in the data.
Helps separate the effective programs from the less-effective programs.
2-969
Internal Analysis: Business Relationships
Includes relationships with: Suppliers
Distributors
Other business partners
Examine: Capacity
Quality
Value provided
2-1070
Keys to Success:
Identify special factors most crucial to success.
Maintain focus on key priorities.
Warning Signs
Indicate potential problems with leveraging the keys to success and performing as planned.
2-1171
External Factors2-12
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External Analysis: Political-Legal Trends
International, federal, state, and local laws and regulations:
Competitive behavior
Pricing
Taxation
Promotion
Distribution
Product liability
Labeling
Product purity, and
Other issues…
2-1373
External Analysis: Economic Trends Must keep an eye on
global, national, regional, and local economic trends.
Some measures typically monitored:
Buying power
Income
Debt
Credit Usage
Consider foreign exchange trends.
2-1574
External Analysis: Social-Cultural Trends Consumer Demographics
Business Demographics
Cross-Cultural Influences
2-1675
External Analysis: Demographic Trends
Key consumer demographic trends include:
Population growth
Population composition: Age Gender Ethnic background Religious background Education Occupation Household size Income
2-1776
External Analysis: Bus. Demographic Trends Size and growth of industries
Number of companies
Number of locations or branches
Number of employees
Sales revenues
2-1877
External Analysis: Cross-Cultural Influences Due to globalization, social and cultural trends may begin
in one market and then spread to others.
Cross-cultural trends represent potential opportunities for marketers.
2-1978
External Analysis: Technological TrendsKey trends include:
The Internet
Smartphones and mobile technology
Digital media
Incorporation of electronic capabilities into a wider range of products
2-20Copyright © 2014 Pearson Education, Inc.
79
External Analysis: Ecological TrendsPotential impacts:
Availability of raw materials
Government regulations
Social attitudes
“greenwashing”: positioning goods and services as ecologically friendly, even when they are not.
2-2180
External Analysis: Competitors Better understand market dynamics.
Anticipate competitor activities.
Identify:
Current competitors
Possible future competitors
Learn about the unique competitive advantages of each competitor.
2-2281
BMGT 411: Week 4
• Study for Test #1
• Kottler Chapters 1-4
• Wood Chapters 1-2
• Read Chapters:
• Kottler: Chapters 5, 6, 7
• Wood: Chapters: 3, 4
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