Marketing Research, Marketing Research, Segmentation, & Consumer Segmentation, & Consumer

BehaviorBehavior

Marketing Research, Marketing Research, Segmentation, & Consumer Segmentation, & Consumer

BehaviorBehavior

What more do you need??

MARKETING RESEARCHMARKETING RESEARCH

Definition:

Used to implement the ____________

Research is used to:Research is used to:

Identify problems/opportunities• Customer complaints• New product ideas• Identify high profit customers

• Understand competitors Generate, refine and evaluate

marketing actions

Research used to:Research used to:

Monitor marketing performancesalesmarket shareprofitsatisfaction return on quality

Research is NOT a Cure!Research is NOT a Cure!

Classic Blunders

Why do I need to know this?Why do I need to know this?

You will use research for decisions

Research can easily be biased

Studies may mislead

Primary Data: Information Primary Data: Information SoughtSought

Primary Data: Information Primary Data: Information SoughtSought

Facts

Opinions

Motives

Primary Data -- Collection Primary Data -- Collection MethodsMethods

Primary Data -- Collection Primary Data -- Collection MethodsMethods

QUALITATIVE:

OBSERVATION

FOCUS GROUPS

QUANTITATIVE:

SURVEYS

Target Markets and Consumer Target Markets and Consumer BehaviorBehavior

Target Markets and Consumer Target Markets and Consumer BehaviorBehavior

Homework DiscussionHomework DiscussionHomework DiscussionHomework Discussion

Product: Describe the person who buys this product:

What is the Marketing Mix for the product?

ProductPricePlacePromotion

More Homework TalkMore Homework TalkMore Homework TalkMore Homework Talk

Other Product: Describe the person who buys this product:

What is the Marketing Mix for the product?

ProductPricePlacePromotion

Why do marketing mixes Why do marketing mixes differ between products?differ between products?Why do marketing mixes Why do marketing mixes differ between products?differ between products?

_____________

_____________

_____________

So, what do we know about So, what do we know about consumers?consumers?

So, what do we know about So, what do we know about consumers?consumers?

Consumer behavior:

WHY STUDY CONSUMER WHY STUDY CONSUMER BEHAVIORBEHAVIOR

WHY STUDY CONSUMER WHY STUDY CONSUMER BEHAVIORBEHAVIOR

Influence

Satisfy

Protect

Haire’s Shopping ListHaire’s Shopping ListHaire’s Shopping ListHaire’s Shopping List

1 1/2 lbs hamburger

2 loaves Wonder Bread

1 bunch of carrots

1 Rumfords Baking Powder

Nescafe Instant coffee

2 cans Del Monte peaches

5 lbs potatoes

1 1/2 lbs hamburger

2 loaves Wonder Bread

1 bunch of carrots

1 Rumfords Baking Powder

Maxwell House coffee (drip ground)

2 cans Del Monte peaches

5 lbs potatoes

Do consumers stay the Do consumers stay the same? Y Nsame? Y N

Do consumers stay the Do consumers stay the same? Y Nsame? Y N

(More or less) diversity

Non-traditional methods of buying and selling (increasing/decreasing)

Move from conspicuous consumption to rational consumption.

US consumers age shifting

Therefore, strategies must __________

Adapted from 1997 Irwin/McGraw-Hill

Influences onConsumer Decision Making

IndividualDifferences

Consumer

DecisionProcess

SituationalFactors

Cultural/SocialEnvironment

Behavioral

BUYER DECISION BUYER DECISION PROCESSPROCESS

BUYER DECISION BUYER DECISION PROCESSPROCESS

ProblemRecognition

InformationSearch

AlternativeEvaluation

Purchase Decision

Post-purchasebehavior

Types of consumer decisionsTypes of consumer decisionsTypes of consumer decisionsTypes of consumer decisions

High-involvement decisions high importance to the individual lots of information processing extensive problem solving

Low-involvement decisions low importance to the individual little information processing routinized response behavior

Break outBreak outBreak outBreak out Hi Involvement Lo Involvement

Recognize need or problem (how)

Search for information (where, what info, how much)

Evaluate alternatives (how many)

Purchase (easy/hard)

STAGE 1: PROBLEM STAGE 1: PROBLEM RECOGNITIONRECOGNITION

STAGE 1: PROBLEM STAGE 1: PROBLEM RECOGNITIONRECOGNITION

Discrepancy between the current state and desired state

Incentives Drives

STAGE 2: INFORMATION STAGE 2: INFORMATION SEARCHSEARCH

STAGE 2: INFORMATION STAGE 2: INFORMATION SEARCHSEARCH

Internal then external

Extent of Search = Cost vs Benefits

Information may not exist Information may not exist because:because:

Information may not exist Information may not exist because:because:

Firm Natural asymmetry = inefficient

markets Product characteristics:

1. Search

2. Experience

3. Credence

STAGES 3 & 4:STAGES 3 & 4: Evaluation and Choice Evaluation and Choice

STAGES 3 & 4:STAGES 3 & 4: Evaluation and Choice Evaluation and Choice

COMPENSATORY PROCESSING

NON-COMPENSATORY PROCESSING

MARKETING IMPLICATIONS:

A CAVEATA CAVEATA CAVEATA CAVEAT

Expectations:

EXPECTANCY EFFECTS:

Examples:Rosenthal’s - smart/stupid ratsDeighton - Ford Campaign

POST-PURCHASE POST-PURCHASE BEHAVIORBEHAVIOR

POST-PURCHASE POST-PURCHASE BEHAVIORBEHAVIOR

Satisfaction vs DissatisfactionA function of ____________

SO-- UNDER ______ and OVER ________

Above average satisfaction leads to:

IMPACT OF CUSTOMER IMPACT OF CUSTOMER SATISFACTIONSATISFACTION

IMPACT OF CUSTOMER IMPACT OF CUSTOMER SATISFACTIONSATISFACTION

PIMS STUDY:ABOVE AVERAGE CUSTOMER

SATISFACTION LEADS TO:

________________

________________

________________

Responses to DissatisfactionResponses to DissatisfactionResponses to DissatisfactionResponses to Dissatisfaction

Which is most likely?

Post Purchase BehaviorPost Purchase BehaviorPost Purchase BehaviorPost Purchase Behavior

Dissonance

Most likely to occur when:

Dissonance vs Satisfaction/Dissatisfaction

IMPLICATIONS:IMPLICATIONS:Methods to --Methods to --

IMPLICATIONS:IMPLICATIONS:Methods to --Methods to --

Increase Satisfaction

Lower Expectations

Meet Expectations

Reduce Dissonance

Follow-ups

Warranties

Money-back

Liberal Return policies...

Break-out DiscussionBreak-out DiscussionBreak-out DiscussionBreak-out Discussion

You own a small bank.

1. Do you want consumers to express their dissatisfaction to you?

2. How can you increase the chances that customers will do what you want in #1 above?

3. Is this a situation where dissonance is likely? If yes, what should you do?

Market Segmentation--based Market Segmentation--based on consumer behavioron consumer behavior

Market Segmentation--based Market Segmentation--based on consumer behavioron consumer behavior

Def:

Look for those people most likely to want your product/service to target

Bases for segmentationBases for segmentationBases for segmentationBases for segmentation

Individual DifferencesDemographics (gender, age

income …)Personality Lifestyles and Psychographics

AIOVALS2

Personality

Risk Perception

Financial

Social

Psychological

Performance

Physical

Methods to Reduce Risk Methods to Reduce Risk PerceptionsPerceptions

Methods to Reduce Risk Methods to Reduce Risk PerceptionsPerceptions

Better warrantees

Money-back guarantees

Liberal return policies

Low-priced alternative

Small package size

Free samples

Endorsements

Government/Private tests

Complete performance information

Complete ingredient information

PsychographicsPsychographicsPsychographicsPsychographics

Activities--work hobbies, social events, entertainment, shopping, memberships, sports

Interests--family, home, job, recreation fashion, food, media, achievements

Opinions--self, social issues, politics, business, education products, future culture

Add to: Demographics--age, education, income, gender, occupation, family size, city size, stage in lifecycle

© 1997 Irwin/McGraw-Hill

BeardenIngram

LaForgeSecond edi tion

Marketing

.

VALS2 Segmentation

Slide 75

StrugglersStrugglers

AchieversAchievers

ActualizersActualizers

StriversStrivers

FulfilledsFulfilleds

RelieversRelievers

ExperiencersExperiencers

MakersMakers

Status OrientedPrinciple Oriented Action Oriented

Abundant Resources

Minimal Resources

Bases for segmentationBases for segmentationBases for segmentationBases for segmentation

Cultural/Social Values/normsSubculture

religionrace/ethnic

backgroundReference group

familysocial class

More Segmentation BasesMore Segmentation BasesMore Segmentation BasesMore Segmentation Bases

Situational FactorsGeographicUsage (Occasion of Use)

BehavioralBenefitUsage (heavy half)

Develop two ads for cat food using two Develop two ads for cat food using two

different segmentation basesdifferent segmentation bases..Develop two ads for cat food using two Develop two ads for cat food using two

different segmentation basesdifferent segmentation bases..

How many bases of segmentation How many bases of segmentation should a firm use?should a firm use?

How many bases of segmentation How many bases of segmentation should a firm use?should a firm use?

Example: Prizm

Target marketsTarget marketsTarget marketsTarget markets

The market segment that the firm tailors its products and strategies to

The group whose wants & needs the firm attempts to meet

Product differentiation --the firm’s offerings differ from other offerings in the marketplace

Distinctive Competence

Criteria for effective Criteria for effective segmentation / target marketssegmentation / target markets

Criteria for effective Criteria for effective segmentation / target marketssegmentation / target markets

Break-outBreak-outBreak-outBreak-out

Evaluate the US Hispanic market on the following criteria.Measurability Hi Mod LoAccessibility Hi Mod LoSubstantial Hi Mod LoDurability Hi Mod LoDifferential

Responsiveness Hi Mod Lo

The Hispanic MarketThe Hispanic MarketThe Hispanic MarketThe Hispanic Market

Hispanic households tend to be larger (3.5 persons per household as opposed to the 2.7 persons per non-Hispanic household) and Hispanics tend to be younger (median age of 23.6 vs. US average of 32) than non-Hispanics

About 3/4 of Hispanics speak Spanish at home. Many view Spanish -language TV and listen to Spanish-language radio.

Hispanics tend to be Roman Catholic; however, many (about 1/5) are leaving the Catholic Church and practicing evangelical Protestantism.

Hispanic populations are concentrated in Florida (Cuban- Americans), the Southwest (Mexican- Americans) and in New York City (Puertorican-Americans).

The size of the Hispanic population is increasing (about 12% of the US population). Additionally, income levels are increasing.

Some Hispanics want to assimilate into the US’s overall culture and do not identify with their Hispanic heritage. Others wish to maintain their heritage and reconnect with their Hispanic roots.

NOTE: Much of this information is drawn from Solomon’s Consumer Behavior text (p 474-81, 3rd edition and Peter and Olson’s Essentials of Consumer behavior text, 1st edition (1994)

Targeting StrategiesTargeting StrategiesTargeting StrategiesTargeting Strategies

1. Undifferentiated strategy

_________ offering ____________ mix(s)

2. Differentiated strategy

_________ offerings __________ mix(s)Counter-segmentation strategy

P.S.--what’s a mix?????

PositioningPositioningPositioningPositioning

Definition:

How the target market perceives/views your product. Your image in the target market’s mind

Segmentation and EthicsSegmentation and EthicsSegmentation and EthicsSegmentation and Ethics

Children as special populations

Gender/ethnic role stereotyping

Harmful products/non-harmful products

Privacy

Service ExerciseService ExerciseService ExerciseService Exercise

Services are defined as “products, such as a bank loan or home security, that are intangible, or at least substantially so.” (AMA definition) These are offerings that cannot be stored, are often inseparable form the producer, and are not standardized.

 Here are some examples of services: Health care, insurance, haircuts,

accounting, banking, consulting for information systems, Internet, sports events, robotics, lawyers, university curriculums, concerts, dentists, information providers, hotels, golfing green fees, taxies, clothing alterations, massages, training, air transportation, lawn care, security guards, janitorial services, restaurants, movie rentals, computer repair, plumbing repair, executive recruiting, catering, doctors. (Is that enough examples????)

 On a sheet of paper, you are to describe a two actual service encounter that

you have had. Please think about a really HORRIBLE service encounter and a really GREAT experience. Describe this experience without naming the service provider. We’ll talk about this in the next class.