Description
explains the marketing decision process.
The Marketing Decision-Making Process
Figure 1.1 The DECIDE Decision-Making Process
D- Define the marketing problem
E-
Enumerate the controllable and uncontrollable decision factors Collect relevant information
C-
I-
Identify the best alternative
D-
Develop and implement a marketing plan Evaluate the decision and the decision process
E-
The Marketing Mix The Market Mix (often referred to as the 4-Ps) refers to the unique blend of marketing elements designed to meet the needs of the organization’s target market. The Marketing Mix consists of the organization’s... • • • • Product Price Promotion Distribution (Place)
Marketing research is frequently used to evaluate the effectiveness of an organization’s marketing mix.
The External Marketing Environments
Marketers make decisions within the context of environments external to their organizations. While marketers can’t control these environments, mix decisions are affected by changes occurring within them. Important external environments include: • • • • • Political and Legal Cultural and Social Economic Technological Competitive
Marketing research is used to monitor and anticipate changes in these environments.
Model of the marketing system
Independent variables (Causes) Marketing mix (controllable)
1. 2. 3. 4. Price decisions Promotion decisions Distribution decisions Product decisions
Dependent variables (Effects) Behavioral response
1. 2. 3. 4. 5. 6. Awareness Knowledge Liking Preference Intent-to-buy Purchase
Situational factors (uncontrollable)
1. 2. 3. 4. 5. 6. 7. Demand Competition Legal/political Economic climate Technological Gov’t. regulation Internal resources of the organization
Performance measures
1. 2. 3. 4. 5. 6. 7. 8. Sales Market share Cost Profit R.O.I. Cash flow Earnings/share Image
Marketing Research
The function which links the consumer, customer or public to the marketer through information. Research Specifies: • Information required • Method of collecting information • How the data will be collected • How the data will be analyzed • Communication of results to management
MR Definitions 1. Book/author Definition 2. AMA “Official” Definition
Why Do Marketing Research?
• Make better marketing decisions • Understand consumers and the marketplace • Find out what went wrong For example, Marketing Research could help: Find out why a product isn’t selling (Poor marketing mix or changes in the external environment)
• MR should be done on an “ongoing” basis • MR must be combined with managerial judgement & experience
Why Not Do Marketing Research?
• A lack of resources
• Poor timing in the marketplace • Decision has already been made • Managers cannot agree on the information needed • The information needed already exists • Cost of conducting research outweighs the benefits • Lose the element of surprise
• MR only one alternative exists for the company
TABLE 1.2
MARKET SIZE Small
The Decision Whether to Conduct Market Research
SMALL PROFIT MARGIN LARGE PROFIT MARGIN Possible benefits greater than cost; e.g., ultraexpensive Lamborghinitype sportswear, larger specialized industrial equipment; e.g., Joy Manufacturing, computer-aided metal stamping machines
Cost likely to be greater than benefit; e.g., eyeglasses replacement screw, tire valve extension
Large
Benefits likely to be greater than costs; e.g., Stouffers frozen entrees, Crest’s tartar control toothpastes
Benefits most likely to be greater than costs; e.g., medical equipment like CT scanners, Toshiba’s high-definition television
NOTE: The decision on whether to conduct marketing research depends on whether the perceived cost is greater than the benefit. Two important determinants of potential benefit are profit margins and market size.
Figure 1.2 A Classification of Marketing Research
Marketing Research
Problem Identification Research • Market potential research • Market share research • Image research • Market characteristics research • Sales analysis research • Forecasting research • Business trends research
Problem Solving Research • Segmentation research • Product research • Pricing research • Promotion research • Distribution research
TABLE 1.1
Problem-Solving Research
Segmentation Research determine basis of segmentation establish market potential and responsiveness for various segments select target markets and create lifestyle profiles, demography, media, and product image characteristics Product Research test concept determine optimal product design package tests product modification brand positioning and repositioning test marketing control store tests Pricing Research importance of price in brand selection pricing policies product line pricing price elasticity of demand initiating and responding to price changes Promotional Research optimal promotional budget sales promotion relationship optimal promotional mix copy decisions media decisions creative advertising testing claim substantiation evaluation of advertising effectiveness Distribution Research determine type of distribution attitudes of channel members intensity of wholesale and retail coverage channel margins location of retail and wholesale outlets
Kinds of Questions Marketing Research Can Help Answer
I. Planning A. What kinds of people buy our product? Where do they live? How much do they earn? How many of them are there? B. Is the market for our product increasing or decreasing? Are there promising markets that we have not yet reached? C. Are there markets for our product in other countries?
II. Problem Solving A. Product 1. Which, of various product designs, is likely to be the most successful? 2. What kind of packaging should we use for our product? B. Price 1. What price should we charge for our new product? 2. As product costs decline, should we lower our prices or try to develop a higher quality product? C. Place 1. Where, and by whom should our product be sold? 2. What kinds of incentives should we offer to induce dealers to push our product? D. Promotion 1. How effective is our advertising? Are the right people seeing it? How does it compare with the competition’s advertising? 2. What kinds of sales promotional devices--coupons, contests, rebates, and so forth--should we employ? 3. What combination of media--newspaper, radio, television, magazines--should we use? III. Control A. What is our market share overall? In each geographic area? By each customer type? B. Are customers satisfied with our product? How is our record for service? Are there many returns? C. How does the public perceive our company? What is our reputation with dealers?
Evolution of Systems for Supporting Decision Making
Ad hoc marketing research
Marketing information system (MkIS)
Marketing decision support system (MDSS)
Expert system (ES)
Point made earlier: MR should be done on an “ongoing” basis
A Decision Support System
Manager
Interactive instructions and display Electronic spreadsheet modeling, statistics
Sales analysis Forecasting
Database
Advertising evaluation Product line analysis Graphics display, modeling Marketplace Market/customer information
doc_111224879.pdf
explains the marketing decision process.
The Marketing Decision-Making Process
Figure 1.1 The DECIDE Decision-Making Process
D- Define the marketing problem
E-
Enumerate the controllable and uncontrollable decision factors Collect relevant information
C-
I-
Identify the best alternative
D-
Develop and implement a marketing plan Evaluate the decision and the decision process
E-
The Marketing Mix The Market Mix (often referred to as the 4-Ps) refers to the unique blend of marketing elements designed to meet the needs of the organization’s target market. The Marketing Mix consists of the organization’s... • • • • Product Price Promotion Distribution (Place)
Marketing research is frequently used to evaluate the effectiveness of an organization’s marketing mix.
The External Marketing Environments
Marketers make decisions within the context of environments external to their organizations. While marketers can’t control these environments, mix decisions are affected by changes occurring within them. Important external environments include: • • • • • Political and Legal Cultural and Social Economic Technological Competitive
Marketing research is used to monitor and anticipate changes in these environments.
Model of the marketing system
Independent variables (Causes) Marketing mix (controllable)
1. 2. 3. 4. Price decisions Promotion decisions Distribution decisions Product decisions
Dependent variables (Effects) Behavioral response
1. 2. 3. 4. 5. 6. Awareness Knowledge Liking Preference Intent-to-buy Purchase
Situational factors (uncontrollable)
1. 2. 3. 4. 5. 6. 7. Demand Competition Legal/political Economic climate Technological Gov’t. regulation Internal resources of the organization
Performance measures
1. 2. 3. 4. 5. 6. 7. 8. Sales Market share Cost Profit R.O.I. Cash flow Earnings/share Image
Marketing Research
The function which links the consumer, customer or public to the marketer through information. Research Specifies: • Information required • Method of collecting information • How the data will be collected • How the data will be analyzed • Communication of results to management
MR Definitions 1. Book/author Definition 2. AMA “Official” Definition
Why Do Marketing Research?
• Make better marketing decisions • Understand consumers and the marketplace • Find out what went wrong For example, Marketing Research could help: Find out why a product isn’t selling (Poor marketing mix or changes in the external environment)
• MR should be done on an “ongoing” basis • MR must be combined with managerial judgement & experience
Why Not Do Marketing Research?
• A lack of resources
• Poor timing in the marketplace • Decision has already been made • Managers cannot agree on the information needed • The information needed already exists • Cost of conducting research outweighs the benefits • Lose the element of surprise
• MR only one alternative exists for the company
TABLE 1.2
MARKET SIZE Small
The Decision Whether to Conduct Market Research
SMALL PROFIT MARGIN LARGE PROFIT MARGIN Possible benefits greater than cost; e.g., ultraexpensive Lamborghinitype sportswear, larger specialized industrial equipment; e.g., Joy Manufacturing, computer-aided metal stamping machines
Cost likely to be greater than benefit; e.g., eyeglasses replacement screw, tire valve extension
Large
Benefits likely to be greater than costs; e.g., Stouffers frozen entrees, Crest’s tartar control toothpastes
Benefits most likely to be greater than costs; e.g., medical equipment like CT scanners, Toshiba’s high-definition television
NOTE: The decision on whether to conduct marketing research depends on whether the perceived cost is greater than the benefit. Two important determinants of potential benefit are profit margins and market size.
Figure 1.2 A Classification of Marketing Research
Marketing Research
Problem Identification Research • Market potential research • Market share research • Image research • Market characteristics research • Sales analysis research • Forecasting research • Business trends research
Problem Solving Research • Segmentation research • Product research • Pricing research • Promotion research • Distribution research
TABLE 1.1
Problem-Solving Research
Segmentation Research determine basis of segmentation establish market potential and responsiveness for various segments select target markets and create lifestyle profiles, demography, media, and product image characteristics Product Research test concept determine optimal product design package tests product modification brand positioning and repositioning test marketing control store tests Pricing Research importance of price in brand selection pricing policies product line pricing price elasticity of demand initiating and responding to price changes Promotional Research optimal promotional budget sales promotion relationship optimal promotional mix copy decisions media decisions creative advertising testing claim substantiation evaluation of advertising effectiveness Distribution Research determine type of distribution attitudes of channel members intensity of wholesale and retail coverage channel margins location of retail and wholesale outlets
Kinds of Questions Marketing Research Can Help Answer
I. Planning A. What kinds of people buy our product? Where do they live? How much do they earn? How many of them are there? B. Is the market for our product increasing or decreasing? Are there promising markets that we have not yet reached? C. Are there markets for our product in other countries?
II. Problem Solving A. Product 1. Which, of various product designs, is likely to be the most successful? 2. What kind of packaging should we use for our product? B. Price 1. What price should we charge for our new product? 2. As product costs decline, should we lower our prices or try to develop a higher quality product? C. Place 1. Where, and by whom should our product be sold? 2. What kinds of incentives should we offer to induce dealers to push our product? D. Promotion 1. How effective is our advertising? Are the right people seeing it? How does it compare with the competition’s advertising? 2. What kinds of sales promotional devices--coupons, contests, rebates, and so forth--should we employ? 3. What combination of media--newspaper, radio, television, magazines--should we use? III. Control A. What is our market share overall? In each geographic area? By each customer type? B. Are customers satisfied with our product? How is our record for service? Are there many returns? C. How does the public perceive our company? What is our reputation with dealers?
Evolution of Systems for Supporting Decision Making
Ad hoc marketing research
Marketing information system (MkIS)
Marketing decision support system (MDSS)
Expert system (ES)
Point made earlier: MR should be done on an “ongoing” basis
A Decision Support System
Manager
Interactive instructions and display Electronic spreadsheet modeling, statistics
Sales analysis Forecasting
Database
Advertising evaluation Product line analysis Graphics display, modeling Marketplace Market/customer information
doc_111224879.pdf