Marketing Research & Product Strategy: Powerpoint Presentation by Ian Anderson, Algonquin College

Chapter 6 Copyright 2010 by Nelson Education Ltd.
Marketing Research
& Product Strategy
6
PowerPoint Presentation by
Ian Anderson, Algonquin College
Looking Ahead
After studying this chapter, you should be able to:
1. Describe small business marketing.
2. Discuss the nature of the marketing research process.
3. Explain the term market and methods of forecasting sales.
4. Identify the components of a formal marketing plan.
5. Define customer relationship management (CRM) and
explain its importance to a small firm.
6. Discuss the significance of providing extraordinary
customer service.

6-2
Looking Ahead
After studying this chapter, you should be able to:
7. Illustrate how technology, such as the Internet, can
improve customer relationships.
8. Identify the key characteristics of consumer behaviour.
9. Explain product strategy and related concepts.
10. Describe the components of a firms total product
offering.

6-3
What is Small Business Marketing?
Marketing
Activities directing the flow of goods and services from
producer to consumer or user.
Small business marketing consists of those
business activities that relate directly to:
Identifying a target market
Determining target market potential
Preparing, communicating, and delivering a bundle of
satisfaction to the target market
6-4
Essential Marketing Activities
Market Analysis
An evaluation process that encompasses market
segmentation, marketing research, and sales
forecasting
Marketing Mix
The combination of product,
pricing, promotion, and
distribution activities.
6-5
Marketing Philosophies Make a
Difference
Consumer-Oriented
All marketing efforts begin and end with the customer;
focus is on the consumers needs
this philosophy is the most consistent with long-term
success of the firm
Production-Oriented
Emphasizes development of the product and production
efficiencies over other activities
Sales-Oriented
Favours product sales over production efficiencies and
customer preferences
6-6
Market Opportunity Assessment
Industry analysis
Competitive Analysis
Market segmentation
Customer market research:
primary & secondary
Estimating the opportunity based on a sales
forecast
6-7
Creation of the Marketing Mix
A Market Opportunity Assessment leads to
the creation of:
The marketing mix
Product strategy
Pricing strategy
Promotion strategy
Distribution strategy
6-8
The Nature of Marketing Research
Steps In the Marketing Research Process
1. Identifying the informational need
Why do we need to know this?
2. Searching for secondary data
Who has researched this topic already?
3. Collecting primary data
Who do we ask and what do we ask them?
4. Interpreting the data
Got the information, now what does it mean?
continued
6-9
The Nature of Marketing Research
Marketing Research
The gathering, processing, reporting, and interpreting of
market information
Secondary Data
Market information that has been previously compiled by
others
May be internal or external
Primary Data
New market information that is gathered by the firm
conducting the research
6-10
Methods for Collecting Primary Data
Observational
Methods
In person
Video
Focus Groups
Test Marketing

Questioning
Methods
Surveys
Mail, Email, Web
Telephone
Personal interviews
Experiments

6-11
Ingredients of a Market
Ingredient 1
Customers:
People or
businesses
Ingredient 2
Purchasing
power:
Money/credit
Ingredient 3
Unsatisfied
needs
6-12
Estimating Market Potential
The Sales Forecast
A prediction of how much (in units and/or dollars) of a
product or service will be purchased within a market during a
specified period of time
Must be based on specific target market segments
An essential component of a business plan that:
Assesses the new ventures feasibility.
Assists in planning for product
scheduling, setting inventory
levels, and personnel decisions

6-13
Segmentation Variables
Divide total market into segments
Benefit variables
Benefits consumers look for in products/services
Geographic variables
Location, size, composition, etc.
Demographic variables
Age, sex, education, income, occupation, etc.
Psychographic variables
How people think and behave (i.e. lifestyle trends)

6-14
Figure 6-3
Dimensions of Forecasting Difficulty
6-15
The Forecasting Process:
Two Dimensions of Forecasting
The Starting Point
Breakdown (top down)
Buildup process (bottom up)
Calculate market size
Calculate potential market share
Production or retail capacity
Competitive data
Develop sales forecast
Adjust to reflect competitive advantage
6-16
The Formal Marketing Plan
Market Analysis
Customer profile
A description of potential customers in a target market
Sales forecasts
most likely, pessimistic, and optimistic
The Competition
Identify industry leader(s)
Clarify industry key success factors (competitive factors)
Research individual competitors (strengths, weaknesses)
Analyze potential for success (Porters Five Forces)
continued
6-17
The Marketing Plan
Marketing Strategy
Total product/service plan
Decisions affecting the total product
Distribution plan
Decisions regarding product delivery to customers
Pricing plan
Setting an acceptable value on the product
Promotional plan
Communicating information to the target market

6-18
Customer Relationship Management
(CRM)
CRM is a company-wide business strategy
designed to optimize profitability and customer
satisfaction by focusing on highly defined and
precise customer groups
Modern CRM focuses on:
Customers instead of products
Changes in company processes, systems and culture
All channels and media involved in the marketing effort
6-19
Customer Relationship Management
(CRM)
CRM programs focus on keeping existing
customers happy
Economic benefits of CRM:
Acquisition costs for new customers are huge
Long-time customers spend more money than new ones
Happy customers refer their friends and colleagues
Order-processing costs are higher for new customers
Old customers will pay more for products

6-20
Successful CRM Program
Exhibit 6-6
6-21
Components of Customer Satisfaction
1. The most basic elements of the product/service
that customers expect all competitors to deliver.
2. General support services, such as customer
assistance.
3. A recovery process for counteracting bad
experiences.
4. Extraordinary services that excel in meeting
customers preferences and make the product or
service seem customized.
6-22
Ways to Provide Extraordinary
Service
Naming Names
Greet customers by name.
Custom Care
Know what your customers want.
Keeping in Touch
Communicate frequently with
your customers.
Boo-Boo Research
Ask lost customers why they went elsewhere.
6-23
Evaluating Customer Service
Customer service problems are the main source
of customer complaints.
Popular approaches to creating customer
service strategies:
Providing an exceptional experience
Respond promptly to customers requests and concerns
Listen to customers and respond accordingly
Stand behind products/services
Treat customers as family members and stay in their
hearts and minds

6-24
Using Technology to Support CRM
CRM software programs are designed to
help companies gather all customer contact
information into a single data management
program
Interpersonal contact
Emails, letters, faxes
Phone calls
Internet communication FAQ, live chats
6-25
Simplified Model of
Consumer Behaviour
Exhibit 6-8
6-26
Stage 1 in
Consumer Decision Making
Problem Recognition
The current state or a change in current state is
not the ideal state of affairs due to:
Change in financial status
Change in household characteristics
Normal depletion of a resource
Product or service performance
Past decisions
Availability of products
6-27
Stage 2 in
Information Search and Evaluation
Evaluation criteria
The features of a product or service that customers use
to compare brands.
Evoked set
A group of brands that a customer
is both aware of and willing to
consider as a solution to a
purchase problem.
6-28
Stages 3 & 4 in
Purchase decision
Deciding how and where to make the purchase
decision:
Store versus nonstore (catalogue, TV, and the Internet)
Post-purchase evaluation
Cognitive dissonance
The anxiety that occurs when a
customer has second thoughts
immediately following a purchase.
6-29
Purchase
"This is the one
I want."
Post-Purchase
Dissonance
"Did I buy the
right one?"
Usage
"I found another
use for
Product
Disposal
"Can I trade this in?"
Positive
Evaluation
It works great."
Negative
Evaluation
Doesn't work well."
Consumer
Complaints
"I'm calling
the store."
No Repurchase
Repurchase
Post-Purchase Activities of Consumers
Exhibit 6-9
6-30
Psychological Factors
Needs
Physiological, social, psychological, and spiritual.
Consumers needs are rarely completely satisfied.
A service or product can satisfy more than one need.
Perceptions
The individual processes that give meaning to the stimuli
confronting consumers.
Perceptual categorization grouping things together
Brand loyalty (a perceptual barrier) makes it difficult
for competing brands to reach the loyal consumer.

continued
6-31
Psychological Factors
Motivations
Goal-directed forces that organize and give direction to the
tension caused by unsatisfied needs.
Provide the behavioural impetus for consumers to act to
fulfill a need.
Marketing is motivation and does not create needs.
Attitudes
An enduring opinion based on knowledge, feeling, and
behavioural tendency.
continued
6-32
Sociological Factors
Culture
Behavioural pattern and values that characterize
a group of consumers in a target market.
Social class
Societal divisions that have different
levels of social prestige.
Reference groups
Groups that an individual allows to influence his or her
behaviour.
Opinion leaders
A group leader who plays a key communications role.
6-33
Product Strategy
Product Strategy
The way the product component of the marketing mix is
used to achieve a firms objectives.
Product item
The lowest common denominator in the product mixthe
individual item
Product line
The sum of the related individual product items
Product mix consistency
The similarity of product lines in a product mix
6-34
Service Marketing versus Goods Marketing
Characteristics
Pure Services
Marketing
Pure Goods
Marketing
Tangibility
Production/
Consumption
Standardization
Perishability
Intangible
goods
Occur at the
same time
Less
standardization
Greater
perishability
Tangible
goods
Occur at
different times
More
standardization
Less
perishability
Hybrid
Services/
Goods
Marketing
Exhibit 6-11
6-35
Product Strategy
One product / one market
One product /multiple markets
Modified product / one market
Modified product / multiple markets
Multiple products / one market
Multiple products / multiple markets
Product
strategy
alternatives:
Convincing nonusers to become customers
Persuading current customers to use more
Alerting customers to new uses for the product
Growth
tactics:
6-36
Business Analysis
Products
relationship to
existing line
Costs of
Development and
Introduction
Available
Personnel and
Facilities
Competition and
Market
acceptance
6-37
Building the Total Product Offering
Branding
A verbal and/or symbolic means of identifying a product.

Rules for Naming a Product:
Select a name that is easy to pronounce and remember.
Choose a descriptive name.
Use a name that can have legal protection.
Select a name with promotional properties.
Select a name that can be used on several product lines of a
similar nature.
6-38
Protecting a Product Offering
Trademark
An identifying feature used to distinguish a
manufacturers product
Service Mark
A legal term indicating the
exclusive right to use a
brand to identify a service.
Vinnies
Villa
6-39
Packaging, Labelling, and Warranties
Packaging
Colour, design, and protection for the product.
Labelling
Shows the brand and informs the consumer.
Warranties
A promise that the product will perform at a certain level or
meet certain standards.
Implied and written warranties
Policy considerations: Cost, service capability, competitive
practices, customer perceptions, legal implications
6-40
Business Marketing
Shorter distribution channels
Greater emphasis on personal selling
Buyer-seller relationship is closer
Greater reliance on promotion such as tradeshows
Greater Web integration with key business clients
6-41

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Chapter 6 Copyright 2010 by Nelson Education Ltd.

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