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

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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

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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.

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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

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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?

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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?

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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.

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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?

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@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.

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Goal is to Maintain Profitable Customers Shift Low Profit Customers Into Higher Profit Products Over Time

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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.

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Customer Lifetime Value (CLV)

• Describes the net present value of the stream of future profits expected over the customer’s lifetime purchases.

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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.

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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.

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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.

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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.

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Internal Factors

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Internal Analysis: Resources

Human

Financial

Informational

Supply

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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.

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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.

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Internal Analysis: Business Relationships

Includes relationships with: Suppliers

Distributors

Other business partners

Examine: Capacity

Quality

Value provided

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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.

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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…

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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.

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External Analysis: Social-Cultural Trends Consumer Demographics

Business Demographics

Cross-Cultural Influences

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External Analysis: Demographic Trends

Key consumer demographic trends include:

Population growth

Population composition: Age Gender Ethnic background Religious background Education Occupation Household size Income

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External Analysis: Bus. Demographic Trends Size and growth of industries

Number of companies

Number of locations or branches

Number of employees

Sales revenues

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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.

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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.

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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.

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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.

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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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