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Class Notes For A Preface to Marketing Management, 14th Edition

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 1 Ch apter 1 Strategic Planning and the Marketing Management Process High - Level Chapter Outline I. Introduction I I . The Marketing Concept II I . What is Marketing? I V . What is Strategic Planning? A. Strategic Planning and Marketing Management B. The Strategic Planning Process Organizational Mission Organizational Objectives Organizational Strategies Choosing an Appropriate Strategy Organizational Portfolio Plan C. The Complete Strategic Plan V. The Marketing Management Process A. Situation Analysis B. Marketing Planning C. Implementation and Control of the Marketing Plan D. Marketing Information Systems and Marketing Research V I . The Strategic Plan, the Marketing Plan, and Other Functional Area Plans A. Marketing’s Role in Cross - Functional Strategic Planning Detailed Chapter Outline I. The Marketing Concept • T he marketing concept means that an organization should seek to make a profit by serving the needs of customer groups. • The purpose of the marketing concept is to rivet the attention of marketing managers on serving broad classes of customer needs ( customer orientation ) , rather than on the firm’s current products (production orientation) or on devising methods to attract customers to

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 2 current products (selling orientation). • The principal task of the marketing function operating under the marketing concept is not to manipulate customers to do what suits the interest of the firm , but rather to find effective and efficient means of making the business do what suits the interest of the customer . • Effective marketing requires that consumer needs come first in organizational decision making. • One qualification to this statement deals with the question of a conflict between consumer wants and societal needs and wants. II. What is Marketing? • Everyone knows something about marketing because it has been a part of their lives since they spent their first dollar . • Since everyone is involved in marketing , it seems strange that one of the persistent problems in the field has been its definition . • The American Marketing Association defines marketing as, “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” • This definition takes into account all parties involved in the marketing effort: members of the producing organization, resellers of goods and services, and customers or clients . • Major types of marketing includes: p roduct , s ervice , p erson , p lace , c ause , and o rganization ( s ee Figure 1.1 for description s and examples) . III. What is Strategic Planning? • Before a production manager, marketing manager, and personnel manager can develop plans for their individual departments , some larger plan or blueprint for the organization should exist. • Senior m anagers must look toward the future and evaluate the ability to shape their organization’s destiny in the years and decades to come. o The output of this process is objectives and strategies designed to give the organization a chance to compete effectively in the future . • The objectives and strategies established at the top level provide the context for planning in each of the divisions and departments by divisional and departmental managers. A. Strategic Planning and Marketing Management • Some of the most successful business organizations are here today because many years ago they offered the right product at the right time to a rapidly growing market. • Over three - quarters of the 100 largest U.S . corporations of 70 years ago have fallen

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 3 from the list. o Their managements failed to recognize that business strategies need to reflect changing environments and emphasis must be placed on developing business systems that allow for continuous improvement. • Present - day b usiness managers realize that the true mission of the organization is to provide value for three key constituencies: customers, employees, and investors . • Strategic planning includes all the activities that lead to the development of a clear organizational mission, organizational objectives, and appropriate strategies to achieve the objective for the entire organization . • Strategic planning , if performed successfully, plays a key role in achieving equilibrium between the short and the long term by balancing acceptable financial performance with preparation for inevitable changes in markets, technology, and competition as well as in economic and political are n as . • The strategic planning process is depicted in Figure 1.2. • In the strategic planning process the organization gathers information about the changing elements of its environment. • This information is useful in aiding the organization to adapt better to these changes through the process of strategic planning. B. The Strategic Planning Process • The output of strategic planning is the development of a strategic plan . • Figure 1.2 indicates four components of a strategic plan: mission, objectives, strategies, and portfolio plan. Organizational Mission • The organization’s environment provides the resources that sustain the organization, whether it is a business, a college or university, or a government agency. • Every organization exists to accomplish something in the larger environment and th at purpose, vision, or mission usually is clear at the organization’s inception. • As time passes, the o rganization expand s, and the environment and managerial personnel change. As a result, one or more things are likely to occur : o T he organization ’s original purpose m ay become irrelevant as the organization expands into new products, new markets, and even new industries . o T he original mission may remain relevant, but managers begin to lose interest in it. o Changes in the environment may make the original mission inappropriate.

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 4 • The result of any or all three of these conditions is a “ drifting ” organization , without a clear mission, vision, or purpose to guide critical decisions . o When this occurs, management must search for a purpose or emphatically restate and reinforce the original purpose. • The mission statement, or pur pose, of an organization is the d escription of its reason for existence. o In essence, the mission statement defines the direction in which the organization is heading and how it will succeed in reaching its desired goal. • The basic questions that must be answered when an organization decides to examine and restate its mission are: o What is the business? o Who is are the customer s ? o What do customers value? o W hat will the business be? • In developing a statement of mission, management must take into account three key elements: the organization’s history, its distinctive competencies, and its environment. o The organization’s history — i n formulating a mission, the critical characteristics and events of the past must be considered. o The organization’s distinctive competencies — t hese are things that an organization does well . o The organization’s environment — i t dictates the opportunities, constraints, and threats that must be identified before a mission statement is developed. • When completed, an effective mission statement will be focused on markets rather than products, achievable, motivating, and specific . • Focused on Markets Rather than Products o I n recent years, a key feature of mission statements has been an external rather than internal focus. o In other words, the mission statement should focus on the broad class of needs that the organization is seeking to satisfy (external focus), not on the physical product or service that the organization is offering at present (internal focus). • Achievable o T he mission statement should open a vision of new opportunities but should not lead the organization into unrealistic ventures far beyond its competencies. o I t should open a vision of new opportunities but should not lead the organization into unrealistic ventures far beyond its competencies. • Motivational o O ne of the side (but very important) benefits of a well - defined mission is the

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 5 guidance it provides employees and managers working in geographically dispersed units and on independent tasks. o It provides a shared sense of purpose outside the various activities taking place within the organization. • Specific o T he mission statement must be specific to provide direction and guidelines to management when they are choosing between alternative courses of action. o However, it does not provide direction for management. Organizational Objectives • Organizational objectives are the end point of an organization’s mission and are what it seeks through the on - going, long - run operations of the organization. • The organizational mission is distilled into a finer set of specific and achievable organizational objectives that must be specific, measurable, action commitments by which the mission of the organization is to be achieved . • I f formulated properly, they can accomplish the following: o They can be converted into specific action. o They will provide direction. o They can establish long - run priorities for the organization. o They can facilitate management control. • Organizational objectives are necessary in all areas that may influence the performance and long - run survival of the organization. • Obviously, during the strategic planning process conflicts are likely to occur between various functional departments in the organization. • The important point is that management must translate the organizational mission into specific objectives that support the realization of the mission. Organizational Strategies • Strategy involves the choice of major directions the organization will take in pursuing its objectives. • As many as 7 0 percent of strategic plans fail because the strategies are not well defined and , thus, could not to be implemented effectively . • Organizational Strategies Based on Products and Markets o O ne means to developing organizational strategies is to focus on the directions the organization can take in order to grow . o The four paths an organization can take in order to grow are market penetration, market development, product development, and diversification

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 6 ( Figure 1.4 ). • Market Penetration Strategies o T hese strategies focus primarily on increasing sales of present products to present customers. o Tactics used to implement a market penetration strategy might include price reductions, advertising that stresses the many benefits of the product, packaging the product in different - sized packages, or making it available at more locations. • Market Development Strategies o A n organization would seek to find new customers for its present products through market development. o Market development strategies involve much, much more than simply getting the product to a new market. • Product Development Strategies o T he new products developed would be directed primarily to present customers. • Diversification o T his strategy can lead the organization into entirely new and even unrelated businesses. o It involves seeking new products (often through acquisitions) for customers not currently being served. • Organizational Strategies Based on Competitive Advantage o Michael Porter developed this model for formulating organizational strategy that is applicable across a wide variety of industries. o Porter suggests that firms should first analyze their industry and then develop either a cost leadership or a strategy based on differentiation. o Using a cost leadership strategy, a firm would focus on being the low - cost company in its industry. o Using a strategy based on differentiation, a firm seeks to be unique in its industry or market segment along particular dimensions that the customers value. • Organizational Strategies Based on Value o As competition increases, t he concept of “c ustomer value ” has become critical for marketers . o I t focuses not only on customer n eeds, but also on the question, How can an organization create value for their customers and still achieve their objectives? o It is unlikely that a firm will succeed by trying to be all things to all people. o M any firms have succeeded by choosing to deliver superior customer value using one of three value strategies - best price, best product, or best service .

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 7 Choosing an Appropriate Strategy • Management should select those strategies consistent with its mission and capitalizes on the organization's distinctive competencies that will lead to a sustainable competitive advantage. • A sustainable competitive advantage can be based on either the assets or skills of the organization. Organizational Portfolio Plan • The f inal phase of strategic planning process is the formulation of the organizational portfolio plan . • Management must decide which businesses to build, maintain, or eliminate, or which new businesses to add. • The f irst step in this approach is to identify various divisions, product lines, etc., that can be considered a “business . ” • These are referred to as strategic business unit (SBU s ) and they have the following characteristics : o They h ave a d istinctive mission . o They h ave their own competitors . o They are a single business or collection of related businesses . o They can b e planned independently of the other businesses of the total organization • Thus, depending on the type of organization, an SBU could be a single product, product line, or division; a college of business administration; or a state mental health agency. C. The Complete Strategic Plan • Completion of the strategic plan (Figure 1.2) facilitates the development of marketing plans for each product, product line, or division of the organization. • The marketing plan serves as a subset of the strategic plan in that it allows for detailed planning at a target market level. IV. The Marketing Management Process • Marketing management can be defined as “the process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organizational objectives.”

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 8 • This definition is consistent with the marketing concept . • The marketing management process is illustrated in Figure 1.5. A. Situation Analysis • S ituation analysis can be divided into six major areas of concern: o The Cooperative Environment ▪ I t includes all firms and individuals who have a vested interest in the firm’s accomplishing its objectives. ▪ Parties of primary interest to the marketing executive in this environment are : ❖ S uppliers ❖ R esellers ❖ O ther departments in the firm ❖ S ubdepartments and employees of the marketing department ▪ Opportunities in this environment are primarily related to methods of increasing efficiency. o The Competitive Environment ▪ I t includes primarily other firms in the industry that rival the organization for both resources and sales. ▪ Opportunities in this environment include such things as : ❖ A cquiring competing firms ❖ O ffering demonstrably better value to consumers and a ttracting them away from competitors ❖ I n some cases, driving competitors out of the industry o The Economic Environment ▪ I t includes the state of the macroeconomy and changes in it which bring about marketing opportunities and constraints. ▪ C hanges in technology can provide significant threats and opportunities. o The Social Environment ▪ It includes general cultural and social traditions, norms, and attitudes . ▪ While these values change slowly, such changes often bring about the need for new products and services. o The Political Environment ▪ It includes the attitudes and reactions of the general public, social and business critics, and other organizations, such as the Better Business Bureau. ▪ Dissatisfaction with such business and marketing practices as unsafe products, products that waste resources and unethical sales procedures can have adverse effects on corporation image and customer loyalty.

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 9 o The Legal Environment ▪ It includes a host of federal, state, and local legislation directed at protecting both business competition and consumer rights. ▪ In recent years, there has been less emphasis on creating new laws for constraining business practices. B. Marketing Planning • Once an opportunity is recognized, the marketing executive must then plan an appropriate strategy for taking advantage of the opportunity. • This process can be viewed in terms of three interrelated tasks that include: o E stablishing marketing objectives o S electing the target market o D eveloping the marketing mix • Establishing Objectives o Marketing objectives usually are derived from organizational objectives; in some cases where the firm is totally marketing oriented, the two are identical. o Marketing objectives are usually sta ted as standards of performance or as tasks to be achieve d by given dates. • Selecting the Target Market o The success of any marketing plan hinges on how well it can identify customer needs and organize its resources to satisfy them profitably . o Four important questions must be answered in selecting the groups of potential customers : ▪ What do customers want or need? ▪ What must be done to satisfy those wants or needs? ▪ What is the size of the market? ▪ What is its growth profile? o Present t arget markets and potential target markets are then ranked according to : ▪ P rofitability ▪ P resent and future sales volume ▪ T he match between what it takes to appeal successfully to the segment and the organization’s capabilities • Developing the Marketing Mix o The marketing mix is the set of controllable variables that must be managed to satisfy the target market and achieve organizational objectives. o These controllable variables are usually classified according to four major decision areas : ▪ P roduct ▪ P rice

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 10 ▪ P romotion ▪ P lace C. Implementation and Control of the Marketing Plan • Implementing the marketing plan involves putting the plan into action and performing marketing tasks according to the predefined schedule. • Controlling the marketing plan involves three steps: o The r esults of the implemented marketing plan are measured o The results are compared with objectives o Decisions are made on whether the plan is achieving objectives D. Marketing Information Systems and Marketing Research • Throughout the marketing management process, current, reliable, and valid information is needed to make effective marketing decisions. V. The Strategic Plan, the Marketing Plan, and O ther Functional Area Plans • Strategic planning is a top management responsibility . • Marketing managers are increasingly involved in strategic analysis and planning . • Nearly all strategic planning questions have marketing implications . • M arketing e xecutives are involved in the str ategic planning process in at least two important ways: o They influence the process by providing important inputs in the form of information and suggestions relating to customers, products, and middlemen . o T hey must always be aware of what the process of st r ategic planning involves as well as the res ults because everything they do — the marketing objectives and strategies they deve lop — must be derived from the str ategic plan. A. Marketing’s Role in Cross - Functional Strategic Planning • More and more organizations are bringing managers and employees together to participate in cross - functional teams . • Rather than making decisions independently, m arketing managers work closely with team members from production, finance, human resources, and other areas to devise plans that address all concerns . • The greatest advantage of strategic planning with a cross - functional team is the ability of team members to consider a situation from a number of viewpoints . • In well - managed organizations, a direct relationship exists between strategic planning

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 11 and the planning done by managers at all levels. • If done properly, strategic planning results in a clearly defined blueprint for management action in all functional areas of the organization ( Figure 1.7 ) . KEY TERMS Distinctive competencies: Distinctive competencies are things that an organization does well — so well in fact that they give it an advantage over similar organizations. No matter how appealing an opportunity may be, to gain advantage over competitors, the organization must formulate strategy based on distinctive competencies. Diversification: An organizational strategy that seeks growth through new products (often through acquisitions) for customers not currently being served. Market development : An organizational strategy that seeks growth through seeking new customers for present products. Market penetration: An organizational strategy that seeks growth through increasing the sale of present products to present customers. Marketing : The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Marketing concept: The marketing concept means that an organization should seek to make a profit by serving the needs of customer groups. Its purpose is to rivet the attention of marketing managers on serving broad classes of customer needs (customer orientation), rather than on the firm’s products (production orientation) or on devising methods to attract customers to current products (selling orientation). Marketing information systems: Throughout the marketing management process, current, reliable, and valid information is needed to make effective marketing decisions. Providing this information is the task of the marketing information system and marketing research. Marketing management: Marketing management is the process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organizational objectives. Marketing mix: The marketing mix is the set of controllable variables that must be managed to satisfy the target market and achieve organizational objectives. The controllable variables are

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 12 usually classified according to four major decision areas: product, price, promotion, and place (or channels of distribution). Marketing planning: The marketing planning process produces three outputs: (1) establishing marketing objectives, (2) selecting the target market, and (3) developing the marketing mix. Organizational mission: The mission statement, or purpose, of an organization is the description of its reason for existence. It is the long - run vision of what the organization strives to be, the unique aim that differentiates the organization from similar ones and the means by which this differentiation will take place. An effective mission statement will be focused on markets rather than products, achievable, motivating, and specific. Organizational objectives: Organizational objectives are the end points of an organization’s mission and are what it seeks through the ongoing, long - run operations of the organization. The organizational mission is distilled into a finer set of specific, measurable, action commitments by which the mission of the organization is to be achieved. Organizational portfolio plan: This stage of the strategic plan involves the allocation of resources across the organization’s product lines, divisions, or businesses. It involves deciding which ones to build, maintain, or eliminate, or which to add. Organizational strategies: Organizational strategies are the choice of the major directions the organization will take in pursuing its objectives. There are three major approaches: (1) strategies based on products and markets, (2) strategies based on competitive advantage, and (3) strategies based on value. Organizational strategies based on competitive advantage: This approach to developing organizational strategy would develop either a cost leadership strategy which focuses on being the lower cost company in the industry or a differentiation strategy which focuses on being unique in the industry or market segment along dimensions that customers value. Organizational strategies based on products and markets: An approach to developing organizational strategies that focuses on the four paths an organization can grow: market penetration strategies, market development strategies, product development strategies, and diversification strategies. Organizational strategies based on value: This approach to developing organizational strategy seeks to succeed by choosing to deliver superior customer value using one of three value strategies — best price, best product, or best service.

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 13 Product development: An organizational strategy that seeks growth through developing new products primarily for present customers. Situation analysis: This stage of the marketing planning process involves the analysis of the past, present, and likely future in six major areas of concern: (1) the cooperative environment; (2) the competitive environment; (3) the economic environment; (4) the social environment; (5) the political environment; and (6) the legal environment. Opportunities for and constraints on marketing activities arise from these environments. Strategic business units (SBUs): Strategic business units (SBUs) are product lines and divisions that can be considered a “business” for the purpose of the organizational portfolio plan. An SBU must have a distinct mission, have its own competitors, be a single business or collection of related businesses, and be able to be planned independently of the other SBUs. Strategic p lanning: Strategic planning provides a blueprint for management actions for the entire organization. It includes all the activities that lead to the development of a clear organizational mission, organizational objectives, and appropriate strategies to achieve the objectives for the entire organization. ADDITIONAL RESOURCES Austin, Robert D., Richard L. Nolan, and Shannon O’Donnell. Harder Than I Thought, Boston: Harvard Business Review Press, 2013. Charan, Ram. Leadership in The Era of Economic Uncertainty . NY: McGraw - Hill, 2009. Christensen, Clayton, M., Scott Cook, and Tandy Hall. “ Marketing Malpractice: The Cause and The Cure. ” Harvard Business Review , December 2005, pp.74 - 75. Dixit, Avinash, K., and Barry J. Noblebuff . The Art of Strategy. NY: W.W. Norton and Co., 2009. Friedman, George. The Next Decade. NY: Doubleday, 2011. Kaplan, Robert S. and David Norton. “ How To Implement a New Strategy without Disrupting Your Organization. ” Harvard Business Review , March 2006, pp. 100 - 109. Levitt, Ted . On Marketing . Boston: HBS Press, 2006. Markower, Jack. Strategies For a Green Economy. NY: McGraw - Hill, 2009.

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    Chapter 01 - Strategic Planning and the Marketing Management Process 1 - 14 O'Sullivan, Don, and Andrew W. Abdela. “ Marketing Perfo rm ance Measurement Ability and Performance. ” Journal of Marketing , April 2007, pp. 79 - 93. Silverstein, Michael J., Abheek Singhi, Carol Liao, and David Michael. The $10 Trillion Prize: Captivating the Newly Affluent in China and India. Boston: Harvard Business Review Press, 2012.

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    Chapter 02 - Marketing Research: Process and Systems for Decision Making 2 - 1 Chapter 2 Marketing Research : Process and Systems for Decision Making High - Level Chapter Outline I. The Role of Marketing Research II. The Marketing Research Process A. Purpose of the R esearch B. Plan of the Research Primary v ersus Secondary Data Qualitative v ersus Quantitative Research Company v ersus Contract Research C. Performance of the Research D. Processing of Research Data E. Preparation of the Research Report F. Limitations of the Research Process III. Marketing Information Systems Detailed Chapter Outline I. The Role of Marketing Research • Marketing research is the process by which information about the environment is generated, analyzed, and interpreted for use in marketing decision making. • Marketing research does not make decisions, but it can substantially increase the chances that good decisions are made. • Marketing managers should recognize that : o E ven the most carefully executed research can be fraught with errors o M arketing research does not forecast with certainty what will happen in the future o T hey should make decisions in light of their own knowledge and experience, since no marketing research study includes all of the factors that could influence the success of a strategy • Although marketing research does not make decisions, it can reduce the risk associated with managing marketing strategies.

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    Chapter 02 - Marketing Research: Process and Systems for Decision Making 2 - 2 • It is vital for investigating the effects of various marketing strategies after they have been implemented. • Today, many marketing researchers work hand - in - hand with marketing managers throughout the research process and have responsibility for making strategic recommendations based on the research. II. The Marketing Research Process • Marketing research can be viewed as the systematic process for obtaining information to aid in decision - making. • There are many types of marketing research. • The five Ps of the research process are ( Figure 2.1 ): o Purpose of the research o Plan of the research o Performance of the research o Processing of research data o Preparation of research report A. Purpose of the R esearch • The first step in the research process is to determine explicitly why the research is needed and what it is to accomplish. • Quite often a situation or problem is recognized as needing research, yet the nature of the problem is not clear or well defined nor is the appropriate type of research evident. • Managers and researchers need to discuss and clarify the current situation and develop a clear understanding of the problem. • Managers and researchers should agree on : o T he current situation involving the problem to be researched o T he nature of the problem o T he specific question or questions the research is designed to investigate • This step is crucial since it influences the type of research to be conducted and the research design. B. Plan of the Research • A research plan spells out the nature of the research to be conducted and includes an explanation of such things as the sample design, measures, and analysis techniques to be used. • Three critical issues influence the research plan are : o W hether primary or secondary data are needed

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    Chapter 02 - Marketing Research: Process and Systems for Decision Making 2 - 3 o W hether qualitative or quantitative research is needed o W hether the company will do its own research or contract with a marketing research specialist Primary v ersus Secondary Data • Primary data are the data collected specifically for the research problem under investigation. • Secondary data are the data that have previously been collected for other purposes but can be used for the problem at hand. • Secondary information has the advantage of usually being cheaper than primary data, although it is not always available for strategy - specific research questions. • There are many types of secondary data that could be useful for understanding a market and for answering a particular research question . • Some of these data can be found from sources internal to the organization such as sales invoices, quarterly sales reports, and marketing research done by the organization . • Other secondary data must be obtained from sources external to the organization and include information such as syndicated data providers and by the government, such as U.S. census data . • Figure 2.2 lists the common types of information that is available in a secondary data research. Qualitative v ersus Quantitative Research • Qualitative research typically involves face - to - face interviews with respondent s designed to develop a better understanding of what they think and feel concerning a research topic. • The two most common types of qualitative research are focus group and long interviews. o Focus groups typically involve discussions among a small number of consumers led by an interviewer and are designed to generate insights and ideas about products and brands. o Long interviews are conducted by an interviewer with a single respondent for several hours. • Quantitative research involves more systematic procedures designed to obtain and analyze numerical data. • There are f our common types of quantitative research in marketing are observation, surveys, experiments, and mathematical modeling . o Observational research involves watching people and recording relevant

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    Chapter 02 - Marketing Research: Process and Systems for Decision Making 2 - 4 facts and behavior s . o Survey research involves the collection of data by means of a questionnaire either by mail, phone, online or in person. o Experimental research involves manipulating one variable and examining its impact on other variables. o Mathematical modeling research often involves secondary data . It is useful because it provides an efficient way to study problems with extremely large secondary data sets. Company v ersus Contract Research • Most large consumer goods companies have marketing research departments that can perform a variety of types of research . • In addition many marketing research firms, advertising agencies, and consulting companies do marketing research on a contract basis. C. Performance of the Research • Performance of the research involves preparing for data collection and actually collecting them. • I n terms of actual data collection, a cardinal rule is to obtain and record the maximal amount of useful information, subject to the constraints of time, money, and respondent privacy. • Failure to obtain and record data clearly can obviously lead to a poor research study, while failure to consider the rights of respondents raises both practical and ethical problems. • Thus, both the objectives and constraints of data collection must be closely monitored. D. Processing of Research Data • Processing research data includes the preparation of data for analysis and the actual analysis of them . • The appropriate analysis techniques for collected data depend on the nature of the research questions and the design of the research. • Qualitative research data consist of interview records that are content analyzed for ideas or themes. • Quantitative research data may be analyzed in a variety of ways depending on the objectives of the research. • A critical part of this stage is interpreting and assessing the research results. • Marketing researchers should always double - check their analysis and avoid

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    Chapter 02 - Marketing Research: Process and Systems for Decision Making 2 - 5 overstating the strength of their findings. E. Preparation of the Research Report • The research report is a complete statement of everything in a research project and includes a write - up of each of the previous stages as well as the strategic recommendations from the research . • Figure 2.4 lists the types of questions marketing researchers and managers should discuss prior to submitting the final research report. • Research reports should be clear and unambiguous with respect to what was done and what recommendations are made. • Researchers should work closely with managers to ensure that the study and its limitations are fully understood. F. Limitations of the Research Process • Many problems and difficulties must be overcome if a research study is to provide valuable information for decision making. • The major goal of most test marketing is to measure new product sales on a limited basis where competitive retaliation and other factors are allowed to operate freely. • P roblems that could invalidate test marketing study results are listed below. o Test market areas are not representatives of the market in general in terms of population, characteristics, competition, and distribution outlets. o Sample size and design are incorrectly formulated because of budget constraints. o Pretest measurements o f competitive brand sales are not made or are inaccurate, limiting the meaningfulness of market share estimates. o Test scores do not give complete support to the study, such that certain package sizes may not be carried or prices may not be held constant during the test period. o Test - market products are advertised or promoted beyond a profitable level for the market in general. o The effects of factors influence sales, such as the sales force, season, weather conditions, competitive retaliation, shelf space, and so forth, are ignored in the research. o The test - market period is too short to determine whether the product will be repurchased by customers. • Careful research planning, coordination, implementation, and control can help reduce such problems and increase the value of research for decision making. III. Marketing Information Systems

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    Chapter 02 - Marketing Research: Process and Systems for Decision Making 2 - 6 • Most marketers use computer - based systems to help them gather, sort, store, and distribute information for marketing decisions. • A popular form of marketing information system is the marketing decision support system , which is a coordinated collection of data, tools, and techniques involving both computer hardware and software by which marketers gather and interpret relevant information for decision making. • These systems require three types of software : o Database management software for sorting and retrieving data from external and internal sources. o Model base management software for manipulating data in ways that are useful for marketing decision making. o A dialog system that permits marketers to explore data base and use model s to produce information to address their decision - making needs . • Marketing decision support systems are designed to handle information from both internal and external source s. • External information is gathered from outside the organization and concerns changes in the environment that could influence marketing strategies. KEY TERMS Experimental r esearch: Experimental research involves manipulating one variable and examining its impact on other variables. Focus groups: A type of qualitative research that typically involves discussions among a small number of consumers led by an interviewer and designed to generate insights and ideas about products and brands. Long interviews: A type of qualitative research conducted by an interviewer with a single respondent for several hours and designed to find out such things as the meanings various products and brands have for the person or how a product influences the person's life. Marketing r esearch: Marketing research is the process by which information about the environment is generated, analyzed, and interpreted for use in marketing decision making. Most often consumers or organizational buyers are the subject of the research. Mathematical m odeling: Mathematical modeling involves developing equations to model relationships among variables to investigate the impact of various strategies and tactics on sales and brand choices.

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    Chapter 02 - Marketing Research: Process and Systems for Decision Making 2 - 7 Observational r esearch: Observational research involves watching people and recording relevant facts and behaviors. Primary d ata: Primary data are data collected specifically for the research problem under investigation . Qualitative r esearch: Qualitative research typically involves face - to - face interviews with respondents designed to develop a better understanding of what they think and feel concerning a research topic, such as a brand name, a product, a package, or an advertisement. Quantitative r esearch: Quantitative research involves more systematic procedures designed to obtain and analyze numerical data. Secondary d ata: Secondary data are those that have previously been collected for other purposes but can be used for the problem at hand. Survey r esearch: Survey research involves the collection of data by means of a questionnaire either by mail, phone, or in person. Test m arketing: The major goal of most test marketing is to measure new product sales on a limited basis where competitive retaliation and other factors are allowed to operate freely. In this way, future sales potential can often be estimated reasonably well. ADDITIONAL RE SOURCES Burns, Alvin C. and Ronald Bush. Marketing Research, 7th ed. Upper Saddle River, NJ: Prentice - Hall, 2014. Churchill, Gilbert A., Jr.; Tom J. Brown; and Tracy A. Suter. Basic Marketing Research. 8 th ed. Mason, OH: Thomson South - Western, 20 1 4 . Hair, Joseph F., Jr., Robert P. Bush , and David J. Ortinau. Marketing Research . 4 th ed. Burr Ridge, IL: McGraw Hill/Irwin, 2009. Iacobucci Dawn, and Gilbert A. Churchill, Jr. Marketing Research: Methodological Foundations. 10th ed. Mason, OH: Thomson South - Western, 2010. Molhatra, Naresh K. Marketing Research. 6th ed. Upper Saddle River, NJ: Pearson Education, 2010.

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    Chapter 02 - Marketing Research: Process and Systems for Decision Making 2 - 8 Zikmund William G., and Barry J. Babin. Essentials of Marketing Research. 5 th ed. Mason, OH: Thomson South - Western, 20 1 3 .

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    Chapter 03 - Consumer Behavior 3 - 1 Chapter 3 Consumer Behavior High - Level Chapter Outline I. Social Influences on Consumer Decision Making A. Culture and Subculture B. Social Class C. Reference Groups and Families II. Marketing Influences on Consumer Decision Making A. Product Influences B. Price Influences C. Pr omotion Influences D. Place Influences III. Situational Influences on Consumer Decision Making IV. Psychological Influences on Consumer Decision Making A. Product Knowledge B. Product Involvement V. Consumer Decision Making A. Need Recognition B. Alternative Search C. Alternative Evaluation D. Purchase Decision E. Post p urchase Evaluation Detailed Chapter Outline I. Social Influences on Consumer Decision Making • Behavioral scientists have become increasingly aware of the powerful effects of the social environment and personal interactions on human behavior. • In terms of consumer behavior, culture, social class, and reference group influences have been related to purchase and consumption decisions. • These influences can have both direct and indirect effects on the buying process. A. Culture and Subculture

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    Chapter 03 - Consumer Behavior 3 - 2 • Culture is one of the most basic influences on an individual’s needs, wants, and behavior. • Cultural antecedents affect everyday behavior, and there is empirical support for the notion that culture is a determinant of certain aspects of consumer behavior. • Cultural values are transmitted through three basic organizations: the family, religious organizations, and educational institutions. • Marketing managers should adapt the marketing mix to cultural values and constantly monitor value changes and differences in both domestic and global markets. • In large nations such as the United States, the population is bound to lose a significant amount of its homogeneity, and thus subcultures arise. • Subcultures are base d on such things as geographic areas, religion, nationalities, ethnic groups, and age. • Many subcultural barriers are decreasing because of mass communication, mass transit, and a decline in the influence of religious values. • However, age groups, such as the teen market, baby boomers, and the mature market, have become increasingly important for marketing strategy . • Marketing Insight 3 – 1 provides a summary of American cultural values. B. Social Class • Social classes develop on the basis of such things as wealth, skill, and power. • The single best indicator of social class is occupation. • For marketing purposes, f our different social classes have been identified: o Upper Americans comprise 14 percent of the population and are differentiated mainly by having high incomes. ▪ This class remains the group in which quality merchandise is most prized and prestige brands are commonly sought. o The middle class comprises 34 percent of the population , and these consumers want to do the right and buy what is popular. ▪ They are concerned with fashion and buying what experts in the media recommend. o The working class comprises 38 percent of the population , people who are “family folk” who depend heavily on relatives for economic and emotional support. ▪ The emphasis on family ties is only one sign of how much more limited and different working - class horizons are socially, psychologically, and geographically compared to those of the middle class. o Lower Americans comprise 16 percent of the population and are as diverse in values and consumption goals as are other social levels .

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    Chapter 03 - Consumer Behavior 3 - 3 ▪ Some members of this group are homeless and penniless although most work part - time or full - time jobs at low wages. ▪ The primary demands of this group are food, clothing and other staples. C. Reference Groups and Families • Groups that an individual looks to (uses as a reference) when forming attitudes and opinions are described as reference groups . • Primary reference groups include family and close friends, while secondary reference groups include fraternal organizations and professional associations. • Secondary reference groups include fraternal organizations and professional associations. • A person normally has several reference groups or reference individuals for various subjects or different decisions. • The family is generally recognized to be an important reference group, and it has been suggested that the household, rather than the individual, is the relevant unit for studying consumer behavior. • It is important for marketing managers to determine not only who makes the actual purchase but also who makes the decision to purchase. • It has been recognized that t he needs, income, assets, debts, and expenditure patterns change over the course of what is called the family life cycle . • The family life cycle can be divided into a number of stages ranging from single, to married, to married with children of different age groups, to older couples, to solitary survivors. • The lifecycle is a useful way of classifying and segmenting individuals and families because it combines trends in earning power with demands placed on income. II. Marketing Influences on Consumer Decision Making • Marketing strategies are often designed to influence consumer decision making and lead to profitable exchanges. • Each element of the marketing mix (product, price, promotion, and place ) can affect consumers in various ways. A. Product Influences • Many attributes of a company’s product, including brand name, quality, newness, and complexity, can a ffect consumer behavior. • One of the key tasks of marketers is to differentiate their products from those of competitors and create consumer perception s that the product is worth purchasing.

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    Chapter 03 - Consumer Behavior 3 - 4 B. Price Influences • The price of products and services often influences whether consumers will purchase them at all, and, if so, which competitive offering is selected. • For some offerings, higher prices may not deter purchase because consumers believe that the products or services are higher quality or are more prestigious. • M any of today’s value - conscious consumers may buy products more on the basis of price than other attributes. C. Promotion Influences • Advertising, sales, promotions, salespeople, and publicity can influence what consumers think about products, what emotions they experience in purchasing and using them, and what behaviors they perform, including shopping in particular stores and purchasing specific brands. • Since consumers receive so much information from marketers and screen out a good deal of it, it is important for marketers to devise communications that : o Offer consistent messages about their products o Are p laced in media that consumers in the target market are likely to use D. Place Influences • The marketer ’s strategy for distributing products can influence consumers in several ways: o Products that are convenient to buy in a variety of stores increase the chances of consumers finding and buying them. When consumers are seeking low - involvement products, they are unlikely to engage in extensive search, so ready availability is important. o Products sold in exclusive outlets may be perceived by consumers as having higher quality. o Offering products by nonstore methods , such as on the Internet or in catalogs , can create consumer perceptions that the products are innovative, exclusive, or tailored for specific target markets. III. Situational Influences on Consumer Decision Making • Situational influences can be d efined as all those factors particular to a time and place that ha ve a demonstrable and systematic effect on current behavior. • These influences may be perceived either consciously or subconsciously and may have

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    Chapter 03 - Consumer Behavior 3 - 5 considerable effect on product and brand choice. o Physical features are the most readily apparent feature s of a situation. These features include geographical and institutional location, decor, sounds, aromas, lighting, weather, and visible configurations of merchandise or other materials. o Social features provide additional depth to a description of a situation. These include other persons present, their characteristics, their apparent roles and interpersonal interactions. o Time is a dimension of situation s that may be specified in units ranging from time of day to season of the year. Time also may be measured relative to some past or future event for the situational participant. o Task feature s of a situation include an intent or requirement to select, shop for, or obtain information about a general or specific purchase. Task may reflect different buyer and user roles anticipated by the individual. o Current conditions make up final features that characterize a situation. These are momentary moods (such as acute anxiety, pleasantness, hostility, and excitation) or momentary conditions (such as cash on hand, fatigue, and illness) rather than chronic individual traits. IV. Psychological Influences on Consumer Decision Making • Information from group, marketing, and situational influences affect what consumers think and feel about particular products and brands. • However, a number of psychological factors influence how this information is interpreted and used and how it affects the consumer decision - making process. • Two of the most important psychological factors are product knowledge and product involvement. A. Product Knowledge • Product knowledge refers to the amount of information a consumer has stored in her or his memory about particular product classes, product forms, models, and ways to purchase them. • Group marketing and situational influences determine the initial level of product knowledge as well as change s in it . • The initial level of product knowledge may influence how much information is sought when deciding to make a purchase. • Product knowledge influences how quickly a consumer goes through the decision - making process. B. Product Involvement

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    Chapter 03 - Consumer Behavior 3 - 6 • Product involvement refers to a consumer’s perception of the importance or personal relevance of an item. • Product involvement influences consumer decision making in two ways: o If the purchase is for a high - involvement product, consumers are likely to develop a high degree of product knowledge so that they can be confident that the item they purchase is just right for them. o A high degree of product involvement encourages extensive decision making by consumers, which likely increases the time it takes to go through the decision - making process. V. Consumer Decision Making • Consumer s recognize a need for a product, search for information about alternatives to meet the need, evaluate the information, make purchases , and evaluate the decision after the purchase. The process by which consumers make decisions to purchase various products and brands is shown in Figure 3.2. • There are three types of decision making, which vary in terms of how complex or expensive a product is and how involved a consumer is in purchasing it. o Extensive decision making requires the most time and effort since the purchase involves a highly complex or expensive product that is important to the consumer . o Limited decision making is more moderate but still involves some time and effort searching for and comparing alternatives . o Routine decision making is the most common type and the way consumers purchase most packaged goods . A. Need Recognition • The starting point in the buying process is the consumer’s recognition of an unsatisfied need. • Any number of either internal or external stimuli may activate needs or wants and recognition of them. • Internal stimuli are such things as feeling hungry and wanting some food, feeling a headache coming on and wanting some Excedrin, or feeling bored and looking for a movie to go to. • External stimuli are such things as seeing a McDonald’s sign and then feeling hungry or seeing a sale sign for winter parkas and remembering that last year’s coat is worn out. • A well - known classification of needs was developed many years ago by Abraham Maslow and includes five types.

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    Chapter 03 - Consumer Behavior 3 - 7 • Maslow’s view is that lower - level needs, starting with physiological and safety needs, must be attended to before higher - level needs can be satisfied. • Maslow’ s hierarchy is described below: o Physiological needs — t his category consists of primary needs of the human body. Physiological needs will dominate when all needs are unsatisfied. o Safety needs — t hese needs consist of such things as protection from physical harm, ill health, and economic disaster and avoidance of the unexpected. o Belongingness and love needs — t hese needs are related to the social and gregarious nature of humans and the need for companionship. o Esteem needs — t hese needs consist of both the need for awareness of importance to others (self - esteem) and actual esteem from others. Satisfaction of these needs leads to feelings of self - confidence and prestige. o Self - actualization needs — t hese can be defined as the desire to become everything one is capable of becoming. This means that the individual will fully realize her or his talents and capabilities. B. Alternative Search • Once a need is recognized, t he individual then searches for alternatives for satisfying the need. • The individual can collect information from five basic sources for a particular purchase decision : o Internal sources : For many purchases , consumers ha ve had previous experience dealing with particular need s and wants . Thus, consumers can usually “search” through their memories for stored information and experience dealing with need satisfying alternatives . This is quite common for routine or habitual purchases. o Group sources : A common source of information for purchase decision comes from communication with other people. Group sources are often the most powerful influence on purchase decisions. o Marketing sources : Marketing sources include factors such as adverti sing , salespeople, dealers, packaging , and displays . It provides a major means by which consumers learn about purchase options . o Public sources : Public sources of information include such things as product ratings in Consumer Reports ; buyer reviews on websites like Amazon.com; and articles written about the product in newspapers, in magazines, on independent blogs, and on other websites. o Experimental sources : Experimental sources refer to handling, examining, and perhaps trying on or using a product . • Information processing is viewed as a four - step process in which the individual is : o Exposed to information

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    Chapter 03 - Consumer Behavior 3 - 8 o Becomes attentive to the information o Understands the information o Retains the information C. Alternative Evaluation • During the process of collecting information or, in some cases, after information is acquired, the consumer evaluates alternatives on the basis of what he or she has learned. One approach to describing the evaluation process is as follows: o The consumer has information about the number of brands in a product class. o The consumer perceives that at least some of the brands in a product class are viable alternatives for satisfying a recognized need. o Each of these brands has a set of attributes (color, quality, size, and so forth). o A set of these attributes is relevant to the consumer, and the consumer perceives that different brands vary in how much of each attribute they possess. o The brand that is perceived as offering the greatest number of desired attributes in the desired amounts and the desired order will be the brand the consumer will like best. o The brand the consumer likes best is the brand the consumer will intend to purchase. D. Purchase Decision • If no other factors intervene after the consumer has decided on the brand that is intended for purchase, the actual purchase is a common result of search and evaluation. • Actually, a purchase involves many decisions, which include product type, brand, model, dealer selection, and method of payment, among other factors. • Traditional risk theorist s believe that consumer s tend to make risk - minimizing decisions based on their perceived definition of the particular purchase. • The perception of risk is based on the possible consequences and uncertainties involved. • Perceived risk may be either functional (related to financial and performance considerations) or psychosocial (related to whether the product will further one’s self - or reference - group image). • The perceived risk literature emphasizes that consumers generally try to reduce risk in their decision making. • In general, the more information the consumer collects prior to purchase, the less likely postpurchase dissonance is to occur .

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