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Principles of Marketing

Principles of Marketing ­ MGT301
Lesson ­ 13
Lesson overview and learning objectives:
In last Lesson we discussed the marketing research process first two steps were discussed in that
Lesson today we will continue the same topic and will be discussing the remaining steps of the
marketing research process. Second topic of today's Lesson is an introduction to the consumer
So our today's topics are:
Contact Methods:
Contact methods are used to obtain the information Contact methods can be listed as:
1. Mail questionnaires--used to collect large amounts of information at a low cost.
2. Telephone interviewing--good method for collecting information quickly.
3. Personal interviewing (which can be either individual or group interviewing).
A form of personal interviewing is "focus group interviewing".
Focus-group interviewing consists of inviting six to ten people to gather for a few hours with a
trained interviewer to talk about a product, service, or organization. The interviewer "focuses"
the group discussion on important issues.
4. Online (Internet) marketing research can consist of Internet surveys or online focus groups.
Many experts predict that online research will soon be the primary tool of marketing researchers.
5. Computer interviewing is a new method being used in the technology age. Consumers read
questions from a computer screen and respond.
Sampling plans are used to outline how samples will be constructed and used.
A sample is a segment of the population selected for marketing research to represent the
population as a whole.
Marketing researchers usually draw conclusions about large groups of  consumers by
studying a small sample of the total consumer population.
Designing a sample calls for three decisions:
a. Who is to be surveyed (what sampling unit)?
b. How many people should be surveyed (what sample size)?
c. How should the sample be chosen (what sampling procedure)?
Kinds of samples include:
a. Probability samples--each population member has a known chance of being
included in the sample, and researchers can calculate confidence limits for sampling
b. Nonprobability samples--sampling error cannot be measured.
Research Instruments:
In collecting primary data, marketing researchers have a choice of two main research
instruments--the questionnaire and mechanical devices. The questionnaire is by far the most
common instrument, whether administered in person, by phone, or online. Questionnaires are very
flexible--there are many ways to ask questions. However, they must be developed carefully and
tested before they can be used on a large scale. A carelessly prepared questionnaire usually contains
several errors.
Principles of Marketing ­ MGT301
In preparing a questionnaire, the marketing researcher must first decide what questions to ask.
Questionnaires frequently leave out questions that should be answered and include questions that
cannot be answered, will not be answered, or need not be answered. Each question should be
checked to see that it contributes to the research objectives.
The form of each question can influence the response. Marketing researchers distinguish between
closed-end questions and open-end questions. Closed-end questions include all the possible
answers, and subjects make choices among them. Examples include multiple-choice questions and
scale questions. Open-end questions allow respondents to answer in their own words. Open-end
questions often reveal more than closed-end questions because respondents are not limited in their
answers. Open-end questions are especially useful in exploratory research, when the researcher is
trying to find out what people think but not measuring how many people think in a certain way.
Closed-end questions, on the other hand, provide answers that are easier to interpret and tabulate.
Researchers should also use care in the wording and ordering of questions. They should use
simple, direct, unbiased wording. Questions should be arranged in a logical order. The first
question should create interest if possible, and difficult or personal questions should be asked last
so that respondents do not become defensive.
Although questionnaires are the most common research instrument, mechanical instruments also
are used. We discussed two mechanical instruments, people meters and supermarket scanners,
earlier in the chapter. Another group of mechanical devices measures subjects' physical responses.
Step 3 Implementing the Research Plan
The researcher next puts the marketing research plan into action. This involves collecting,
processing, and analyzing the information. Data collection can be carried out by the company's
marketing research staff or by outside firms. The company keeps more control over the collection
process and data quality by using its own staff. However, outside firms that specialize in data
collection often can do the job more quickly and at a lower cost.
The data collection phase of the marketing research process is generally the most expensive and
the most subject to error. The researcher should watch fieldwork closely to make sure that the plan
is implemented correctly and to guard against problems with contacting respondents, with
respondents who refuse to cooperate or who give biased or dishonest answers, and with
interviewers who make mistakes or take shortcuts.
Step 4 Interpreting and Reporting the Findings
The final step in the marketing research process is interpreting and reporting the findings. The
researchers should keep from overwhelming managers with numbers and fancy statistical
techniques. Researchers should present important findings that are useful in the major decisions
faced by management. Interpretation should not be left only to researchers. Marketing managers
will also have important insights into the problems. Interpretation is an important phase of the
marketing process.  The best research is meaningless if the manager blindly accepts wrong
interpretations from the researcher.
The researcher must now interpret the findings, draw conclusions, and report them to
management. The researcher should not try to overwhelm managers with numbers and fancy
statistical techniques. Rather, the researcher should present important findings that are useful in
the major decisions faced by management.
However, interpretation should not be left only to the researchers. They are often experts in
research design and statistics, but the marketing manager knows more about the problem and the
Principles of Marketing ­ MGT301
decisions that must be made. In many cases, findings can be interpreted in different ways, and
discussions between researchers and managers will help point to the best interpretations. The
manager will also want to check that the research project was carried out properly and that all the
necessary analysis was completed. Or, after seeing the findings, the manager may have additional
questions that can be answered through further sifting of the data. Finally, the manager is the one
who ultimately must decide what action the research suggests. The researchers may even make the
data directly available to marketing managers so that they can perform new analyses and test new
relationships on their own.
Interpretation is an important phase of the marketing process. The best research is meaningless if
the manager blindly accepts faulty interpretations from the researcher. Similarly, managers may be
biased--they might tend to accept research results that show what they expected and to reject
those that they did not expect or hope for. Thus, managers and researchers must work together
closely when interpreting research results, and both must share responsibility for the research
process and resulting decisions
A. Consumer Market:
a. Defining Consumer Market:
All individuals and households who buy or acquire goods and services for personal consumption
are termed as consumers. Markets have to be understood before marketing strategies can be
developed. People using consumer markets buy goods and services for personal consumption.
Consumers vary tremendously in age, income, education, tastes, and other factors. Consumer behavior
is influenced by the buyer's characteristics and by the buyer's decision process. Buyer characteristics
include four major factors: cultural, social, personal, and psychological.
All individuals and
households who buy or
Consumer Markets:
acquire goods and
Consumer Buying Behavior refers to the buying
behavior of final consumers--individuals and
services for personal
households who buy goods and services for
personal consumption.
The world consumer market consists of more than 6 billion people. At present growth rates, the
world population will reach almost 8 billion people by 2025
Consumers around the world vary tremendously in age, income, education level, and tastes. They
also buy an incredible variety of goods and services. How these diverse consumers connect with
each other and with other elements of the world around them impacts their choices among various
products, services, and companies. Here we examine the fascinating array of factors that affect
consumer behavior.
b. Why to Study Consumer Behavior:
Basic objective of the studying consumer behavior is that the firm needs to know who buys their
product? How they buy? When and where they buy? Why they buy? How they respond to
marketing stimuli. Because they study consumer behavior (CB) what Consumer Behavior is about?
Principles of Marketing ­ MGT301
How, why, where and when consumers make purchase decisions? Considers who influences the
decisions? What is Consumer Behavior about? All these are important questions, which are to be
known to the companies so that they can design, and implement marketing strategies to satisfy the
customers. Consumers determine the sales and profits of a firm by their purchase decisions, thus
the economic viability of the firm. In late 1990, US consumers were spending enough dollar bills to
stretch from the Earth to the Sun and back, with enough left over for over 600 lines to the moon!
Along with these questions companies should also be knowing some other factors like what is
Disposable income and what is Discretionary income what is the stage of family life cycle stage
because these all these factors influence the consumer behaviors which are very important to the
c. Consumer Behavior
Consumer behavior is the process through which the ultimate buyer makes purchase decisions.
This can be defined as the processes involved when individuals or groups select, purchase, use, or
dispose of products, services, ideas, or experiences to satisfy needs and desires (Solomon, 1996).
Those actions directly involved in obtaining, consuming and disposing of products and services,
including the decision processes that precede and follow those actions (Engel et al. 1995).
Consumer behavior examines mental and emotional processes in addition to the physical activities
as by (Wilkie 1990).
d. Marketing Applications:
Consumer behaviors plays important role in almost all types of decisions to be made in marketing.
For the reason being that all functions performed in marketing revolve around the customers and
consumers. Like:
Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target consumers.
Some firms find it easy to choose their positioning strategy. For example, a firm well known for
quality in certain segments will go for this position in a new segment if there are enough buyers
seeking quality. But in many cases, two or more firms will go after the same position. Then, each
will have to find other ways to set itself apart. Each firm must differentiate its offer by building a
unique bundle of benefits that appeals to a substantial group within the segment.
The positioning task consists of three steps: identifying a set of possible competitive advantages
upon which to build a position, choosing the right competitive advantages, and selecting an overall
positioning strategy. The company must then effectively communicate and deliver the chosen
position to the market.
Segmentation: Dividing a market into distinct groups of buyers on the basis of needs,
characteristics, or behavior who might require separate products or marketing mixes. Market
segmentation reveals the firm's market segment opportunities. The firm now has to evaluate the
various segments and decide how many and which ones to target. We now look at how companies
evaluate and select target segments. The company also needs to examine major structural factors
that affect long-run segment attractiveness. For example, a segment is less attractive if it already
contains many strong and aggressive competitors. The existence of many actual or potential substitute
products may limit prices and the profits that can be earned in a segment. The relative power of buyers
also affects segment attractiveness. Buyers with strong bargaining power relative to sellers will try
to force prices down, demand more services, and set competitors against one another--all at the
expense of seller profitability. Finally, a segment may be less attractive if it contains powerful suppliers
who can control prices or reduce the quality or quantity of ordered goods and services.
Product development: A strategy for company growth by offering modified or new products to
current market segments. Developing the product concept into a physical product in order to
ensure that the product idea can be turned into a workable product.
Principles of Marketing ­ MGT301
Product development--offering modified or new products to current markets.
Market development: A strategy for company growth by identifying and developing new market
segments for current company products.
International marketing
Table of Contents:
  1. PRINCIPLES OF MARKETING:Introduction of Marketing, How is Marketing Done?
  5. MARKETING CHALLENGES IN THE 21st CENTURY:Connections with Customers
  6. STRATEGIC PLANNING AND MARKETING PROCESS:Setting Company Objectives and Goals
  7. PORTFOLIO ANALYSIS:MARKETING PROCESS,Marketing Strategy Planning Process
  8. MARKETING PROCESS:Analyzing marketing opportunities, Contents of Marketing Plan
  9. MARKETING ENVIRONMENT:The Companyís Microenvironment, Customers
  10. MARKETING MACRO ENVIRONMENT:Demographic Environment, Cultural Environment
  12. THE MARKETING RESEARCH PROCESS:Developing the Research Plan, Research Approaches
  14. CONSUMER BUYING BEHAVIOR:Model of consumer behavior, Cultural Factors
  15. CONSUMER BUYING BEHAVIOR (CONTINUED):Personal Factors, Psychological Factors
  16. BUSINESS MARKETS AND BUYING BEHAVIOR:Market structure and demand
  17. MARKET SEGMENTATION:Steps in Target Marketing, Mass Marketing
  18. MARKET SEGMENTATION (CONTINUED):Market Targeting, How Many Differences to Promote
  19. Product:Marketing Mix, Levels of Product and Services, Consumer Products
  20. PRODUCT:Individual product decisions, Product Attributes, Branding
  21. PRODUCT:NEW PRODUCT DEVELOPMENT PROCESS, Idea generation, Test Marketing
  23. KEY TERMS:New-product development, Idea generation, Product development
  24. Price the 2nd P of Marketing Mix:Marketing Objectives, Costs, The Market and Demand
  25. PRICE THE 2ND P OF MARKETING MIX:General Pricing Approaches, Fixed Cost
  26. PRICE THE 2ND P OF MARKETING MIX:Discount and Allowance Pricing, Segmented Pricing
  27. PRICE THE 2ND P OF MARKETING MIX:Price Changes, Initiating Price Increases
  28. PLACE- THE 3RD P OF MARKETING MIX:Marketing Channel, Channel Behavior
  29. LOGISTIC MANAGEMENT:Push Versus Pull Strategy, Goals of the Logistics System
  30. RETAILING AND WHOLESALING:Customer Service, Product Line, Discount Stores
  31. KEY TERMS:Distribution channel, Franchise organization, Distribution center
  32. PROMOTION THE 4TH P OF MARKETING MIX:Integrated Marketing Communications
  33. ADVERTISING:The Five Mís of Advertising, Advertising decisions
  34. ADVERTISING:SALES PROMOTION, Evaluating Advertising, Sales Promotion
  35. PERSONAL SELLING:The Role of the Sales Force, Builds Relationships
  36. SALES FORCE MANAGEMENT:Managing the Sales Force, Compensating Salespeople
  38. DIRECT MARKETING:PUBLIC RELATIONS, Major Public Relations Decisions
  39. KEY TERMS:Public relations, Advertising, Catalog Marketing
  40. CREATING COMPETITIVE ADVANTAGE:Competitor Analysis, Competitive Strategies
  41. GLOBAL MARKETING:International Trade System, Economic Environment
  42. E-MARKETING:Internet Marketing, Electronic Commerce, Basic-Forms
  43. MARKETING AND SOCIETY:Social Criticisms of Marketing, Marketing Ethics