1. Research 2. Segments and Targets 3. Comp. dynamics

Question 1

In which ways can small companies do marketing research in creative and affordable ways?

Answer 1

1. Engaging students or professors to design and carry out projects—Companies such as
   American Express, Booz Allen Hamilton, GE, Hilton Hotels, IBM, Mars, Price Chopper, and
   Whirlpool engage in “crowdcasting” and are sponsors of competitions such as the Innovation
   Challenge, where top MBA students compete in teams. The payoff to the students is experience
   and visibility; the payoff to the companies is a fresh sets of eyes to solve problems at a
   fraction of what consultants would charge.
2. Using the Internet
3. Checking out rivals
4. Tapping into marketing partner expertise—Marketing research firms, ad agencies, distributors,
   and other marketing partners may be able to share relevant market knowledge they have
   accumulated. Those partners targeting small or medium-sized businesses may be especially
   Extensive consumer research was
   crucial to the success of Gillette’s
   Venus series of razors designed
   exclusively for women.

Question 2

What are the 3 categories for marketing research firms?

Answer 2

1. Syndicated-service research firms—These firms gather consumer and trade information, which
   they sell for a fee. Examples include the Nielsen Company, Kantar Group,Westat, and IRI.
2. Custom marketing research firms—These firms are hired to carry out specific projects. They
   design the study and report the findings.
3. Specialty-line marketing research firms—These firms provide specialized research services.
   The best example is the field-service firm, which sells field interviewing services to other firms.

Question 3

What are the steps for MKT Research process?

Answer 3

1. Define the problem and research objectives
2. Develop the research plan
3. Collect the information
4. Analyze the information
5. Present the findings
6. Make the decision

Question 4

What are the types of data?

Answer 4

he researcher can gather secondary data, primary data, or both.
1. Secondary data are data that were collected for another purpose and already exist somewhere.

2. Primary data are data freshly gathered for a specific purpose or for a specific research project.
   Researchers usually start their investigation by examining some of the rich variety

Question 5

What are resarch approaches?

Answer 5

1. Observational:
   e.g. Ethnographic uses concepts and
   tools from anthropology and other social science disciplines to provide deep cultural understanding
   of how people live and work.
2. Focus group research.
   A focus group is a gathering of 6 to 10 people carefully selected by researchers based on certain demographic, psychographic, or other considerations and brought together to discuss various topics of interest at length.
3. Survey research
   assess people’s knowledge, beliefs,
   preferences, and satisfaction and to measure these magnitudes in the general population.
4. Behavioral research
   Customers leave traces of their purchasing behavior in store scanning data, catalog purchases, and customer databases. Marketers can learn much by analyzing these data. Actual purchases reflect consumers’ preferences and often are more reliable than statements they offer to market researchers.
5. Experimental research
   The most scientifically valid research is experimental
   research, designed to capture cause-and-effect relationships by eliminating competing
   explanations of the observed findings.

Question 6

What are biases or challenges to overcome in focus groups?

Answer 6

1. Some researchers believe consumers have been so bombarded with ads, they unconsciously (or perhaps cynically) parrot back what they’ve already heard instead of what they really think
2. maintain their self-image and public persona or have a need to identify with the other members of the group.
3. And the “loudmouth” or “know-it-all” problem often crops up when one highly opinionated person drowns out the rest of the group

Question 7

What is the main benefit of the focus group?

Answer 7

the beauty of a focus
group, as one marketing executive noted, is that “it’s still the most costeffective,
quickest, dirtiest way to get information in rapid time on an
idea.” In analyzing the pros and cons, Wharton’s Americus Reed might
have said it best: “A focus group is like a chain saw. If you know
what you’re doing, it’s very useful and effective. If you don’t, you could
lose a limb.”

Question 8

What are the 3 main research instruments?

Answer 8

1. Questionnaries
   Because of its flexibility, it is by far the most common instrument used to collect primary data.
2. Qualitative measures
   Qualitative research techniques are relatively unstructured measurement approaches that permit a range of possible responses. Their variety is limited only by the creativity of the marketing researcher.

Drawbacks: Very small samples and may not necessarily generalize to broader populations.

Different researchers examining the same qualitative results may draw very different conclusions.

3. Technological devices
   Galvanometers
   can measure the interest or emotions aroused by exposure to a specific ad or picture.

The tachistoscope
flashes an ad to a subject with an exposure interval that may range from less than one hundredth of a second to several seconds. After each exposure, the respondent describes everything he or she recalls.

Eye cameras
study respondents’ eye movements to see where
their eyes land first, how long they linger on a given item, and so on.

Question 9

Do’s and dont’s of questionnaires

Answer 9

1. Ensure that questions are without bias. Don’t lead the respondent
   into an answer.
2. Make the questions as simple as possible. Questions that include
   multiple ideas or two questions in one will confuse respondents.
3. Make the questions specific. Sometimes it’s advisable to add memory
   cues. For example, be specific with time periods.
4. Avoid jargon or shorthand. Avoid trade jargon, acronyms, and initials not
   in everyday use.
5. Steer clear of sophisticated or uncommon words. Use only words in
   common speech.
6. Avoid ambiguous words. Words such as “usually” or “frequently” have
   no specific meaning.
7. Avoid questions with a negative in them. It is better to say, “Do you
   ever. . . ?” than “Do you never . . . ?”
   m a r k e t i n g
   Memo Questionnaire Dos and Don’ts
8. Avoid hypothetical questions. It’s difficult to answer questions about
   imaginary situations. Answers aren’t necessarily reliable.
9. Do not use words that could be misheard. This is especially important
   when administering the interview over the telephone. “What is your
   opinion of sects?” could yield interesting but not necessarily relevant
   answers.
10. Desensitize questions by using response bands. To ask people their age
    or ask companies about employee turnover rates, offer a range of response
    bands instead of precise numbers.
11. Ensure that fixed responses do not overlap. Categories used in fixedresponse
    questions should be distinct and not overlap.
12. Allow for the answer “other” in fixed-response questions. Precoded
    answers should always allow for a response other than those l

Question 10

What are the types of questions?

Answer 10

1. Closed end questions
   a. Dichotomous: Two possible answers
   b. Multiple choice: 3 or more possible answers
   c. Likert scale: Strongly disagree -> Strongly agree
   d. Semantic differential: Scale connecting 2 bipolar words e.g. Large -> small
   e. Importance scale
   f. Rating scale
   g. Intention-to-buy scale
2. Open ended questions:
   a. Completely unstructured: e.g. “What is your opinion of American Airlines?”
   b. Word association: Words are presented, one at a time, and respondents mention the first word that
   comes to mind.
   c. Sentence completion
   d. Story completion: E.g. “I flew American a few days ago. I noticed that the exterior and interior of the plane had very bright colors. This aroused in me the following thoughts and feelings . . . .” Now complete the story.
   e. Picture: A picture of two characters is presented,
   with one making a statement. Respondents are asked to identify with the other and fill in the empty balloon.
   f. Thematic Apperception Test (TAT): A picture is presented and respondents are asked to make up a story about what they think is happening or may happen in the picture

Question 11

Which are other popular qualitative research approaches?

Answer 11

1. Word associations
   —Ask subjects what words come to mind when they hear the brand’s name.
   “What does the Timex name mean to you? Tell me what comes to mind when you think of
   Timex watches.” The primary purpose of free-association tasks is to identify the range of possible
   brand associations in consumers’ minds.
2. Projective techniques
   —Give people an incomplete stimulus and ask them to complete it, or give them an ambiguous stimulus and ask them to make sense of it. One approach is “bubble
   exercises” in which empty bubbles, like those found in cartoons, appear in scenes of people buying or using certain products or services. Subjects fill in the bubble, indicating what they believe is happening or being said. Another technique is comparison tasks in which people compare brands to people, countries, animals, activities, fabrics, occupations, cars, magazines, vegetables, nationalities, or even other brands.
3. Visualization
   —Visualization requires people to create a collage from magazine photos or drawings to depict their perceptions.
4. Brand personification
   —Ask subjects what kind of person they think of when the brand is mentioned: “If the brand were to come alive as a person, what would it be like, what would it
   do, where would it live, what would it wear, who would it talk to if it went to a party (and what would it talk about)?” For example, the John Deere brand might make someone think of a rugged Midwestern male who is hardworking and trustworthy. The brand personality delivers a picture of the more human qualities of the brand.
5. Laddering
   —A series of increasingly more specific “why” questions can reveal consumer motivation and consumers’ deeper, more abstract goals. Ask why someone wants to buy a Nokia cell phone. “They look well built” (attribute). “Why is it important that the phone be well built?” “It suggests Nokia is reliable” (a functional benefit). “Why is reliability important?”
   “Because my colleagues or family can be sure to reach me” (an emotional benefit). “Why must you be available to them at all times?” “I can help them if they’re in trouble” (brand essence). The brand makes this person feel like a Good Samaritan, ready to help others.

Question 12

What are the 3 decisions to be made for the sampling plan?

Answer 12

1. Sampling unit: Whom should we survey? In the American Airlines survey, should the sampling
   unit consist only of first-class business travelers, first-class vacation travelers, or both? Should it include
   travelers under age 18? Both traveler and spouse? Once they have determined the sampling
   unit, marketers must develop a sampling frame so everyone in the target population has an equal
   or known chance of being sampled.
2. Sample size: How many people should we survey? Large samples give more reliable results, but it’s
   not necessary to sample the entire target population to achieve reliable results. Samples of less than 1 percent of a population can often provide good reliability, with a credible sampling procedure.

3. Sampling procedure: How should we choose the respondents? Probability sampling allows marketers to calculate confidence limits for sampling error and makes the sample more representative. Thus, after choosing the sample, marketers could conclude that
“the interval five to seven trips per year has 95 chances in 100 of containing the true number of trips taken annually by first-class passengers flying between Chicago

Question 13

What is Neuromarketing?

Answer 13

The term neuromarketing describes brain research on the effect of marketing stimuli. Firms with names such as NeuroFocus and EmSense are using EEG (electroencephalograph) technology to correlate brand activity with physiological cues such as skin temperature or eye movement and thus gauge how people react to ads.

One major research finding to emerge from neurological consumer research is that many purchase decisions appear to be characterized less by the logical weighing of variables and more “as a largely
unconscious habitual process, as distinct from the rational, conscious, information-processing model of economists and traditional marketing
textbooks.” Even basic decisions, such as the purchase of gasoline, seem to be influenced by brain activity at the subrational level.

Question 14

What are the contact methods?

Answer 14

1. Mail
   The mail questionnaire is one way to reach people who would not give personal interviews or whose responses might be biased or distorted by the interviewers. But low rate of response.
2. Telephone
   Interviews must be brief and not too personal. Although the response rate has typically been higher
   than for mailed questionnaires, telephone interviewing in the United States is getting more difficult because of consumers’ growing antipathy toward telemarketers.
3. Personal
   Personal interviewing is the most versatile method. The interviewer can ask more questions and record additional observations about the respondent, such as dress and body language. At the same time, however, personal interviewing is the most expensive method, is subject to interviewer bias, and requires more administrative planning and supervision. Personal interviewing takes two forms. In arranged interviews, marketers contact respondents for an appointment and often offer a small payment or incentive. In intercept interviews, researchers stop people at a shopping mall or busy street corner and request an interview on the
   spot.
4. Online
   Marketers can also host a real-time consumer panel or virtual focus group or sponsor a chat room, bulletin board, or blog and introduce questions from time to time. They can ask customers to brainstorm or have followers of the company on Twitter rate an idea. Online communities and networks of customers serve as a resource for a wide variety of companies. Insights from Kraftsponsored online communities helped the company develop its popular line of 100-calorie snacks.

Question 15

What are advantages of online research?

Answer 15

1. Inexpensive
2. Fast
3. Honesty and thoughtfulness
4. Versatility

Question 16

What are DISadvantages of online research?

Answer 16

1. Small and skewed samples
2. Online panels and communities can suffer from excessive turnover.
3. technological problems and inconsistencies.

Question 17

What are the 7 characteristics of good marketing research?

Answer 17

1. Scientific method
   Effective marketing research uses the principles of the scientific method: careful observation, formulation of
   hypotheses, prediction, and testing.
2. Research creativity
   In an award-winning research study to reposition Cheetos snacks, researchers dressed up in a brand mascot Chester Cheetah suit and walked around the streets of San Francisco. The response the character encountered led to the realization that even adults loved the fun and playfulness of Cheetos. The resulting repositioning led to a double-digit sales increase despite a tough business environment.
3. Multiple methods
   Marketing researchers shy away from overreliance on any one method. They also recognize the value of using two or three methods to increase confidence in the results.
4. Interdependence of
   models and data Marketing researchers recognize that data are interpreted from underlying models that guide the type of information sought.
5. Value and cost of information
   Marketing researchers show concern for estimating the value of information against its cost. Costs are typically easy to determine, but the value of research is harder to quantify. It depends on the reliability and validity of the findings and management’s willingness to accept and act on those findings.
6. Healthy skepticism
   Marketing researchers show a healthy skepticism toward glib assumptions made by managers about how a market works. They are alert to the problems caused by “marketing myths.”
7. Ethical marketing
   Marketing research benefits both the sponsoring company and its customers. The misuse of marketing research can harm or annoy consumers,

Question 18

How to measure Marketing performance?

Answer 18

(1) marketing metrics to assess marketing
effects and
(2) marketing-mix modeling to estimate causal
relationships and measure how marketing activity affects outcomes.

Marketing dashboards are a structured way to disseminate the insights gleaned from these two approaches within the organization.

Question 19

Which 5 questions should you ask yourself if you think that you are properly measuring your marketing performance?

Answer 19

1. Do you routinely research consumer behavior (retention, acquisition, usage) and why consumers
   behave that way (awareness, satisfaction, perceived quality)?
2. Do you routinely report the results of this research to the board in a format integrated with
   financial marketing metrics?
3. In those reports, do you compare the results with the levels previously forecasted in the business
   plans?
4. Do you also compare them with the levels achieved by your key competitor using the same
   indicators?
5. Do you adjust short-term performance according to the change in your marketing-based asset(s)?

He believes they can split evaluation into two parts: (1) short-term results
and (2) changes in brand equity. Short-term results often reflect profit-and-loss concerns as
shown by sales turnover, shareholder value, or some combination of the two. Brand-equity measures
could include customer awareness, attitudes, and behaviors; market share; relative price premium;
number of complaints; distribution and availability; total number of customers; perceived
quality, and loyalty and retention

Question 20

Which are sample metrics to follow?

Answer 20

I. External II. Internal
Awareness Awareness of goals
Market share (volume or value) Commitment to goals
Relative price (market share value/volume) Active innovation support
Number of complaints (level of dissatisfaction) Resource adequacy
Consumer satisfaction Staffing/skill levels
Distribution/availability Desire to learn
Total number of customers Willingness to change
Perceived quality/esteem Freedom to fail
Loyalty/retention Autonomy
Relative perceived quality Relative employee satisfaction

Question 21

What is Marketing mix modeling?

Answer 21

Marketing-mix models analyze data from a variety of
sources, such as retailer scanner data, company shipment data, pricing, media, and promotion
spending data, to understand more precisely the effects of specific marketing activities

Question 22

What are shortcomings or disadvantages of marketing mix modeling?

Answer 22

• Marketing-mix modeling focuses on incremental growth instead of baseline sales or longterm
effects.
• The integration of important metrics such as customer satisfaction, awareness, and brand
equity into marketing-mix modeling is limited.
• Marketing-mix modeling generally fails to incorporate metrics related to competitors, the
trade, or the sales force (the average business spends far more on the sales force and trade promotion
than on advertising or consumer promotion).

Question 23

Which 2 scorecards should be included to reflect performance?

Answer 23

1. A customer-performance scorecard
   records how well the company is doing year after year on such customer-based measures. Management should set target goals for each measure and take action when results get out of bounds.

• A stakeholder-performance scorecard
tracks the satisfaction of various constituencies who
have a critical interest in and impact on the company’s performance: employees, suppliers, banks, distributors, retailers, and stockholders. Again, management should take action when one or more groups register increased or above-norm levels of dissatisfaction.

Question 24

What are measures of customer performance scorecard?

Answer 24

Sample Customer-Performance Scorecard Measures
• Percentage of new customers to average number of customers
• Percentage of lost customers to average number of customers
• Percentage of win-back customers to average number of customers
• Percentage of customers falling into very dissatisfied, dissatisfied, neutral, satisfied, and very
satisfied categories
• Percentage of customers who say they would repurchase the product
• Percentage of customers who say they would recommend the product to others
• Percentage of target market customers who have brand awareness or recall
• Percentage of customers who say that the company’s product is the most preferred in its category
• Percentage of customers who correctly identify the brand’s intended positioning and differentiation
• Average perception of company’s product quality relative to chief competitor
• Average perception of company’s service quality relative to chief competitor

Question 25

What are the 2 pathways of LaPointe? Dashboards

Answer 25

1. The customer metrics pathway
   looks at how prospects become customers, from awareness to preference to trial to repeat purchase,
   or some less linear model. This area also examines how the customer experience contributes to the perception of value and competitive advantage.
2. The unit metrics pathway
   reflects what marketers know about sales of product/service units—how much is sold by product line and/or by geography; the marketing cost per unit sold as an efficiency yardstick; and where and how margin is optimized in terms of characteristics of the product line or distribution channel.
3. The cash-flow metrics pathway
   focuses on how well marketing expenditures are achieving short-term returns. Program and campaign
   ROI models measure the immediate impact or net present value of profits expected from a given investment.
4. The brand metrics pathway tracks the development of the longerterm impact of marketing through brand equity measures that assess both the perceptual health of the brand from customer and prospective customer perspectives as well as the overall financial
   health of the brand.

Question 26

Summary of Marketing Research chapter

Answer 26

1. Companies can conduct their own marketing research or hire other companies to do it for them. Good marketing research is characterized by the scientific method, creativity, multiple research methods, accurate model building, costbenefit analysis, healthy skepticism, and an ethical focus.
2. The marketing research process consists of defining the problem, decision alternatives; and research objectives; developing the research plan; collecting the information; analyzing the information; presenting the findings to management; and making the decision.
3. In conducting research, firms must decide whether to collect their own data or use data that already
   exist. They must also choose a research approach
   (observational, focus group, survey, behavioral data, or
   experimental) and research instruments (questionnaire,
   qualitative measures, or technological devices). In
   addition, they must decide on a sampling plan and
   contact methods (by mail, by phone, in person, or
   online).
4. Two complementary approaches to measuring marketing productivity are: (1) marketing metrics to assess marketing effects and (2) marketing-mix modeling to estimate causal relationships and measure how marketing activity affects outcomes. Marketing dashboards are a structured way to disseminate the insights gleaned from these two approaches within the organization.

Question 27

What are the requirements for effective target marketing?

Answer 27

To compete more effectively, many companies are now
embracing target marketing. Instead of scattering their marketing efforts, they’re focusing on those consumers they have the greatest chance of satisfying.

Effective target marketing requires that marketers:

1. Identify and profile distinct groups of buyers who differ in their needs and wants (market segmentation).
2. Select one or more market segments to enter (market targeting).
3. For each target segment, establish and communicate the distinctive benefit(s) of the company’s market offering (market positioning).

Question 28

What is a market segment?

Answer 28

A market segment
consists of a group of customers who share a similar set of needs and wants. The marketer’s task is to identify the appropriate number and nature of market segments and decide which one(s) to target.

Question 29

What is geographical segmentation?

Answer 29

Geographic segmentation divides the market into geographical units such as nations, states,
regions, counties, cities, or neighborhoods. The company can operate in one or a few areas, or it can
operate in all but pay attention to local variations. In that way it can tailor marketing programs to
the needs and wants of local customer groups in trading areas, neighborhoods, even individual
stores. In a growing trend called grassroots marketing, such activities concentrate on getting as close
and personally relevant to individual customers as possible.

Question 30

What is Prizm?

Answer 30

Nielsen Claritas has developed a geoclustering approach called PRIZM (Potential Rating Index by Zip Markets) NE that classifies over half a million U.S. residential neighborhoods into 14 distinct groups and 66 distinct lifestyle segments called PRIZM Clusters.
The groupings take into consideration 39 factors in five broad categories: (1) education and affluence, (2) family life cycle, (3) urbanization, (4) race and ethnicity, and (5) mobility. The neighborhoods are broken down by zip code, zip+4, or census tract and block group. The clusters have descriptive titles such as Blue Blood Estates, Winner’s Circle, Hometown Retired, Shotguns and Pickups, and Back Country Folks. The inhabitants in a cluster tend to lead similar lives, drive similar
cars, have similar jobs, and read similar magazines

Question 31

How is demographic segmentation done?

Answer 31

1. AGE AND LIFE-CYCLE STAGE
2. LIFE STAGE
3. GENDER
4. INCOME
5. GENERATION
6. RACE AND CULTURE

Question 32

What are the 3 types of New Luxury Products?

Answer 32

The authors identify three main types of
New Luxury products:

1• Accessible superpremium products
such as Victoria’s Secret underwear and Kettle gourmet potato chips, carry a significant premium over middle-market brands, yet consumers can readily trade up to them because they are relatively low-ticket items in affordable categories.

2. Old Luxury brand extensions extend historically high-priced brands down-market while retaining their cachet, such as the Mercedes-Benz C-class and the American Express Blue card.
3. • Masstige goods, such as Kiehl’s skin care and Kendall-Jackson wines, are priced between average middle-market brands and superpremium Old Luxury brands. They are “always based on emotions, and consumers have a much stronger emotional
   engagement with them than with other goods.”

Question 33

Because generation Y / Millenials are turned off by overt branding practices, which approaches have been implemented by marketers to reach and persuade them?

Answer 33

1. Online buzz—Rock band Foo Fighters created a digital street team that sends targeted e-mail
   blasts to members who “get the latest news, exclusive audio/video sneak previews, tons of
   chances to win great Foo Fighters prizes, and become part of the Foo Fighters Family.”
2. Student ambassadors—Red Bull enlisted college students as Red Bull Student Brand
   Managers to distribute samples, research drinking trends, design on-campus marketing initiatives,
   and write stories for student newspapers.
3. Unconventional sports—Chick-fil-A sponsored the National Amateur Dodgeball Association,
   “a recreational pursuit for nontraditional sport enthusiasts.”
4. Cool events—Hurley, which defined itself as an authentic “Microphone for Youth” brand
   rooted in surf, skate, art, music, and beach cultures, became the title sponsor of the U.S. Open of Surfing. Other sponsors included Casio, Converse, Corona, Paul Mitchell, and Southwest Airlines.
5. Computer games—Product placement is not restricted to movies or TV: Mountain Dew, Oakley, and Harley-Davidson all made deals to put logos on Tony Hawk’s Pro Skater 3 from Activision.
6. Videos—Burton ensures its snowboards and riders are clearly visible in any videos that are shot.
7. Street teams—As part of an antismoking crusade, the American Legacy Foundation hires teens as the “Truth Squad” to hand out T-shirts, bandanas, and dog tags at teen-targeted events.

Question 34

Which are the 4 groups with higher resources?

Answer 34

The four groups with higher resources are:
1. Innovators—Successful, sophisticated, active, “take-charge” people with high self-esteem.
Purchases often reflect cultivated tastes for relatively upscale, niche-oriented products
and services.
2. Thinkers—Mature, satisfied, and reflective people motivated by ideals and who value order,
knowledge, and responsibility. They seek durability, functionality, and value in products.
3. Achievers—Successful, goal-oriented people who focus on career and family. They favor
premium products that demonstrate success to their peers.
4. Experiencers—Young, enthusiastic, impulsive people who seek variety and excitement.
They spend a comparatively high proportion of income on fashion, entertainment, and
socializing.

Question 35

Which are the 4 groups with lower resources?

Answer 35

The four groups with lower resources are:
1. Believers—Conservative, conventional, and traditional people with concrete beliefs. They prefer
familiar, U.S.-made products and are loyal to established brands.
2. Strivers—Trendy and fun-loving people who are resource-constrained. They favor stylish
products that emulate the purchases of those with greater material wealth.
3. Makers—Practical, down-to-earth, self-sufficient people who like to work with their hands.
They seek U.S.-made products with a practical or functional purpose.
4. Survivors—Elderly, passive people concerned about change and loyal to their favorite brands.

Question 36

What is BEHAVIORAL segmentation?

Answer 36

In behavioral segmentation, marketers divide buyers into groups on the basis of their knowledge
of, attitude toward, use of, or response to a product.

1. NEEDS AND BENEFITS
   Not everyone who buys a product has the same needs or wants the same benefits from it.Needs-based or benefit-based segmentation is a widely used approach because it identifies distinct market segments with clear marketing implications.
2. DECISION ROLES
   People play five roles in a buying decision:
   a. Initiator, b. Influencer, c. Decider, d. Buyer, and e. User. For example, assume a wife initiates a
   purchase by requesting a new treadmill for her birthday. The husband may then seek information from many sources, including his best friend who has a treadmill and is a key influencer in what models to consider.
3. USER AND USAGE—REAL USER AND USAGE-RELATED VARIABLES
   - Occasions,

• User status,
  Every product has its nonusers, ex-users, potential users, first-time users, and regular
  users. Blood banks cannot rely only on regular donors to supply blood; they must also recruit new
  first-time donors and contact ex-donors, each with a different marketing strategy
• Usage rate,
• Buyer-readiness stage,
• Loyalty status

Marketers usually envision four groups based on
Brand loyalty status:
1. Hard-core loyals—Consumers who buy only one brand all the time
2. Split loyals—Consumers who are loyal to two or three brands
3. Shifting loyals—Consumers who shift loyalty from one brand to another
4. Switchers—Consumers who show no loyalty to any brand

• Attitude: Enthusiastic, positive, indifferent, negative,
  and hostile.
• Multiple bases: Combining different behavioral bases can provide a more comprehensive and cohesive view of a market and its segments.

Question 37

How to segment?

Answer 37

Two bases for segmenting consumer markets are
consumer characteristics and consumer responses.
The major segmentation variables for consumer
markets are geographic, demographic, psychographic,
and behavioral. Marketers use them singly
or in combination.

Question 38

Which are the 5 crirteria for effective segmentation?

Answer 38

1• Measurable.
The size, purchasing power, and characteristics of the segments can be measured.

2 • Substantial.
The segments are large and profitable enough to serve. A segment should be the largest possible homogeneous group worth going after with a tailored marketing program. It would not pay, for example, for an automobile manufacturer to develop cars for people who are less than four feet tall.

3 • Accessible. The segments can be effectively reached and served.

4 • Differentiable. The segments are conceptually distinguishable and respond differently to
different marketing-mix elements and programs. If married and unmarried women respond
similarly to a sale on perfume, they do not constitute separate segments.

5 • Actionable. Effective programs can be formulated for attracting and serving the segments.

Question 39

Which are the 5 forces identified by Michael Porter?

Answer 39

1. Threat of intense segment rivalry
2. Threat of new entrants
3. Threat of substitute products
4. Threat of buyers’ growing bargaining power
5. Threat of suppliers’ growing bargaining power

Question 40

How to evaluate different market segments?

Answer 40

In evaluating different market segments, the firm must look at two factors: the segment’s overall
attractiveness and the company’s objectives and resources. How well does a potential segment
score on the five criteria? Does it have characteristics that make it generally attractive, such as
size, growth, profitability, scale economies, and low risk? Does investing in the segment make
sense given the firm’s objectives, competencies, and resources?

Question 41

Mass market vs. differentiated markets?

Answer 41

In undifferentiated or mass marketing, the firm ignores segment differences and goes after the
whole market with one offer

In differentiated marketing, the firm sells different products to all the different segments of the market.

Question 42

What is multiple segment specialization?

Answer 42

With selective specialization, a firm selects a subset of all the possible segments, each objectively attractive and appropriate. There may be little or no synergy among the segments, but each promises to be a moneymaker.

Question 43

What is a super segment?

Answer 43

supersegment is a set of segments sharing some exploitable similarity. For example, many symphony orchestras target people who have broad cultural interests, rather than only those who regularly attend concerts. A firm can also attempt to achieve some synergy with product or market specialization.

• With product specialization, the firm sells a certain product to several different market segments. A microscope manufacturer, for instance, sells to university, government, and commercial laboratories, making different instruments for each and building a strong reputation in the specific product area. The downside risk is that the product may be supplanted by an entirely new technology.

• With market specialization, the firm concentrates on serving many needs of a particular customer group, such as by selling an assortment of products only to
university laboratories. The firm gains a strong reputation among this customer group and becomes a channel for additional products its members can use. The downside risk is that the customer group may suffer budget cuts or shrink in size

Question 44

What is a Niche?

Answer 44

A niche is a more narrowly defined customer group seeking a distinctive mix of benefits within a
segment.Marketers usually identify niches by dividing a segment into subsegments

Question 45

What is single segment concentration?

Answer 45

SINGLE-SEGMENT CONCENTRATION With single-segment concentration, the firm markets to only one particular segment.

Through concentrated marketing, the firm gains deep knowledge of the segment’s needs and achieves a strong market presence. It also enjoys operating economies by specializing its production, distribution, and promotion. If it captures segment leadership, the firm can earn a high return on its investment.

Question 46

What is CUSTOMERIZATION / Individual marketing?

Answer 46

Customerization combines operationally driven
mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice. The firm no longer requires prior information about the customer, nor does it need to own manufacturing. It provides a platform and tools and “rents”

Question 47

What is “the long tail” theory based on? (supporting premisses and assumptions)

Answer 47

Anderson’s long tail theory is based on three premises: (1) Lower costs of distribution make it economically easier to sell products without
precise predictions of demand; (2) The more products available for sale, the greater the likelihood of tapping into latent demand for niche tastes unreachable through traditional retail channels; and (3) If enough niche tastes are aggregated, a big new market can result.

Question 48

How can a firm stay number 1?

Answer 48

To stay number one, the firm must first find ways to expand total market demand.

Second, it must protect its current share through good defensive and offensive actions.

Third, it should increase market share, even if market size remains constant. .

Question 49

How to increase consumption?

Answer 49

1. NEW CUSTOMERS Every product class has the potential to attract buyers who are unaware of
   the product or are resisting it because of price or lack of certain features
   new users among three groups:
   a. those who might use it but do not (marketpenetration strategy),
   b. those who have never used it (new-market segment strategy), or
   c. those who live elsewhere (geographical-expansion strategy).
2. MORE USAGE Marketers can try to increase the amount, level, or frequency of consumption. They can sometimes boost the amount through packaging or product redesign. Larger package sizes increase the amount of product consumers use at one time
   - > Increasing frequency of consumption requires
   (1) identifying additional opportunities to use the brand in the same basic way or
   (2) identifying completely new and different ways to use the brand.

Additional Opportunities to Use the Brand A marketing program can communicate the appropriateness and advantages of using the brand.

Another opportunity arises when consumers’ perceptions of their usage differs from reality.
Consumers may fail to replace a short-lived product when they should because they overestimate
how long it stays fresh.

One strategy is to tie the act of replacing the product to a holiday, event, or time of year.
Another might be to provide consumers with better information about when they first used the product or need to replace it, or the current level of product performance.

New Ways to Use the Brand
The second approach to increasing frequency of consumption is to identify completely new and different applications.

Question 50

How to protect market share while growing?

Answer 50

The most constructive response is continuous innovation. The front-runner should lead the industry in developing new products and customer services, distribution effectiveness, and cost cutting.

Question 51

How is proactive marketing?

Answer 51

PROACTIVE MARKETING In satisfying customer needs, we can draw a distinction between responsive marketing, anticipative marketing, and creative marketing.

1. A responsive marketer finds a stated need and fills it.
2. An anticipative marketer looks ahead to needs customers may have in the near future.
3. A creative marketer discovers solutions customers did not ask for but to which they enthusiastically respond.

Creative marketers are proactive market-driving firms, not just marketdriven ones

Question 52

Which are the 2 proactive skills needed?

Answer 52

A company needs two proactive skills:

(1) responsive anticipation to see the writing
on the wall, as when IBM changed from a hardware producer to a service business and

(2) creative anticipation to devise innovative solutions, as when PepsiCo introduced H2OH! (a soft drink–bottled water hybrid). Note that responsive anticipation is performed before a given change, while reactive response happens after the change takes place.

Question 53

What are characteristics of proactive firms?

Answer 53

Proactive firms:
• Are ready to take risks and make mistakes,
• Have a vision of the future and of investing in it
• Have the capabilities to innovate,
• Are flexible and nonbureaucratic, and
• Have many managers who think proactively.

Question 54

How is DEFENSIVE marketing?

Answer 54

The aim of defensive strategy is to reduce the probability of attack, divert attacks to less-threatened areas, and lessen their intensity. Speed of response can make an important difference to profit.

Question 55

Which are the 6 strategies that can be used by a dominating firm?

Answer 55

1. Position Defense.
   Position defense means occupying the most desirable market space in consumers’ minds, making the brand almost impregnable,
2. Flank Defense.
   The market leader should erect outposts to protect a weak front or support a possible counterattack.
3. Preemptive Defense.
   A more aggressive maneuver is to attack first, perhaps with guerrilla action across the market—hitting one competitor here, another there—and keeping everyone
   off balance.
4. Counteroffensive Defense.
   In a counteroffensive, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so it will have to pull back to defend itself.
5. Mobile Defense.
   In mobile defense, the leader stretches its domain over new territories through market broadening and market diversification. Market broadening shifts the company’s
   focus from the current product to the underlying generic need. Thus, “petroleum” companies such as BP sought to recast themselves as “energy” companies.
6. Contraction Defense.
   Sometimes large companies can no longer defend all their territory. In planned contraction (also called strategic withdrawal), they give up weaker markets and reassign resources to stronger ones.

Question 56

Which factors should be considered before acquiring higher market share?

Answer 56

1. The possibility of provoking antitrust action. Frustrated competitors are likely to cry “monopoly” and seek legal action if a dominant firm makes further inroads.
2. Economic cost.
   profitability might fall with market share gains
   after some level. In the illustration, the firm’s optimal market share is 50 percent. The cost of gaining further market share might exceed the value if holdout customers dislike the company, are loyal to competitors, have unique needs, or prefer dealing with smaller firms. And the costs of legal work, public relations, and lobbying rise with market share. Pushing
   for higher share is less justifiable when there are unattractive market segments, buyers who want multiple sources of supply, high exit barriers, and few scale or experience economies. Some market leaders have even increased profitability by selectively decreasing market share in weaker areas.
3. The danger of pursuing the wrong marketing activities.
   Companies successfully gaining
   share typically outperform competitors in three areas: new-product activity, relative productquality, and marketing expenditures. Companies that attempt to increase market share by cutting prices more deeply than competitors typically don’t achieve significant gains, because rivals meet the price cuts or offer other values so buyers don’t switch.
4. The effect of increased market share on actual and perceived quality.
   Too many customers can put a strain on the firm’s resources, hurting product value and service delivery.
   Charlotte-based FairPoint Communications struggled to integrate the 1.3 million customers it gained in buying Verizon Communications’s New England franchise. A slow conversion and significant service problems led to customer dissatisfaction, regulator’s anger, and eventually bankruptcy

Question 57

Which are the attack strategies for challengers?

Answer 57

DEFINING THE STRATEGIC OBJECTIVE AND OPPONENT(S)
• It can attack the market leader: This is a high-risk but potentially high-payoff strategy and makes good sense if the leader is not serving the market well
• It can attack firms its own size that are not doing the job and are underfinanced.
• It can attack small local and regional firms. Several major banks grew to their present size by
gobbling up smaller regional banks, or “guppies.”.

CHOOSING A GENERAL ATTACK STRATEGY

• Frontal Attack:
matches its opponent’s product, advertising, price, and distribution.

• Flank Attack.
A flanking strategy is another name for identifying shifts that are causing gaps to develop, then rushing to fill the gaps. Flanking is particularly attractive to a challenger with fewer resources and can be more likely to succeed than frontal attacks.

• Encirclement Attack.
Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts. It makes sense when the challenger commands superior resources.

• Bypass Attack.
Bypassing the enemy altogether to attack easier markets instead offers three lines of approach: diversifying into unrelated products, diversifying into new geographical markets, and leapfrogging
into new technologies.

• Guerrilla Attacks.
Guerrilla attacks consist of small, intermittent attacks,
conventional and unconventional, including selective price cuts, intense promotional blitzes, and occasional legal action, to harass the opponent and eventually secure permanent footholds

CHOOSING A SPECIFIC ATTACK STRATEGY

Question 58

What are the 4 market-follower strategies?

Answer 58

1. Counterfeiter
2. Cloner—The cloner emulates the leader’s products, name, and packaging, with slight variations.
   For example, Ralcorp Holdings sells imitations of name-brand cereals in look-alike boxes. Its Tasteeos, Fruit Rings, and Corn Flakes sell for nearly $1 a box less than the leading name brands; the company’s sales were up 28 percent in 2008.
3. Imitator—The imitator copies some things from the leader but differentiates on packaging, advertising, pricing, or location. The leader doesn’t mind as long as the imitator doesn’t attack aggressively.
4. Adapter—The adapter takes the leader’s products and adapts or improves them. The adapter may choose to sell to different markets, but often it grows into a future challenger, as many Japanese firms have done after improving products developed elsewhere.

Question 59

What are Market-Nicher Strategies?

Answer 59

An alternative to being a follower in a large market is to be a leader in a small market, or niche, as
we introduced in Chapter 8. Smaller firms normally avoid competing with larger firms by targeting
small markets of little or no interest to the larger firms

Question 60

What does it mean that a product has a life-cycle?

Answer 60

To say a product has a life cycle is to assert four things:

1. Products have a limited life.
2. Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller.
3. Profits rise and fall at different stages of the product life cycle.
4. Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage.

Question 61

What are the stages of the product life-cycle?

Answer 61

1. Introduction—A period of slow sales growth as the product is introduced in the market.
   Profits are nonexistent because of the heavy expenses of product introduction.
2. Growth—A period of rapid market acceptance and substantial profit improvement.
3. Maturity—A slowdown in sales growth because the product has achieved acceptance by most
   potential buyers. Profits stabilize or decline because of increased competition.
4. Decline—Sales show a downward drift and profits erode.

Question 62

What are advantages of being first to market (pioneer) ?

Answer 62

What are the sources of the pioneer’s advantage?51 Early users will recall the pioneer’s brand
name if the product satisfies them. The pioneer’s brand also establishes the attributes the product
class should possess.52 It normally aims at the middle of the market and so captures more users.
Customer inertia also plays a role; and there are producer advantages: economies of scale, technological leadership, patents, ownership of scarce assets, and other barriers to entry. Pioneers can
spend marketing dollars more effectively and enjoy higher rates of repeat purchases. An alert pioneer
can lead indefinitely by pursuing various strategies

Question 63

Inventor, pioneer and market pioneer.

Answer 63

distinguish between an inventor, first to develop patents in a new-product category, a product pioneer,
first to develop a working model, and a market pioneer, first to sell in the new-product category. Through countless variations, Trivial Pursuit has proven to be more than a passing fad.
although pioneers
may still have an advantage, a larger number of market pioneers fail than has been reported, and a
larger number of early market leaders (though not pioneers) succeed.

Question 64

How to sustain rapid market share growth?

Answer 64

To sustain rapid market share growth now, the firm:
• improves product quality and adds new features and improved styling.
• adds new models and flanker products (of different sizes, flavors, and so forth) to protect the
main product.
• enters new market segments.
• increases its distribution coverage and enters new distribution channels.
• shifts from awareness and trial communications to preference and loyalty communications.
• lowers prices to attract the next layer of price-sensitive buyers.

Question 65

How is the stage of Maturity in the product life cycle?

Answer 65

The maturity stage divides into three phases: growth, stable, and decaying maturity. In the first,
sales growth starts to slow. There are no new distribution channels to fill. New competitive forces
emerge. In the second phase, sales per capita flatten because of market saturation. Most potential
consumers have tried the product, and future sales depend on population growth and replacement
demand. In the third phase, decaying maturity, the absolute level of sales starts to decline, and customers
begin switching to other products

Question 66

How to do marketing and add value in mature products?

Answer 66

MARKET MODIFICATION A company might try to expand the market for its mature brand
by working with the two factors that make up sales volume: Volume = number of brand users ×
usage rate per user, as in Table 11.1, but may also be matched by competitors.
PRODUCT MODIFICATION Managers also try to stimulate sales by improving quality,
features, or style. Quality improvement increases functional performance by launching a “new
and improved” product. Feature improvement adds size, weight, materials, supplements, and
accessories that expand the product’s performance, versatility, safety, or convenience. Style
improvement increases the product’s esthetic appeal. Any of these can attract consumer attention.
MARKETING PROGRAM MODIFICATION Finally, brand managers might also try to
stimulate sales by modifying nonproduct elements—price, distribution, and communications in
particular. They should assess the likely success of any changes in terms of effects on new and
existing customers.

Question 67

What is harvesting?

Answer 67

Harvesting calls for gradually reducing
a product or business’s costs while trying to maintain sales. The first step is to cut R&D costs
and plant and equipment investment. The company might also reduce product quality, sales force
size, marginal services, and advertising expenditures, ideally without letting customers, competitors,
and employees know what is happening. Harvesting is difficult to execute, yet many mature
products warrant this strategy. It can substantially increase current cash flow

Question 68

What is divesting?

Answer 68

When a company decides to divest a product with strong distribution and residual goodwill, it
can probably sell the product to another firm. Some firms specialize in acquiring and revitalizing