1. Marketing Research & Product Strategy5
Marketing Research & Product Strategy
PowerPoint Presentation by
Thomas McKaig, Ryerson University

2. Looking Ahead After studying this chapter, you should be able to:
1. Describe small business marketing.
2. Discuss the nature of the marketing research process.
3. Explain the term market and methods of forecasting sales.
4. Identify the components of a formal marketing plan.
5. Explain how customer satisfaction influences customer loyalty.
6. Identify the key characteristics of consumer behaviour.
7. Explain product strategy and related concepts.
8. Describe the components of a firm’s total product offering.

3. What is Small Business Marketing?
Activities directing the flow of goods and services from producer to consumer or user.
Small business marketing consists of those business activities that relate directly to:
Identifying a target market
Determining target market potential
Preparing, communicating, and delivering a bundle of satisfaction to the target market

4. Essential Marketing Activities
Market Analysis
An evaluation process that encompasses market segmentation, marketing research, and sales forecasting
Marketing Mix
The combination of product, pricing, promotion, and distribution activities.

5. Marketing Philosophies Make a Difference
Consumer-Oriented
All marketing efforts begin and end with the customer; focus is on the consumer’s needs— this philosophy is the most consistent with long-term success of the firm
Production-Oriented
Emphasizes development of the product and production efficiencies over other activities
Sales-Oriented
Favours product sales over production efficiencies and customer preferences

6. Core Marketing Activities for Small Business
Market Analysis
Marketing Mix
Marketing Research
Market Segmentation
Sales Forecasting
Target Market
Entrepreneur
Distribution Promotion Pricing Product
Figure 5.1

7. The Nature of Marketing Research
Steps In the Marketing Research Process
Identifying the informational need
Why do we need to know this?
Searching for secondary data
Who has researched this topic already?
Collecting primary data
Who do we ask and what do we ask them?
Interpreting the data
Got the information, now what does it mean?
…continued

8. The Nature of Marketing Research
The gathering, processing, reporting, and interpreting of market information
Secondary Data
Market information that has been previously compiled by others
Primary Data
New market information that is gathered by the firm conducting the research

9. Methods for Collecting Primary Data
Observational Methods
Human
Mechanical
Questioning Methods
Surveys
Mail
Telephone
Personal interviews
Experiments

10. Ingredients of a Market
Ingredient 1 Customers: People or businesses
Ingredient 2 Purchasing power: Money/credit
Ingredient 3 Unsatisfied needs

11. Estimating Market Potential
The Sales Forecast
A prediction of how much (in units and/or dollars) of a product or service will be purchased within a market during a specified period of time
An essential component of a business plan that:
Assesses the new venture’s feasibility.
Assists in planning for product scheduling, setting inventory levels, and personnel decisions

12. Dimensions of Sales Forecasting Difficulty
Limited Entrepreneurial/
Managerial Experience
New Venture
Poor Understanding of
Forecasting Techniques
Established Business
Conditions That Make
Forecasting Easier
Forecasting More Difficult
Experienced
Entrepreneur/Manager
Entrepreneur Familiar with
Forecast
Figure 5.3

13. Sales Forecasts and Limitations
This is a prediction of how much of a product or service within a market will be purchased during a specific time frame.
Formally defined, a sales forecast estimates how much of a product or service can be sold within a given market in a defined period of time.
Sales forecasting can and will be inaccurate either due to inexperience or inconclusive forecasting assumptions.

14. The Forecasting Process: Two Dimensions of Forecasting
The Starting Point
Buildup process
All potential buyers in various submarkets are identified and then the estimated demand is added up (bottom-up).

15. Understanding Potential Target Markets
A group of customers or potential customers who have purchasing power and unsatisfied needs
Focus strategy
A type of competitive strategy in which cost and marketing strategies are achieved within narrow market segments
Market Segmentation
The division of a market into several smaller groups with similar needs.

16. The Formal Marketing Plan
Market Analysis
Customer profile
A description of potential customers in a target market
Sales forecasts
“most likely,” “pessimistic,” and “optimistic”
The Competition
Profile of key management personnel
Overall strengths and weaknesses
Related products being marketed or tested
Likelihood of competitors’ entry into target market
…continued

17. The Formal Marketing Plan
Marketing Strategy
Total product and/or service plan
Decisions affecting the total product
Distribution plan
Decisions regarding product delivery to customers
Pricing plan
Setting an acceptable value on the product
Promotional plan
Communicating information to the target market

18. Satisfying the Customer: The Key to Customer Loyalty
Three Basic Beliefs:
Superior customer service creates customer satisfaction.
Customer satisfaction produces customer loyalty.
Small firms possess great potential for providing superior customer service.

19. Components of Customer Satisfaction
The most basic element of the product or service that customers expect all competitors to deliver.
General support services, such as customer assistance.
A recovery process for counteracting bad experiences.
Extraordinary services that excel in meeting customers’ preferences and make the product or service seem customized.

20. Why Firms Fail to Adopt a Consumer Orientation
The State of Competition
With no competition or high demand, firms focus on production.
Production Focus of Small Business Managers
Small business managers tend to have strong production skills and weak marketing skills.
Focus on the Present
Small business managers tend to focus on current success which is the result of an overemphasis on selling.

21. Ways to Develop Extraordinary Services
Naming Names
Greet customers by name.
Custom Care
Know what your customers’ want.
Keeping in Touch
Communicate frequently with your customers.
Boo-Boo Research
Ask lost customers why they went elsewhere.

22. The Customer Service Commitment
Exceptional customer service provides a potential competitive edge opportunity to small firms.
Being attentive and respectful of customers leads to customer satisfaction and to success.
Superior levels of customer service are not easy to attain and are not cheap.

23. Evaluating Customer Service
Customer service problems are the main source of customer complaints.
Ways to address complaints:
Watch for problems
Talk to customers
Check up on the service
Evaluating customer service is essential of any business

24. Understanding the Customer
Key Points about Customers:
Customers are first and foremost human beings.
A customer’s satisfaction results from their interaction with the firm.
Understanding customers leads to more customer satisfaction and loyalty.

25. Simplified Model of Consumer Behaviour
Decision-Making Process
Sociological Factors
Culture
Social Class
Reference Groups
Opinion Leaders
Psychological Factors
Needs
Perceptions
Motivations
Attitudes
Information Search and Evaluation
Problem Recognition
Purchase Decision
Post-Purchase Decision
Figure 5.5

26. Stage 1 in Consumer Decision Making
Problem Recognition
The current state or a change in current state is not the ideal state of affairs due to:
Change in financial status
Change in household characteristics
Normal depletion of a resource
Product or service performance
Past decisions
Availability of products

27. Stage 2 in Consumer Decision Making
Information Search and Evaluation
Evaluation criteria
The features of a product or service that customers use to compare brands.
Evoked set
A group of brands that a customer is both aware of and willing to consider as a solution to a purchase problem.

28. Stages 3 & 4 in Consumer Decision Making
Purchase decision
Deciding how and where to make the purchase decision:
Store versus nonstore (catalogue, TV, and the Internet)
Post-purchase evaluation
Cognitive dissonance
The anxiety that occurs when a customer has second thoughts immediately following a purchase.

29. Post-Purchase Activities of Consumers
"This is the one I want."
Post-Purchase
Dissonance
"Did I buy the right one?"
Usage
"I found another use for…”
Product Disposal
"Can I trade this in?"
Positive Evaluation
“It works great."
Negative Evaluation
“Doesn't work well."
Consumer
Complaints
"I'm calling the store."
No Repurchase
Repurchase
Figure 5.6

30. Consumer Behaviour Model
Psychological Factors
Needs
Can be classified as physiological, social, psychological, and spiritual.
Consumers’ needs are never completely satisfied.
Difficulty occurs in determining which need can be satisfied by a specific product or service.
A service or product can satisfy more than one need.
…continued

31. Consumer Behaviour Model
Psychological Factors (continued)
Perceptions
The individual processes that give meaning to the stimuli confronting consumers.
Perceptual categorization
The process of grouping similar things so as to manage huge quantities of incoming stimuli.
Brand loyalty (a perceptual barrier) makes it difficult for competing brands to reach the loyal consumer.
…continued

32. Consumer Behaviour Model
Psychological Factors (continued)
Motivations
Goal-directed forces that organize and give direction to the tension caused by unsatisfied needs.
Provide the behavioural impetus for consumers to act to fulfill a need.
Marketing is motivation and does not create needs.
Attitudes
An enduring opinion based on knowledge, feeling, and behavioural tendency.
…continued

33. Consumer Behaviour Model
Sociological Factors
Culture
Behavioural pattern and values that characterize a group of consumers in a target market.
Social class
Societal divisions that have different levels of social prestige.
…continued

34. Consumer Behaviour Model
Sociological Factors
Reference groups
Groups that an individual allows to influence his or her behaviour.
Opinion leaders
A group leader who plays a key communications role.

35. Product Definition Product
A total bundle of satisfaction—a service, a good, or both—offered to consumers in an exchange transaction.
Includes both the main element (physical product or core service) and complementary components (features).

36. Service Marketing versus Goods Marketing
Pure Services Marketing
Pure Goods Marketing
Characteristics
Tangible goods
Occur at different times
More standardization
Less perishability
Intangible goods
Occur at the same time
Less standardization
Greater perishability
Tangibility
Production/ Consumption
Standardization
Perishability
Hybrid Services/ Goods Marketing
Figure 5.7

37. Product Strategy Product Strategy
The way the product component of the marketing mix is used to achieve a firm’s objectives.
Product item
The lowest common denominator in the product mix—the individual item
Product line
The sum of the related individual product items
Product mix consistency
The similarity of product lines in a product mix
…continued

38. Product Development Process
Product Strategy
Product Development Process
Idea accumulation
Increasing the number of ideas under consideration
Business analysis
Product’s relationship to the existing product line
Cost of development and introduction
Available personnel and facilities
Competition and market acceptance
…continued

39. Product Development Process
Product Strategy
Product Development Process
Total Product Development
Branding, packaging, pricing, and promotion
Product Testing
Proving the product design through consumer reaction to the product.

40. Product Life Cycle
Figure 5.8

41. The Product or Service Concept
Core features ensure:
The product and service of a firm meets the needs of the target customer.
Based on location, unique products, quality of service, store design, advertising or technology
Secondary features are non-critical in nature and may include attractive packaging, or an interesting window display.

42. Business Analysis Product’s relationship to existing line
Development Costs
Available Personnel and facilities
Competition and Market acceptance

43. Building the Total Product Offering
Branding
A verbal and/or symbolic means of identifying a product.
Rules for Naming a Product:
Select a name that is easy to pronounce and remember.
Choose a descriptive name.
Use a name that can have legal protection.
Select a name with promotional properties.
Select a name that can be used on several product lines of a similar nature.

44. Protecting a Product Offering
Trademark
An identifying feature used to distinguish a manufacturer’s product
Service Mark
A legal term indicating the exclusive right to use a brand to identify a service.
Vinnie’s
Villa™

45. Packaging, Labelling, and Warranties
Colour, design, and protection for the product.
Labelling
Shows the brand and informs the consumer.
Warranties
A promise that the product will perform at a certain level or meet certain standards.
Implied and written warranties
Policy considerations: Cost, service capability, competitive practices, customer perceptions, legal implications