MKT

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Feb 20, 2024

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Learning Objectives At the end of this exercise, you should be able to: ● Learning Objective 1.2 ● LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. ● Learning Objective 1.3 ● LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. ● Learning Objective 1.4 ● LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
Scenario Fitness industry startup Powerfully Fit is ready to launch two new products -- a power- generating workout shirt available in two styles and three colors and one self-charging fitness tracker -- available for men and women. Your boss, the VP of Marketing, has been highly involved in the new product development process and has hired you as the Marketing Manager responsible for a successful launch. The VP of Marketing tells you about Powerfully Fit's new products: "Powerfully Fit uses proprietary, cutting-edge nanotechnology to generate power from human motion. Powerfully Fit's motion-powered innovations include a highly flexible, moisture-wicking fabric that generates and stores energy within the material and a line of fitness trackers with integrated nano generators. The research and development
investment was significant; therefore, Powerfully Fit's products will be priced higher than the competition's products, which lack the ability to generate power." Your Job Your boss explains what she needs you to do: "Your job is to evaluate the market for fitness technology to uncover opportunities for our new products. Your focus should be on making recommendations where customer value can be created and firm goals achieved."
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"The fitness technology industry is full of well-established competitors. Powerfully Fit needs to break through the clutter to grab the consumer's attention. Keys to our successful product launch and profitability are creating customer value and developing loyal customers." Decision Point: Evaluating What Consumers Want The VP of Marketing gives you marketing research on three different consumer desires in the fitness technology market. As a first step, you need to prioritize the desires of actual and potential buyers of Powerfully Fit's products. In order for exchange to happen, Powerfully Fit must be able to satisfy these wants. VP of Marketing: “Keep in mind that our goal is to engage customers by creating exceptional customer value that results in a profitable customer relationship. The first step in creating customer value is understanding consumer needs and wants relative to our new products. Choose the market desire Powerfully Fit should focus on satisfying.” Select an option from the choices below and click Submit . Function: consumers want wearable technology with the latest and greatest functionality. Your Boss's Response to Choosing Function
You report back to your boss that you plan to focus on the desire for functionality. Your boss agrees with your analysis and recommendation: "Focusing on functionality is a good strategy for Powerfully Fit. We have invested heavily in nanotechnology research and development, and as a result our power- generating products are functionally superior to the competition's products. Now we need to identify the type of customer that would benefit the most from our product offerings." Decision Point: Choosing Your Target Market
The VP of Marketing directs you to begin looking at markets for Powerfully Fit's products: "Assuming that we focus on the desire for fitness technology functionality, what market do you think would benefit most from our offerings?" Select an option from the choices below and click Submit . Marathon Madness: This mid-size market works out daily. Workouts often include long distance runs. Quality, durable products are attractive to this market, and marathoners are willing to pay premium prices to get the latest tech. Your Boss's Response to Choosing a Target Market
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You meet with your boss to discuss your targeting decision. She supports your recommendation: "You did a nice job choosing a viable target market for our revolutionary fitness products. If our product launch is going to be successful, we need to ensure that we identify a reasonably large target market that contains consumers who value high-tech fitness wearables and are willing to pay premium prices." Decision Point: Crafting Your Value Proposition
Now that you have chosen which consumers to serve, you need to decide how best to serve them. Powerfully Fit's value proposition should capture the values and benefits it promises to deliver to its consumers to satisfy their needs and wants. Marketing analysts present you with three different value propositions to choose from. Given your target market selection, choose the value proposition that would be most effective. Select an option from the choices below and click Submit . "Lead the Pack, Create Power." — Powerfully Fit provides innovative fitness technologies that never run out of power.
Introducing the 4 Ps Deciding on the target market and value proposition are important steps in creating value for consumers and serve as the foundation for a solid consumer relationship. To deliver value to the consumer, firms construct integrated marketing programs for their target markets using the 4 Ps. Mentoring Moment: The 4 Ps After a firm understands a consumer's needs and wants and designs a value-driven marketing strategy, it must construct an integrated marketing program (often called the marketing mix) that delivers value to the consumer. The marketing mix is the marketer's toolbox, which contains the 4 Ps: Product, Price, Promotion, and Place. Keeping with the fitness theme, identify the marketing mix elements for a personal trainer. You must drag and drop one item at a time and then click Submit to see your results. After clicking Submit, you will be able to drag and drop another item, repeating the process.
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- **Product**: Package of six one-hour sessions with an ACSM Certified Personal Trainer, Kathy. - **Price**: Training sessions available for $50 per hour or $250 for a package of six one-hour sessions. - **Place**: Meeting with your personal trainer at the gym for the session scheduled at 10 AM on Friday. - **Promotion**: ACSM Certified Personal Trainer Kathy uses social media outlets like Facebook and Instagram to connect and communicate with existing and potential clients by highlighting their success stories. Decision Point: Creating Value Through Suppliers One of the key relationships Powerfully Fit must build is with its suppliers. Because power-generating nanotechnology is the most important feature in its product,
Powerfully Fit collects four proposals from manufacturers who want to produce Powerfully Fit's patented nanotechnology. Your boss asks you to evaluate these potential suppliers, each of which has a different competitive advantage. Keep Powerfully Fit's target market and value proposition in mind as you choose a supplier for the nanotechnology. Select an option from the choices below and click Submit . High Quality: This supplier produces the highest quality nano-processors available on the market today. Although the unit prices are on the high side, their reliability is the best. Your Boss's Response to Choosing High Quality
You meet with your boss to discuss your selection of the high-quality supplier. Your boss agrees with your decision: "Since we are targeting a market that values performance over price, it is critical that we provide our consumers with the best product possible. Our power-generating technology is what sets us apart from the competition, so we need to ensure that the nanotechnology works flawlessly." Decision Point: Choosing Where to Sell Your Product
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Another key relationship that Powerfully Fit must develop is with its intermediaries, the retailers and wholesalers who will make the products available for sale to the ultimate
consumers. Intermediaries can add value to the marketing system in many ways including product display, customer service, and product assortment. Keep Powerfully Fit's target market and value proposition in mind as you choose which intermediary you will recommend to carry Powerfully Fit's products. Select an option from the choices below and click Submit . Specialty Running Store: This small independent store carries a large selection of items, all related to the sport of running. This high-end store provides a high level of customer service and charges high prices. Customer Service
Providing customer service creates value for consumers not only at the point of sale, but also during the consumption process. Therefore, Powerfully Fit needs to determine how it will handle customer service for product support on its end. Because its products contain revolutionary power-generating technology, it expects that a significant number of consumers will have questions about the products after the purchase. Decision Point: How You Will Handle Customer Service Customer service creates value for consumers but is an expense to the firm that must be managed. Your boss asks for your recommendation as to how Powerfully Fit should provide customer service. Select an option from the choices below and click Submit . Limited Support: Customers can access customer service agents via phone and Internet during regular business hours, Monday through Friday. The cost to provide this level of service is moderate. Decision Point: Choosing Your Customer Relationship Strategy Creating value for the consumer is one important responsibility for marketers, but no less critical is the marketer's responsibility for creating value for the firm. One measure of value from a firm's perspective is whether the exchange was profitable to the firm. Loyal customers are often, but not always, the most profitable customers.
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Your marketing analysts have developed two different customer relationship strategies at your request. You need to choose the strategy that will maximize value for the firm. Select an option from the choices below and click Submit. New and Old: Powerfully Fit needs to focus on getting new customers as well as keeping its existing customers. Therefore, Powerfully Fit should split its marketing budget between new customer acquisition and existing customer retention. Final Feedback
You sit down with your manager one last time to review your decisions and recommendations: "Thank you for your analysis and recommendations for the launch of Powerfully Fit's new wearable technology products. We are very excited to launch these products commercially because we feel that our power-generating technology is a game changer for the industry. Because we kept value creation at the heart of our decision-making process, I am optimistic that consumers will be as enthusiastic about our new products as we are."
Learning Objectives At the end of this exercise, you should be able to: ● Learning Objective 2.3 ● LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. ● Learning Objective 2.4 ● LO 2.4: Describe the elements of a customer valuedriven marketing strategy and mix and the forces that influence them. Scenario In Fine Fettle is a natural foods brand that manufactures high-quality products using healthy, premium ingredients. In Fine Fettle, which translates to "In Good Heath,"
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produces foods that contain health-promoting ingredients like turmeric, apple cider vinegar, avocado oil, and kefir. In Fine Fettle's latest product line features turmeric, the spice that gives curry its yellow color. Your boss, the VP of Marketing, has developed a marketing strategy for the product line and now requires your assistance in developing the marketing mix. Background
The VP of Marketing brings you up to speed on In Fine Fettle's turmeric product line: "Our food scientists have created three turmeric-based products: meal replacement shakes, soups, and nutritional gummies. Turmeric has been shown to have many health benefits including reducing inflammation, improving brain function, and fighting depression." "We need to have a strong launch for this product line. Therefore, we must consider each element of the marketing mix carefully -- product, price, promotion, and place." "Your job is to develop a marketing mix plan that will create demand for turmeric-based products over the next year. Our goal is to target the growing market of consumers who are demanding healthier foods. These consumers understand the role food plays in health and wellness and are willing to pay more for functional foods. Keep in mind that food marketing is a competitive industry, and our success depends on a strong launch." Decision Point: Which 'P' You Should Start With To begin, you must decide which part of the marketing mix to focus on first: product, price, promotion, or place. Which is the best starting point for your marketing mix decisions? VP of Marketing: "Remember that each marketing mix decision will have implications for the remaining decisions. Think carefully about which part of the marketing mix to start with, because each one will affect the others." Select an option from the choices below and click Submit . Product
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Your Boss's Response to Your Choosing Product You report back to your boss that you plan to focus on the product. He agrees with your choice: "Before we can make effective pricing, promotion, and place decisions, we need to decide which turmeric product to bring to market." Mentoring Moment: The 4 Ps The marketing mix is one of the fundamental concepts in marketing today. Commonly known as the four Ps, the marketing mix is the marketer's strategic toolbox. The four Ps must work together to create value for the customer; therefore, these decisions should be seen as interdependent rather than independent. Each of the four Ps consists of many tactical tools and decisions. Review the four P tactics below and place them into the proper category. Note: Drag and drop each item to the correct P tactic. When you are done, click Submit to see your results.
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P Product Droppable P PRODUCT P Product Droppable P Price Droppable P
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PRICE P Price Droppable P Place Droppable P PLACE P Place Droppable
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P Promotion Droppable P PROMOTION P Promotion Droppable Product Correct. Brand name is an element of the product tactic. Price Correct. Seven days represents the payment period that the firm offers to its intermediary, which is an element of price.
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Place Correct. Transportation is part of place because transportation is a critical step necessary to get the product from a producer to a consumer. Promotion Correct. The salesforce is engaged in personal selling, which is an element of promotion because it is a form of communication. - Payment terms offered to grocery stores: **Place** - Employing a salesforce to engage with store managers: **Promotion** - Brand name selection for the avocado-based desserts: **Product** - Hiring McLane Trucking Company for transportation: **Place** These tactics relate to the different elements of the marketing mix: place, promotion, product, and place, respectively. Decision Point: Choosing Your Turmeric Product The VP of Marketing reviews the target market's profile with you: "Our current target market is consumers who want to eat healthy and live an active lifestyle. We are focusing on consumers ages 18-34. In their limited free time, this market enjoys going to the gym, spending time outdoors, and playing sports. Household sizes are typically small, usually 1-3 people." "These consumers are willing to pay higher prices for functional foods and convenience foods. They also value natural ingredients and authentic foods."
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"These consumers are highly connected, social, and mobile, relying on each other to make decisions on products. Their media consumption is primarily through Internet- enabled devices: 90% of millennials use smartphones and tablets daily. Less than 15% of millennials have a current newspaper subscription." Given the target market's profile and needs and wants, which product do you recommend that In Fine Fettle launch first? Select an option from the choices below and click Submit . Turmeric meal replacement shakes Your Boss's Response to the Product Choice You have decided to launch the turmeric product line with meal replacement shakes. Your boss agrees with your decision and suggests that you conduct a focus group with millennials in your target market to gather additional marketing research.
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Meal Replacement Shake Focus Group To help you fine tune the shake, you form a focus group consisting of healthy-lifestyle millennials and listen to what they have to say about what they value in a meal replacement shake. ● 14 of the 15 participants state that the most important attributes in a meal replacement shake are high-quality ingredients and nutritional value. ● 10 of 15 value the functional properties of their shake the most -- those ingredients that promote health or reduce disease. ● 6 of 15 state that taste is the most important attribute. Finally, you discuss packaging. ● The majority want packaging that provides convenience in storage and consumption. ● Millennials also want the next 'cool thing' and favor limited edition packaging for the feeling of prestige.
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● Because they are often on the go, they favor lightweight packaging that is both portable and durable. Decision Point: Choosing Your Shake's Formula Based on your focus group, you ask your product research team to propose different formulas for turmeric meal replacement shakes. Keeping in mind that all In Fine Fettle's products use ingredients that are of higher quality than the competition's, your food scientists offer you three different formulations. Choose the formula that would be most attractive to the target market. Select an option from the choices below and click Submit . - Has the second-highest turmeric content and anti-inflammatory properties
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- Made with superior quality ingredients - Taste rated as 7/10 Decision Point: Choosing Your Shake's Packaging You've selected the formula for the turmeric shake. You now need to decide on the best packaging style. Your design team has come up with three options for the pre-mixed shakes. Based on what you learned from your focus group, what is the best packaging style? Select an option from the choices below and click Submit . Drink pouch: 12-ounce drink pouches with screw tops are resealable, portable, and lightweight. The pouches are fairly inexpensive to purchase. Decision Point: Choosing Your Shake's Price Now that you've selected the product strategies for the shake, you need to decide on a pricing strategy. The meal replacement market is very crowded with competitors. Therefore, In Fine Fettle must consider the competition's prices when setting the price for its new product. A market analysis reveals that most ready-made meal replacement shakes sell for between $2 and $4 per shake.
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Keep your target market and product decisions in mind as you consider your pricing options. Select an option from the choices below and click Submit . Above-market: In Fine Fettle will offer its turmeric shake for $4.50 per shake, which is above the market average. Manager Response to Above-Market Pricing You chose the above-market pricing strategy for In Fine Fettle's turmeric shake. You meet with your boss to discuss your decision, and he agrees with your recommendation for the turmeric shake's price: "Although above-market pricing can be challenging in a competitive marketplace, our high-quality ingredients and market demand justify your recommendation. Good job."
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Decision Point: Choosing Your Shake's Promotional Strategy After discussions with your boss, you decide to focus your attention on advertising, one of the key promotional elements. Choose the type of media that you feel is the best channel for your advertising, keeping your target market and prior marketing mix decisions in mind. Select an option from the choices below and click Submit .
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Electronic media: Utilize In Fine Fettle's website and social media to engage consumers in a conversation. Costs are still relatively low for this media-rich interactive channel. Decision Point: Choosing Your Shake's Place Products must be available to consumers when and where they want them. Retailers and wholesalers act as the intermediary between manufacturers and consumers and provide services to both manufacturers and consumers. In Fine Fettle is considering three different options for selling its new product: warehouse clubs, supermarkets, and high-end health food markets. Keep your target market, product, price, and promotion decisions in mind as you consider your place options. Select an option from the choices below and click Submit .
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High-end health food markets: High-end health food markets carry only health food products in a boutique-like setting. These markets have knowledgeable customer service associates available in every department. On average, product prices are relatively high. Learning Objectives At the end of this exercise, you should be able to: ● Learning Objective 3.1 ● LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers.
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Scenario As the Marketing Manager at Gerlach Publishing, a company that exclusively publishes textbooks for Colorado public schools, you are responsible for researching and monitoring the company’s macroenvironment and proposing necessary changes in its marketing strategy. Your key responsibilities include identifying which changes in the macroenvironment will affect Gerlach's business the most, estimating what the likely effects of the macroenvironmental changes will be, and suggesting how Gerlach should respond to these changes. In the past, the macroenvironment for Gerlach has been fairly stable. However, information you’ve received from your research team shows that this is starting to change. The first three reports deal with long-term changes in the macroenvironment. Review the reports before you decide which next steps to recommend to your supervisor, the Vice President of Marketing. Mentoring Moment: Macroenvironment vs. Microenvironment A company's environment consists of both a microenvironment and a macroenvironment — forces outside of marketing that affect a marketing manager's decision making. The microenvironment includes forces close to a company, whereas the macroenvironment consists of the larger societal factors that affect the microenvironment and the company. Classify the following six environmental factors as an aspect of either the
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microenvironment or the macroenvironment. Drag and drop each card into the appropriate category and then click Submit. Competitors: Gerlach faces increasing competition from firms that produce ebooks only. Bring your tech: More schools are encouraging their students to bring smartphones and tablets to class, which allows learners to find information online rather than in textbooks. Finance department: Financial analysts suggest that a 10% cut in expenses is necessary next year to increase Gerlach's return on sales. GenX: GenX's offspring are beginning to enter secondary schools. This generation demands a tech-rich experience for its children. Economic downturn: As the economy slows, fewer families can afford to send their kids to private school, resulting in increased public school enrollments. Media: The low ranking of the Colorado school system is getting a lot of coverage in mainstream media and social media. Apologies for the confusion earlier. Let me reclassify the environmental factors based on the microenvironment and macroenvironment: **Microenvironment:**
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- Competitors: Gerlach faces increasing competition from firms that produce ebooks only. - Finance department: Financial analysts suggest that a 10% cut in expenses is necessary next year to increase Gerlach's return on sales. - Media: The low ranking of the Colorado school system is getting a lot of coverage in mainstream media and social media. **Macroenvironment:** - GenX: GenX's offspring are beginning to enter secondary schools. This generation demands a tech-rich experience for its children. - Economic downturn: As the economy slows, fewer families can afford to send their kids to private school, resulting in increased public school enrollments. - Bring your tech: More schools are encouraging their students to bring smartphones and tablets to class, which allows learners to find information online rather than in textbooks. Demographic Report ● Historically, the number of school-age children in Colorado increased at a gradual rate each year. ● Now, the population as a whole is aging, and the number of school-aged children has begun to decline and is expected to continue declining in the next decade. ● The percentage of students coming from non-English-speaking homes recently reached 14% in Colorado. This represents exponential growth in the number of English language learners.
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● More growth is expected in the upcoming years. Natural Environment Report Gerlach currently buys paper from local suppliers to print its textbooks. Deforestation has resulted in a shortage of trees available for logging. Many of the remaining forests are coming under increasing protection from both environmentalists and governments. Recently companies have begun producing more paper from recycled materials to reduce their consumption of old growth forests, but paper produced from recycled materials costs approximately 8% more than traditionally manufactured paper. Cultural Report ● The Colorado public school system is increasingly being seen as an outdated institution overly focused on standardized testing rather than true learning. ● From kindergarten through 12th grade, an average public school student will take 112 standardized tests. As a result, parents are seeking other educational options. ● The number of students being homeschooled in Colorado has been increasing by about 2% annually. ● The homeschool market currently does not buy from Gerlach. Decision Point: What Should You Address First?
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After reviewing the reports of long-term changes in Gerlach’s demographic environment, natural environment, and cultural environment, you must pick the element that you think Gerlach should address first. Select an option from the choices below and click Submit . Cultural environment Decision Point: Effects of Cultural Changes Now that you have selected the cultural environment, you must predict what the effects of these changes on Gerlach’s microenvironment might be. Select the outcome you see as most likely.
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Select an option from the choices below and click Submit . These changes might lead to a decreased public school population as parents move their children into other options. Decision Point: Responding to Cultural Changes You evaluate what effect cultural changes might have on Gerlach’s microenvironment. You call a meeting with your marketing analysts to discuss the situation. You give them your prediction that distrust of public schools will lead to a decreased school population, and ask for their recommendations as to how Gerlach should respond. Select an option from the choices below and click Submit . We should create and market a homeschooling program. Cultural Changes: Results
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You take your proposal to your supervisor. She thinks that your analysis and recommendations are flawed. VP of Marketing: “I think that if we followed your plan, in the year 2030 Gerlach would be struggling. We would have gone too far in trying to increase our potential market. Social engineering is not our business; textbook publishing is. Keep this experience in mind as you look at the short-term changes to Gerlach’s macroenvironment.” Decision Point: What Else Will You Address? You chose to explore the cultural environment’s changes to Gerlach’s business. But the demographic and natural environments will have effects as well. From the choices below, choose the best responses to these changes. Check the two responses you think are most appropriate, and then click Submit .
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Position Gerlach as the environmentally friendly company by emphasizing its electronic products. Make products for the English language learner market to make up for the reduced overall market share. Short-Term Changes The VP of Marketing tells you, “Now that you’ve analyzed the long-term marketing environment, let’s take a look at the short-term changes that will affect Gerlach. Next month, the state of Colorado will be choosing science textbooks for grades 3 through 12. We’ve already printed these books, and need to make a return on our investment by selling as many as possible. I’ve sent a report to you concerning changes in the macroenvironment for our science books. Look them over, and decide which you think will affect us the most.” Change Report
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● A wealthy scientist has left a large grant to the Colorado public schools to be used only for science education. This grant will double the money available for the state to purchase science textbooks and materials. ● A technology company has just come out with a laptop computer especially designed for students’ use in a classroom. Sturdy and cheap, it allows students to access online editions of their textbooks, use tutorials, and connect to their classroom’s smart boards, as well as other functionalities. It is being advertised as the “future of learning.” ● A new but highly influential member of the school board (which chooses Colorado’s textbooks) is proposing a radical overhaul of the way science is taught in the state by implementing experiential learning. She proposes that science be taught not through books but only through a new, experimental “hands-on” style: experiments, field trips, etc. Her popularity and influence make it likely this measure will pass next week, even though most science teachers oppose the plan. Decision Point: How Technological Changes Will Affect Gerlach
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Now that you have selected the technological environment as the one most likely to affect your business in the short term, you must determine what the effects of these changes might be on Gerlach’s microenvironment. Choose the outcome you see as being most likely. Select an option from the choices below and click Submit . The school board will look for textbooks that have a strong package of supporting educational technology.
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Decision Point: How Will You Respond to Technological Changes? You call a meeting with your marketing analysts to discuss the situation. You give them your prediction that the school board will look for textbooks with supporting technology programs, and ask for their recommendations as to how Gerlach should respond. Select an option from the choices below and click Submit. We should emphasize our technology offerings in our textbook presentations to the school board. Technological Changes: Results You take your concerns and your proposal to the VP of Marketing. She agrees with your recommendation. Gerlach emphasizes its technology offerings in its presentations to the school board, and makes successful sales and a large profit. The management of Gerlach is pleased, and you get a raise. Decision Point: How Will You Respond to Political Changes? Your original choice as to which changing macroenvironment would most affect Gerlach was flawed. The political environment would actually have the greatest
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effect. Given what you’ve learned from your previous experiences, decide how you think Gerlach should respond to the changing political environment. Select an option from the choices below and click Submit. Gerlach should aggressively lobby against the “hands-on” proposal. Learning Objectives At the end of this exercise, you should be able to: ● Learning Objective 4.2
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● LO 4.2: Define the marketing information system and discuss its parts. ● Learning Objective 4.3 ● LO 4.3: Outline the role of marketing research and the steps in the marketing research process. ● Learning Objective 4.4 ● LO 4.4: Explain how companies analyze and use marketing information. Scenario eCompeteUSA is a competitive video gaming tournament company headquartered in Palo Alto, California. Video game tournaments are organized competitions where multiplayer video games are played for cash prizes of up to $500,000. Gamers and fans are flocking to tournaments both in-person and virtually. Recently, an eSports tournament housed at the Staples Center sold out in under an hour, which surprised even industry insiders.
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eSports is gaining popularity worldwide with audience sizes exceeding 443 million. The industry is currently valued at over $1 billion, and many predict that the value will top $3 billion by 2025. The industry is currently dominated by men (85% men, 15% women) and young people (60% of viewers are under 35 years old). Currently, eCompeteUSA has a relatively small share of the market, but the company feels there are significant opportunities for growth and profitability. You have recently been hired as a research analyst reporting to the VP of Marketing, whose task is to help eCompeteUSA grow its business. Decision Point: Your First Step You consider the situation, roll up your sleeves, and get to work. What should be the first step you take in obtaining the information you need to help eCompeteUSA move up in the eSports industry? Select an option from the choices below and click Submit. Set up a meeting with the VP of Marketing and other involved parties to define the problem that needs to be solved. Decision Point: Preparing for Your First Meeting
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You go to your in-house database, which houses eCompeteUSA's domestic and international sales as well as revenue composition over the past 10 years. You examine this data and apply some statistical analysis in order to help decide where to go next. What should you present at the next meeting to put your investigation on the right path? Select an option from the choices below and click Submit. After further consideration, you decide to step back and work on defining the research problem.
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Present data on eCompeteUSA's current revenue streams, broken down by source with sales trend extrapolations. Present the trends in the growth of the U.S. eSports market, because the majority of eCompeteUSA's sales are domestic. Feedback on the First Stage Before the meeting, the VP of Marketing drops by your office to check on your progress. You tell her what you plan to present at the meeting. She advises you to reconsider: “The first stage of the market research process is to define the problem and research objectives. You need to do that first. It doesn’t do any good to come up with a solution to a problem that you haven't yet defined.” Decision Point: Defining the Problem You hold a meeting with the VP of Marketing and others to define the main focus of the research. Which of the following questions would best serve eCompeteUSA at this time?
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Select an option from the choices below and click Submit. Can we increase eCompeteUSA's market share by targeting nontraditional niche (small) audiences? Decision Point: Choosing Your Research Objectives After defining the problem that eCompeteUSA wants solved, you need to determine what type of research objective to pursue. What type of research objective would be most appropriate given eCompeteUSA's research problem? Select an option from the choices below and click Submit. Descriptive research Feedback on the Research Problem In the next department meeting, you discuss your recommendations for the research problem and objective, which leads to a lively discussion. The VP finally weighs in, "I think your research problem and objective don't really address our firm's need because they are too narrowly focused and don't investigate
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enough opportunities to expand our market. We need to look for ways to increase our market share by targeting nontraditional niche audiences using descriptive research." Mentoring Moment: Research Types Defining the research problem and research objectives is often regarded as the most difficult step in the marketing research project. Although this step is challenging, it is critically important because it is impossible to solve problems that have not been clearly defined. With the research problem defined, researchers must decide on the type of research they will pursue to generate the data they need. The three types of research (also called objectives) are exploratory, descriptive, and causal. Drag and drop the problem description into the type of research that would most likely be used to generate the appropriate data. When you’ve classified all the descriptions, click Submit. High heels: Sophia wants to know if she can increase the sales of shoes in her boutique by moving the display from the back of the store to next to the registers. Thirsty athletes: Greg needs to understand how the consumption of sports drinks varies by geographical region. Price hike: Wei wants to understand what would happen to his sales if he increased the cost of his app from $0.99 to $1.99.
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Hypotheses help: Joe's research problem is still not clearly defined, and he needs to generate some hypotheses for his research. Yoga love: Gema wants to open a yoga studio in her hometown, but first she wants to understand how her hometown's residents feel about practicing yoga. Distinctive coffee: Sierra wants to expand her menu by offering specialty coffees and needs to come up with ideas for creative flavors. - **High heels:** Exploratory - **Thirsty athletes:** Descriptive - **Price hike:** Causal - **Hypotheses help:** Exploratory - **Yoga love:** Descriptive - **Distinctive coffee:** Exploratory Decision Point: Choosing Your Research Topic You are now tasked with developing a research plan that would best support the research objectives you have just chosen. You consider your options and narrow them down to the following three. Which option will you select? Select an option from the choices below and click Submit. Research the attitudes that U.S. women and consumers over 35 have towards the eSports industry.
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Decision Point: Choosing Your Secondary Sources Having decided what you want to research, you now must decide what sources to use to gather your data. The following secondary resources are available. Which will you choose to use first? Bear in mind that using in-house databases costs very little, whereas using a commercial database will incur considerable expenses. Select an option from the choices below and click Submit. Use in-house year purchase history data from the past 10 years, which contains consumer profiles. Decision Point: Do You Want Primary Sources? Having decided what secondary sources you will use, you now need to decide whether you elect to use any primary sources for obtaining data. This will involve setting up targeted research to answer the questions that you need answered. Note that this research will be carried out in-house by the market research department, but will be quite expensive. Select an option from the choices below and click Submit. You will use the research department to gather attitudinal data relevant to the research problem and objectives you have set by conducting surveys.
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Decision Point: Choosing Your Primary Sources Having decided to use primary sources to obtain data, you need to decide what sort of primary sources you will use. The following three options are suggested by the researchers within the market research department. Choose the one you think best suits your research objectives. Select an option from the choices below and click Submit. Performing a survey that focuses on consumer knowledge, attitudes, and preferences towards the eSports industry. Decision Point: Choosing Your Data Collection Method Having chosen to use a survey to obtain descriptive data on eSports attitudes, you now need to decide how to contact consumers. You want to gather a large quantity of data fairly quickly, while not incurring high costs. How will you collect this data? Select an option from the choices below and click Submit. Telephone interviews
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Decision Point: Choosing an Appropriate Question When writing the questionnaire you decide to include a question that will allow you to classify consumers by consumption level. Which of the following questions should you include in the survey in order to accurately discover this information? Select an option from the choices below and click Submit. Would you classify yourself as a heavy, moderate, light, or non-consumer of eSports memorabilia and tickets?
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Decision Point: Presenting Your Findings You have worked with the research department to implement the research plan. The team has gathered the data, checked it for accuracy, and coded it for analysis. How should you present your findings so that the VP of Marketing can best utilize them? Select an option from the choices below and click Submit. Present only those important insights and findings that you think will be useful in the major decisions made by management. Final Feedback
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After your presentation, the VP calls you into her office to review your work: "The marketing research process is a complex one. Identifying the correct research problem and objectives early in the process is imperative for a successful outcome. For eCompeteUSA to increase its market share, we should investigate opportunities in the nontraditional niche markets. Your research provided us with insights into how these markets feel about the eSports industry and eCompeteUSA. Given what we have learned, I am optimistic that we can increase our share by targeting underrepresented women consumers with a unique marketing mix." Learning Objectives
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At the end of this exercise, you should be able to: ● Learning Objective 5.1 ● LO 5.1: Understand the consumer market and the major factors that influence consumer buyer behavior. ● Learning Objective 5.2 ● LO 5.2: Identify and discuss the stages of the buyer decision process. Scenario Fitness industry start-up Powerfully Fit is ready to launch its new product into the crowded fitness apparel market. Its new product is a power-generating workout shirt. The VP of Marketing has been highly involved in the new product development process
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and has hired you as the Marketing Manager responsible for analyzing the buyer decision process (also called the consumer decision-making process) and making strategic recommendations that will optimize the shirt's sales. Your Job Your boss, the VP of Marketing, tells you about Powerfully Fit's new product: “Powerfully Fit uses proprietary, cutting-edge nanotechnology to generate power from human motion. The nanotechnology uses friction to generate power, which is then stored in the textile-based battery. The battery stores enough energy to charge a cellular phone in 15 minutes after 1 hour of wear." “At $69.95, Powerfully Fit's PowerShirt will cost twice what typical high-end workout shirts cost, but keep in mind that the competition's shirts lack the ability to generate and store power. Styles are currently limited to two cuts and three colors (white, black, and gray) for both men and women in sizes XS-XL." Your boss continues: “Your job is to evaluate each stage of the buyer decision process looking for opportunities to satisfy consumers' needs. As you gain a better understanding of what the buyers' decision process for our new product looks like, you need to recommend marketing actions that will move consumers from recognizing a need to becoming loyal customers." Decision Point: PowerShirt's Differential Advantage
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Now that you have been briefed on the PowerShirt's features, you need to identify which attribute of the PowerShirt is its most valuable differential advantage. Keep in mind that the differential advantage is the feature that sets it apart from the competition and makes the product desirable to the target market. VP of Marketing: “The sports apparel market is large and growing -- nearly $100 billion in sales in the United States alone -- and is crowded with big-name competitors with huge product lines offering hundreds of shirt styles and colors. To succeed in the sports apparel market, Powerfully Fit needs to stand out from the rest.” Which of the following is the PowerShirt's differential advantage? Select an option from the choices below and click Submit. Power Your Boss's Response to Your Choice of Differential Advantage
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You report back to your boss that you plan to focus on the power attribute. Your boss agrees with your selection: “Identifying the product's differential advantage is an important step towards understanding consumer behavior. PowerShirt's power-generating ability is what sets it apart from the competition. We should focus on this feature as we design our marketing program. But let's look at our target markets first.” Decision Point: Your Target Markets The VP of Marketing provides you with three potential target markets' profiles: Fitness Fanatics, Wanna-Be Fits, and Frugal Fitness. Potential Target Markets Fitness Fanatics Wanna-Be Fits Frugal Fitness Segment Size Small Medium Large Fitness Importance Very high Moderate to low Low to very low
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Price Sensitivity for Fitness Apparel Low Medium High Education Level High Well educated Less educated Median Income $85,000 $61,000 $37,000 Age Range 72% are 20-34 years old 70% are 30-45 years old 58% are 45-60 years old Family Status 65% single 69% married w/1 or 2 young kids 62% married w/2-3 older/grown kids Other Significant discretionary income, shop specialty stores Limited discretionary income, shop sales Minimal discretionary income, shop discount stores Given the three potential target markets' different profiles, which target market do you recommend to be PowerShirt's primary target market? Select an option from the choices below and click Submit. Fitness Fanatics Your Boss's Response to Your Target Market Choice
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You have decided to target Fitness Fanatics first. Your boss agrees with your decision: "Even though the size of this segment is smaller, these consumers will be the most willing to pay the high price for the PowerShirt. Additionally, long hours at the gym mean more power for the consumer. Now we need to gain a better understanding of our target market using market research." Mentoring Moment: Buyer Decision Process Now that you have identified your product's differential advantage and your target market, you need to turn your attention to the buyer decision process. The buyer decision process begins with need recognition and ends with post-purchase behavior. Review each of the following situations from the mobile phone industry and then drag it to the correct stage in the buying process. Drag each situation and drop it into the correct category. When all the situations have been categorized, click Submit.
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Once Jackie gets into the office, she asks her coworkers what they like and dislike about their mobile phones. After work, Jackie visits her cellular provider to purchase her new phone and update her mobile contract. On her way into work this morning, Jackie dropped her mobile phone and now it will not turn on. Using information from her coworkers and manufacturer websites, Jackie creates a spreadsheet that ranks each phone on price, reliability, and camera quality. Jackie is thrilled with her new phone, especially the camera quality, and tells everyone at work that they should upgrade, too. Need Recognition: - On her way into work this morning, Jackie dropped her mobile phone and now it will not turn on. Information Search: - Once Jackie gets into the office, she asks her coworkers what they like and dislike about their mobile phones. Evaluation of Alternatives: - Using information from her coworkers and manufacturer websites, Jackie creates a spreadsheet that ranks each phone on price, reliability, and camera quality.
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Purchase Decision: - After work, Jackie visits her cellular provider to purchase her new phone and update her mobile contract. Post-purchase Behavior: - Jackie is thrilled with her new phone, especially the camera quality, and tells everyone at work that they should upgrade, too. Fitness Fanatics' Profile To help you understand Fitness Fanatics' media habits and sports apparel buying behavior, you form a focus group consisting of male and female target group members. Key findings are provided in a report. REPORT Fitness Fanatics’ Media Habits: Key Findings ● Media consumption: ○ 3 1/2 hours per day spent browsing the Internet
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○ 3 1/4 hours per day spent on social media ○ 2 hours per day watching TV ○ 1 1/4 hours per day listening to radio ○ 1/2 hour per day reading print media (newspaper/magazines) ● Sports apparel buying habits: ○ 95% seek recommendations from peers prior to purchase ○ 79% research products on manufacturers' websites ○ 72% purchase apparel seen on/endorsed by professional athletes ○ 61% research products in-store ○ 39% seek recommendations from retail sales associates ○ 31% consider price a key decision factor ○ 24% research products in print media ● There was consensus within the group that superior function was the most important attribute sought from athletic apparel. ● Comfort, durability, moisture control, storage, and style were top features sought. Price was not a deciding factor for the majority of the group. ● When they were shown PowerShirt's power-generating ability, they were very receptive. 85% of target stated that dead cell phones/MP3 player batteries had compromised a workout in the past due to inability to access music and fitness apps. Decision Point: Which Ad Should You Run? Using what you have learned in your focus group, you begin your analysis of the buyer decision process. In the first stage of the process, you need to show consumers that their existing state does not equal their desired state. Which advertising strategy would be optimal for the need (problem) recognition stage? Select an option from the choices below and click Submit.
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Television ad on a fitness training television channel showing a consumer charging their phone using PowerShirt Decision Point: Where to Provide Your Information You've selected the advertising program to begin need stimulation for the PowerShirt. Once the target market recognizes a need for the PowerShirt, they will need to gather more information about it. Your responsibility is to make sure that this information is readily available to the potential consumer. You now need to decide on a marketing strategy that will put out information when and where consumers will search for it. Select two options from the choices below, and then click Submit.
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Social media websites: Create PowerShirt accounts on leading social media sites highlighting product innovation and superiority PowerfullyFit.com website: Create dedicated PowerShirt pages housed on the firm's website complete with images, video, and text Mentoring Moment: Involvement Not every purchase requires consumers to move sequentially through each of the five stages of the buyer decision process. Some purchases are arrived at much more quickly, allowing consumers to pass quickly through some of the stages or even skip a stage entirely. Involvement reflects the amount of importance the consumer feels the product has. Involvement also captures the concept of perceived risk of a negative outcome -- financial, social, or even personal welfare. Is this product expensive? What will my friends think of this product? Could this product hurt me? As the level of perceived risk increases, so does the consumer's level of involvement, resulting in a longer, slower, more methodical decision-making process. Classify the following products as either high involvement or low involvement from the Fitness Fanatic target market's perspective. After you have classified all the products, you can click Submit.
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- **High involvement:** - Running shoes: Fitness Fanatics highly value their workout gear, and running shoes play a crucial role in their exercise routine. The selection of proper footwear involves considerations of comfort, durability, performance, and injury prevention, making it a high involvement item. - Automobile: While cars might be important for daily life, they are not directly associated with fitness or sports activities for Fitness Fanatics. Therefore, for this particular target market, automobiles might be seen as a low involvement purchase. - **Low involvement:** - Oatmeal: Though important for fitness enthusiasts as a healthy dietary option, oatmeal is typically perceived as a low involvement product. While they might care about its nutritional value, the decision-making process for purchasing oatmeal might not involve deep consideration or perceived risk. - Paper towels: These items, generally used for cleaning purposes, tend to be low involvement products for most consumers. They are often bought based on convenience, price, and basic functionality without much deliberation. Decision Point: Choosing the Best Message In the evaluation of alternatives stage, consumers focus on key product attributes as they review and rank alternative brands, eliminating brands that do not deliver on the most important features. As a marketing manager, you need to ensure that your communication plan focuses the consumer's attention on your product's strengths.
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Keep your target market's desires and PowerShirt's differential advantage in mind as you consider your messaging strategy for your integrated marketing communication plan. Select an option from the choices below and click Submit. PowerOn! PowerShirt keeps you charged all day long. Your Boss's Response to Your Message You chose PowerOn! as your messaging strategy. You meet with your boss to discuss your decision, and he agrees with your message focus: "Our target market values functionality, and the attribute on which we excel is power generation. This should be our primary message. Good job!"
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Decision Point: Persuading Your Customers to Purchase After discussions with your boss, you decide to focus your integrated marketing communications around the PowerOn! message. As consumers approach the decision point, you must address those factors that affect purchase intent and ultimately purchase. Given what you know about the target market, which of the following three factors is most likely to increase purchase intent? Select an option from the choices below and click Submit. Word of mouth: Provide free sample PowerShirts to key opinion leaders in large running clubs and gyms to generate positive word of mouth. Decision Point: Maintaining Your Customers' Loyalty You meet with your boss to discuss your progress: "I am pleased with the progress you have made in your evaluation of the first four steps of the buyer decision process. It is critical that we not only have an understanding of the process from the consumer's perspective, but also use this understanding to guide our marketing strategy and decision making." "Our work does not stop when the consumer purchases the PowerShirt. To reach our goals, we need to make sure we are developing loyal customers who will make purchases in the future. Reducing cognitive dissonance is one strategy for building
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customer loyalty. Our analysts have recommended three different strategies. Which one do you recommend we implement first?" Select an option from the choices below and click Submit. Quality product/instructions: Manufacture with superior components, provide sales training to retail associates, and provide detailed use instructions for consumers. Final Feedback The Vice President calls you into his office to summarize your buyer decision process analysis for PowerShirt and your marketing action recommendations:
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"The PowerShirt is a high-involvement purchase for the Fitness Fanatics segment, not only because it is a new product in the market, but also because these consumers really care about their fitness purchases." "You did a good job analyzing the buyer decision process and have made valuable marketing strategy recommendations for each stage. I look forward to developing a relationship with the Fitness Fanatics segment by developing superior products and exceeding customer expectations." Learning Objectives At the end of this exercise, you should be able to: ● Learning Objective 6.2 ● LO 6.2: List and discuss the major bases for segmenting consumer and business markets. ● Learning Objective 6.3 ● LO 6.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. ● Learning Objective 6.4
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● LO 6.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Scenario Sauber, Inc. is a German consumer electronics company that manufactures large appliances for the home including washing machines, dryers, dishwashers, ovens, and stoves. It currently serves the European market with its sleekly designed, high-efficiency appliances. Sauber is currently exploring opportunities for an expansion to the United States. You have been hired as the Marketing Manager responsible for the U.S. market expansion. Your boss, the VP of Marketing, informs you that the product Sauber will first introduce to the U.S. market is its All-in-One washer-dryer combination appliance, which is its top seller in the European market. Currently, Sauber has 47% of the European washer-dryer market, which is 12% more than its closest competitor. Decision Point: Segmentation As Marketing Manager, before you can identify the meaningful segmentation variables, you need to know a little more about the Sauber washer-dryer. The All-in-One washer- dryer combo does it all in one machine -- without taking up a lot of space. Just place the dirty laundry in the front-loading machine and when you return, it's washed and dried. Even more impressive is its ability to clean; whites were 20% cleaner with 15% fewer stains as compared to competing models. The machine measures just 22 inches across and 34 inches high, which is 10% smaller than competing models. However, this means
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it holds a smaller load by U.S. standards. And unlike traditional dryers, which require outside exhaust venting, the All-in-One is ventless. Sauber's washer-dryer is available in four stylish finishes: stainless steel, pearl white, gunite gray, and obsidian. Although the cycle time is 20% longer than average, the machine runs quietly and offers 10 wash, 5 spin, and 8 dry options. A programmable timer allows users to program a wash up to 23 hours in advance. The manufacturer's suggested retail price is $1499, which is more expensive than U.S. brands' washer- dryer combinations, which average around $1000. Choose the two variables that would be most predictive of purchase intent for the All-in- One washer-dryer. Select two options from the choices below, and then click Submit . Household size Dwelling type: apartment, condo, or house? The VP's Reaction to Your Segmentation Strategy
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You meet with the VP of Marketing to discuss your segmentation strategy, and she agrees with your recommendation: "Household size and dwelling type are the best segmentation variables to use for the Sauber washer-dryer market because household size affects laundry volume and dwelling type determines the need for a vented or ventless dryer. Keep these variables in mind as you identify your target market." Decision Point: Your Next Step Now that you have your primary segmentation variables identified, what should your next step be? Select an option from the choices below and click Submit . Identify the market segments to target. The VP's Response to Your Next Step
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In the Monday marketing meeting, you discuss your plans for the next step. The VP of Marketing agrees with your plan: “I agree that we need to define our target market first. Before we can develop marketing campaigns or positioning strategies, we need to know with whom we are speaking -- our target market.” Decision Point: Target Market: Household Size With the segmentation variables identified, the VP of Marketing asks you to think about what the target market would look like for the Sauber washer-dryer combo. The VP continues: "I need you to analyze three key demographic segmentation variables and make recommendations for each. As you make your recommendations, keep the washer-dryer's key attributes in mind. We'll begin with household size." Select an option from the choices below and click Submit . Small households: 1-2 members
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The VP's Reaction to Your Choice of Household Size When you meet with your manager the next day, she asks for your thoughts on household size segmentation. When you tell her your plan to target small households, she agrees: "U.S. consumers are used to laundry machines that can handle loads almost twice the amount that our washer-dryer combo can clean. Small households typically generate less laundry than large or medium households, and therefore could adapt to smaller load size more easily. I agree that we will increase our probability of success if we target small households." Decision Point: Target Market: Dwelling Type Now you need to think about the dwelling type that your target consumers are most likely to live in. As you make your selection, keep the following descriptions in mind: ● The average American house is 2600 square feet, with 85% having washer and dryer hookups. ● The average American apartment is 940 square feet, with 67% having washer and dryer hookups. ● The average American condominium is 1750 square feet, with 91% having washer and dryer hookups. Select an option from the choices below and click Submit .
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Apartment Your Department's Reaction to Your Choice of Dwelling At the next department meeting, dwelling types is an agenda item. You recommend targeting consumers who live in apartments, and the department agrees. "Consumers who live in apartments have limited space, which makes our All-in-One machine attractive to this segment. Additionally, because many apartments lack laundry hookups, our ventless dryer is an economical option for this segment." Decision Point: Target Market: Income The last segmentation variable you need to consider is income. You could target consumers with high incomes (greater than $100,000) or medium incomes (between $40,000 and $99,999). Sauber eliminated consumers with incomes less than $40,000 from consideration because not enough of these consumers have the ability to purchase their own laundry machines.
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Select an option from the choices below and click Submit . High income The VP's Reaction to Your Choice of Income The VP stops by your office to discuss your last targeting decision: "Premium-priced products are more successful when targeted at a more affluent segment. I agree that Sauber should focus on high-income consumers in the U.S. market." Mentoring Moment: Segmentation The segmentation process allows marketers to divide large, diverse markets into smaller, more homogeneous segments. Four basic types of variables are used to segment markets: geographic, demographic, psychographic, and behavioral. Drag each variable description and drop it into the correct segmentation variable type.
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Life cycle: Louis and Theresa have a full house of kids living at home ages 15, 12, and 10. Occupation: Tyrese is an engineer who works full time for a government contractor. Occasion: George only buys his wife flowers once a year. She gets a dozen red roses every Valentine's Day. Usage rate: Erin loves lattes and visits her local coffee shop on a daily basis to get her fix. Personality: Phil is outgoing, gregarious, and always up for an adventure. Lifestyle: Ellie is interested in fine arts and fashion, enjoys traveling overseas, and participates in a variety of outdoor adventure activities. - Demographic: - Life cycle: Louis and Theresa have a full house of kids living at home ages 15, 12, and 10. - Occupation: Tyrese is an engineer who works full time for a government contractor. - Psychographic: - Personality: Phil is outgoing, gregarious, and always up for an adventure.
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- Lifestyle: Ellie is interested in fine arts and fashion, enjoys traveling overseas, and participates in a variety of outdoor adventure activities. - Behavioral: - Occasion: George only buys his wife flowers once a year. She gets a dozen red roses every Valentine's Day. - Usage rate: Erin loves lattes and visits her local coffee shop on a daily basis to get her fix. The VP's Feedback on Your Target Lifestyle Your boss calls you into her office to discuss your psychographic targeting strategy: "I'm sorry to say I don't agree with your recommendation to target consumers who live a homebody lifestyle. These consumers really are not time-pressed and would probably be home often enough to move their laundry from the washer to the dryer. I think we need to find a segment that puts a premium on their time. In my opinion, either the social butterfly or the work-a-holic segment would benefit more from the washer-dryer
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combo than the homebody segment." Decision Point: Target Market: Lifestyle Consumer lifestyles are also an important factor in market segmentation and targeting. Review the following three consumer lifestyles and identify the one that would find the greatest value in the All-in-One washer-dryer. ● Social butterfly: With large social circles and lots of activities, these consumers are always on the go. Typically young, these consumers move from work, to the gym, to a night on the town nearly every night. A quick change of clothes is all they need to keep the party going. ● Work-a-holic: With a high-pressure job and the CEO's office in sight, it's not uncommon for these consumers to pull 80+ hour work weeks. Approaching their mid-30s, these consumers recognize that their professional aspirations have taken a toll on their social life, but for now they're content with the sleep-work- sleep routine. ● Homebody: With a comfortable career and income, these consumers know what makes them happy: reading, listening to music, and spending time at home with their pets and close friends. Select an option from the choices below and click Submit . Social butterfly
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Decision Point: How to Distinguish Yourself from Your Competitors Everyone at Sauber is now in agreement that consumers who are time-pressed are the best target market for the All-in-One washer-dryer. Therefore, the target market for the washer-dryer combo is a busy, small-household, high-income consumer who lives in an apartment. In order to promote the All-in-One washer-dryer to this target, you need to decide how to distinguish it from its competitors. What is a good number of key product differences to promote? There may be more than one good choice here. Select an option from the choices below and click Submit . Two Decision Point: Promoting Key Differences You are focusing on two product attributes when promoting the Sauber washer-dryer. Given what you know about the Sauber washer-dryer combo, which product attributes do you want to promote to your target market? Select an option from the choices below and click Submit . Cleaning power and convenience
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Decision Point: Sauber's Differential Advantage Keeping the target market and competition in mind, what is the best way to position the Sauber washer-dryer in the marketplace? Laundry appliance consumers seek a number of attributes from the product. Fortunately, you just received data from a recent consumer survey identifying cleaning ability, price, and machine size as the three most important attributes to consumers. Select a positioning statement that you feel captures Sauber's differential advantage most accurately. Select an option from the choices below and click Submit . Sauber All-In-One: Cleanest clothes, small machine. Final Feedback The VP of Marketing calls you into her office to discuss your segmentation, targeting, and positioning analysis.
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"The marketing strategy decisions for Sauber's All-in-One washer-dryer are critical elements of the U.S. expansion. You have provided us with a sound segmentation strategy and clear target market recommendation. With this knowledge, you positioned the product to achieve maximum sales. Thank you for your analysis and recommendations. We look forward to a successful U.S. launch for the Sauber All-in- One." Learning Objectives At the end of this exercise, you should be able to: ● Learning Objective 7.3 ● LO 7.3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.
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Scenario Verdure Inc. is a California-based firm focusing on promoting health and wellness through community-based health clubs. In addition to its above-average membership price, one attribute that differentiates Verdure's health clubs from the competition is its luxurious spa embedded within the health club. The Spa at Verdure offers traditional massage and reflexology, and recently decided to expand and add services based on Eastern medicine. The Spa also offers a small line of opulent oils and lotions used in its treatments for consumers to purchase and take home. Verdure targets a high-income clientele who demand the best from all of its products and services. The majority of Verdure's clients are young singles and couples with college degrees and incomes in excess of $100,000. The Spa plans to double its square footage and offerings, so Verdure management has been re-evaluating the customer experience it provides at The Spa. Your Task
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You have been hired by Verdure's VP of Marketing to enhance The Spa's customer experience by focusing on the four unique characteristics of services -- intangibility, inseparability, variability, and perishability.
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Your task is to choose marketing tactics and responses that will create value for consumers while helping Verdure achieve its goal of becoming a profitable spa that provides an unparalleled customer experience. Decision Point: Classifying the Spa on the Service- Goods Continuum As you consider your task, you reflect on the customer experience you are working to develop. You understand that products can be placed on a service-goods continuum with purely tangible goods and purely services as endpoints. To choose the best marketing tactics, you evaluate The Spa at Verdure's position on the continuum. Which classification most accurately represents The Spa's position on the service-goods continuum? Select an option from the choices below and click Submit. Mostly a service Your Boss's Reaction to Choosing a Service
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The VP of Marketing stops by your office to check on your progress: "You are correct that even though we have a small line of tangible spa products for sale, what we focus on is the experience. Our consumers visit us for the relaxation and restoration that they receive from our unique assortment of treatments. Thus, we primarily create value for our customers through our services." Mentoring Moment: Service Characteristics You have identified The Spa's focus on value creation through services. Marketing services can be challenging because they are experience-based products that cannot be touched. Services share four common characteristics that differentiate them from tangible goods: intangibility, inseparability, variability, and perishability. Review each of the following spa service examples and then drag it to the appropriate service characteristic. Ryan just had his first cupping treatment from his therapist, Ava, and he's pleased. Ava was professional and attentive, and the therapy alleviated his aching muscles. Every day, The Spa at Verdure can provide up to 40 treatments across its 5 luxurious treatment rooms. On average, 30 treatments are booked each day, leaving 25% of its capacity unused. Jose loves getting weekly massages to treat his aching muscles from his therapist, Tim. Last week he was not happy with Tim's massage because the massage pressure was too hard and it felt rushed.
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Because she cannot see, touch, or smell the Thai Tok Sen treatment before the massage, Audrey is unsure of the tapping massage's quality and value. - **Intangibility**: "Because she cannot see, touch, or smell the Thai Tok Sen treatment before the massage, Audrey is unsure of the tapping massage's quality and value." Intangibility refers to the inability to experience or evaluate a service before purchasing or using it. Audrey's uncertainty about the quality of the Thai Tok Sen treatment due to its intangible nature aligns with this characteristic. - **Inseparability**: "Ryan just had his first cupping treatment from his therapist, Ava, and he's pleased. Ava was professional and attentive, and the therapy alleviated his aching muscles." Inseparability pertains to the simultaneous production and consumption of services. Ryan's positive experience with Ava's cupping treatment highlights the interaction between the service provider (Ava) and the service itself (cupping treatment). - **Variability**: "Jose loves getting weekly massages to treat his aching muscles from his therapist, Tim. Last week he was not happy with Tim's massage because the massage pressure was too hard and it felt rushed." Variability refers to the inconsistency or lack of uniformity in service delivery. Jose's dissatisfaction due to the varying quality of massages from Tim demonstrates the variability characteristic. - **Perishability**: "Every day, The Spa at Verdure can provide up to 40 treatments across its 5 luxurious treatment rooms. On average, 30 treatments are booked each day, leaving 25% of its capacity unused." Perishability involves the inability to store or inventory services for future use. The fact that 25% of the spa's treatment capacity goes unused each day highlights the perishability of services; they can't be stored or saved for use at a later time.
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Decision Point: Choosing the Spa's Decor Perhaps the fundamental challenge in marketing services is intangibility because it limits consumers' ability to evaluate the product before purchase. One way firms can try to overcome the intangibility of services is by using quality signals. The Spa at Verdure is renovating its Spa area to increase its capacity to provide the new, Eastern-style treatments. As part of the renovation, new decor and finishes will be chosen. What quality of decor and finishes do you recommend that The Spa install? Select an option from the choices below and click Submit. Expensive high-end finishes: natural Carrara marble countertops, sleek Italian leather furnishings, opulent lighting Decision Point: How You Address Intangibility With the finishes for The Spa chosen, you consider other ways to overcome intangibility. You appreciate that consumers are hesitant to purchase spa services that they cannot evaluate before consumption. What is the best strategy to address the intangibility of spa services? Select an option from the choices below and click Submit. Frame and post positive Trip Advisor and Yelp reviews at The Spa.
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Decision Point: How You Will Increase Value Members of Verdure pay a premium price for their gym membership and are accustomed to professional, attentive customer service. Service quality depends not only on who provides the service, but also when, where, and how the services are provided. The Spa wants to ensure that its consumers receive the highest level of service at every interaction. What policy would most effectively reduce service variability and increase customer value? Select an option from the choices below and click Submit. Design a descriptive protocol for each spa service including clear delivery standards. Decision Point: How The Spa Should Provide Customer Service Training Customer service is a critical component in the service encounter. You now must decide how to train your staff to provide customer service. Choose the training option that will create the most customer value and reduce perceived variability. Select an option from the choices below and click Submit.
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Train the staff in customer delight—to understand the wants and needs of the customer and to exceed customer expectations. Decision Point: Making the Service Encounter More Positive When consumers evaluate service quality, they often do not separate the service from the provider because products are sold, produced, and consumed at the same time. Which two of the following strategies would have the most positive effect on the overall service encounter by addressing inseparability? Select two options from the choices below, and then click Submit. Encourage customer coproduction. Design a professional dress code for employees. Decision Point: How to Revise the Reservation Policy
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Verdure Health and Fitness customers are primarily busy working professionals. Currently 20%-30% of appointments booked by Verdure clients result in no-shows. Verdure management knows that one of the keys to profitability is maximizing therapy appointment reservations while minimizing unused appointment times and no-shows. The VP has asked you to develop a policy to address this inventory management issue. Which of the following reservation policies would benefit Verdure the most by minimizing unused appointment times? Select an option from the choices below and click Submit. Charge customers a fee of 50% of the service price when they miss an appointment. Decision Point: Choosing a Sales Promotion
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One of the other inventory challenges faced by The Spa is maximizing the number of reservations throughout the day and across the week. Although demand is strong for weekend and evening reservations, demand is soft for weekday, daytime reservations when most of Verdure's clients are at the office. The Spa at Verdure needs a strategy to address this capacity management issue, and the VP once again asks you for a recommendation. Which of these sales promotions would benefit The Spa the most? Select an option from the choices below and click Submit. Offer a 25% discount on the price of services booked during off-peak times. Final Feedback
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In the next department meeting, you present your plan to your colleagues. After your presentation, the VP calls you into her office to review your work: "The marketing of services is a challenging task due to the unique characteristics of service. Our target market has high expectations from all of the products that they purchase, including services. Consumers have much more difficulty evaluating services than they do tangible goods during the purchase process. Deciding to invest in the high- end finishes for our spa was a critical decision that signaled our commitment to provide the best experience possible for our clientele. The tactical recommendations that followed provided us with a solid strategic plan that should lead to a profitable expansion of The Spa at Verdure." Learning Objectives
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At the end of this exercise, you should be able to: ● Learning Objective 8.1 ● LO 8.1: Explain how companies find and develop new product ideas. ● Learning Objective 8.2 ● LO 8.2: List and define the steps in the new product development process and the major considerations in managing this process.
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Scenario Epic Products is a new product development consulting company that specializes in helping small companies bring new products to market. Epic has many projects in the product development process pipeline so it only has time to take on one new client this quarter. Three companies have submitted proposals for new products that need Epic's expertise to bring their product concepts to market. Your objective as part of the Epic team is to choose the product with the most potential for success, as well as advise the company about whether the product should go to market. Your Product Choices The three proposed new products your team needs to choose from are:
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● A smart suitcase with built-in charge capabilities for the business traveler ● A smart home security system that enables voice and video and integrates with a smartphone or tablet
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● A new, revolutionary anti-aging cream to reduce wrinkles and facial lines in four months All three products already have competition in the marketplace, and none will be first to market. Mentoring Moment: The R-W-W Framework The R-W-W Framework is used to screen new products. R-W-W stands for: ● Is it Real? ● Can we Win? ● Is it Worth doing? Drag and drop each description of a new product below to the correct R-W-W category. When you’ve classified each description, click Submit.
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Research shows that 85% of high school students enjoyed playing the new game. A smaller ergonomic mouse was used by 57% of data entry clerks who participated in the survey. To manufacture the new product, the company may need to hire 10 more assemblers. The new product would cost $12.50 to manufacture, and similar products sell for $9.00. The results of the last market survey showed only 35% of consumers were interested in the new product. **R: Is it Real?** - "Research shows that 85% of high school students enjoyed playing the new game." - "The results of the last market survey showed only 35% of consumers were interested in the new product." **W: Can we Win?** - "A smaller ergonomic mouse was used by 57% of data entry clerks who participated in the survey." - "To manufacture the new product, the company may need to hire 10 more assemblers." **W: Is it Worth doing?** - "The new product would cost $12.50 to manufacture, and similar products sell for $9.00."
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Decision Point: Choosing Your Product In order for the new product development team to narrow down the product choices, the team needs to go through the idea screening process. The marketing research team has come up with data on each product. Click here to access the Marketing Research on New Product Options report. Based on the marketing research findings, which of the three products positively answered all three R-W-W framework questions? Select an option from the choices below and click Submit. Anti-aging cream Accepting the Anti-aging Cream
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Given the research and the market potential, the team agrees that this is the best product for this quarter. It meets all of the R-W-W requirements and has the best potential for success. Decision Point: Concept Testing Now that the product has been selected, the team needs to develop a product concept that will appeal to consumers. The basic formula for the cream does not have a scent. The team feels the product would sell better if a plant extract or scent was added to the formula, but doesn’t take away from the effectiveness of the cream. Based on this desire, the team has come up with three product concepts for the anti- aging cream. Before you decide on a concept, they want to do product testing, which is the next phase in the product development process. The team has decided that focus groups with potential customers that fit the three different concepts will be conducted for product testing. Choose the product concept that you think will test the best.
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Select an option from the choices below and click Submit. Mid-tier product: This concept would appeal to career women and men, and would be sold at department and specialty beauty locations. This product needs to appeal as a unisex product, or else have both a men's and a women's line in different packaging, sold at the same location. Decision Point: Mid-Tier Product Focus Group The focus group for the mid-tier product consists of seven women and three men. Household income levels for this group are between $50,000 and $150,000. Ages range from 45 to 60. The target price for 1.7 fluid ounces of product is $65. This group has a unisex anti-aging cream that works on both men and women. There is no noticeable smell to the product, to appeal to men as well as women who may have sensitivity to fragrance in products. This product received glowing reviews from all three men and five of the women. The other two women felt that they would be more drawn to a product with a nice scent. Based on this feedback, what is the next step to move this product forward? Select an option from the choices below and click Submit. Begin marketing strategy development.
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Decision Point: Choosing Your Marketing Strategy The next step in the new product development process is the marketing strategy development. The team has decided that the mid-tier product concept tested the best, so they need to come up with a marketing strategy for the product. You know from the focus group testing and research that the market for this product is both men and women, age 45+, with moderate to high household income levels. The anti-aging cream will be sold at department stores, and the target price is expected to be $65. The client is a cosmetics company that has been in business for five years and has distribution relationships with several large department stores. The company wants to increase overall company market share by 10% with this product within the next two years. The team now needs to choose the best marketing strategy. Select an option from the choices below and click Submit. Concentrated niche marketing: This strategy goes after a large share of a small niche of consumers. Business Analysis
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The business analysis process is a review of the sales, costs, and profit projections needed to satisfy a company’s strategy. Because the client doesn’t have another anti- aging product in its product line, it has decided to use the costs of a similar product to estimate these figures. The company has estimated that a per-unit price to manufacture and market the product is $33. These projections are used to analyze the new product's financial attractiveness. Decision Point: Developing Your Product The team now needs to decide on the physical packaging for the anti-aging cream prototype, taking the product from concept to mock-up. The team has reviewed similar moisturizer and face cream packaging to help with its decision. Use the table below to choose the best option.
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Type of Container Price per Unit Safety Appeal by Age Group Level of Messiness (1 to 5, with 5 being the most messy) Plastic bottle $0.08 Unbreak able Between 35 and 50 years 1 Plastic tube $0.05 Unbreak able Between 35 and 50 years 5 Glass jar $0.12 Breakab le Over 60 years 2 Select an option from the choices below and click Submit. Plastic bottle Decision Point: Test Marketing Your Product Your next step in the process is to test the product in the market. Test marketing can be extensive and expensive. At a brainstorming session, the team comes up with the following three scenarios. You now need to recommend which option is best for the anti- aging cream. Select an option from the choices below and click Submit.
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Use a controlled test market of middle-income consumers in selected stores. Use a complete test marketing program for the anti-aging cream, including testing advertising, distribution, branding, and packaging. Decision Point: Should Your Product Go to Market? The final step in the new product development strategy is to decide whether the product is worth taking to market. You need to consider the following factors: ● Current budget for creating this product: $150,000 ● Manufacturing facility: The estimate for leasing an industrial facility is $4 per square foot. (You would need at least 7500 square feet to start.) The company can use its current labor pool, but would need at least $100,000 for setup expenses and $50,000 for materials/supplies. ● Introduction timing: Sources have shared that the primary competition may launch a similar product within the next 2 to 3 years. ● Where to launch the product: More research needs to be completed to determine where to launch the product. Focus groups have been used in only one geographic area; the client wants to do focus groups in other areas of the country. Should your product go to market right now? Select an option from the choices below and click Submit.
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We propose that the client wait 1 to 2 years to take this product to market.
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